Table of Contents
Filed Pursuant to Rule 424(b)(4)
Registration No. 333-251802
PROSPECTUS
REVIVA PHARMACEUTICALS HOLDINGS, INC.
Up to 2,887,104 Shares of Common Stock
6,881,313 Shares of Common Stock Issuable Upon Exercise of
Warrants
556,313 Warrants to Purchase Common Stock
This prospectus relates to the issuance by us of up to an aggregate
of up to 6,325,000 shares of our common stock, $0.0001 par value
per share (the “Common Stock”) that are issuable upon the exercise
of 6,325,000 warrants (the “Public Warrants”) originally issued in
the initial public offering, or the “IPO” of Tenzing (as defined
herein), at an exercise price of $11.50 per share of Common
Stock.
This prospectus also relates to the offer and sale by the Selling
Securityholders identified in this prospectus, or their permitted
transferees, of:
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(i)
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up to 3,443,417 shares of Common Stock, including:
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(a)
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556,313 shares of Common Stock issuable upon conversion of the
Private Warrants;
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(b)
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300,000 shares of Common Stock that were issued pursuant to the
Side Letter (as defined herein);
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(c)
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55,050 shares of Common Stock that were issued pursuant to the
Non-Redemption Agreement (as defined herein);
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(d)
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1,581,250 founder shares of Common Stock (the “Founder Shares”),
1,437,500 of which were issued to Sponsor (as defined herein) in
June of 2018 and the remainder of which were issued to Sponsor in
August of 2018;
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(e)
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358,813 shares of Common Stock that were issued as part of the
private placement of units (the “Private Placement Units”)
that took place simultaneously with the closing of Tenzing’s
IPO, 343,000 of which were issued to Sponsor (“Sponsor’s Private
Placement Shares”);
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(f)
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41,263 shares of Common Stock held by the Backstop Investors (as
defined herein);
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(g)
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353,228 shares of Common Stock held by the holders of the former
Reviva Notes (as defined here in) and
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(h)
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197,500 shares of Common Stock (the “Working Capital Shares”)
issued upon conversion of the Working Capital Notes (as defined
herein).
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(ii)
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up to 556,313 outstanding warrants (the “Private Warrants”, and
together with the Public Warrants, the “Warrants”), each entitling
the holder thereof to purchase one share of Common Stock at an
exercise price of $11.50 per share, subject to certain adjustments,
including (a) 358,813 outstanding warrants that were issued as
part of the private placement of units that took place
simultaneously with the closing of Tenzing’s IPO (the “Private
Placement Warrants”), and (b) 197,500 outstanding Working Capital
Warrants (as defined herein).
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We will not receive any proceeds from the sale of shares of Common
Stock or Private Warrants by the Selling Securityholders pursuant
to this prospectus, except with respect to amounts received by
us upon exercise of the Public Warrants or the Private Warrants to
the extent such Public Warrants or Private Warrants, as applicable,
are exercised with cash. However, we will pay the expenses, other
than underwriting discounts and commissions and certain expenses
incurred by the Selling Securityholders in disposing of the
securities, associated with the sale of securities pursuant to this
prospectus.
We are registering the offer and sale of the securities described
above to satisfy certain registration rights we have granted. Our
registration of the securities covered by this prospectus does not
mean that either we or the Selling Securityholders will issue,
offer or sell, as applicable, any of the securities. The Selling
Securityholders and any of their permitted transferees may offer
and sell the securities covered by this prospectus in a number of
different ways and at varying prices. Additional information on the
Selling Securityholders, and the times and manner in which they may
offer and sell the securities under this prospectus, is provided
under “Selling Securityholders” and “Plan of
Distribution” in this prospectus.
We are an “emerging growth company,” as that term is defined under
the federal securities laws and, as such, are subject to certain
reduced public company reporting requirements.
Our Common Stock and warrants are listed on the Nasdaq Capital
Market, or Nasdaq, under the symbols “RVPH” and “RVPHW”,
respectively. On May 14, 2021 the closing price of our Common Stock
was $4.83 per share and the closing price of our warrants was
$0.397 per warrant.
Investing in our securities involves a high degree of risk.
See “Risk Factors” beginning on
page 5 of this prospectus. You should carefully
consider these risk factors, as well as the information contained
in this prospectus, before you invest.
Neither the Securities and Exchange Commission nor any state
securities commission has approved or disapproved of these
securities or passed upon the adequacy or accuracy of this
prospectus. Any representation to the contrary is a criminal
offense.
The date of this Prospectus is May 14, 2021
TABLE OF
CONTENTS
INTRODUCTORY
NOTE
Closing of Merger
On December 14, 2020 (the “Closing Date”), Reviva
Pharmaceuticals Holdings, Inc., a Delaware corporation and the
successor by re-domiciliation to Tenzing Acquisition Corp., a
British Virgin Islands exempted company (“Tenzing”), Tenzing Merger
Subsidiary Inc., a Delaware corporation and wholly-owned subsidiary
of Tenzing (“Merger Sub”), and Reviva Pharmaceuticals, Inc., a
Delaware corporation (together with its consolidated subsidiaries,
“Old Reviva”), consummated a business combination (the “Business
Combination”) through the proposed merger (the “Closing”) of Merger
Sub with and into Reviva (the “Merger”), contemplated by the
previously announced Agreement and Plan of Merger, dated as of
July 20, 2020 (as amended, the “Merger Agreement”), by and
among Tenzing, Merger Sub, Old Reviva, and the other parties
thereto. Pursuant to the Merger Agreement, at the effective time of
the Merger (the “Effective Time”), Merger Sub merged with and into
Old Reviva, with Old Reviva as the surviving company in the Merger
and, after giving effect to such Merger, Old Reviva becoming a
wholly-owned subsidiary of Reviva Pharmaceuticals
Holdings, Inc. (together with its consolidated subsidiaries
after the Closing Date, “New Reviva”)
On December 11, 2020, in advance of and in connection with the
Closing, and pursuant to the terms of the Merger Agreement, Tenzing
changed its jurisdiction of organization by continuing out of the
British Virgin Islands and re-domiciling to a corporation
incorporated under the laws of the State of Delaware (the
“Domestication”).
In accordance with the terms and subject to the conditions of the
Merger Agreement, at the Effective Time, (i) all shares of Old
Reviva common stock and Old Reviva preferred stock (together,
“Reviva Stock”) issued and outstanding immediately prior to the
Effective Time (other than those properly exercising any applicable
dissenters rights under Delaware law) converted into the right to
receive shares of common stock of New Reviva, par value $0.0001 per
share (the “Common Stock”); (ii) each issued and outstanding
warrant to acquire shares of Old Reviva common stock were assumed
by New Reviva and automatically converted into a warrant for Common
Stock, with its price and number of shares equitably adjusted based
on the terms of the Merger Agreement (the “Assumed Warrants”); and
(iii) each outstanding option to acquire Old Reviva common
stock (whether vested or unvested) were assumed by New Reviva and
automatically converted into an option to acquire shares of Common
Stock, with its price and number of shares equitably adjusted based
on the terms of the Merger Agreement.
Unless the context otherwise requires, references in this
prospectus to “Reviva”, the
“Company”, “us”, “we”,
“our” and any related terms prior to the closing of the
Business Combination are intended to mean Reviva
Pharmaceuticals, Inc., a Delaware corporation, and its
consolidated subsidiaries, and after the closing of the Business
Combination, Reviva Pharmaceuticals Holdings, Inc., a
Delaware corporation and its consolidated subsidiaries.
Escrow Agreement
In connection with the Business Combination, on December 14,
2020, the Company entered into an escrow agreement (the “Escrow
Agreement”) with Sponsor, Dr. Bhat and Continental Stock
Transfer & Trust Company, as escrow agent (the “Escrow
Agent”). Pursuant to the Escrow Agreement and the Merger Agreement,
at the Closing, 573,666 shares of Common Stock, representing ten
percent (10%) of the merger consideration provided for in the
Merger Agreement (the “Escrow Shares”) otherwise issuable to the
holders of Reviva Stock (the “Reviva Securityholders”) (allocated
pro rata among the Reviva Securityholders based on the merger
consideration otherwise issuable to them at the Closing (“Pro Rata
Consideration”)) were deposited into a segregated escrow account
with the Escrow Agent, and such shares are held in escrow together
with any dividends, distributions or other income on the Escrow
Shares (the “Escrow Property”) in accordance with the Escrow
Agreement. The Escrow Property will be held in the escrow account
for a period of twelve (12) months after the Closing as the sole
and exclusive source of payment for any post-Closing
indemnification claims (subject to certain exceptions as set forth
in the Escrow Agreement). The Reviva Securityholders will have the
right to vote the Escrow Shares while they are held in escrow.
Earnout
In addition to the merger consideration set forth above, the Reviva
Securityholders also have a contingent right to receive up to an
additional 1,000,000 shares of Common Stock (the “Earnout Shares”)
after the Closing based on the stock price performance of the
Common Stock and the achievement by Reviva of certain clinical
trial milestones during the three (3) year period following
the Closing (the “Earnout Period”). In order to receive the Earnout
Shares, during the Earnout Period, both:
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the closing price of Reviva’s common stock has to be equal to or
greater than $15.00 per share for any 20 trading days within any 30
trading day period; and
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Reviva must receive positive data from (i) its first phase 3
trial in Acute Schizophrenia and (ii) either a phase 2
clinical trial in pulmonary arterial hypertension or idiopathic
pulmonary fibrosis.
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If there is a final determination that the Reviva Securityholders
are entitled to receive Earnout Shares, then such Earnout Shares
will be allocated such that (i) one-half (1/2) of the Earnout
Shares will be allocated to Old Reviva preferred stockholders
(pro rata amongst them based on the number of shares of Old
Reviva preferred stock owned) and (ii) the remaining one-half
(1/2) of the Earnout Shares will be allocated to all of the Reviva
Securityholders pro rata, treating the Old Reviva preferred
stock on an as-converted to common stock basis (a one-for-one
basis).
Maxim Side Letter
Pursuant to that certain underwriting agreement, dated as of
August 20, 2018 (the “Underwriting Agreement”), by and between
Tenzing and Maxim Group LLC (“Maxim Group,” the underwriter of
Tenzing’s initial public offering (the “IPO”)), Maxim Group was
entitled to an aggregate cash payment of $2,213,750 (the “Deferred
Underwriting Commission”) payable upon the Closing. In connection
with the Closing, on December 14, 2020, Tenzing entered into a
letter agreement (the “Side Letter”) with Maxim Group, which Side
Letter provided that in lieu of the payment of $2,113,750 of the
Deferred Underwriting Commission in cash, Tenzing shall, at the
Closing, issue to Maxim Group’s affiliate, Maxim Partners, LLC
(“Maxim Partners,” and together with Maxim Group, “Maxim”), an
aggregate of 300,000 shares of Common Stock (the “Side Letter
Shares”), with the remaining $100,000 of the Deferred Underwriting
Commission being paid in cash upon the Closing. Maxim was also
given certain registration rights in the Side Letter.
Backstop Agreements
On October 21, 2020, Tenzing entered into backstop agreements
(the “Initial Backstop Agreements”) with Reviva and certain
investors (the “Initial Backstop Investors”) in connection with the
Business Combination. Pursuant to the Backstop Agreements, the
Backstop Investors agreed to (i) purchase in the aggregate,
among all Backstop Investors, a total of 417,518 of Tenzing’s
ordinary shares in open market or private transactions (the
“Backstop Shares”), (ii) hold and not transfer, grant any
proxies or powers of attorney, or incur any liens with respect to,
such Backstop Shares through the closing of the Business
Combination, and (iii) not redeem any Backstop Shares in
connection with the Business Combination or any future extension of
the Tenzing’s deadline to consummate its initial business
combination prior to the closing of the Business Combination. In
exchange, Tenzing agreed to issue to the Backstop Investors for
each ten (10) Backstop Shares that they purchase on or prior
to a certain deadline set forth in the Initial Backstop Agreements
and hold without transfer, do not redeem and otherwise act in
material compliance with the terms of the Backstop Agreement one
(1) share (each, an “October 21 Additional Share”) of
common stock of Tenzing after giving effect to the conversion of
Tenzing from a British Virgin Islands company to a Delaware
corporation, as contemplated by the Merger Agreement, such issuance
to be completed by Tenzing within 10 business days after the
closing of the Business Combination. The Backstop Investors were
also given registration rights in the Backstop Agreements pursuant
to which the Company agreed to file a resale registration statement
for the Additional Shares within 90 days after the closing of
the Business Combination and to use its commercially reasonable
efforts to have the registration statement declared effective as
soon as practicable after the filing thereof.
On October 22, 2020, Tenzing entered into an additional
backstop agreement (the “Additional Backstop Agreement”, and
together with the Initial Backstop Agreements, the “Backstop
Agreements”) with Reviva, and an additional investor (the
“Additional Backstop Investor, and together with the Initial
Backstop Investors, the “Backstop Investors”) in connection with
the Business Combination, pursuant to which such investor agreed to
purchase 23,148 of Tenzing’s ordinary shares in open market or
private transactions, and Tenzing agreed to issue up to 2,314
ordinary shares of Tenzing in connection therewith (the
“October 22 Additional Shares,” and together with the
October 21 Additional Shares, the “Additional Shares”). The
Additional Backstop Agreements are on the same form and subject to
the same terms and conditions as the Initial Backstop
Agreements.
Working Capital Loans
In order to finance transaction costs in connection with a business
combination, Sponsor made working capital loans to Tenzing prior to
the consummating of the Business Transaction (the “Working Capital
Loans”). Such working capital loans were evidenced by promissory
notes. On December 14, 2020, in connection with the
consummation of the Business Combination, Sponsor elected to have
the Working Capital Loans converted, pursuant to the terms of the
Working Capital Loans, into private units of Tenzing, resulting in
the issuance of an aggregate of 197,500 shares of Common Stock (the
“Working Capital Shares”) and warrants to purchase 197,500 shares
of the Common Stock (the “Working Capital Warrants,” together with
the Working Capital Shares, the “Conversion Securities”). Upon
issuance of the Conversion Securities all of the existing
obligations of the Company under the Working Capital Loans were
satisfied in full and irrevocably discharged, terminated and
released, and Sponsor retained no rights with respect to such
Working Capital Loans, other than the registration rights provided
pursuant to such Working Capital Loans.
On December 28, 2020, Sponsor conducted a liquidating distribution
of all of the shares of Company Common Stock that it held on such
date, including the Founder Shares, Sponsor’s Private Placement
Shares, and Working Capital Shares, to its members (as permitted
transferees pursuant to a liquidating distribution) and assigned
its registration rights in connection with the distribution. As a
result, each of the members of Sponsor have the same registration
rights and transfer restrictions with respect to the shares of
Company Common Stock, including the Founder Shares, Sponsor’s
Private Placement Shares, and Working Capital Shares, received by
such member pursuant to the liquidating distribution.
Non-Redemption Agreement
In connection with Tenzing’s shareholder approval of the Merger
Agreement, on December 8, 2020, Tenzing entered into a
Non-Redemption Agreement (the “Non-Redemption Agreement”) with
Sponsor and a certain shareholder of the Company (the
“Shareholder”). Pursuant to the Non-Redemption Agreement, on
December 14, 2020 the Company and the Shareholder entered into
a registration rights agreement (the “Registration Rights
Agreement”), pursuant to which the Shareholder was given certain
registration rights with respect to (a) fifty-five thousand
fifty (55,050) shares (the “Shareholder Additional Shares”) of
Common Stock that were issued to the Shareholder at the Closing
pursuant to the Non-Redemption Agreement, (b) three hundred
forty-three thousand (343,000) Private Placement Warrants to
acquire shares of Common Stock of the Company that were acquired by
Sponsor as part of the private placement units issued to Sponsor in
connection with Tenzing’s IPO, which Sponsor transferred to
Shareholder on December 15, 2020 pursuant to the terms of the
Non-Redemption Agreement, (c) the Working Capital Warrants,
which Sponsor transferred to Shareholder on December 15, 2020
pursuant to the terms of the Non-Redemption Agreement (d) all
shares of Common Stock issuable upon exercise of the Private
Placement Warrants, (e) all shares of Common Stock issuable
upon exercise of the Working Capital Warrants, and (f) any
securities issued or then issuable upon any stock split, dividend
or other distribution, recapitalization or similar event with
respect to the foregoing.
The Reviva Notes
Prior to the Closing, Reviva issued an aggregate principal amount
of up to $500,000 in unsecured convertible promissory notes to
certain investors (the “Reviva Interim Period Notes”) to finance
its ordinary course administrative costs and expenses and other
expenses incurred in connection with the consummation of the Merger
and the other transactions contemplated by the Merger Agreement.
The Reviva Interim Period Notes automatically converted,
immediately prior to consummation of the Merger, and accordingly
shared in the merger consideration, into a number of shares of
Common Stock equal to the quotient (rounded down to the nearest
whole share) obtained by dividing (A) the sum of all then
outstanding principal under the Reviva Interim Period Notes on a
date that was no more than five (5) days prior to Closing by
(B) a conversion price equal to $0.831063.
In addition, prior to the Closing, Reviva issued an aggregate
principal amount of up to $2,000,000 in unsecured convertible
promissory notes to certain investors (the “Reviva Contingent
Interim Period Notes”, and together with the Reviva Interim Period
Notes, the “Reviva Notes”) to payoff and satisfy the a judgment
against Reviva issued by the District Court of Harris County, Texas
and to finance its ordinary course administrative costs and
expenses and other expenses incurred in connection with the
consummation of the Merger and the other transactions contemplated
by the Merger Agreement. The Reviva Contingent Interim Period Notes
automatically converted immediately prior to consummation of the
Merger, and accordingly shared in the merger consideration, into a
number of shares of Common Stock equal to the quotient (rounded
down to the nearest whole share) obtained by dividing (A) the
sum of all then outstanding principal under the Reviva Contingent
Interim Period Notes on a date that was no more than five
(5) days prior to Closing by (B) a conversion price equal
to $1.163953.
The holders of shares of Common Stock issued upon conversion of the
Reviva Notes hold certain registration rights, pursuant to which
the Company agreed to file a resale registration statement for such
shares of Common Stock within 90 days after the closing of the
Business Combination and to use its commercially reasonable efforts
to have the registration statement declared effective as soon as
practicable after the filing thereof.
ABOUT THIS
PROSPECTUS
This prospectus is part of a registration statement on
Form S-1 we filed with the Securities and Exchange
Commission (the “SEC”) using the “shelf” registration process.
Under this shelf registration process, the Selling Securityholders
may, from time to time, sell the securities offered by them
described in this prospectus. We will not receive any proceeds from
the sale by such Selling Securityholders of the securities offered
by them described in this prospectus. This prospectus also relates
to the issuance by us of the shares of Common Stock issuable upon
the exercise of the Public Warrants. We will receive proceeds from
any exercise of the Public Warrants or the Private Warrants for
cash.
Neither we nor the Selling Securityholders have authorized anyone
to provide you with any information or to make any representations
other than those contained in this prospectus or any applicable
prospectus supplement or any free writing prospectuses prepared by
or on behalf of us or to which we have referred you. Neither we nor
the Selling Securityholders take responsibility for, and can
provide no assurance as to the reliability of, any other
information that others may give you. Neither we nor the Selling
Securityholders will make an offer to sell these securities in any
jurisdiction where the offer or sale is not permitted.
For investors outside the United States: neither we nor the Selling
Securityholders have done anything that would permit this offering
or possession or distribution of this prospectus in any
jurisdiction where action for that purpose is required, other than
in the United States. Persons outside the United States who come
into possession of this prospectus must inform themselves about,
and observe any restrictions relating to, the offering of our
securities and the distribution of this prospectus outside the
United States.
This prospectus contains summaries of certain provisions contained
in some of the documents described herein, but reference is made to
the actual documents for complete information. All of the summaries
are qualified in their entirety by the actual documents. Copies of
some of the documents referred to herein have been filed, will be
filed or will be incorporated by reference as exhibits to the
registration statement of which this prospectus is a part, and you
may obtain copies of those documents as described below under
“Where You Can Find More Information.”
We may also provide a prospectus supplement or post-effective
amendment to the registration statement to add information to, or
update or change information contained in, this prospectus. You
should read both this prospectus and any applicable prospectus
supplement or post-effective amendment to the registration
statement together with the additional information to which we
refer you in the sections of this prospectus entitled “Where You
Can Find More Information.”
Solely for convenience, trademarks and tradenames referred to in
this prospectus may appear without the ® or ™ symbols, but such
references are not intended to indicate in any way that we will not
assert, to the fullest extent under applicable law, our rights, or
that the applicable owner will not assert its rights, to these
trademarks and tradenames.
PROSPECTUS SUMMARY
This summary highlights selected information from this
prospectus and does not contain all of the information that is
important to you in making an investment decision. This summary is
qualified in its entirety by the more detailed information included
elsewhere in this prospectus. Before making your investment
decision with respect to our securities, you should carefully read
this entire prospectus, including the information under
“Risk Factors,” “Management’s Discussion and
Analysis of Financial Condition and Results of
Operations,” and the financial statements included
elsewhere in this prospectus.
Our Business
We are a clinical-stage biopharmaceutical company that discovers,
develops and seeks to commercialize next-generation therapeutics
for diseases representing significant unmet medical needs and
burden to society, patients, and their families. Our current
pipeline focuses on the central nervous system, respiratory, and
metabolic diseases. We use a chemical genomics driven technology
platform and proprietary chemistry to develop new medicines. Our
pipeline currently has two drug candidates, RP5063 (Brilaroxazine)
and RP1208. Both are new chemical entities discovered in-house. We
have been granted composition of matter patents for both RP5063 and
R1208 in the United States (U.S.), Europe, and several other
countries.
Our lead drug candidate, RP5063, is ready for continued clinical
development for multiple neuropsychiatric indications. These
include schizophrenia, bipolar disorder (BD), major depressive
disorder (MDD), behavioral and psychotic symptoms, dementia or
Alzheimer’s disease (BPSD), Parkinson’s disease psychosis (PDP),
and attention deficit hyperactivity disorder (ADHD). Furthermore,
RP5063 is also ready for clinical development for two respiratory
indications — pulmonary arterial hypertension (PAH) and idiopathic
pulmonary fibrosis (IPF). The U.S. Food and Drug Administration
(FDA) has granted Orphan Drug designation to RP5063 for the
treatment of PAH in November 2016 and IPF in
April 2018.
Our primary focus is to complete the clinical development of RP5063
for the treatment of acute and maintenance schizophrenia.
Subject to the receipt of additional financing, we may also
continue the clinical development of RP5063 for the treatment of
BD, MDD, BPSD, PDP, ADHD, PAH and IPF. Moreover, subject to the
receipt of additional financing, we may also advance the
development of our second drug candidate, RP1208, for the treatment
of depression and obesity.
The development status of the Reviva product pipeline is presented
below:
Business Combination and Domestication
On December 14, 2020, our predecessor company, formerly known
as Tenzing Acquisition Corp., a British Virgin Islands exempted
company (“Tenzing”), and Reviva Pharmaceuticals, Inc., a
Delaware corporation (together with its consolidated subsidiaries,
“Old Reviva”), consummated the transactions contemplated by the
Agreement and Plan of Merger, dated as of July 20, 2020 (as
amended, the “Merger Agreement”), by and among Tenzing, Tenzing
Merger Subsidiary Inc., a Delaware corporation and wholly-owned
subsidiary of Tenzing (“Merger Sub”), Old Reviva, and the other
parties thereto. Pursuant to the Merger Agreement, Merger Sub
merged with and into Old Reviva, with Old Reviva surviving as our
wholly owned subsidiary. We refer to this transaction as the
Business Combination. In connection with and one day prior to the
completion of the Business Combination, Tenzing re-domiciled out of
the British Virgin Islands and continued as a company incorporated
in the State of Delaware, and changed its name to Reviva
Pharmaceuticals Holdings, Inc. Prior to the completion of the
Business Combination, the Company was a shell company. Following
the Business Combination, the business of Old Reviva is the
business of the Company.
Old Reviva was incorporated in the state of Delaware on May 1,
2006 and its subsidiary, Reviva Pharmaceuticals India Pvt. Ltd.,
was incorporated on December 23, 2014. Tenzing was formed
pursuant to the laws of the British Virgin Islands on
March 20, 2018.
About RP5063
Our RP5063 drug candidate is a novel, multimodal serotonin (5HT),
dopamine (DA), and nicotinic receptors modulator. Our compound
displays a high affinity for 5HT2A/2B//7 and
DA2/3/4 receptors and a moderate affinity for nicotinic (nACh-
α4β2) receptors (Rajagopal et al., 2017). The binding affinity of
RP5063 to dopamine and serotonin sub-receptors in radioligand
binding assays is the following (Ki, nM): dopamine D2S (0.28),
D2L (0.45), D3 (3.7), and D4.4 (6.0); Serotonin
5HT1A (1.5), 5-HT2A (2.5), 5-HT2B (0.19),
5-HT2C (39), 5-HT6 (51), and 5-HT7 (2.7). RP5063
displayed moderate binding affinity to nicotine- nAChR,
α4β2 (Ki = 36.3 nM).
Radioactive and non-radioactive studies in rat and dog models show
that the gastrointestinal tract completely absorbs orally
administered RP5063-related material, with acceptable
bioavailability in rat (22%) and dog (85%) animal models. Exposure
to RP5063 increased in a dose-dependent manner. Once absorbed,
RP5063 rapidly and extensively distributes into various tissues.
Noteworthy is the brain with a brain:plasma ratio of ~3.5, despite
high plasma protein binding (>99%) characteristics. Rat and dog
hepatocytes rapidly metabolize RP5063; however, human hepatocytes
metabolize this compound slower. This finding suggests that this
compound will show a low clearance in humans. We believe the risk
of RP5063 inducing or inhibiting cytochrome P450 (CYP) at
anticipated pharmacologically relevant concentrations in humans is
low. Hepatic metabolism via the cytochrome P450s is the primary
route of elimination with CYP3A4/5, undertaking most of the
metabolism (69%), a small contribution from CYP2D6 (17%) and minor
contributions by other cytochromes including extra-hepatic CYP2J2.
Two metabolites in human plasma and urine display no
pharmacological activity. We believe there is a low risk of
inhibition and induction of human cytochromes by RP5063 at expected
plasma concentrations clinically.
A full battery of regulatory compliant toxicology and safety
pharmacology studies is complete. We believe the results from these
tests support the chronic administration of RP5063 in clinical
trials. We believe the completed safety pharmacology and toxicology
studies report several significant safety findings. These include
(1) RP5063 is neither genotoxic nor clastogenic, (2) it
does not affect the function of cardiovascular (QT interval or
blood pressure) or respiratory systems, and (3) it is not
phototoxic in the 3T3 in vitro assay.
Implications of Being an Emerging Growth Company
We are an “emerging growth company” as defined in
Section 2(a)(19) of the Securities Act, as modified by the
Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). As
such, we are eligible for and intend to take advantage of certain
exemptions from various reporting requirements applicable to other
public companies that are not emerging growth companies for as long
as we continue to be an emerging growth company, including
(i) the exemption from the auditor attestation requirements
with respect to internal control over financial reporting under
Section 404(b) of the Sarbanes-Oxley Act, (ii) the
exemptions from say-on-pay, say-on-frequency and say-on-golden
parachute voting requirements and (iii) reduced disclosure
obligations regarding executive compensation in our periodic
reports and proxy statements.
We will remain an emerging growth company until the earlier of:
(i) the last day of the fiscal year (a) following the
fifth anniversary of the closing of Tenzing’s initial public
offering, (b) in which we have total annual gross revenue of
at least $1.07 billion, or (c) in which we are deemed to be a
“large accelerated filer” under the Securities Exchange Act of
1934, as amended (the “Exchange Act”), which would occur if the
market value of our common equity held by non-affiliates exceeds
$700.0 million as of the last business day of our most recently
completed second fiscal quarter; or (ii) the date on which we
have issued more than $1.0 billion in non-convertible debt
securities during the prior three-year period.
In addition, the JOBS Act provides that an emerging growth company
can take advantage of an extended transition period for complying
with new or revised accounting standards. This allows an emerging
growth company to delay the adoption of certain accounting
standards until those standards would otherwise apply to private
companies. We have elected to avail ourselves of this extended
transition period and, as a result, we will adopt new or revised
accounting standards on the relevant dates on which adoption of
such standards is required for non-public companies instead of the
dates required for other public companies.
Summary Risk Factors
Our business is subject to numerous risks and uncertainties,
including those in the section entitled “Risk Factors” and
elsewhere in this prospectus. These risks include, but are not
limited to, the following:
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We have never generated any product revenues.
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We expect to incur significant losses for the foreseeable future
and may never achieve or maintain profitability.
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We are heavily dependent on the success of RP5063, our only
advanced product candidate, which is still under clinical
development, and if RP5063 does not receive regulatory approval or
is not successfully commercialized, our business will be
harmed.
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The COVID-19 outbreak and global pandemic could adversely impact
our business, including our clinical trials.
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We will require additional capital to fund our operations, and if
we fail to obtain necessary financing, we may not be able to
complete the development and commercialization of RP5063 or
RP1208.
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If the interpretations, estimates or judgments we use to prepare
our financial statements prove to be incorrect, we may be required
to restate our financial results, which could have a number of
material adverse effects on us.
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Clinical trials are very expensive, time-consuming, difficult to
design and implement and involve an uncertain outcome.
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We face significant competition from other biotechnology and
pharmaceutical companies, and our operating results will suffer if
we fail to compete effectively.
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We do not have our own manufacturing capabilities and will rely on
third parties to produce clinical and commercial supplies of
RP5063, RP1208 and any future product candidate.
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We intend to rely on third parties to conduct, supervise and
monitor our clinical trials, and if those third parties perform in
an unsatisfactory manner, it may harm our business.
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If we are unable to obtain and maintain patent protection for our
technology and products or if the scope of the patent protection
obtained is not sufficiently broad, we may not be able to compete
effectively in our markets.
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Certain of our warrants are accounted for as liabilities and the
changes in value of such warrants could have a material effect on
our financial results.
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We are an emerging growth company within the meaning of the
Securities Act and have taken advantage of certain exemptions from
disclosure requirements available to emerging growth companies;
this could make our securities less attractive to investors and may
make it more difficult to compare our performance with other public
companies.
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We do not currently intend to pay dividends on our common stock in
the foreseeable future, and consequently, any gains from an
investment in our common stock will likely depend on appreciation
in the price of our common stock.
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Our officers, directors, and principal stockholders exercise
significant control over our Company, and will control our company
for the foreseeable future, including the outcome of matters
requiring stockholder approval.
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You will experience immediate and substantial dilution in the net
tangible book value per share of the common stock you
purchase.
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Other risks disclosed below under “Risk Factors”.
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Corporate Information
Our principal offices are located at 19925 Stevens Creek Blvd.,
Suite 100, Cupertino, CA 95014, and our telephone number is
(408) 501-888. Our website address is http://revivapharma.com. Our
website and the information contained on, or that can be accessed
through, our website shall not be deemed to be incorporated by
reference in, and are not considered part of, this prospectus. You
should not rely on any such information in making your decision
whether to purchase our common stock.
THE
OFFERING
The following summary of the offering contains basic information
about the offering and our Common Stock and is not intended to be
complete. It does not contain all the information that may be
important to you. For a more complete understanding of our Common
Stock, please refer to the section titled “Description of
Capital Stock.”
We are registering the issuance by us of 6,325,000 shares of Common
Stock that may be issued from time to time upon exercise of the
Public Warrants. We are also registering the resale by the selling
securityholders named in this prospectus or their permitted
transferees of (i) up to 3,443,417 shares of Common Stock
(including up to 556,313 shares of Common Stock that may be issued
upon exercise of the Private Warrants) and (ii) 556,313
Private Warrants.
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Issuance of Common Stock Underlying Public
Warrants
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6,325,000 shares of Common Stock
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Common Stock Offered by Selling Securityholders
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3,443,417 shares of Common Stock (including up to 556,313 shares of
Common Stock that may be issued upon exercise of the Private
Warrants).
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Warrants Offered by the Selling Securityholders
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556,313 Private Warrants
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Common Stock Outstanding
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9,231,737 shares of Common Stock as of December
28, 2020.
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Use of Proceeds
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All of the shares of Common Stock and Private Warrants offered by
the Selling Securityholders pursuant to this prospectus will be
sold by the Selling Securityholders for their respective accounts.
We will not receive any of the proceeds from these sales, except
with respect to amounts received by us upon exercise of the Public
Warrants or the Private Warrants to the extent such Public Warrants
or Private Warrants, as applicable, are exercised with cash.
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Risk Factors
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You should read the section entitled “Risk Factors” in
this prospectus for a discussion of the factors to consider
carefully before deciding to invest in shares of our Common
Stock.
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Trading Market and Ticker Symbol
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Our common stock and warrants are listed on Nasdaq Capital Market
under the symbols “RVPH” and “RVPHW”, respectively.
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CAUTIONARY
NOTE REGARDING FORWARD-LOOKING STATEMENTS
Certain statements in this prospectus may constitute
“forward-looking statements” for purposes of the federal securities
laws. Our forward-looking statements include, but are not limited
to, statements regarding our or our management team’s expectations,
hopes, beliefs, intentions or strategies regarding the future. In
addition, any statements that refer to projections, forecasts or
other characterizations of future events or circumstances,
including any underlying assumptions, are forward-looking
statements. The words “anticipate,” “believe,” “contemplate,”
“continue,” “could,” “estimate,” “expect,” “intends,” “may,”
“might,” “plan,” “possible,” “potential,” “predict,” “project,”
“should,” “will,” “would” and similar expressions may identify
forward-looking statements, but the absence of these words does not
mean that a statement is not forward-looking. Forward-looking
statements in this prospectus may include, for example, statements
about:
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our ability to maintain the listing of the Common Stock and
Warrants on Nasdaq;
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our ability to grow and manage growth economically;
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our ability to retain key executives and medical and science
personnel;
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the impact of the COVID-19 pandemic, and related responses of
businesses and governments to the pandemic, on our operations and
personnel, on commercial activity in the markets in which we
operate and on our results of operations;
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the possibility that our products in development succeed in or fail
clinical trials or are not approved by the U.S. Food and Drug
Administration or other applicable authorities;
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the possibility that we could be forced to delay, reduce or
eliminate its planned clinical trials or development programs;
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our ability to obtain approval from regulatory agents in different
jurisdictions for our current or future product candidates;
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changes in applicable laws or regulations;
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changes to our relationships within the pharmaceutical
ecosystem;
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our current and future capital requirements to support our
development and commercialization efforts and our ability to
satisfy our capital needs;
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the accuracy of our estimates regarding expenses and capital
requirements.
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our limited operating history;
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our history of operating losses in each year since inception and
expectation that we will continue to incur operating losses for the
foreseeable future;
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the valuation of our Private Warrants could increase the volatility
in our net income (loss);
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changes in the markets that we target;
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our ability to maintain or protect the validity of our patents and
other intellectual property;
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our exposure to any liability, protracted and costly litigation or
reputational damage relating to data security;
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our ability to develop and maintain effective internal controls;
and
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the possibility that we may be adversely affected by other
economic, business, and/or competitive factors.
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The foregoing does not represent an exhaustive list of matters that
may be covered by the forward-looking statements contained herein
or risk factors that we are faced with that may cause our actual
results to differ from those anticipated in such forward-looking
statements.
All forward-looking statements are expressly qualified in their
entirety by this cautionary notice. You are cautioned not to place
undue reliance on any forward-looking statements, which speak only
as of the date of this report or the date of the document
incorporated by reference into this report. We have no obligation,
and expressly disclaims any obligation, to update, revise or
correct any of the forward-looking statements, whether as a result
of new information, future events or otherwise. We have expressed
our expectations, beliefs and projections in good faith and
believes they have a reasonable basis. However, we cannot assure
you that our expectations, beliefs or projections will result or be
achieved or accomplished.
MARKET AND
INDUSTRY DATA
Information contained in this prospectus concerning the market and
the industry in which we compete, including our market position,
general expectations of market opportunity and market size, is
based on information from various third-party sources, on
assumptions made by us based on such sources and our knowledge of
the markets for our services and solutions. Any estimates provided
herein involve numerous assumptions and limitations, and you are
cautioned not to give undue weight to such information. Third-party
sources generally state that the information contained in such
source has been obtained from sources believed to be reliable but
that there can be no assurance as to the accuracy or completeness
of such information. Notwithstanding the foregoing, we are liable
for the information provided in this prospectus. The industry in
which we operate is subject to a high degree of uncertainty and
risk. As a result, the estimates and market and industry
information provided in this prospectus are subject to change based
on various factors, including those described in the section
entitled “Risk Factors” and elsewhere in this
prospectus.
RISK FACTORS
Investing in our securities involves a high degree of risk. You
should carefully consider the risks and uncertainties described
below, together with the other information in this prospectus,
including our consolidated financial statements and the related
notes appearing at the end of this prospectus and in the section
titled “Management’s Discussion and Analysis of
Financial Condition and Results of Operations,” before
deciding whether to invest in our securities. The occurrence of one
or more of the events or circumstances described in these risk
factors, alone or in combination with other events or
circumstances, may have a material adverse effect on our business,
reputation, revenue, financial condition, results of operations and
future prospects, in which event the market price of our Common
Stock could decline, and you could lose part or all of your
investment. Unless otherwise indicated, reference in this section
and elsewhere in this prospectus to our business being adversely
affected, negatively impacted or harmed will include an adverse
effect on, or a negative impact or harm to, the business,
reputation, financial condition, results of operations, revenue and
our future prospects. The material and other risks and
uncertainties summarized above and described below are not intended
to be exhaustive and are not the only ones we face. Additional
risks and uncertainties not presently known to us or that we
currently deem immaterial may also impair our business operations.
This prospectus also contains forward-looking statements that
involve risks and uncertainties. Our actual results could differ
materially from those anticipated in the forward-looking statements
as a result of a number of factors, including the risks described
below. See the section titled “Cautionary Note Regarding
Forward-Looking Statements.”
Risks Related to Our Business, Financial Position and Capital
Requirements
We have never generated any product revenues.
We are a clinical-stage biopharmaceutical company. Although we were
formed in May 2006, to date, we have not generated any product
revenues from our product candidates currently in development. We
have not yet demonstrated an ability to successfully complete a
large-scale, pivotal clinical trial, obtain marketing approval,
manufacture a commercial scale product, or arrange for a
third-party to do so on our behalf, or conduct sales and marketing
activities necessary for successful product commercialization.
Consequently, we have no meaningful operations upon which to
evaluate our business and predictions about our future success or
viability may not be as accurate as they could be if we had a
history of successfully developing and commercializing
pharmaceutical products.
Our ability to generate revenue and become profitable depends upon
our ability to successfully complete the development of our product
candidates, RP5063 for the treatment of schizophrenia,
respiratory/pulmonary diseases such as Pulmonary Arterial
Hypertension, or PAH, and Idiopathic Pulmonary Fibrosis, or IPF,
and for other neuropsychiatric diseases, such as bipolar disorder,
or BD, major depressive disorder, or MDD, Alzheimer’s
psychosis/agitation, or AD, Parkinson’s psychosis, or PD, and
attention deficit hyperactivity disorder, or ADHD/ADD, and RP1208
for the treatment of depression and obesity, and obtain the
necessary regulatory approvals for their commercialization. We have
never been profitable, have no products approved for commercial
sale and to date have not generated any revenue from product
sales.
Even if we receive regulatory approval for the commercialization of
RP5063, we do not know when this product candidate will generate
revenue, if at all. RP1208 is in pre-clinical development. Our
ability to generate product revenue depends on a number of factors,
including our ability to:
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successfully complete clinical trials and obtain regulatory
approval for the marketing of our product candidates;
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set an acceptable price for our product candidates and obtain
coverage and adequate reimbursement from third-party payors;
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establish sales, marketing and distribution systems for our product
candidates;
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add operational, financial and management information systems and
personnel, including personnel to support our clinical,
manufacturing and planned future commercialization efforts and
operations;
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initiate and continue relationships with third-party manufacturers
and have commercial quantities of our product candidates
manufactured at acceptable cost levels;
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attract and retain an experienced management and advisory team;
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achieve broad market acceptance of our products in the medical
community and with third-party payors and consumers;
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launch commercial sales of our products, whether alone or in
collaboration with others; and
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maintain, expand and protect our intellectual property
portfolio.
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Because of the numerous risks and uncertainties associated with
product development, we are unable to predict the timing or amount
of increased expenses, or when, or if, we will be able to achieve
or maintain profitability. Our expenses could increase beyond
expectations if we are required by the FDA, and comparable non-U.S.
regulatory authorities, to perform studies or clinical trials in
addition to those that we currently anticipate. Even if our product
candidates are approved for commercial sale, we anticipate
incurring significant costs associated with the commercial launch
of these products. If we cannot successfully execute any one of the
foregoing, our business, prospects and results of operations may be
adversely affected.
We expect to incur significant losses for the foreseeable
future and may never achieve or maintain profitability.
Investment in pharmaceutical product development is highly
speculative because it entails substantial upfront capital
expenditures and significant risk that a product candidate will
fail to gain regulatory approval or become commercially viable. We
have never generated any revenues and cannot estimate with
precision the extent of our future losses. We do not currently have
any products that are available for commercial sale and we may
never generate revenue from selling products or achieve
profitability. We expect to continue to incur substantial and
increasing losses through the projected commercialization of RP5063
and RP1208. For the year ended December 31, 2020, we reported a
loss of $3,783,388, and a negative cash flow from operations of
$3,725,692. We had an accumulated deficit of $58,310,093 and had
cash and cash equivalents of $8,760,462 as of December 31,
2020.
RP5063 has not been approved for marketing in the United States and
may never receive such approval. Although RP1208 may be in
Investigational New Drug (IND) enabling studies for depression and
may be in animal efficacy studies for obesity within a short time
frame following the receipt of adequate additional financing, it is
not currently in an IND-enabling study or animal efficacy study,
respectively, and may never meet the requirements for filing an
IND. As a result, we are uncertain when or if we will achieve
profitability and, if so, whether we will be able to sustain it.
Our ability to produce revenue and achieve profitability is
dependent on our ability to complete the development of our product
candidates, obtain necessary regulatory approvals, and have our
product candidates manufactured and successfully marketed. We
cannot assure you that we will be profitable even if we
successfully commercializes our product candidates. If we do not
successfully obtain regulatory approval to market our product
candidates, our revenues will be dependent, in part, upon, among
other things, the size of the markets in the territories for which
we gain regulatory approval, the number of competitors in such
markets, the accepted price for our product candidates and whether
we own the commercial rights for that territory. If the indication
approved by regulatory authorities is narrower than we expects, or
the treatment population is narrowed by competition, physician
choice or treatment guidelines, we may not generate significant
revenue from sales of our product candidates, even if approved.
Even if we do achieve profitability, we may not be able to sustain
or increase profitability on a quarterly or annual basis. Failure
to become and remain profitable may adversely affect the timing of
our clinical results and our ability to raise capital and continue
operations.
We expect our research and development expenses to be significant
in connection with the following planned research:
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Phase 3 studies for RP5063 for the treatment of schizophrenia;
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Phase 2 studies for the treatment of PAH, IPF, BD, MDD, AD,
PD, ADHD/ADD;
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pre-clinical studies and clinical studies for RP1208 for the
treatment of depression and obesity.
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Further, we will require additional capital to proceed with the
planned research described above. See “Risks Related to Our
Business and Industry — Risks Related to Our Business, Financial
Position and Capital Requirements — We will require additional
capital to fund our operations, and if we fail to obtain necessary
financing, we may not be able to complete the development and
commercialization of RP5063.”
In addition, if we obtain regulatory approval for RP5063, we expect
to incur increased sales and marketing expenses. As a result, we
expect to continue to incur significant and increasing operating
losses and negative cash flows for the foreseeable future. These
losses have had and will continue to have an adverse effect on our
financial position and working capital.
We are heavily dependent on the success of RP5063, our only
advanced product candidate, which is still under clinical
development, and if RP5063 does not receive regulatory approval or
is not successfully commercialized, our business will be
harmed.
We currently have no products that are approved for commercial sale
and may never be able to develop marketable drug products. We
expect that a substantial portion of our efforts and expenditures
in the foreseeable future will be devoted to RP5063. Our only other
product candidate is RP1208, which is in the pre-clinical phase. We
do not expect to allocate a significant portion of our efforts or
resources to the clinical trials or development of this product
candidate in the foreseeable future. Accordingly, our business
currently depends heavily on the successful development, regulatory
approval and commercialization of RP5063. We cannot be certain that
RP5063 will receive regulatory approval or be successfully
commercialized even if we receive regulatory approval. The
research, testing, manufacturing, labeling, approval, sale,
marketing and distribution of drug products are and will remain
subject to extensive regulation by the FDA and other regulatory
authorities in the United States and other countries that each have
differing regulations. We are not permitted to market RP5063 in the
United States until we receive approval of a new drug application,
or NDA, from the FDA, or in any foreign countries until we receives
the requisite approval from such countries. We have not submitted
an NDA to the FDA or comparable applications to other regulatory
authorities and do not expect to be in a position to do so for the
foreseeable future. Obtaining approval of an NDA is an extensive,
lengthy, expensive and inherently uncertain process, and the FDA
may delay, limit or deny approval of RP5063 for many reasons,
including:
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We may not be able to demonstrate that RP5063 is safe and effective
as a treatment for our targeted indications to the FDA’s
satisfaction;
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the FDA may require additional Phase 3 trials of RP5063 in
schizophrenia, which would increase our costs and prolong its
development;
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the results of our clinical trials may not meet the level of
statistical or clinical significance required by the FDA for
marketing approval;
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the FDA may disagree with the number, design, size, conduct or
implementation of our clinical trials;
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the contract research organizations, or CROs, that we retain to
conduct clinical trials may take actions outside of our control
that materially adversely impact our clinical trials;
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the FDA may not find the data from preclinical studies and clinical
trials sufficient to demonstrate that the clinical and other
benefits of RP5063 outweigh its safety risks;
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the FDA may disagree with our interpretation of data from our
preclinical studies and clinical trials or may require that we
conduct additional studies;
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the FDA may not accept data generated at our clinical trial
sites;
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if our NDA is reviewed by an advisory committee, the FDA may have
difficulties scheduling an advisory committee meeting in a timely
manner or the advisory committee may recommend against approval of
our application or may recommend that the FDA require, as a
condition of approval, additional preclinical studies or clinical
trials, limitations on approved labeling or distribution and use
restrictions;
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the FDA may require development of a risk evaluation and mitigation
strategy, or REMS, as a condition of approval;
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the FDA may identify deficiencies in the manufacturing processes or
facilities of our third-party manufacturers; or
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the FDA may change its approval policies or adopt new
regulations.
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The COVID-19 outbreak and global pandemic could adversely
impact our business, including our clinical trials.
Public health crises such as pandemics or similar outbreaks could
adversely impact our business. In December 2019, a novel
strain of coronavirus, or COVID-19, surfaced in Wuhan, China. Since
then, COVID-19 has spread globally. As a result of the COVID-19
outbreak, or similar pandemics, and government response to
pandemics, we have and may in the future experience disruptions
that could severely impact our business and clinical trials,
including:
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delays or difficulties in enrolling patients in our clinical
trials;
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interruption of key clinical trial activities, such as clinical
trial site data monitoring and efficacy, safety and translational
data collection, processing and analyses, due to limitations on
travel imposed or recommended by federal, state or local
governments, employers and others or interruption of clinical trial
subject visits, which may impact the collection and integrity of
subject data and clinical study endpoints;
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delays or difficulties in initiating or expanding clinical trials,
including delays or difficulties with clinical site initiation and
recruiting clinical site investigators and clinical site staff;
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increased rates of patients withdrawing from our clinical trials
following enrollment as a result of contracting COVID-19 or being
forced to quarantine;
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diversion of healthcare resources away from the conduct of clinical
trials, including the diversion of hospitals serving as our
clinical trial sites and hospital staff supporting the conduct of
our clinical trials;
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delays or disruptions in preclinical experiments and
investigational new drug application-enabling studies due to
restrictions of on-site staff and unforeseen circumstances at
contract research organizations and vendors;
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interruption or delays in the operations of the FDA and comparable
foreign regulatory agencies; and
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interruption of, or delays in receiving, supplies of our product
candidates from our contract manufacturing organizations due to
staffing shortages, production slowdowns or stoppages and
disruptions in delivery systems.
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The COVID-19 outbreak continues to rapidly evolve. The extent to
which the outbreak may impact our business and clinical trials 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 actions to contain the outbreak or treat
its impact, such as social distancing and quarantines or lock-downs
in the United States and other countries, business closures or
business disruptions and the effectiveness of actions taken in the
United States and other countries to contain and treat the
disease.
We will require additional capital to fund our operations,
and if we fail to obtain necessary financing, we may not be able to
complete the development and commercialization of RP5063 or
RP1208.
We expect to spend substantial amounts to complete the development
of, seek regulatory approvals for, and commercialize RP5063 and RP
1208. With the proceeds from the Business Combination we intend to
proceed with the development and potential commercialization of
RP5063 for the treatment of schizophrenia. However, we will require
additional capital to complete the development and potential
commercialization of RP5063 for the treatment of schizophrenia and
to continue the development of RP5063 for PAH, IPF, BD, MDD,
AD, PD, ADHD/ADD and other potential indications, and to continue
the development of RP1208 for the treatment of depression and
obesity. No assurance can be given that such additional capital
will be available on terms acceptable to us, if at all. If we are
unable to raise capital when needed or on acceptable terms, we
could be forced to delay, reduce or eliminate our planned
development programs or any future commercialization efforts. In
addition, attempting to secure additional financing may divert the
time and attention of our management from day-to-day activities and
harm our product candidate development efforts. Because the length
of time and activities associated with successful development of
RP5063 and RP1208 is highly uncertain, we are unable to estimate
the actual funds we will require for development and any approved
marketing and commercialization activities. Our future funding
requirements, both near and long-term, will depend on many factors,
including, but not limited to:
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the initiation, progress, timing, costs and results of our planned
clinical trials for RP5063 and pre-clinical research for
RP1208;
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the outcome, timing and cost of meeting regulatory requirements
established by the FDA, the European Medicines Agency, or EMA, and
other comparable foreign regulatory authorities;
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the cost of filing, prosecuting, defending and enforcing our patent
claims and other intellectual property rights;
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the cost of defending potential intellectual property disputes,
including patent infringement actions brought by third parties
against us with respect to RP5063, RP1208 or any future product
candidates;
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the effect of competing technological and market developments;
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the cost and timing of completion of commercial-scale manufacturing
activities;
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the cost of establishing sales, marketing and distribution
capabilities for RP5063, RP1208 or any future product candidates,
in regions where we choose to commercialize our products on our
own; and
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the initiation, progress, timing and results of our
commercialization of RP5063, RP1208 or any future product
candidates, if approved for commercial sale.
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We cannot be certain that such funding will be available on
acceptable terms, or at all. If we are unable to raise additional
capital in sufficient amounts or on terms acceptable to us, we may
have to significantly delay, scale back or discontinue the
development or commercialization of RP5063 or RP1208 or potentially
discontinue operations.
Raising additional funds by issuing securities may cause
dilution to existing shareholders, and raising funds through
lending and licensing arrangements may restrict our operations or
require us to relinquish proprietary rights.
We expect that significant additional capital will be needed in the
future to continue our planned operations. Until such time, if
ever, as we can generate substantial product revenues, we expect to
finance our cash needs through a combination of equity offerings,
debt financings, strategic alliances and license and development
agreements in connection with any collaborations. We do not have
any committed external source of funds. To the extent that we
raises additional capital by issuing equity securities, our
existing shareholders’ ownership may experience substantial
dilution, and the terms of these securities may include liquidation
or other preferences that adversely affect then-existing
stockholders’ interests. Debt financing and 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 have to relinquish valuable rights to our
technologies, future revenue streams, research programs or product
candidates or grant licenses on terms that may not be favorable to
us. Any debt financing we enter into may involve covenants that
restrict our operations. These restrictive covenants may include
limitations on additional borrowing and specific restrictions on
the use of our assets as well as prohibitions on our ability to
create liens, pay dividends, redeem our shares or make investments.
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 product development or future commercialization
efforts or grant rights to develop and market product candidates
that we would otherwise develop and market ourselves.
We will need to expand our organization, and we may
experience difficulties in managing this growth, which could
disrupt our operations.
As of December 31, 2020, we had five employees, and we
are highly dependent on our management personnel, especially our
Chief Executive Officer, Laxminarayan Bhat, Narayan Prabhu our
Chief Financial Officer and Marc Cantillon our Chief Medical
Officer. We expect to hire a significant number of additional
employees for our managerial, clinical, scientific, operational,
sales and marketing teams. We may have operational difficulties in
connection with identifying, hiring and integrating new personnel.
Future growth would impose significant additional responsibilities
on our management, including the need to identify, recruit,
maintain, motivate and integrate additional employees, consultants
and contractors. Also, our management has no prior experience in
managing these growth activities and may need to divert a
disproportionate amount of our attention away from our day-to-day
activities and devote a substantial amount of time to such
activities. We may not be able to effectively manage the expansion
of our operations, which may result in weaknesses in our
infrastructure, give rise to operational mistakes, loss of business
opportunities, loss of employees and reduced productivity among
remaining employees. Our expected growth could require significant
capital expenditures and may divert financial resources from other
projects, such as the development of product candidates. If our
management is unable to effectively manage our growth, our expenses
may increase more than expected, our ability to generate and/or
grow revenues could be reduced, and we may not be able to implement
our business strategy. Our future financial performance and our
ability to commercialize RP5063 and RP1208 and compete effectively
will depend, in part, on our ability to effectively manage any
future growth.
Many of the other pharmaceutical companies that we compete against
for qualified personnel and consultants have greater financial and
other resources, different risk profiles and a longer history in
the industry than we do. They also may provide more diverse
opportunities and better chances for career advancement. Some of
these characteristics may be more appealing to high-quality
candidates and consultants than what we have to offer. If we are
unable to continue to attract and retain high-quality personnel and
consultants, the rate and success at which we can discover and
develop product candidates and our business will be limited.
We will be impacted by
new state laws in California that require gender and diversity
quotas for boards of directors of public companies headquartered in
California.
In September 2018, California enacted SB 826, requiring public
companies headquartered in California to maintain minimum female
representation on their boards of directors as follows: by
December 31, 2019, public company boards must have a minimum
of one female director; by December 31, 2021, public company
boards with five members will be required to have at least two
female directors, and public company boards with six or more
members will be required to have at least three female
directors.
Additionally, on September 30, 2020, California enacted AB
979, requiring public companies with principal executive offices in
California to each have at least one director from an
underrepresented community based on ethnicity and sexual
orientation by December 31, 2021. By December 31, 2022,
each of these companies will be required to have at least two
directors from such underrepresented communities if such company
has more than four but fewer than nine directors, or at least three
directors from underrepresented communities if the company has nine
or more directors.
The current composition of our board of directors does not include
a female director. In order to meet the requirements of applicable
California law, we expect to onboard the requisite number of female
and diverse directors. Failure to achieve designated minimum levels
in a timely manner will expose us to financial penalties and
reputational harm. We cannot assure that we can recruit, attract
and/or retain qualified members of the board and meet gender and
diversity quotas as required by California law (provided that such
laws are not repealed before the compliance deadlines), which may
cause certain investors to divert their holdings in our securities
and expose us to financial penalties and/or reputational harm.
Our employees, independent contractors, principal
investigators, consultants, commercial collaborators, service
providers and other vendors may engage in misconduct or other
improper activities, including non-compliance with regulatory
standards and requirements, which could have an adverse effect on
our results of operations.
We are exposed to the risk that our employees and contractors,
including principal investigators, consultants, commercial
collaborators, service providers and other vendors may engage in
fraudulent or other illegal activity. Misconduct by these parties
could include intentional, reckless and/or negligent conduct or
other unauthorized activities that violate the laws and regulations
of the FDA and other similar regulatory bodies, including those
laws that require the reporting of true, complete and accurate
information to such regulatory bodies; manufacturing standards;
federal and state healthcare fraud and abuse and health regulatory
laws and other similar foreign fraudulent misconduct laws; or laws
that require the true, complete and accurate reporting of financial
information or data. Activities subject to these laws also involve
the improper use or misrepresentation of information obtained in
the course of clinical trials, which could result in regulatory
sanctions and serious harm to our reputation. It is not always
possible to identify and deter third-party misconduct, and the
precautions we take to detect and prevent this activity may not be
effective in controlling unknown or unmanaged risks or losses or in
protecting us from governmental investigations or other actions or
lawsuits stemming from a failure to be in compliance with such laws
or regulations. If any such actions are instituted against us, and
we are not successful in defending ourselves or asserting our
rights, those actions could have a significant impact on our
business and financial results, including the imposition of
significant civil, criminal and administrative penalties, damages,
monetary fines, possible exclusion from participation in Medicare,
Medicaid and other federal healthcare programs, reputational harm,
diminished profits and future earnings, and curtailment of our
operations, any of which could adversely affect our ability to
operate our business and our results of operations.
If we seek to enter into strategic alliances for the
development of RP5063 or RP1208 but fail to enter into and maintain
successful strategic alliances, our development costs may increase
and our ability to develop RP5063 or RP1208 may be significantly
delayed.
We may seek to enter into strategic alliances or collaborative
arrangements with pharmaceutical companies or other industry
participants in order to advance our development of RP5063 or, in
the future, RP1208 or other product candidates, and to reduce our
costs of development. If we seek such alliances or collaborative
arrangements, we may not be able to negotiate such alliances or
collaborative arrangements on acceptable terms, if at all. We face
significant competition from other biopharmaceutical companies for
appropriate partners in such alliances or arrangements.
Furthermore, if we are successful in entering strategic alliances
or collaborative arrangements, we may not be able to maintain such
alliances or arrangements for a sufficient amount of time to
commercialize RP5063, RP1208 or other product candidates, or such
alliances or arrangements may not result in successful development
of our products. If we seek suitable alliances or arrangements but
then fail to create or to maintain these, we may have to limit the
size or scope of, or delay, our development of RP5063, RP1208 or
other future product candidates. If we elect to fund our
development or research programs on our own, we will have to
increase our expenditures and will need to obtain additional
funding, which may be unavailable or available only on unfavorable
terms. See “Risks Related to Our Business and
Industry — Risks Related to Our Business, Financial Position
and Capital Requirements — We will require additional
capital to fund our operations, and if we fail to obtain necessary
financing, we may not be able to complete the development and
commercialization of RP5063.”
To the extent we are able to enter into collaborative
arrangements or strategic alliances, we will be exposed to risks
related to those collaborations and alliances.
Biotechnology companies at our stage of development may become
dependent upon collaborative arrangements or strategic alliances to
complete the development and commercialization of drug candidates,
particularly after the Phase 2 stage of clinical testing. If we
elect to enter into collaborative arrangements or strategic
alliances, these arrangements may place the development of RP5063,
RP1208 or other future product candidates outside our control, may
require that we relinquish important rights or may otherwise be
entered on terms unfavorable to us.
Dependence on collaborative arrangements or strategic alliances
will subject us to a number of risks, including the risk that:
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We may not be able to control the amount and timing of resources
that our collaborators may devote to RP5063 and RP1208;
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our collaborators may experience financial difficulties;
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we may be required to relinquish important rights, such as
marketing and distribution rights;
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business combinations or significant changes in a collaborator’s
business strategy may also adversely affect a collaborator’s
willingness or ability to complete our obligations under any
arrangement;
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a collaborator could independently move forward with a competing
drug candidate developed either independently or in collaboration
with others, including our competitors; and
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collaborative arrangements are often terminated or allowed to
expire, which would delay the development and may increase the cost
of developing our drug candidates.
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Our business and operations would suffer in the event our
computer systems and networks fail.
Our business depends on the proper functioning and availability of
our computer systems and networks. Our computer systems, as well as
those of our CROs and other contractors and consultants, are
vulnerable to damage from computer viruses, unauthorized access,
natural disasters, terrorism, war and telecommunication and
electrical failures. If such an 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 preclinical or clinical trial data from completed, ongoing or
planned 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 were to result in a loss of or damage to our data or
applications, or inappropriate disclosure of personal, confidential
or proprietary information, we could incur liability and the
further development of RP5063, RP1208 or any future product
candidate could be delayed. Any successful cyber security attack or
other unauthorized attempt to access our systems also could result
in negative publicity which could damage our reputation or brand
with our patients, referral sources, payors or other third parties
and could subject us to substantial penalties under the federal
Health Insurance Portability and Accountability Act of 1996, or
HIPAA and other federal and state privacy laws, in addition to
private litigation with those affected.
Potential product liability lawsuits against us could cause
us to incur substantial liabilities and limit commercialization of
any products that we may develop.
The use of RP5063 and RP1208 in clinical trials and the sale of any
products for which we obtain marketing approval exposes us to the
risk of product liability claims. Product liability claims might be
brought against us by consumers, health care providers,
pharmaceutical companies or others selling or otherwise coming into
contact with our products. On occasion, large judgments have been
awarded in class action lawsuits based on drugs that had
unanticipated adverse effects. If we cannot successfully defend
against product liability claims, we could incur substantial
liability and costs. In addition, regardless of merit or eventual
outcome, product liability claims may result in:
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impairment of our business reputation and significant negative
media attention;
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withdrawal of participants from our clinical trials;
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significant costs to defend the related litigation;
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distraction of management’s attention from our primary
business;
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substantial monetary awards to patients or other claimants;
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inability to commercialize RP5063, RP1208 or any future product
candidate;
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product recalls, withdrawals or labeling, marketing or promotional
restrictions;
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decreased demand for RP5063, RP1208 or any future product
candidate, if approved for commercial sale; and
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Any product liability insurance coverage we acquire in the future
may not be sufficient to reimburse us for any expenses or losses it
may suffer. Moreover, insurance coverage is becoming increasingly
expensive and in the future we may not be able to maintain
insurance coverage at a reasonable cost or in sufficient amounts to
protect us against losses due to liability. If we obtain marketing
approval for RP5063 or RP1208, we intend to acquire insurance
coverage to include the sale of commercial products; however, we
may be unable to obtain product liability insurance on commercially
reasonable terms or in adequate amounts. A successful product
liability claim or series of claims brought against us could cause
our share price to decline and, if judgments exceed our insurance
coverage, could adversely affect our results of operations and
business, including preventing or limiting the commercialization of
any product candidates we develop.
We identified a material weakness in our internal control
over financial reporting. If we are not able to remediate the
material weakness and otherwise maintain an effective system of
internal control over financial reporting, the reliability of our
financial reporting, investor confidence in our Company and the
value of our Common Stock and warrants could be adversely
affected.
As a public company, we are required to maintain internal control
over financial reporting and to report any material weaknesses in
such internal controls. Section 404 of the Sarbanes-Oxley Act
(“Section 404”), requires that we evaluate and determine the
effectiveness of internal controls over financial reporting and
provide a management report on internal control over financial
reporting. A material weakness is a deficiency, or a combination of
deficiencies, in internal control, such that there is a reasonable
possibility that a material misstatement of the entity’s financial
statements will not be prevented, or detected in a timely
manner.
During the audit of our 2020 financial statements, we identified a
material weakness in internal control over financial reporting
related to controls over accounting for complex non-routine
transactions and related disclosures. As a result, adjustments had
to be recorded to correct resulting errors identified during the
2020 audit procedures. In addition, as described in Note 2,
“Summary of Significant Accounting Policies and Basis of
Presentation,” of our restated 2020 financial statements, contained
elsewhere in this prospectus, subsequent to the issuance of our
2020 financial statements, our management determined there was an
error related to the accounting treatment of our outstanding
Private Warrants previously issued. We have begun implementing
changes to our internal control over financial reporting in
accordance with our remediation plan and procedure, as described in
our Amended Annual Report on Form 10-K/A filed with the SEC on May
7, 2021, to remediate the control deficiencies that gave rise to
the material weakness and have concluded that our remediation plan
of our previously disclosed material weaknesses is already designed
to address the restatement noted above and is already designed to
improve the process and controls in the determination of the
appropriate accounting and classification of our financial
instruments and key agreements.
If our steps are insufficient to successfully remediate the
material weakness and otherwise establish and maintain an effective
system of internal control over financial reporting, the
reliability of our financial reporting, investor confidence in our
Company and the value of our Common Stock and warrants could be
materially and adversely affected. Effective internal control over
financial reporting is necessary for us to provide reliable and
timely financial reports and, together with adequate disclosure
controls and procedures, are designed to reasonably detect and
prevent fraud. Any failure to implement required new or improved
controls, or difficulties encountered in their implementation could
cause us to fail to meet our reporting obligations. For as long as
we are a “smaller reporting company” under the U.S. securities
laws, our independent registered public accounting firm will not be
required to attest to the effectiveness of our internal control
over financial reporting pursuant to Section 404. An independent
assessment of the effectiveness of internal control over financial
reporting could detect problems that management’s assessment might
not. Undetected material weaknesses in our internal control over
financial reporting could lead to financial statement restatements
and require us to incur the expense of remediation.
Moreover, we do not expect that disclosure controls or internal
control over financial reporting will prevent all error and all
fraud. A control system, no matter how well designed and operated,
can provide only reasonable, not absolute, assurance that the
control system’s objectives will be met. Further, the design of a
control system must reflect the fact that there are resource
constraints and the benefits of controls must be considered
relative to their costs. Because of the inherent limitations in all
control systems, no evaluation of controls can provide absolute
assurance that all control issues and instances of fraud, if any,
have been detected. Failure of our control systems to prevent error
or fraud could materially adversely impact our Company.
If the interpretations, estimates or judgments we use to
prepare our financial statements prove to be incorrect, we may be
required to restate our financial results, which could have a
number of material adverse effects on us.
We are subject to complex securities laws and regulations and
accounting principles and interpretations. The preparation of our
financial statements requires us to interpret accounting principles
and guidance and to make estimates and judgments that affect the
reported amounts of assets and liabilities and the disclosure of
contingent assets and liabilities at the date of the financial
statements, as well as the reported expenses incurred during the
reporting periods. We base our interpretations, estimates and
judgments on our historical experience and on various other factors
that we believe are reasonable under the circumstances, the results
of which form the basis for the preparation of our financial
statements. Generally accepted accounting principles presentation
is subject to interpretation by the SEC, the Financial Accounting
Standards Board and various other bodies formed to interpret and
create appropriate accounting principles and guidance. If one of
these bodies disagrees with our accounting recognition, measurement
or disclosure or any of our accounting interpretations, estimates
or assumptions, it may have a significant effect on our reported
results and may retroactively affect previously reported
results.
Specifically, prior to and in connection with the closing of our
Business Combination, our predecessor company, Tenzing, issued
public warrants to purchase 6,325,000 shares (the “Public
Warrants”) and private placement warrants to purchase 556,313
shares (the “Private Warrants,” together with the Public Warrants,
the “Warrants”). For a full description of the Warrants, refer to
(i) the registration statement on Form S-4 (File No. 333-245057),
filed in connection with the Business Combination, declared
effective by the SEC on November 10, 2020 and (ii) our “Description
of Securities” included as Exhibit 4.1 to our Annual Report on Form
10-K for the year ended December 31, 2020, filed with the SEC on
March 22, 2021. Each Warrant entitles the holder to purchase one
share of our common stock at a price of $11.50 per share, subject
to adjustment. We originally classified the Warrants as equity in
our previously issued audited consolidated balance sheet as of
December 31, 2020, and the related consolidated statements of
operations, stockholders' equity (deficit), and cash flows for the
year then ended, and the related notes (collectively, referred to
as the "Financial Statements") included in our Annual Report on
Form 10-K filed on March 22, 2021.
On April 12, 2021, the Staff of the Securities and Exchange
Commission (“SEC Staff”) released the Staff Statement on Accounting
and Reporting Considerations for Warrants Issued by Special Purpose
Acquisition Companies (the “Statement”). In the Statement, SEC
Staff made the observation that certain contractual provisions
included in many Special Purpose Acquisition Company warrant
agreements may result in such warrants needing to be classified as
a liability rather than as equity.
We have reviewed the Statement and the terms of our Warrants with
our third-party technical accounting advisor and our independent
auditors and management has concluded that the Private Warrants
should be reclassified as liabilities measured at fair value, which
will result in non-cash gains or losses from changes in fair value
reported each period in earnings.
However, no assurance can be given that additional guidance or new
regulations or accounting principles and interpretations will not
be released that would require us to reclassify the Public Warrants
as liabilities measured at fair value, with changes in fair value
reported each period in earnings and/or require a restatement of
our Financial Statements with respect to treatment of the Public
Warrants.
Any restatement of our financial results could, among other
potential adverse effects:
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result in us incurring substantial costs;
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affect our ability to timely file our periodic reports until the
restatement is completed;
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divert the attention of our management and employees from managing
our business;
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result in material changes to our historical and future financial
results;
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result in investors losing confidence in our operating results;
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subject us to securities class action litigation; and
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cause our stock price to decline.
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Risks Related to Clinical Development, Regulatory Approval and
Commercialization
Clinical trials are very expensive, time-consuming, difficult
to design and implement and involve an uncertain
outcome.
Our only advanced product candidate, RP5063, is still in
development and will require extensive clinical testing before we
are prepared to submit an NDA for regulatory approval. We cannot
predict with any certainty if or when we might submit an NDA for
regulatory approval for RP5063 or whether any such NDA will be
approved by the FDA. Human clinical trials are very expensive and
difficult to design and implement, in part because they are subject
to rigorous regulatory requirements. The clinical trial process is
also time-consuming. We estimate that the Phase 3 clinical trials
of RP5063 for schizophrenia indication will take at least
four years to complete. Furthermore, failure can occur at any
stage of the trials, and we could encounter problems that cause us
to abandon or repeat clinical trials. Product candidates in later
stages of clinical trials may fail to show the desired safety and
efficacy traits despite having progressed through preclinical
studies and initial clinical trials, and the results of early
clinical trials of RP5063 therefore may not be predictive of the
results of our planned Phase 3 clinical study.
The commencement and completion of clinical trials may be delayed
by one or more factors, including:
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failure to obtain regulatory approval to commence a trial,
including in other countries in the global portion of our planned
Phase 3 clinical study;
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unforeseen safety issues;
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determination of dosing issues;
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lack of effectiveness during clinical trials;
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inability to reach agreement on acceptable terms with prospective
CROs and clinical trial sites;
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slower than expected rates of patient recruitment or failure to
recruit suitable patients to participate in a trial;
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failure to manufacture sufficient quantities of a drug candidate
for use in clinical trials;
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inability to monitor patients adequately during or after treatment;
and
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inability or unwillingness of medical investigators to follow our
clinical protocols.
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In addition, our management has limited prior experience in
managing and completing late-stage clinical trials, and may not be
able to successfully design and implement these trials or respond
to adverse factors that may arise in the course of conducting these
trials.
Further, we, the FDA or an institutional review board, or IRB, at a
clinical trial site may suspend our clinical trials at any time if
it appears that we or our collaborators are failing to conduct a
trial in accordance with regulatory requirements, including the
FDA’s current Good Clinical Practice, or GCP, regulations, that we
are exposing participants to unacceptable health risks, or if the
FDA finds deficiencies in our investigational new drug, or IND,
submissions or the conduct of these trials.
Therefore, we cannot predict with any certainty the schedule for
commencement and completion of future clinical trials. If we
experience delays in the commencement or completion of our clinical
trials, or if we terminate a clinical trial prior to completion,
the commercial prospects of RP5063 could be harmed, and our ability
to generate revenues from RP5063 may be delayed. In addition, any
delays in our clinical trials could increase our costs, slow down
the approval process and jeopardize our ability to commence product
sales and generate revenues. Any of these occurrences may harm our
business, financial condition and results of operations.
Moreover, while we are not currently intending to engage any
principal investigators as advisors or consultants, it is
conceivable that principal investigators for our clinical trials
may serve as scientific advisors or consultants from time to time
and receive compensation in connection with such services. Under
certain circumstances, we may be required to report some of these
relationships to the FDA. The FDA may conclude that a financial
relationship between us and a principal investigator has created a
conflict of interest or otherwise affected interpretation of the
study. FDA may therefore question the integrity of the data
generated at the applicable clinical trial site and the utility of
the clinical trial itself may be jeopardized. This could result in
a delay in approval, or rejection, of our marketing applications by
the FDA and may ultimately lead to the denial of marketing approval
of one or more of our product candidates.
The results of our clinical trials may not support our
RP5063, RP1208 and any future product candidate claims.
Even if our clinical trials are completed as planned, we cannot be
certain that our results will support the safety and effectiveness
of RP5063 for the treatment of schizophrenia or any other potential
indication, including but not limited to PAH, IPF, BD, MDD,
AD, PD, ADHD/ADD, or any of other product candidates, including
RP1208. Success in preclinical testing and early clinical trials
does not ensure that later clinical trials will be successful, and
we cannot be sure that the results of later clinical trials will
replicate the results of prior clinical trials and preclinical
testing. A failure of a clinical trial to meet its predetermined
endpoints would likely cause us to abandon a product candidate and
may delay development of any other product candidates. Any delay
in, or termination of, our clinical trials will delay the
submission of our NDAs with the FDA and, ultimately, our ability to
commercialize RP5063, RP1208 or any future product candidate, and
generate product revenues.
Enrollment and retention of patients in clinical trials is an
expensive and time-consuming process and could be made more
difficult or rendered impossible by multiple factors outside of our
control.
We may encounter delays in enrolling, or be unable to enroll, a
sufficient number of patients to complete any of our clinical
trials, and even once enrolled we may be unable to retain a
sufficient number of patients to complete any of our trials.
Patient enrollment and retention in clinical trials depends on many
factors, including the size of the patient population, the nature
of the trial protocol, the existing body of safety and efficacy
data with respect to the study drug, the number and nature of
competing treatments and ongoing clinical trials of competing drugs
for the same indication, the proximity of patients to clinical
sites and the eligibility criteria for the study. Furthermore, any
negative results we may report in clinical trials of our product
candidate may make it difficult or impossible to recruit and retain
patients in other clinical trials of that same product candidate.
Delays or failures in planned patient enrollment or retention may
result in increased costs, program delays or both, which could have
a harmful effect on our ability to develop RP5063, RP1208 or any
future product candidate, or could render further development
impossible. In addition, we expect to rely on CROs and clinical
trial sites to ensure proper and timely conduct of our future
clinical trials and, while we intend to enter into agreements
governing their services, we will be limited in our ability to
compel their actual performance.
The continued spread of COVID-19 globally could adversely impact
our clinical trial operations, including our ability to recruit and
retain patients and principal investigators and site staff who, as
healthcare providers, may have heightened exposure to COVID-19 if
an outbreak occurs in their geography. Disruptions or restrictions
on the ability of patients enrolled in our clinical studies to
travel, or the ability of staff at study sites to travel, as well
as temporary closures of our facilities or the facilities of our
clinical trials partners and their contract manufacturers, would
negatively impact our clinical trial activities.
We face significant competition from other biotechnology and
pharmaceutical companies, and our operating results will suffer if
we fail to compete effectively.
Drug development is highly competitive and subject to rapid and
significant technological advancements. As a significant unmet
medical need exists for the treatment of schizophrenia, there are
several large and small pharmaceutical companies focused on
delivering therapeutics for the treatment of schizophrenia.
Further, it is likely that additional drugs will become available
in the future for the treatment of schizophrenia.
We are aware of other companies that are working to develop drugs
that would compete against RP5063 for schizophrenia treatment. Many
of our existing or potential competitors have substantially greater
financial, technical and human resources than we do and
significantly greater experience in the discovery and development
of product candidates, as well as in obtaining regulatory approvals
of those product candidates in the United States and in foreign
countries. Our current and potential future competitors also have
significantly more experience commercializing drugs that have been
approved for marketing.
Mergers and acquisitions in the pharmaceutical and biotechnology
industries could result in even more resources being concentrated
among a small number of our competitors.
Competition may increase further as a result of advances in the
commercial applicability of technologies and greater availability
of capital for investment in these industries. Our competitors may
succeed in developing, acquiring or licensing, on an exclusive
basis, drugs that are more effective or less costly than any
product candidate that we may develop.
We will face competition from other drugs currently approved or
that will be approved in the future for the treatment of
schizophrenia. Therefore, our ability to compete successfully will
depend largely on our ability to:
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develop and commercialize medicines that are superior to other
products in the market;
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demonstrate through our clinical trials that RP5063 is
differentiated from existing and future therapies;
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attract qualified scientific, product development and commercial
personnel;
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obtain patent or other proprietary protection for our
medicines;
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obtain required regulatory approvals;
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obtain coverage and adequate reimbursement from, and negotiate
competitive pricing with, third- party payors; and
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successfully collaborate with pharmaceutical companies in the
discovery, development and commercialization of new medicines.
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The availability of our competitors’ products could limit the
demand, and the price we are able to charge, for any product
candidate it develops. The inability to compete with existing or
subsequently introduced drugs would have an adverse impact on our
business, financial condition and prospects.
Established pharmaceutical companies may invest heavily to
accelerate discovery and development of novel compounds or to
in-license novel compounds that could make RP5063 less competitive.
In addition, any new product that competes with an approved product
must demonstrate compelling advantages in efficacy, convenience,
tolerability and safety in order to overcome price competition and
to be commercially successful. Accordingly, our competitors may
succeed in obtaining patent protection, receiving FDA approval for
or commercializing medicines before we do, which would have an
adverse impact on our business and results of operations.
If we are not able to obtain required regulatory approvals,
we will not be able to commercialize RP5063, RP1208 or any other
product candidates, and our ability to generate revenue will be
materially impaired.
RP5063 and the activities associated with its development and
commercialization, including its design, research, testing,
manufacture, safety, efficacy, recordkeeping, labeling, packaging,
storage, approval, advertising, promotion, sale and distribution,
are subject to comprehensive regulation by the FDA and other
regulatory agencies in the United States and by the EMA and similar
regulatory authorities outside the United States. Failure to obtain
marketing approval for RP5063 will prevent us from commercializing
it.
We have not received approval from regulatory authorities to market
any product candidate in any jurisdiction, and it is possible that
none of RP5063, RP1208 nor any other product candidates we may seek
to develop in the future will ever obtain the appropriate
regulatory approvals necessary for us to commence product
sales.
Prior to submitting an NDA to the FDA, a marketing authorization
application, or MAA, to the EMA, or an equivalent application to
other foreign regulatory authorities for approval of RP5063, we
will need to complete its Phase 3 clinical study.
We expect to rely on third-party CROs and consultants to assist us
in filing and supporting the applications necessary to gain
marketing approvals. Securing marketing approval requires the
submission of extensive preclinical and clinical data and
supporting information to regulatory authorities for each
therapeutic indication to establish RP5063’s safety and efficacy
for that indication. Securing marketing approval also requires the
submission of information about the product manufacturing process
to, and inspection of manufacturing facilities by, the regulatory
authorities.
We may not be able to obtain or maintain orphan drug
designation or exclusivity for our product candidate.
We have been granted orphan drug designation in the United States
for RP5063 for the treatment of IPF and PAH. Upon receipt of
regulatory approval, orphan drug status will provide us with
seven years of market exclusivity in the United States under
the Orphan Drug Act. However, there is no guarantee that the FDA
will grant orphan drug designation for any of our drug candidates
for any future indication, which would make us ineligible for the
additional exclusivity and other benefits of orphan drug
designation. Moreover, there can be no assurance that another
company also holding orphan drug designation for the same
indication or which may receive orphan drug designation in the
future will not receive approval prior to when we do, in which case
our competitor would have the benefit of the seven years of
market exclusivity, and we would be unable to commercialize our
product candidate for the same indication until the expiration of
such seven-year period. Even if we are the first to obtain approval
for the orphan drug indication, there are circumstances under which
a competing product may be approved for the same indication during
our seven-year period of exclusivity.
Under the Orphan Drug Act, the FDA may grant orphan drug
designation to a drug intended to treat a rare disease or
condition, which is generally a disease or condition that affects
fewer than 200,000 individuals in the United States and for which
there is no reasonable expectation that the cost of developing and
making a drug available in the Unites States for this type of
disease or condition will be recovered from sales of the product.
Orphan drug designation must be requested before submitting an NDA.
After the FDA grants orphan drug designation, the identity of the
therapeutic agent and its potential orphan use are disclosed
publicly by the FDA. Orphan designation does not convey any
advantage in or shorten the duration of regulatory review and
approval process. In addition to the potential period of
exclusivity, orphan designation makes a company eligible for grant
funding of up to $400,000 per year for four years to defray
costs of clinical trial expenses, tax credits for clinical research
expenses and potential exemption from the FDA application user
fee.
If a product that has orphan designation subsequently receives the
first FDA approval for the disease or condition for which it has
such designation, the product is entitled to orphan drug
exclusivity, which means the FDA may not approve any other
applications to market the same drug for the same indication for
seven years, except in limited circumstances, such as
(i) the drug’s orphan designation is revoked; (ii) its
marketing approval is withdrawn; (iii) the orphan exclusivity
holder consents to the approval of another applicant’s product;
(iv) the orphan exclusivity holder is unable to assure the
availability of a sufficient quantity of drug; or (v) a
showing of clinical superiority to the product with orphan
exclusivity by a competitor product. If a drug designated as an
orphan product receives marketing approval for an indication
broader than what is designated, it may not be entitled to orphan
drug exclusivity. There can be no assurance that we will receive
orphan drug designation for RP5063 for any additional indications
or for RP1208, if we elect to seek such designation.
RP5063, RP1208 and any future product candidate may cause
adverse effects or have other properties that could delay or
prevent its regulatory approval or limit the scope of any approved
label or market acceptance.
Adverse events caused by RP5063, RP1208 and any future product
candidate could cause us, other reviewing entities, clinical trial
sites or regulatory authorities to interrupt, delay or halt
clinical trials and could result in the denial of regulatory
approval. If an unacceptable frequency or severity of adverse
events are reported in our clinical trials for RP5063, RP1208 or
any future product candidates, our ability to obtain regulatory
approval for such product candidates may be negatively
impacted.
Furthermore, if any of our product candidates are approved and then
cause serious or unexpected side effects, a number of potentially
significant negative consequences could result, including:
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regulatory authorities may withdraw their approval of the product
or require a REMS to impose restrictions on its distribution or
other risk management measures;
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regulatory authorities may require the addition of labeling
statements, such as warnings or contraindications;
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we may be required to change the way the product is administered or
to conduct additional clinical trials;
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we could be sued and held liable for harm caused to patients;
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we could elect to discontinue the sale of our products; and
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our reputation may suffer.
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Any of these events could prevent us from achieving or maintaining
market acceptance of the affected product candidate and could
substantially increase the costs of commercializing RP5063, RP1208
and any future product candidate.
The results of pre-clinical testing are not necessarily
predictive of future results, and RP1208 may not have favorable
results in our planned clinical trials.
Any positive results from our pre-clinical testing of RP1208 may
not necessarily be predictive of the results from our planned
clinical trials. Many companies in the pharmaceutical industry have
suffered significant setbacks in clinical trials after achieving
positive results in pre-clinical development, and we cannot be
certain that we will not face similar setbacks. The pre-clinical
data we have obtained for RP1208 may not predict results from
studies in larger numbers of subjects drawn from more diverse
populations or in a commercial setting, and also may not predict
the ability of RP1208 to achieve its intended goals, or to do so
safely.
Moreover, pre-clinical and clinical data are often susceptible to
varying interpretations and analyses, and many companies that
believed their product candidates performed satisfactorily in
pre-clinical studies and clinical trials nonetheless failed to
obtain FDA or EMA approval. If we fail to produce positive results
in our clinical trials, the development timeline and regulatory
approval and commercialization prospects for our products and,
correspondingly, our business and financial prospects, would be
materially adversely affected.
Even if we obtain FDA approval for RP5063, RP1208 or any
future product candidate in the United States, we may never obtain
approval for or commercialize it in any other jurisdiction, which
would limit our ability to realize our full market
potential.
In order to market any products in any particular jurisdiction, we
must establish and comply with numerous and varying regulatory
requirements on a country-by-country basis regarding safety and
efficacy. Approval by FDA in the United States does not ensure
approval by regulatory authorities in other countries or
jurisdictions. In addition, clinical trials conducted in one
country may not be accepted by regulatory authorities in other
countries, and regulatory approval in one country does not
guarantee regulatory approval in any other country. Approval
processes vary among countries and can involve additional product
testing and validation and additional administrative review
periods. Seeking foreign regulatory approval could result in
difficulties and costs for us and require additional preclinical
studies or clinical trials which could be costly and time
consuming. Regulatory requirements can vary widely from country to
country and could delay or prevent the introduction of our products
in those countries. We do not have any product candidates approved
for sale in any jurisdiction, including in international markets,
and we do not have experience in obtaining regulatory approval in
international markets. If we fail to comply with regulatory
requirements in international markets or to obtain and maintain
required approvals, or if regulatory approvals in international
markets are delayed, our target market will be reduced and our
ability to realize the full market potential of any product we
develop will be unrealized.
Even if we obtain regulatory approval for RP5063, RP1208 or
any future product candidate, we will still face extensive
regulatory requirements and our products may face future
development and regulatory difficulties.
Any product candidate for which we obtain marketing approval, along
with the manufacturing processes, post-approval clinical data,
labeling, packaging, distribution, adverse event reporting,
storage, recordkeeping, export, import, advertising and promotional
activities for such product, among other things, will be subject to
extensive and ongoing requirements of and review by the FDA and
other regulatory authorities. These requirements include
submissions of safety and other post-marketing information and
reports, establishment registration and drug listing requirements,
continued compliance with current Good Manufacturing Practice, or
cGMP, requirements relating to manufacturing, quality control,
quality assurance and corresponding maintenance of records and
documents, requirements regarding the distribution of samples to
physicians and recordkeeping and current GCP requirements for any
clinical trials that we conduct post-approval. Even if marketing
approval of a product candidate is granted, the approval may be
subject to limitations on the indicated uses for which the product
may be marketed or to the conditions of approval, including any
requirement to implement a REMS. If RP5063, RP1208 or any future
product candidate receives marketing approval, the accompanying
label may limit the approved use of our drug candidate, which could
limit sales of the product.
The FDA may also impose requirements for costly post-marketing
studies or clinical trials and surveillance to monitor the safety
or efficacy of the product. The FDA closely regulates the
post-approval marketing and promotion of drugs to ensure drugs are
marketed only for the approved indications and in accordance with
the provisions of the approved labeling. The FDA imposes stringent
restrictions on manufacturers’ communications regarding off-label
use and if we do not market our products for their approved
indications, we may be subject to enforcement action for off-label
marketing. Violations of the Federal Food, Drug, and Cosmetic Act
relating to the promotion of prescription drugs may lead to FDA
enforcement actions and investigations alleging violations of
federal and state health care fraud and abuse laws, as well as
state consumer protection laws.
In addition, later discovery of previously unknown adverse events
or other problems with our products, manufacturers or manufacturing
processes, or failure to comply with regulatory requirements, may
yield various results, including:
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restrictions on manufacturing such products;
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restrictions on the labeling or marketing of a product;
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restrictions on product distribution or use;
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requirements to conduct post-marketing studies or clinical
trials;
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withdrawal of the products from the market;
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refusal to approve pending applications or supplements to approved
applications that we submit;
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fines, restitution or disgorgement of profits or revenues;
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suspension or withdrawal of marketing approvals;
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refusal to permit the import or export of our products;
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injunctions or the imposition of civil or criminal penalties.
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The FDA’s policies may change and additional government regulations
may be enacted that could prevent, limit or delay regulatory
approval of RP5063, RP1208 or any future product candidate. 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.
Even if RP5063, RP1208 or any future product candidate
receives marketing approval, it may fail to achieve market
acceptance by physicians, patients, third-party payors or others in
the medical community necessary for commercial success.
If RP5063, RP1208 or any future product candidate receives
marketing approval, it may nonetheless fail to gain sufficient
market acceptance by physicians, patients, third-party payors and
others in the medical community. If it does not achieve an adequate
level of acceptance, we may not generate significant product
revenues and become profitable. The degree of market acceptance of
RP5063, RP1208 or any future product candidate, if approved for
commercial sale, will depend on a number of factors, including, but
not limited to:
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the efficacy and potential advantages compared to alternative
treatments;
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effectiveness of sales and marketing efforts;
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the cost of treatment in relation to alternative treatments,
including any similar generic treatments;
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our ability to offer our products for sale at competitive
prices;
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the convenience and ease of administration compared to alternative
treatments;
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the willingness of the target patient population to try new
therapies and of physicians to prescribe these therapies;
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the strength of marketing and distribution support;
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the availability of third-party coverage and adequate
reimbursement;
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the prevalence and severity of any side effects; and
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any restrictions on the use of our product together with other
medications.
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Because we expects sale of RP5063, RP1208 or any future product
candidate, if approved, to generate substantially all of our
product revenues for the foreseeable future, the failure of this
product to find market acceptance would harm our business and
require us to seek additional financing.
If we are unable to establish sales, marketing and
distribution capabilities either on our own or in collaboration
with third-parties, we may not be successful in commercializing
RP5063, RP1208 or any future product candidate, if
approved.
We do not have any infrastructure for the sales, marketing or
distribution of our products, and the cost of establishing and
maintaining such an organization may exceed the cost-effectiveness
of doing so. In order to market any product that may be approved,
we must build our sales, distribution, marketing, managerial and
other non-technical capabilities or make arrangements with third
parties to perform these services. To achieve commercial success
for any product for which we have obtained marketing approval, we
will need a sales and marketing organization.
We expect to build a focused sales, distribution and marketing
infrastructure to market RP5063, RP1208 or any future product
candidate in the United States, if approved. There are significant
expenses and risks involved with establishing our own sales,
marketing and distribution capabilities, including our ability to
hire, retain and appropriately incentivize qualified individuals,
generate sufficient sales leads, provide adequate training to sales
and marketing personnel, and effectively manage a geographically
dispersed sales and marketing team. Any failure or delay in the
development of our internal sales, marketing and distribution
capabilities could delay any product launch, which would adversely
impact the commercialization of RP5063, RP1208 or any future
product candidate. For example, if the commercial launch of RP5063,
RP1208 or any future product candidate for which we recruit a sales
force and establish marketing capabilities is delayed or does not
occur for any reason, we would have prematurely or unnecessarily
incurred these commercialization expenses. This may be costly, and
our investment would be lost if we cannot retain or reposition our
sales and marketing personnel.
Factors that may inhibit our efforts to commercialize our products
on our own include:
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our inability to recruit, train and retain adequate numbers of
effective sales and marketing personnel;
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the inability of sales personnel to obtain access to physicians or
attain adequate numbers of physicians to prescribe any drugs;
and
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unforeseen costs and expenses associated with creating an
independent sales and marketing organization.
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We do not anticipate having the resources in the foreseeable future
to allocate to the sales and marketing of RP5063 in markets outside
of the United States. Therefore, our future success will depend, in
part, on our ability to enter into and maintain collaborative
relationships for such capabilities, the collaborator’s strategic
interest in the product and such collaborator’s ability to
successfully market and sell the product. We intend to pursue
collaborative arrangements regarding the sale and marketing of
RP5063, RP1208 or any future product candidate, if approved, for
markets outside of the United States; however, we cannot assure you
that we will be able to establish or maintain such collaborative
arrangements, or if able to do so, that they will have effective
sales forces. To the extent that we depend on third parties for
marketing and distribution, any revenues we receive will depend
upon the efforts of such third parties, and there can be no
assurance that such efforts will be successful.
If we are unable to build our own sales force or negotiate a
collaborative relationship for the commercialization of RP5063,
RP1208 or any future product candidate we may be forced to delay
the potential commercialization of RP5063, RP1208 or any future
product candidate or reduce the scope of our sales or marketing
activities for RP5063, RP1208 or any future product candidate. If
we elect to increase our expenditures to fund commercialization
activities itself, we will need to obtain additional capital, which
may not be available to us on acceptable terms, or at all. If we do
not have sufficient funds, we will not be able to bring RP5063,
RP1208 or any future product candidate to market or generate
product revenue. We could enter into arrangements with
collaborative partners or otherwise at an earlier stage than
otherwise would be ideal and we may be required to relinquish
rights to RP5063, RP1208 or any future product candidate or
otherwise agree to terms unfavorable to it, any of which may have
an adverse effect on our business, operating results and
prospects.
If we are unable to establish adequate sales, marketing and
distribution capabilities, either on our own or in collaboration
with third parties, we will not be successful in commercializing
RP5063, RP1208 or any future product candidate and may not become
profitable. We will be competing with many companies that currently
have extensive and well-funded marketing and sales operations.
Without an internal team or the support of a third party to perform
marketing and sales functions, we may be unable to compete
successfully against these more established companies.
If we obtain approval to commercialize any products outside
of the United States, a variety of risks associated with
international operations could materially adversely affect our
business.
If RP5063, RP1208 or any future product candidate is approved for
commercialization, we intend to enter into agreements with third
parties to market it in certain jurisdictions outside the United
States. We expect that it will be subject to additional risks
related to international operations or entering into international
business relationships, including:
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different regulatory requirements for drug approvals and
rules governing drug commercialization in foreign
countries;
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reduced protection for intellectual property rights;
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unexpected changes in tariffs, trade barriers and regulatory
requirements;
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economic weakness, including inflation, or political instability in
particular foreign economies and markets;
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compliance with tax, employment, immigration and labor laws for
employees living or traveling abroad;
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foreign reimbursement, pricing and insurance regimes;
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foreign currency fluctuations, which could result in increased
operating expenses and reduced revenues, and other obligations
incident to doing business in another country;
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workforce uncertainty in countries where labor unrest is more
common than in the United States;
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potential non-compliance with the U.S. Foreign Corrupt Practices
Act, the U.K. Bribery Act 2010 and similar anti-bribery and
anticorruption laws in other jurisdictions;
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production shortages resulting from any events affecting raw
material supply or manufacturing capabilities abroad; ands
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business interruptions resulting from geopolitical actions,
including war and terrorism, or natural disasters including
earthquakes, typhoons, floods and fires.
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We have no prior experience in these areas. In addition, there are
complex regulatory, tax, labor and other legal requirements imposed
by both the European Union and many of the individual countries in
Europe with which we will need to comply.
Our subsidiary may not be in compliance with the laws of
foreign countries, and it may face penalties and fines imposed by
the Indian government.
We have not retained local counsel to assess whether our
subsidiary, Reviva Pharmaceuticals India Private Limited, is in
compliance with applicable local law. There can be no assurance
that we will be able to initially meet such requirements or
maintain compliance with the laws and regulations of each foreign
country in which our subsidiary operates. As a result, we, Reviva
Pharmaceuticals India Private Limited and our other subsidiary may
be subject to adverse legal consequences, including but not limited
to penalties and fines, which could adversely affect our business,
financial condition or results of operations.
We are subject to U.S. foreign investment regulations, which
may impose additional burdens on or may limit certain
investors’ ability to purchase our Common Stock in
amounts deemed by the U.S. government to confer control,
potentially making our Common Stock less attractive to investors,
and may also impact our ability to generate revenues outside of the
U.S.
In 2018, Congress passed the Foreign Investment Risk Review
Modernization Act of 2018 (“FIRRMA”), which expanded the
jurisdiction of the Committee on Foreign Investment in the United
States (“CFIUS”) to review direct or indirect foreign investments
in U.S. companies. Among other things, FIRRMA empowers CFIUS to
require certain foreign investors to make mandatory filings,
permits CFIUS, to charge filing fees related to such filings, and
empowers CFIUS to self-initiate national security reviews of
foreign direct and indirect investments in U.S. companies. In the
case that CFIUS determines an investment to be a threat to national
security, CFIUS has the power to unwind or place restrictions on
the investment. Any such restrictions on the ability to purchase
shares of our Common Stock may have the effect of delaying or
deterring any particular investment and could also affect the price
that some investors are willing to pay for our Common Stock. In
addition, such restrictions could also limit the opportunity for
our stockholders to receive a premium for their shares of our
common stock in relation to any potential change in control.
Our current and future relationships with foreign actors such
as, health care and administrative professionals at foreign state
owned hospitals or foreign government healthcare regulators will be
subject to applicable anti-corruption laws regulatory laws, which
could expose us to penalties.
Our business operations and current and future arrangements with
investigators, healthcare professionals, consultants, third-party
payors and customers, may expose us to broadly applicable
anti-corruption and anti-bribery laws and regulations. These laws
may constrain the business or financial arrangements and
relationships through which we conduct our operations, including
how we market, sell and distribute our products. Such laws include
the Foreign Corrupt Practices Act of 1977, as amended (the “FCPA”)
prohibits any offer, payment, promise to pay or authorization to
pay any money, gift or thing of value to any Foreign Official,
political party, or candidate for office for the purpose of
influencing any act or failure to act by the recipient, in his or
her official capacity, in order to obtain or retain business, or
inducing the recipient to use influence to affect a decision of a
foreign government or agency in order to obtain or retain business
for anyone. The FCPA also imposes recordkeeping requirements and
internal controls provisions, which, among other things, require
the issuer to keep accurate books, records, and accounts.
Our current and future relationships with investigators,
health care professionals, consultants, third-party payors, and
customers will be subject to applicable healthcare regulatory laws,
which could expose us to penalties.
Our business operations and current and future arrangements with
investigators, healthcare professionals, consultants, third-party
payors and customers, may expose us to broadly applicable fraud and
abuse and other healthcare laws and regulations. These laws may
constrain the business or financial arrangements and relationships
through which we conduct our operations, including how we research,
market, sell and distribute our products for which we obtain
marketing approval. Such laws include:
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the federal Anti-Kickback Statute 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. A person or entity does not need to have actual
knowledge of the federal Anti-Kickback Statute or specific intent
to violate it to have committed a violation; in addition, the
government may assert that a claim including items or services
resulting from a violation of the federal Anti-Kickback Statute
constitutes a false or fraudulent claim for purposes of the civil
False Claims Act;
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the federal false claims laws, including the civil False Claims
Act, impose criminal and civil penalties, including civil
whistleblower or qui tam actions, against individuals or entities
for 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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HIPAA 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. Similar to
the federal Anti-Kickback Statute, a person or entity does not need
to have actual knowledge of the statute or specific intent to
violate it to have committed a violation;
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HIPAA, as amended by the Health Information Technology for Economic
and Clinical Health Act and its implementing regulations, also
imposes obligations, including mandatory contractual terms, with
respect to safeguarding the privacy, security and transmission of
individually identifiable health information;
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the federal Physician Payment 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 certain exceptions) to
report annually to the government information related to payments
or other “transfers of value” made to physicians (defined to
include doctors, dentists, optometrists, podiatrists and
chiropractors) and teaching hospitals, and requires applicable
manufacturers and group purchasing organizations to report annually
to the government ownership and investment interests held by the
physicians described above and their immediate family members and
payments or other “transfers of value” to such physician
owners (covered manufacturers are required to submit reports to the
government by the 90th day of each calendar year); and
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analogous state and foreign laws and regulations, such as state
anti-kickback and false claims laws, 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; 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 current and future business arrangements
with third parties will comply with applicable healthcare laws and
regulations will involve substantial costs. It is possible that
governmental authorities will conclude that our business practices
do not comply with current or future statutes, regulations, agency
guidance or case law involving applicable healthcare laws. If our
operations are found to be in violation of any of these or any
other health regulatory laws that may apply to it, we may be
subject to significant penalties, including the imposition of
significant civil, criminal and administrative penalties, damages,
monetary fines, disgorgement, individual 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
operate our business and our results of operations. Defending
against any such actions can be costly, time-consuming and may
require significant financial and personnel resources. Therefore,
even if we are successful in defending against any such actions
that may be brought against us, our business may be impaired.
Current and future legislation may increase the difficulty
and cost for us to obtain marketing approval of and commercialize
RP5063, RP1208 or any future product candidate and affect the
prices we may obtain.
In the United States and some foreign jurisdictions, there have
been a number of legislative and regulatory changes and proposed
changes regarding the healthcare system and efforts to control
health care costs, including drug prices, that could have a
significant negative impact on our business, including preventing,
limiting or delaying regulatory approval of our drug candidates and
reducing the sales and profits derived from our products once they
are approved.
For example, in the United States, the Patient Protection and
Affordable Care Act of 2010 (“ACA”) substantially changed the way
health care is financed by both governmental and private insurers
and significantly affects the pharmaceutical industry. Many
provisions of ACA impact the biopharmaceutical industry, including
that in order for a biopharmaceutical product to receive federal
reimbursement under the Medicare Part B and Medicaid programs
or to be sold directly to U.S. government agencies, the
manufacturer must extend discounts to entities eligible to
participate in the drug pricing program under the Public Health
Services Act, or PHS. Since its enactment, there have been judicial
and Congressional challenges and amendments to certain aspects of
ACA. There is continued uncertainty about the implementation of
ACA, including the potential for further amendments to the ACA and
legal challenges to or efforts to repeal the ACA.
We cannot be sure whether additional legislative changes will be
enacted, or whether government regulations, guidance or
interpretations will be changed, or what the impact of such changes
would be on the marketing approvals, sales, pricing, or
reimbursement of our drug candidates or products, if any, may
be.
Coverage and adequate reimbursement may not be available for
RP5063, RP1208 or any future product candidate, which could make it
difficult for us to sell our products profitably.
Market acceptance and sales of any product candidates that we
develop, will depend in part on the extent to which reimbursement
for these products and related treatments will be available from
third-party payors, including government health administration
authorities and private health insurers. Third-party payors decide
which drugs they will pay for and establish reimbursement levels.
Third-party payors often rely upon Medicare coverage policy and
payment limitations in setting their own coverage and reimbursement
policies. However, decisions regarding the extent of coverage and
amount of reimbursement to be provided for any product candidates
that we develop will be made on a plan-by-plan basis. One payer’s
determination to provide coverage for a product does not assure
that other payors will also provide coverage, and adequate
reimbursement, for the product. Additionally, a third-party payor’s
decision to provide coverage for a drug does not imply that an
adequate reimbursement rate will be approved. Each plan determines
whether or not it will provide coverage for a drug, what amount it
will pay the manufacturer for the drug, and on what tier of its
formulary the drug will be placed. The position of a drug on a
formulary generally determines the co-payment that a patient will
need to make to obtain the drug and can strongly influence the
adoption of a drug by patients and physicians. Patients who are
prescribed treatments for their conditions and providers
prescribing such services generally rely on third-party payors to
reimburse all or part of the associated healthcare costs. Patients
are unlikely to use our products unless coverage is provided and
reimbursement is adequate to cover a significant portion of the
cost of our products.
A primary trend in the U.S. healthcare industry and elsewhere is
cost containment. Third-party payors have attempted to control
costs by limiting coverage and the amount of reimbursement for
particular medications. We cannot be sure that coverage and
reimbursement will be available for any product that we
commercialize and, if reimbursement is available, what the level of
reimbursement will be. Inadequate coverage and reimbursement may
impact the demand for, or the price of, any product for which we
obtain marketing approval. If coverage and adequate reimbursement
are not available, or are available only to limited levels, we may
not be able to successfully commercialize any product candidates
that we develop.
Additionally, there have been a number of legislative and
regulatory proposals to change the healthcare system in the United
States and in some foreign jurisdictions that could affect our
ability to sell any future drugs profitably. These legislative and
regulatory changes may negatively impact the reimbursement for any
future drugs, following approval.
Risks Related to Our Dependence on Third Parties
We do not have our own manufacturing capabilities and will
rely on third parties to produce clinical and commercial supplies
of RP5063, RP1208 and any future product candidate.
We do not have experience in drug formulation or manufacturing and
does not own or operate, and does not expect to own or operate,
facilities for product manufacturing, storage and distribution, or
testing. We also will rely on third-party manufacturers to supply
us with sufficient quantities of RP5063 to be used, if approved,
for the commercialization of RP5063. If we are unable to initiate
or continue our relationship with one or more of these third-party
contractors, we could experience delays in our development efforts
as we locate and qualify new manufacturers.
Further, our reliance on third-party manufacturers entails risks to
which we would not be subject if we manufactured our product
candidates, including:
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inability to meet our product specifications and quality
requirements consistently;
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delay or inability to procure or expand sufficient manufacturing
capacity;
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manufacturing and product quality issues related to scale-up of
manufacturing;
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costs and validation of new equipment and facilities required for
scale-up;
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failure to comply with cGMP and similar foreign standards;
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inability to negotiate manufacturing agreements with third parties
under commercially reasonable terms;
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termination or nonrenewal of manufacturing agreements with third
parties in a manner or at a time that is costly or damaging to
us;
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reliance on a limited number of sources, and in some cases, single
sources for product components, such that if we are unable to
secure a sufficient supply of these product components, we will be
unable to manufacture and sell RP5063, RP1208 or any future product
candidate in a timely fashion, in sufficient quantities or under
acceptable terms;
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lack of qualified backup suppliers for those components that are
currently purchased from a sole or single source supplier;
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operations of our third-party manufacturers or suppliers could be
disrupted by conditions unrelated to our business or operations,
including the bankruptcy of the manufacturer or supplier;
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carrier disruptions or increased costs that are beyond our control;
and
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failure to deliver our products under specified storage conditions
and in a timely manner.
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Any of these events could lead to clinical trial delays, failure to
obtain regulatory approval or impact our ability to successfully
commercialize our products. Some of these events could be the basis
for FDA action, including injunction, recall, seizure, or total or
partial suspension of production.
We intend to rely on third parties to conduct, supervise and
monitor our clinical trials, and if those third parties perform in
an unsatisfactory manner, it may harm our business.
We intend to rely on CROs and clinical trial sites to ensure the
proper and timely conduct of our clinical trials, and we expect to
have limited influence over their actual performance.
We intend to rely upon CROs to monitor and manage data for our
clinical programs, as well as the execution of future non-clinical
studies. We expects to control only certain aspects of our CROs’
activities. Nevertheless, we will be responsible for ensuring that
each of our studies is conducted in accordance with the applicable
protocol, legal, regulatory and scientific standards and our
reliance on the CROs does not relieve us of our regulatory
responsibilities.
We and our CROs will be required to comply with the Good Laboratory
Practices and GCPs, which are regulations and guidelines enforced
by the FDA and are also required by the Competent Authorities of
the Member States of the European Economic Area and comparable
foreign regulatory authorities in the form of International
Conference on Harmonization guidelines for any of our product
candidates that are in preclinical and clinical development. The
Regulatory authorities enforce GCPs through periodic inspections of
trial sponsors, principal investigators and clinical trial sites.
If we or our CROs fail to comply with GCPs, the clinical data
generated in our clinical trials may be deemed unreliable and the
FDA or comparable foreign regulatory authorities may require us to
perform additional clinical trials before approving our marketing
applications. Accordingly, if our CROs fail to comply with these
regulations or fail to recruit a sufficient number of subjects, we
may be required to repeat clinical trials, which would delay the
regulatory approval process.
Our CROs will be independent contractors and not our employees, and
we will not control whether or not they devote sufficient time and
resources to our future clinical and non-clinical programs. These
CROs may also have relationships with other commercial entities,
including our competitors, for whom they may also be conducting
clinical trials, or other drug development activities which could
harm our competitive position. We face the risk of potential
unauthorized disclosure or misappropriation of our intellectual
property by CROs, which may reduce our trade secret protection and
allow our potential competitors to access and exploit our
proprietary technology. If our CROs do not successfully carry out
their contractual duties or obligations, fail to meet expected
deadlines, or if the quality or accuracy of the clinical data they
obtain is compromised due to the failure to adhere to our clinical
protocols or regulatory requirements or for any other reasons, our
clinical trials may be extended, delayed or terminated, and we may
not be able to obtain regulatory approval for, or successfully
commercialize any product candidate that we develop. As a result,
our financial results and the commercial prospects for any product
candidate that we develop would be harmed, our costs could
increase, and our ability to generate revenues could be
delayed.
If our relationship with these CROs terminate, we may not be able
to enter into arrangements with alternative CROs or do so on
commercially reasonable terms. Switching or adding additional CROs
involves substantial cost and requires management time and focus.
In addition, there is a natural transition period when a new CRO
commences work. As a result, delays occur, which can materially
impact our ability to meet our desired clinical development
timelines. Though we intend to carefully manage our relationships
with our CROs, there can be no assurance that we will not encounter
challenges or delays in the future or that these delays or
challenges will not have an adverse impact on our business,
financial condition and prospects.
Risks Related to Our Intellectual Property
If we are unable to obtain and maintain patent protection for
our technology and products or if the scope of the patent
protection obtained is not sufficiently broad, we may not be able
to compete effectively in our markets.
We rely upon a combination of patents, trade secret protection and
confidentiality agreements to protect the intellectual property
related to our drug development programs and product candidates.
Our success depends in large part on our ability to obtain and
maintain patent protection in the United States and other countries
with respect to RP5063, RP1208 and any future product candidates.
We seek to protect our proprietary position by filing patent
applications in the United States and abroad related to our
development programs and product candidates. The patent prosecution
process is 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.
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. The patent applications that we
own may fail to result in issued patents with claims that cover
RP5063, RP1208 or any future product candidate in the United States
or in other foreign countries. There is no assurance that all of
the potentially relevant prior art relating to our patents and
patent applications has been found, which can invalidate a patent
or prevent a patent from issuing from a pending patent application.
Even if patents do successfully issue and even if such patents
cover RP5063, RP1208 or any future product candidate, third parties
may challenge their validity, enforceability or scope, which may
result in such patents being narrowed, invalidated, or held
unenforceable. Any successful opposition to these patents or any
other patents that we own could deprive us of rights necessary for
the successful commercialization of any product candidates that we
may develop. Further, if we encounter delays in regulatory
approvals, the period of time during which we could market a
product candidate under patent protection could be reduced.
If the patent applications we hold with respect to our development
programs and product candidates fail to issue, if their breadth or
strength of protection is threatened, or if they fail to provide
meaningful exclusivity for RP5063, RP1208 or any future product
candidate, it could dissuade companies from collaborating with us
to develop product candidates, and threaten our ability to
commercialize future drugs. Any such outcome could have a material
adverse effect on our business.
The patent position of biotechnology and pharmaceutical companies
generally is highly uncertain, involves complex legal and factual
questions and has in recent years been the subject of much
litigation. In addition, the laws of foreign countries may not
protect our rights to the same extent as the laws of the United
States. For example, European patent law restricts the
patentability of methods of treatment of the human body more than
United States law does. Publications of discoveries in scientific
literature often lag behind the actual discoveries, and patent
applications in the United States and other jurisdictions are
typically not published until 18 months after filing, or in
some cases not at all. Therefore, we cannot know with certainty
whether we were the first to make the inventions claimed in our
owned patents or pending patent applications, or that we were the
first to file for patent protection of such inventions. As a
result, the issuance, scope, validity, enforceability and
commercial value of our patent rights are highly uncertain. Our
pending and future patent applications may not result in patents
being issued which protect our technology or products, in whole or
in part, or which effectively prevent others from commercializing
competitive technologies and products. Changes in either the patent
laws or interpretation of the patent laws in the United States and
other countries may diminish the value of our patents or narrow the
scope of our patent protection. Moreover, we may be subject to a
third party pre-issuance submission of prior art to the U.S. Patent
and Trademark Office, or USPTO, or become involved in opposition,
derivation, reexamination, inter partes review, post-grant 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 of, or
invalidate, our patent rights, allow third parties to commercialize
our technology or products and compete directly with us, without
payment to us, or result in our inability to manufacture or
commercialize products without infringing third-party patent
rights. 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.
Various extensions may be available; however the life of a patent,
and the protection it affords, is limited. Without patent
protection for our current or future product candidates, we may be
open to competition from generic versions of such products. 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 patent
portfolio may not provide us with sufficient rights to exclude
others from commercializing products similar or identical to
ours.
Obtaining and maintaining our patent protection depends on
compliance with various procedural, document submission, fee
payment and other requirements imposed by governmental patent
agencies, and our patent protection could be reduced or eliminated
for non-compliance with these requirements.
Periodic maintenance fees on any issued patent are due to be paid
to the USPTO and other foreign patent agencies in several stages
over the lifetime of the patent. The USPTO and various foreign
national or international patent agencies require compliance with a
number of procedural, documentary, fee payment and other similar
provisions during the patent application process. While an
inadvertent lapse may in many cases be cured by payment of a late
fee or by other means in accordance with the applicable rules,
there are situations in which non-compliance 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. Non-compliance events that could result in
abandonment or lapse of patent rights include, but are not limited
to, failure to timely file national and regional stage patent
applications based on our international patent application, failure
to respond to official actions within prescribed time limits,
non-payment of fees and failure to properly legalize and submit
formal documents. If we fail to maintain the patents and patent
applications covering RP5063, RP1208 or any future product
candidate. Our competitors might be able to enter the market, which
would have an adverse effect on our business.
Third party claims or litigation alleging infringement of
patents or other proprietary rights or seeking to invalidate
patents or other proprietary rights, may delay or prevent the
development and commercialization of RP5063, RP1208 and any future
product candidate.
Our commercial success depends in part on avoiding infringement and
other violations of the patents and proprietary rights of third
parties. 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, derivation and administrative law proceedings, inter
party review, and post-grant review before the USPTO, as well as
oppositions and similar processes in foreign jurisdictions.
Numerous U.S. and foreign issued patents and pending patent
applications, which are owned by third parties, exist in the fields
in which we and our collaborators are developing product
candidates. As the biotechnology and pharmaceutical industries
expand and more patents are issued, and as we gain greater
visibility and market exposure, the risk increases that our product
candidates or other business activities may be subject to claims of
infringement of the patent and other proprietary rights of third
parties. Third parties may assert that we are infringing their
patents or employing their proprietary technology without
authorization. Based on our general knowledge in this field of
technology and based on the patent prosecution of RP5063 conducted
in the United States and in foreign countries, we do not believe
that there are valid patents which contain granted claims that
could be asserted with respect to RP5063, however, we may be
incorrect.
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.
Because patent applications can take many years to issue,
there may be currently pending patent applications which may later
result in issued patents that our product candidates may infringe.
In addition, third parties may obtain patents in the future and
claim that use of our technologies infringes upon these patents. If
any third-party patents were held by a court of competent
jurisdiction to cover the manufacturing process of any of our
product candidates, any molecules formed during the manufacturing
process or any final product itself, the holders of any such
patents may be able to block our ability to commercialize such
product candidate unless we obtained a license under the applicable
patents, or until such patents expire. Similarly, if any
third-party patent were held by a court of competent jurisdiction
to cover aspects of our formulations, processes for manufacture or
methods of use, including combination therapy, the holders of any
such patent may be able to block our ability to develop and
commercialize the applicable product candidate unless we obtained a
license or until such patent expires. In either case, such a
license may not be available on commercially reasonable terms or at
all. In addition, we may be subject to claims that we are
infringing other intellectual property rights, such as trademarks
or copyrights, or misappropriating the trade secrets of others, and
to the extent that our employees, consultants or contractors use
intellectual property or proprietary information owned by others in
their work for us, disputes may arise as to the rights in related
or resulting know-how and inventions.
Parties making claims against us may obtain injunctive or other
equitable relief, which could effectively block our ability to
further develop and commercialize one or more of our product
candidates. 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. In
the event of a successful infringement or other intellectual
property claim 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 affected products, which may be
impossible or require substantial time and monetary expenditure. We
cannot predict whether any such license would be available at all
or whether it would be available on commercially reasonable terms.
Furthermore, even in the absence of litigation, we may need to
obtain licenses from third parties to advance our research or allow
commercialization of our product candidates, and we have done so
from time to time. We may fail to obtain any of these licenses at a
reasonable cost or on reasonable terms, if at all. In that event,
we would be unable to further develop and commercialize one or more
of our product candidates, which could harm our business
significantly. We cannot provide any assurances that third-party
patents do not exist which might be enforced against our future
drugs or product candidates, resulting in either an injunction
prohibiting our sales, or, with respect to our sales, an obligation
on our part to pay royalties and/or other forms of compensation to
third parties.
We may be involved in lawsuits to protect or enforce our
patents, the patents of our licensors or our other intellectual
property rights, which could be expensive, time consuming and
unsuccessful.
Competitors may infringe or otherwise violate our patents or our
other intellectual property rights. To counter infringement or
unauthorized use, we may be required to file legal claims, which
can be expensive and time-consuming. In addition, in an
infringement proceeding, a court may decide that one of our patents
is not valid or is unenforceable, or may refuse to stop the other
party from using the technology at issue on the grounds that our
patents do not cover the technology in question. An adverse result
in any litigation or defense proceedings could put one or more of
our patents at risk of being invalidated or interpreted narrowly
and could put our patent applications at risk of not issuing. The
initiation of a claim against a third party may also cause the
third party to bring counter claims against us, such as claims
asserting that our patents are invalid or unenforceable. In patent
litigation in the United States, defendant counterclaims alleging
invalidity or unenforceability are commonplace.
Grounds for a patent invalidity challenge could be an alleged
failure to meet any of several statutory requirements, including
lack of novelty, obviousness, non-enablement or lack of statutory
subject matter. Grounds for an unenforceability assertion could be
an allegation that someone connected with prosecution of the patent
withheld relevant material information from the USPTO, or made a
materially misleading statement, during prosecution. Third parties
may also raise similar validity claims before the USPTO in
post-grant proceedings such as ex parte reexaminations, inter
partes review, or post-grant review, or oppositions or similar
proceedings outside the United States, in parallel with litigation
or even outside the context of litigation. The outcome following
legal assertions of invalidity and unenforceability is
unpredictable. We cannot be certain that there is no invalidating
prior art, of which we and the patent examiner were unaware during
prosecution. If a defendant were to prevail on a legal assertion of
invalidity or unenforceability, we would lose at least part, and
perhaps all, of any future patent protection on our current or
future product candidates. Such a loss of patent protection could
harm our business.
We may not be able to prevent misappropriation of our intellectual
property rights, particularly in countries where the laws may not
protect those rights as fully as in the United States. Our business
could be harmed if in litigation the prevailing party does not
offer us a license on commercially reasonable terms. Any litigation
or other proceedings to enforce our intellectual property rights
may fail, and even if successful, may result in substantial costs
and distract our management and other employees.
Furthermore, because of the substantial amount of discovery
required in connection with intellectual property litigation, there
is a risk that some of our confidential information could be
compromised by disclosure during this type of litigation. There
could also be public announcements of the results of hearings,
motions or other interim proceedings or developments. If securities
analysts or investors perceive these results to be negative, it
could have an adverse effect on the price of securities that may be
issued by us.
We may not be able to protect our intellectual property
rights throughout the world, which could impair our
business.
Filing, prosecuting and defending patents covering RP5063, RP1208
and any future product candidate throughout the world would be
prohibitively expensive. 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 may obtain patent
protection, but where patent enforcement is not as strong as that
in the United States. These products may compete with our products
in jurisdictions where Revive does not have any issued patents and
any future patent claims or other intellectual property rights may
not be effective or sufficient to prevent them from so
competing.
Our reliance on third parties requires us to share our trade
secrets, which increases the possibility that a competitor will
discover them or that our trade secrets will be misappropriated or
disclosed.
Because we expect to rely on third parties to manufacture RP5063,
RP1208 and any future product candidates, and we expect to
collaborate with third parties on the development of RP5063, RP1208
and any future product candidates, we must, at times, share trade
secrets with them. We also conducts joint research and development
programs that may require us to share trade secrets under the terms
of our research and development partnerships or similar agreements.
We seek to protect our proprietary technology in part by entering
into confidentiality agreements and, if applicable, material
transfer agreements, consulting agreements or other similar
agreements with our advisors, employees, third-party contractors
and consultants prior to beginning research or disclosing
proprietary information. These agreements typically limit the
rights of the third parties to use or disclose our confidential
information, including our trade secrets. Despite the contractual
provisions employed when working with third parties, the need to
share trade secrets and other confidential information increases
the risk that such trade secrets become known by our competitors,
are inadvertently incorporated into the technology of others, or
are disclosed or used in violation of these agreements. Given that
our proprietary position is based, in part, on our know-how and
trade secrets, a competitor’s discovery of our trade secrets or
other unauthorized use or disclosure would impair our competitive
position and may have an adverse effect on our business and results
of operations.
In addition, these agreements typically restrict the ability of our
advisors, employees, third-party contractors and consultants to
publish data potentially relating to our trade secrets, although
our agreements may contain certain limited publication rights.
Despite our efforts to protect our trade secrets, our competitors
may discover our trade secrets, either through breach of our
agreements with third parties, independent development or
publication of information by any of our third-party collaborators.
A competitor’s discovery of our trade secrets would impair our
competitive position and have an adverse impact on our
business.
Risks Related to Our Securities
Our officers, directors, and principal stockholders exercise
significant control over our Company, and will control our company
for the foreseeable future, including the outcome of matters
requiring stockholder approval.
Our officers, directors and principal stockholders who beneficially
own more than 5% of our common stock, in the aggregate,
beneficially own shares representing approximately 53.12% of our
outstanding capital stock as of April 15, 2021. As a result, such
entities and individuals have the ability, acting together, to
control the election of our directors and the outcome of corporate
actions requiring stockholder approval, such as: (i) a merger or a
sale of our company, (ii) a sale of all or substantially all of our
assets, and (iii) amendments to our certificate of incorporation
and bylaws. This concentration of voting power and control could
have a significant effect in delaying, deferring or preventing an
action that might otherwise be beneficial to our other stockholders
and be disadvantageous to our stockholders with interests different
from those entities and individuals. These individuals also have
significant control over our business, policies and affairs as
officers and directors of our company.
An active trading market for our Common Stock or warrants may
not be sustained.
An active trading market for our Common Stock or warrants may not
develop or continue or, if developed, may not be sustained The lack
of an active market for our Common Stock or warrants may impair
investors’ ability to sell their Common Stock or warrants at the
time they wish to sell them or at a price that they consider
reasonable, may reduce the fair market value of their shares of
Common Stock or warrants and may impair our ability to raise
capital to continue to fund operations by selling securities and
may impair our ability to acquire additional intellectual property
assets by using our securities as consideration
A sale of a substantial number of shares of our Common Stock
or warrants in the public market could cause the market price of
our Common Stock or warrants to drop significantly, even if our
business is doing well.
The price of our Common Stock or warrants could decline as a result
of sales of a large number of shares of our Common Stock or
warrants or the perception that these sales could occur. These
sales, or the possibility that these sales may occur, also might
make it more difficult for us to sell equity securities in the
future at a time and at a price that we deem appropriate.
In addition, in the future, we may issue additional shares of
Common Stock, warrants or other equity or debt securities
convertible into Common Stock in connection with a financing,
acquisition, litigation settlement, employee arrangements or
otherwise. Any such issuance could result in substantial dilution
to our existing stockholders and could cause the price of our
common stock or warrants to decline.
If equity research analysts do not publish research or
reports about our business or if they issue unfavorable commentary
or downgrade our Common Stock or warrants, the price of our Common
Stock or warrants could decline.
The trading market for our Common Stock and warrants relies in part
on the research and reports that equity research analysts publish
about us and our business. We do not control these analysts. The
price of our Common Stock could decline if one or more equity
analysts downgrade our Common Stock or warrants or if analysts
issue other unfavorable commentary or cease publishing reports
about us or our business.
The price of our Common Stock or Warrants may be volatile,
which could subject us to securities class action litigation and
our stockholders could incur substantial losses.
The market price for our Common Stock or warrants may be volatile
and subject to wide fluctuations in response to factors including
the following:
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actual or anticipated fluctuations in our quarterly or annual
operating results;
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actual or anticipated changes in our growth rate relative to our
competitors;
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failure to meet or exceed financial estimates and projections of
the investment community or that we provide to the public;
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issuance of new or updated research or reports by securities
analysts;
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share price and volume fluctuations attributable to inconsistent
trading volume levels of our securities; additions or departures of
key management or other personnel;
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disputes or other developments related to proprietary rights,
including patents, litigation matters, and our ability to obtain
patent protection for our products;
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announcement or expectation of additional debt or equity financing
efforts;
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sales of our securities by us, our insiders or our other
stockholders; and
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general economic, market or political conditions in the United
States or elsewhere.
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In particular, the market prices of pharmaceutical companies like
ours have been highly volatile due to factors, including, but not
limited to:
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any delay or failure to conduct a clinical trial for a company’s
product or to receive approval from the FDA and other regulatory
agents;
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developments or disputes concerning a company’s intellectual
property rights;
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technological innovations of such companies or their
competitors;
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changes in market valuations of similar companies;
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announcements by such companies or their competitors of significant
contracts, acquisitions, strategic partnerships, joint ventures,
capital commitments, new technologies, or patents;
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failure to complete significant transactions or collaborate with
vendors in manufacturing a product; and
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proposals for legislation that would place restrictions on the
price of pharmaceutical products.
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These and other market and industry factors may cause the market
price and demand for our Common Stock and warrants to fluctuate
substantially, regardless of our actual operating performance,
which may limit or prevent investors from readily selling their
shares of Common Stock or warrants and may otherwise negatively
affect the liquidity of our Common Stock or warrants. In addition,
the stock market in general, and Nasdaq and emerging growth
companies in particular, have experienced extreme price and volume
fluctuations that have often been unrelated or disproportionate to
the operating performance of these companies. In the past, when the
market price of a stock has been volatile, holders of that stock
have instituted securities class action litigation against the
company that issued the stock. If any of our stockholders brought a
lawsuit against us, we could incur substantial costs defending the
lawsuit. Such a lawsuit could also divert the time and attention of
our management.
Certain of our warrants are accounted for as liabilities and
the changes in value of such warrants could have a material effect
on our financial results.
On April 12, 2021, the Staff of the Securities and Exchange
Commission (“SEC Staff”) released the Staff Statement on Accounting
and Reporting Considerations for Warrants Issued by Special Purpose
Acquisition Companies (the “Statement”). In the Statement, SEC
Staff made the observation that certain contractual provisions
included in many Special Purpose Acquisition Company warrant
agreements may result in such warrants needing to be classified as
a liability rather than as equity. As a result of the SEC
Statement, we reevaluated the accounting treatment of our Warrants,
and determined to classify the Private Warrants as derivative
liabilities measured at fair value, with changes in fair value each
period reported in earnings.
As a result, included on our restated consolidated balance sheet as
of December 31, 2020, contained elsewhere in this prospectus, are
derivative liabilities related to embedded features contained
within our Private Warrants. Accounting Standards Codification 815,
Derivatives and Hedging (“ASC 815”), provides for the remeasurement
of the fair value of such derivatives at each balance sheet date,
with a resulting non-cash gain or loss related to the change in the
fair value being recognized in earnings in the statement of
operations. As a result of the recurring fair value measurement,
our consolidated financial statements and results of operations may
fluctuate quarterly, based on factors, which are outside of our
control. Due to the recurring fair value measurement, we expect
that we will recognize non-cash gains or losses on our Private
Warrants each reporting period and that the amount of such gains or
losses could be material.
We are an emerging growth company within the meaning of the
Securities Act and have taken advantage of certain exemptions from
disclosure requirements available to emerging growth companies;
this could make our securities less attractive to investors and may
make it more difficult to compare our performance with other public
companies.
We are an “emerging growth company” within the meaning of the
Securities Act, as modified by the Jumpstart Our Business Startups
Act of 2012 (the “JOBS Act”), and have taken advantage of certain
exemptions from various reporting requirements that are applicable
to other public companies that are not emerging growth companies
including, but not limited to, not being required to comply with
the auditor attestation requirements of Section 404 of the
Sarbanes-Oxley Act, reduced disclosure obligations regarding
executive compensation in our periodic reports and proxy statements
and exemptions from the requirements of holding a nonbinding
advisory vote on certain executive compensation matters. As a
result, our shareholders may not have access to certain information
they may deem important. We may be an emerging growth company for
up to five years from the IPO of Tenzing, although
circumstances could cause the loss of that status earlier,
including if the market value of our common stock held by
non-affiliates exceeds $700 million as of the last business
day in any August before that time, in which case we would no
longer be an emerging growth company as of the end of that fiscal
year. We cannot predict whether investors will find our securities
less attractive because we rely on these exemptions. If some
investors find the securities less attractive as a result of
reliance on these exemptions, the trading prices of our securities
may be lower than they otherwise would be, there may be a less
active trading market for our securities and the trading prices of
the securities may be more volatile.
Further, Section 102(b)(1) of the JOBS Act exempts
emerging growth companies from being required to comply with new or
revised financial accounting standards until private companies
(that is, those that have not had a Securities Act registration
statement declared effective or do not have a class of securities
registered under the Exchange Act) are required to comply with the
new or revised financial accounting standards. The JOBS Act
provides that an emerging growth company can elect to opt out of
the extended transition period and comply with the requirements
that apply to non-emerging growth companies but any such an
election to opt out is irrevocable. We have elected not to opt out
of such extended transition period. Accordingly, when a standard is
issued or revised and it has different application dates for public
or private companies, we, as an emerging growth company, will adopt
the new or revised standard at the time private companies adopt the
new or revised standard, unless early adoption is permitted by the
standard, and we elect early adoption. This may make comparison of
our financial statements with another public company which is
neither an emerging growth company nor an emerging growth company
which has opted out of using the extended transition period
difficult or impossible because of the potential differences in
accounting standards used.
We will incur significantly increased costs and devote
substantial management time as a result of operating as a public
company particularly after we are no longer an
“emerging growth company.”
As a newly public company, we will incur significant legal,
accounting and other expenses that we did not incur as a private
company. For example, we are required to comply with certain of the
requirements of the Sarbanes-Oxley Act and the Dodd-Frank Wall
Street Reform and Consumer Protection Act, as amended, as well as
rules and regulations subsequently implemented by the SEC,
including the establishment and maintenance of effective disclosure
and financial controls and changes in corporate governance
practices. We expect that compliance with these requirements will
increase our legal and financial compliance costs and will make
some activities more time consuming and costly. In addition, we
expect that our management and other personnel will need to divert
attention from operational and other business matters to devote
substantial time to these public company requirements. In
particular, we expect to incur significant expenses and devote
substantial management effort toward ensuring compliance with the
requirements of Section 404 of the Sarbanes-Oxley Act. In
addition, after we no longer qualify as an emerging growth company,
we expect to incur additional management time and cost to comply
with the more stringent reporting requirements applicable to
companies that are deemed accelerated filers or large accelerated
filers, including complying with the auditor attestation
requirements of Section 404 of the Sarbanes-Oxley Act. We have
not yet completed the process of compiling the system and
processing documentation needed to comply with such requirements.
We may not be able to complete our evaluation, testing and any
required remediation in a timely fashion. In that regard, we
currently do not have an internal audit function, and we will need
to hire or contract for additional accounting and financial staff
with appropriate public company experience and technical accounting
knowledge.
We cannot predict or estimate the amount of additional costs we may
incur as a result of becoming a public company or the timing of
such costs.
There may be limitations on the effectiveness of our internal
controls, and a failure of our control systems to prevent error or
fraud may materially harm us.
Proper systems of internal controls over financial accounting and
disclosure controls and procedures are critical to the operation of
a public company. We have limited operating history and limited
personnel in our finance and accounting functions, which may result
in a lack of segregation of duties and we are at the very early
stages of establishing, and we may be unable to effectively
establish such systems, especially in light of the fact that we now
have to operate as a publicly reporting company. This would leave
us without the ability to reliably assimilate and compile financial
information and significantly impair our ability to prevent error
and detect fraud, all of which would have a negative impact on our
internal controls over financial reporting.
Moreover, we do not expect that disclosure controls or internal
controls over financial reporting, even if established, will
prevent all error and all fraud. A control system, no matter how
well designed and operated, can provide only reasonable, not
absolute, assurance that the control system’s objectives will be
met. Further, the design of a control system must reflect the fact
that there are resource constraints and the benefits of controls
must be considered relative to their costs. Because of the inherent
limitations in all control systems, no evaluation of controls can
provide absolute assurance that all control issues and instances of
fraud, if any, have been detected. Failure of our control systems
to prevent error or fraud could materially adversely impact us.
We do not currently intend to pay dividends on our Common
Stock in the foreseeable future, and consequently, any gains from
an investment in our Common Stock will likely depend on
appreciation in the price of our Common Stock.
We have never declared or paid cash dividends on our Common Stock
and do not anticipate paying any cash dividends to holders of our
Common Stock in the foreseeable future. Consequently, investors
must rely on sales of their Common Stock and warrants after price
appreciation, which may never occur, as the only way to realize any
future gains on their investments. There is no guarantee that
shares of our Common Stock or warrants will appreciate in value or
even maintain the price at which the stockholders have purchased
their shares or warrants.
Upon our dissolution, the stockholders may not recoup all or
any portion of their investment.
In the event of our liquidation, dissolution or winding-up, whether
voluntary or involuntary, the proceeds and/or assets of remaining
after giving effect to such transaction, and the payment of all
debts and liabilities and distributions required to be made to
holders of any outstanding preferred stock will then be distributed
to the stockholders of Common Stock on a pro rata basis. There can
be no assurance that we will have available assets to pay to the
holders of our Common Stock, or any amounts, upon such a
liquidation, dissolution or winding-up.
Our amended and restated certificate of incorporation allows
for our board of directors to create new series of preferred stock
without further approval by the stockholders, which could adversely
affect the rights of the holders of our Common Stock.
Our board of directors has the authority to fix and determine the
relative rights and preferences of preferred stock. Our board of
directors has the authority to issue up to 10 million shares of
preferred stock without further stockholder approval. As a result,
our board of directors could authorize the issuance of a series of
preferred stock that would grant to holders the preferred right to
our assets upon liquidation and the right to receive dividend
payments before dividends are distributed to the holders of our
Common Stock. In addition, our board of directors could authorize
the issuance of a series of preferred stock that has greater voting
power than the Common Stock or that is convertible into our Common
Stock, which could decrease the relative voting power of our Common
Stock or result in dilution to existing stockholders.
Delaware law and our certificate of incorporation, as
amended, and our bylaws contain certain provisions, including
anti-takeover provisions that limit the ability of stockholders to
take certain actions and could delay or discourage takeover
attempts that stockholders may consider favorable.
Our certificate of incorporation, as amended, and our bylaws, and
the Delaware General Corporation Law, as amended (the “DGCL”),
contain provisions that could have the effect of rendering more
difficult, delaying, or preventing an acquisition deemed
undesirable by our board of directors and therefore depress the
trading price of our Common Stock. These provisions could also make
it difficult for stockholders to take certain actions, including
electing directors who are not nominated by the current members of
our board of directors or taking other corporate actions, including
effecting changes in management. Among other things, our
certificate of incorporation, as amended, and our bylaws include
provisions regarding:
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the ability of our board of directors to issue shares of preferred
stock, including “blank check” preferred stock and to
determine the price and other terms of those shares, including
preferences and voting rights, without stockholder approval, which
could be used to significantly dilute the ownership of a hostile
acquirer;
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the limitation of the liability of, and the indemnification of, our
directors and officers;
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the right of our board of directors to elect a director to fill a
vacancy created by the expansion of our board of directors or the
resignation, death or removal of a director, which prevents
stockholders from being able to fill vacancies on our board of
directors;
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a prohibition on stockholder action by written consent (except as
required for holders of future series of preferred stock), which
forces stockholder action to be taken at an annual or special
meeting of stockholders and could delay the ability of stockholders
to force consideration of a stockholder proposal or to take action,
including the removal of directors;
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the requirement that a special meeting of stockholders may be
called only by our board of directors, which could delay the
ability of stockholders to force consideration of a proposal or to
take action, including the removal of directors;
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controlling the procedures for the conduct and scheduling of our
board of directors and stockholder meetings;
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the requirement for the affirmative vote of holders of at least a
majority of the voting power of all of the voting power of the then
outstanding shares of the voting stock, voting as a single class,
to amend, alter, change or repeal any provision of our bylaws and
certain provisions in our certificate of incorporation, as
amended,, respectively, which could preclude stockholders from
bringing matters before annual or special meetings of stockholders
and delay changes in our board of directors and also may inhibit
the ability of an acquirer to effect such amendments to facilitate
an unsolicited takeover attempt;
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the ability of our board of directors to amend our bylaws by an
affirmative vote of a majority of our board of directors, which may
allow our board of directors to take additional actions to prevent
an unsolicited takeover and inhibit the ability of an acquirer to
amend our bylaws to facilitate an unsolicited takeover attempt;
and
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advance notice procedures with which stockholders must comply to
nominate candidates to our board of directors or to propose matters
to be acted upon at a stockholders’ meeting, which could
preclude stockholders from bringing matters before annual or
special meetings of stockholders and delay changes in our board of
directors and also may discourage or deter a potential acquirer
from conducting a solicitation of proxies to elect the acquirer’s
own slate of directors or otherwise attempting to obtain control of
us.
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These provisions, alone or together, could delay or prevent hostile
takeovers and changes in control or changes in our board of
directors or management. In addition, as a Delaware corporation, we
will generally be subject to provisions of Delaware law, including
Section 203 of the DGCL.
Any provision of our certificate of incorporation, as amended,, our
bylaws or Delaware law that has the effect of delaying or
preventing a change in control could limit the opportunity for
stockholders to receive a premium for their shares of our capital
stock and could also affect the price that some investors are
willing to pay for our common stock.
Our certificate of incorporation, as amended, designates a
state or federal court located within the State of Delaware as the
exclusive forum for substantially all disputes between us and our
stockholders, which could limit our stockholders’
ability to choose the judicial forum for disputes with us or
our directors, officers, or employees.
Our certificate of incorporation, as amended, provides that, unless
we consent in writing to the selection of an alternative forum, the
Court of Chancery of the State of Delaware, or if such court does
not have subject matter jurisdiction, any other court located in
the State of Delaware with subject matter jurisdiction, will be the
sole and exclusive forum for (i) any derivative action or
proceeding brought on the Company’s behalf, (ii) any action
asserting a claim of breach of a fiduciary duty owed by any current
or former director, officer, other employee or stockholder of the
Company to the Company or the Company’s stockholders,
(iii) any action asserting a claim against the Company or our
officers or directors arising pursuant to any provision of the
Delaware General Corporate Law or our certificate of incorporation,
as amended, or our bylaws or as to which the DGCL confers
jurisdiction on the Court of Chancery of the State of Delaware, or
(iv) any action asserting a claim against the Company or any
director or officer of the Company governed by the internal affairs
doctrine of the law of the State of Delaware; provided, that, if
and only if the Court of Chancery of the State of Delaware
dismisses any such action for lack of subject matter jurisdiction,
such action may be brought in another state court sitting in the
State of Delaware. Additionally, our certificate of incorporation,
as amended, provides that, unless the Company consents to the
selection of an alternative forum, the federal district courts of
the United States of America shall, to the fullest extent permitted
by law, be the sole and exclusive forum for the resolution of any
complaint asserting a cause of action arising under the Securities
Act of 1933, as amended; provided, however, that such provision
will not apply to suits brought to enforce any liability or duty
created by the Securities Exchange Act of 1934, as amended, or any
other claim for which the federal courts have exclusive
jurisdiction.
Any person or entity purchasing or otherwise acquiring any interest
in any of our securities will be deemed to have notice of and
consented to these provisions. These exclusive-forum provisions may
limit a stockholder’s ability to bring a claim in a judicial forum
of its choosing for disputes with us or our directors, officers, or
other employees, which may discourage lawsuits against us and our
directors, officers, and other employees. If a court were to find
these exclusive-forum provisions to be inapplicable or
unenforceable in an action, we may incur additional costs
associated with resolving the dispute in other jurisdictions, which
could harm our results of operations.
USE OF
PROCEEDS
All of the shares of Common Stock and Private Warrants offered by
the Selling Securityholders pursuant to this prospectus will be
sold by the Selling Securityholders for their respective accounts.
We will not receive any of the proceeds from these sales, except
with respect to amounts received by us upon exercise of the Public
Warrants or the Private Warrants to the extent such Public Warrants
or Private Warrants, as applicable, are exercised with cash.
DIVIDEND
POLICY
We have never declared or paid any dividends on our Common Stock
and do not anticipate paying any in the foreseeable future. Any
future determination relating to our dividend policy will be made
at the discretion of our board of directors and will depend on a
number of factors, including future earnings, capital requirements,
financial conditions, future prospects, contractual restrictions
and covenants and other factors that our board of directors may
deem relevant.
MANAGEMENT’S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
As a result of the completion of the Business Combination, the
financial statements of Old Reviva are now the financial statements
of the Company. Prior to the Business Combination, the Company had
no operating assets but, upon consummation of the Business
Combination, the business and operating assets of Old Reviva
acquired by the Company became the sole business and operating
assets of the Company. Accordingly, the financial statements of Old
Reviva and their respective subsidiaries as they existed prior to
the Business Combination and reflecting the sole business and
operating assets of the Company going forward, are now the
financial statements of the Company.
All statements other than statements of historical fact included
in this section regarding our financial position, business strategy
and the plans and objectives of management for future operations,
are forward- looking statements. When used in this section, words
such as “anticipate,” “believe,”
“estimate,” “expect,” “intend” and similar
expressions, as they relate to our management, identify
forward-looking statements. Such forward-looking statements are
based on the beliefs of management, as well as assumptions made by,
and information currently available to, our management. Actual
results could differ materially from those contemplated by the
forward- looking statements as a result of certain factors detailed
herein. All subsequent written or oral forward-looking statements
attributable to us or persons acting on our behalf are qualified in
their entirety by this paragraph.
Some of the information contained in this discussion and
analysis or set forth elsewhere, including information with respect
to our plans and strategy for our business include forward-looking
statements that involve risks, uncertainties and assumptions. You
should read the sections titled “Cautionary Note Regarding
Forward-Looking Statements” and “Risk Factors”
for a discussion of important factors that could cause actual
results to differ materially from the results described in or
implied by the forward-looking statements contained in the
following discussion and analysis.
Restatement of Previously Issued Financial Statements
The following information has been reviewed in light of the
restatement and revision of our consolidated financial statements
as described in the “Explanatory Note” at the beginning of our
Amended Annual Report on Form 10-K/A filed with the SEC on May 7,
2021 and in Note 2, “Summary of Significant Accounting Policies and
Practices,” and Note 9, “Stockholders’ Equity (Deficit),” in Notes
to the Consolidated Financial Statements of our restated 2020
financial statements, contained elsewhere in this prospectus,. Upon
review, no changes to the below disclosures were required as a
result of the restatement because the restatement and revision of
our consolidated financial statements did not have a material
impact on our previously reported operating expenses, cash,
operating cash flows, investing cash flows, or financing cash
flows. The impact of these changes was an increase to total
liabilities of $2.0 million and a corresponding decrease to total
equity of $2.0 million as of December 31, 2020.
Company Overview
We are a clinical-stage biopharmaceutical company that discovers,
develops and seeks to commercialize next-generation therapeutics
for diseases representing significant unmet medical needs and
burden to society, patients, and their families. Our current
pipeline focuses on the central nervous system, respiratory, and
metabolic diseases. We use a chemical genomics driven technology
platform and proprietary chemistry to develop new medicines. Our
pipeline currently has two drug candidates, RP5063 (Brilaroxazine)
and RP1208. Both are new chemical entities discovered in-house. We
have been granted composition of matter patents for both RP5063 and
R1208 in the United States (U.S.), Europe, and several other
countries.
Our lead drug candidate, RP5063, is ready for continued clinical
development for multiple neuropsychiatric indications. These
include schizophrenia, bipolar disorder (BD), major depressive
disorder (MDD), behavioral and psychotic symptoms, dementia or
Alzheimer’s disease (BPSD), Parkinson’s disease psychosis (PDP),
and attention deficit hyperactivity disorder (ADHD). Furthermore,
RP5063 is also ready for clinical development for two respiratory
indications — pulmonary arterial hypertension (PAH) and idiopathic
pulmonary fibrosis (IPF). The U.S. Food and Drug Administration
(FDA) has granted Orphan Drug designation to RP5063 for the
treatment of PAH in November 2016 and IPF in
April 2018.
Our primary focus is to complete the clinical development of RP5063
for the treatment of acute and maintenance schizophrenia.
Subject to the receipt of additional financing, we may also
continue the clinical development of RP5063 for the treatment of
BD, MDD, BPSD, PDP, ADHD, PAH and IPF. Moreover, subject to the
receipt of additional financing, we may also advance the
development of our second drug candidate, RP1208, for the treatment
of depression and obesity.
Impact of COVID-19
In response to the spread of COVID-19, we have taken temporary
precautionary measures intended to help minimize the risk of the
virus to our employees and community, including temporarily
requiring employees to work remotely and suspending all
non-essential travel for our employees.
As a result of the COVID-19 pandemic, we may experience disruptions
that could adversely impact our business. The COVID-19 pandemic may
negatively affect clinical site initiation, patient recruitment and
enrollment, patient dosing, distribution of drug to clinical sites
and clinical trial monitoring for our clinical trials. The COVID-19
pandemic may also negatively affect the operations of the
third-party contract research organizations that we intend to rely
upon to assist us in conducting our clinical trials and the
contract manufacturers who manufacture our drug candidates.
We are continuing to assess the potential impact of the COVID-19
pandemic on our business and operations. For additional information
on the various risks posed by the COVID-19 pandemic, refer to the
section titled “Risk Factors” of this prospectus.
Business Combination and Domestication
On December 14, 2020, our predecessor company, formerly known
as Tenzing Acquisition Corp., a British Virgin Islands exempted
company (“Tenzing”), and Reviva Pharmaceuticals, Inc., a
Delaware corporation (together with its consolidated subsidiaries,
“Old Reviva”), consummated the transactions contemplated by the
Agreement and Plan of Merger, dated as of July 20, 2020 (as
amended, the “Merger Agreement”), by and among Tenzing, Tenzing
Merger Subsidiary Inc., a Delaware corporation and wholly-owned
subsidiary of Tenzing (“Merger Sub”), Old Reviva, and the other
parties thereto. Pursuant to the Merger Agreement, Merger Sub
merged with and into Old Reviva, with Old Reviva surviving as our
wholly owned subsidiary. We refer to this transaction as the
Business Combination. In connection with and one day prior to the
completion of the Business Combination, Tenzing re-domiciled out of
the British Virgin Islands and continued as a company incorporated
in the State of Delaware, and changed its name to Reviva
Pharmaceuticals Holdings, Inc. Prior to the completion of the
Business Combination, the Company was a shell company. Following
the Business Combination, the business of Old Reviva is the
business of the Company.
Old Reviva was incorporated in the state of Delaware on May 1,
2006 and its subsidiary, Reviva Pharmaceuticals India Pvt. Ltd.,
was incorporated on December 23, 2014. Tenzing was formed
pursuant to the laws of the British Virgin Islands on
March 20, 2018.
The Business Combination was accounted for as a reverse merger in
accordance with U.S. GAAP. Under this method of accounting, Tenzing
was treated as the “acquired” company for financial reporting
purposes. This determination was primarily based on the holders of
Old Reviva expecting to have a majority of the voting power of the
post-combination company, Old Reviva senior management comprising
substantially all of the senior management of the post-combination
company, the relative size of Old Reviva compared to Tenzing, and
Old Reviva operations comprising the ongoing operations of the
post-combination company. Accordingly, for accounting purposes, the
Business Combination is treated as the equivalent of Old Reviva
issuing stock for the net assets of Tenzing, accompanied by a
recapitalization. The net assets of Tenzing were stated at
historical cost, with no goodwill or other intangible assets
recorded. Operations prior to the Business Combination are those of
Old Reviva.
Financial Overview
We are a clinical-stage biopharmaceutical company and have not
generated any revenues from the sale of products. We have never
been profitable, and our accumulated deficit as of December 31,
2020 was $58.3 million. Our net loss for the year ended
December 31, 2020 was $3.8 million. We expect to incur
significant expenses and increased operating losses for the next
several years. We expect our expenses to increase in connection
with our ongoing activities to research, develop and commercialize
our product candidates. Furthermore, we expect to incur additional
costs associated with operating as a public company. We will need
to generate significant revenues to achieve profitability, and we
may never do so.
We expect our expenses will increase substantially in connection
with our ongoing activities, as we:
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invest significantly to further research and develop, through
clinical trials for RP5063 (Brilaroxazine) and pre-clinical
research for RP1208, and seek regulatory approval for our product
candidates RP5063 (Brilaroxazine) and RP1208;
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identify and develop additional product candidates;
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hire additional clinical, scientific and management personnel;
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seek regulatory and marketing approvals for any product candidates
that we may develop;
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ultimately establish a sales, marketing and distribution
infrastructure to commercialize any drugs for which we may obtain
marketing approval;
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maintain, expand and protect our intellectual property
portfolio;
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acquire or in-license other drugs and technologies; and
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add operational, financial and management information systems and
personnel, including personnel to support our product candidate
development, any future commercialization efforts and our
transition to a public company.
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We have funded our operations to date primarily from the issuance
and sale of our equity and convertible equity securities. As of
December 31, 2020, we had cash and cash equivalents of
approximately $8.8 million. To fund our current operating plans, we
will need to raise additional capital. Our existing cash and cash
equivalents will not be sufficient for us to complete
development of our product candidates and, if applicable, to
prepare for commercializing any product candidate that may receive
approval. Accordingly, we will continue to require substantial
additional capital beyond our existing cash and cash equivalents to
continue our clinical development and potential commercialization
activities; however, we believe that our existing cash and cash
equivalents, will be sufficient to fund our current operating plans
through at least December 2021. The amount and timing of our future
funding requirements will depend on many factors, including the
pace and results of our clinical development efforts. We will seek
to fund our operations through public or private equity or debt
financings or other sources, which may include collaborations with
third parties. Adequate additional financing may not be available
to us on acceptable terms, or at all. Our failure to raise capital
as and when needed would have a negative impact on our financial
condition and our ability to pursue our business strategy. We
cannot assure you that we will ever be profitable or generate
positive cash flow from operating activities.
Research and Development Expenses
We focus our resources on research and development activities,
including the conduct of preclinical and clinical studies and
product development and expenses such costs as they are incurred.
We have not historically tracked or recorded research and
development expenses on a project-by-project basis, primarily
because we use our employee and infrastructure resources across
multiple research and development projects, and it is not practical
for us to allocate such costs on a project-by-project basis. Our
research and development expenses primarily consist of
employee-related expenses, including deferred salaries, salaries,
benefits and taxes for personnel in research and development
functions.
The largest recurring component of our total operating expenses has
historically been research and development activities. We expect
our research and development expenses will increase for the next
several years as we advance our development programs, pursues
regulatory approval of our product candidates in the U.S. and other
jurisdictions and prepare for potential commercialization, which
would require a significant investment in costs related to contract
manufacturing, inventory buildup and sales and marketing
activities.
Our primary product candidates and their current status is as
follows:
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Drug Candidate
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Indication
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Status
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RP5063
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Schizophrenia
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Phase 2 complete. We are currently focusing our efforts on
initiating a pivotal Phase 3 study in acute schizophrenia.
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RP5063
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Bipolar Disorder
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Phase 1 complete**
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RP5063
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Depression-MDD
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Phase 1 complete**
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RP5063
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Alzheimer’s (AD-Psychosis/Behavior)
|
Phase 1 complete**
|
|
RP5063
|
Parkinson’s
|
Phase 1 complete**
|
|
RP5063
|
ADHD/ADD
|
Phase 1 complete**
|
|
RP5063
|
PAH
|
Phase 1 complete**
|
|
RP5063
|
IPF
|
Phase 1 complete**
|
|
RP1208
|
Depression
|
Completed pre-clinical development studies, including in vitro
receptor binding studies, animal efficacy studies, and PK studies.
Compound ready for IND enabling studies.
|
|
RP1208
|
Obesity
|
Completed pre-clinical development studies, including in vitro
receptor binding studies and PK studies. Compound ready for animal
efficacy studies.
|
** We completed the Phase 1 clinical study for RP5063
(Brilaroxazine) prior to starting the Phase 2 study in
schizophrenia and schizoaffective disorder. We collected safety
data for RP5063 (Brilaroxazine) in over 200 patients, including
healthy subjects and patients with stable schizophrenia, acute
schizophrenia and schizoaffective disorder. Generally, no separate
Phase 1 study is required for conducting a Phase 2 study for an
additional indication, provided the treatment doses in the Phase 2
study for an additional indication are within the range of doses
tested in the previously completed Phase 1 study.
The successful development of our platform and product candidates
is highly uncertain, and we may never succeed in achieving
marketing approval for our product candidates RP5063
(Brilaroxazine), RP1208, or any future product candidates. We
estimate that initial costs to conduct our Phase 3 clinical study
for RP5063 could total approximately $21.0 million, with
approximately $7.0 million payable over the course of calendar
2021, and approximately $10.0 million payable during calendar 2022,
and approximately $4.0 million payable during calendar 2023. At
this time, other than our estimates for conducting our Phase 3
clinical study for RP5063, we cannot reasonably estimate the
nature, timing, or costs of the efforts necessary to finish
developing any of our product candidates or the period in which
material net cash, if any, from these product candidates may
commence. This is due to the numerous risks and uncertainties
associated with developing therapeutics, including the uncertainty
of:
| |
●
|
the scope, rate of progress, expense, and results of clinical
trials;
|
| |
|
|
| |
●
|
the scope, rate of progress, and expense of process development and
manufacturing;
|
| |
|
|
| |
●
|
preclinical and other research activities; and
|
| |
|
|
| |
●
|
the timing of regulatory approvals.
|
General Administrative Expenses
General and administrative expenses primarily consist of payroll
and related costs for employees in executive, business development,
finance, and administrative functions. Other significant general
and administrative expenses include professional fees for
accounting and legal services.
We expect general and administrative expenses to increase as we
expand infrastructure and continue the development of our clinical
programs. Other increases could potentially include increased costs
for director and officer liability insurance, costs related to the
hiring of additional personnel, and increased fees for directors,
outside consultants, lawyers, and accountants. We expect to incur
significant costs to comply with corporate governance, internal
controls, and similar requirements applicable to public
companies.
Interest Expense
For the year ended December 31, 2020, interest expense consisted
primarily of interest associated with our promissory notes and
beneficial conversion feature recognized on conversion of
promissory notes.
Interest Income and Other Income
Interest income and other, net consists largely of interest earned
on our cash & cash equivalents and gain recorded on
issuance of common stock in lieu of salaries.
Critical Accounting Policies and Use of Estimates
Our management’s discussion and analysis of our financial condition
and results of operations is based on our consolidated financial
statements, which have been prepared in accordance with U.S.
generally accepted accounting principles, or U.S. GAAP. The
preparation of our consolidated financial statements requires
management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and the disclosure of
contingent assets and liabilities at the date of the consolidated
financial statements, and the reported amounts of expenses during
the period. Significant items subject to such estimates and
assumptions include stock-based compensation, beneficial conversion
features, warrant values, and deferred taxes and related valuation
allowances. Our actual results could differ from these estimates
under different assumptions or conditions.
Our significant accounting policies are more fully described in
Note 2 to the consolidated financial statements included in this
prospectus under the heading “Index to Financial Statements.” We
believe that the following accounting policies are the most
critical to assist stockholders and investors reading the
consolidated financial statements in fully understanding and
evaluating our financial condition and results of operations.
Research and development costs
Research and development costs are charged to operating expenses as
incurred. Research and development costs include, but are not
limited to, payroll and personnel expenses, laboratory supplies,
consulting costs, and allocated overhead, including rent, equipment
depreciation, and utilities.
Income taxes
The Company utilizes FASB ASC 740, “Income Taxes,” which requires
the recognition of deferred tax assets and liabilities for the
expected future tax consequences of events that have been included
in the financial statements or tax returns. Under this method,
deferred tax assets and liabilities are determined based on the
difference between the tax basis of assets and liabilities and
their financial reporting amounts based on enacted tax laws and
statutory tax rates applicable to the periods in which the
differences are expected to affect taxable income. A valuation
allowance is recorded when it is “more likely-than-not” that a
deferred tax asset will not be realized.
The Company accounts for income taxes using the liability method
whereby deferred tax asset and liability account balances are
determined based on differences between the financial reporting and
tax bases of assets and liabilities and are measured using the
enacted tax rates and laws that will be in effect when the
differences are expected to reverse. The Company provides a
valuation allowance, if necessary, to reduce deferred tax assets to
their estimated realizable value.
In evaluating the ability recover its deferred income tax assets,
the Company considers all available positive and negative evidence,
including its opening results, ongoing tax planning, and forecasts
of future taxable income on a jurisdiction-by-jurisdiction
basis. The Company generated a deferred tax asset through net
operating loss carry-forward. However, a valuation allowance of
100% has been established due to the uncertainty of the Company’s
realization of the net operating loss carry forward prior to its
expiration. In the event the Company determines that it would
be able to realize its deferred income tax assets in the
future in excess of their net recorded amount, it would make an
adjustment to the valuation allowance that would reduce the
provision for income taxes. Conversely, in the event that all
or part of the net deferred tax assets are determined not to be
realizable in the future, an adjustment to the valuation allowance
would be charged to earnings in the period such determination is
made.
Fair Value Measurements of Warrants
ASC 820 “Fair Value Measurements” defines fair value, establishes a
framework for measuring fair value in GAAP and expands disclosures
about fair value measurements. ASC 820 defines fair value as the
price that would be received to sell an asset or paid to transfer a
liability in an orderly transaction between market participants at
the measurement date. ASC 820 establishes a fair value hierarchy
that distinguishes between (1) market participant assumptions
developed based on market data obtained from independent sources
(observable inputs) and (2) an entity’s own assumptions about
market participant assumptions developed based on the best
information available in the circumstances (unobservable inputs).
The fair value hierarchy consists of three broad levels, which
gives the highest priority to unadjusted quoted prices in active
markets for identical assets or liabilities (Level 1) and the
lowest priority to unobservable inputs (Level 3).
The three levels of the fair value hierarchy under ASC 820 are
described below:
| |
●
|
Level 1 — Quoted prices (unadjusted) in active markets that are
accessible at the measurement date for assets or liabilities. The
fair value hierarchy gives the highest priority to Level 1
inputs.
|
| |
●
|
Level 2 — Directly or indirectly observable inputs as of the
reporting date through correlation with market data, including
quoted prices for similar assets and liabilities in active markets
and quoted prices in markets that are not active. Level 2 also
includes assets and liabilities that are valued using models or
other pricing methodologies that do not require significant
judgment since the input assumptions used in the models, such as
interest rates and volatility factors, are corroborated by readily
observable data from actively quoted markets for substantially the
full term of the financial instrument.
|
| |
●
|
Level 3 — Unobservable inputs that are supported by little or no
market activity and reflect the use of significant management
judgment. These values are generally determined using pricing
models for which the assumptions utilize management’s estimates of
market participant assumptions.
|
In determining the fair value of warrants, the Company utilizes
valuation techniques that maximize the use of observable inputs and
minimize the use of unobservable inputs to the extent possible as
well as considers counterparty credit risk in its assessment of
fair value.
Beneficial Conversion Features
In accordance with FASB ASC 470-20, “Debt with Conversion and Other
Options” the Company records a beneficial conversion feature
(“BCF”) related to the issuance of convertible debt or preferred
stock instruments that have conversion features at fixed rates that
are in-the-money when issued. The BCF for the convertible
instruments is recognized and measured by allocating a portion of
the proceeds equal to the intrinsic value of that feature to
additional paid-in capital. The intrinsic value is generally
calculated at the commitment date as the difference between the
conversion price and the fair value of the common stock or other
securities into which the security is convertible, multiplied by
the number of shares into which the security is convertible. If
certain other securities are issued with the convertible security,
the proceeds are allocated among the different components. The
portion of the proceeds allocated to the convertible security is
divided by the contractual number of the conversion shares to
determine the effective conversion price, which is used to measure
the BCF. The effective conversion price is used to compute the
intrinsic value. The value of the BCF is limited to the basis that
is initially allocated to the convertible security.
Results of Operations
Comparison of the years ended December 31, 2020 and
2019:
The following table summarizes our results of operation for the
years ended December 31, 2020 and 2019:
|
|
|
Year ended
December 31,
|
|
|
Change
|
|
|
Change
|
|
|
|
|
2020
|
|
|
2019
|
|
|
$
|
|
|
%
|
|
|
Operating expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and development
|
|
$ |
295,150 |
|
|
$ |
195,744 |
|
|
|
99,406 |
|
|
|
51 |
|
|
General and administrative
|
|
|
2,139,501 |
|
|
|
181,116 |
|
|
|
1,958,385 |
|
|
|
1,081 |
|
|
Loss from operations
|
|
|
(2,434,651 |
)
|
|
|
(376,860 |
)
|
|
|
|
|
|
|
|
|
|
Interest expense
|
|
|
(1,453,120 |
)
|
|
|
(469,373 |
)
|
|
|
(983,747 |
)
|
|
|
(210 |
)
|
|
Interest and other income
|
|
|
105,183 |
|
|
|
201 |
|
|
|
104,982 |
|
|
|
52,230 |
|
|
Total other expense
|
|
|
(1,347,937 |
)
|
|
|
(469,172 |
)
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
$ |
(3,783,388 |
)
|
|
$ |
(846,832 |
)
|
|
|
|
|
|
|
|
|
Research & Development expenses
We incurred approximately $295,000 and $196,000 in research
and development expenses for the years ended December 31, 2020 and
2019, respectively. The primary reason for the increase or
$99,000, or 51%, was due to higher salary expenditures and
increased consulting and drug development costs. Our research and
development expenses are expected to increase for the foreseeable
future as we continue to advance our platform and product
candidates.
General Administrative Expenses
For the years ended December 31, 2020 and 2019, we incurred
approximately $2.1 million and $181,000 in general and
administrative expenses. The increase of $2.0 million, or 1,081%,
was due to warrant expense of approximately $1,125,000, $345,000
attributable to the increased use of consultants in connection
with accounting and legal activities and $444,000 in salary
and related expenses for key personnel.
Interest Expense
Interest expense for the years ended December 31, 2020 and 2019 was
approximately $1,453,000 and $470,000, respectively. The increase
of $983,000, or 210%, in interest expense was due to the investor
notes issued in 2020 and a beneficial conversion feature recognized
on conversion of notes payable immediately prior to the Business
Combination.
Interest & Other Income
Interest income consists of interest earned on our cash &
cash equivalents and other income of $25,000 recognized in the year
ended December 31, 2020, related to a non-refundable transaction
payment made by Tenzing.
Liquidity and Capital Resources
As of December 31, 2020, we had cash and cash equivalents of
approximately $8.8 million. We expect to continue to incur
significant expenses and operating losses for the foreseeable
future as we continue our research and preclinical and clinical
development of our product candidates; expand the scope of our
current studies for our product candidates; initiate additional
preclinical, clinical or other studies for our product candidates;
change or add additional manufacturers or suppliers; seek
regulatory and marketing approvals for any of our product
candidates that successfully complete clinical studies; seek to
identify, evaluate and validate additional product candidates;
acquire or in-license other product candidates and technologies;
maintain, protect and expand our intellectual property portfolio;
attract and retain skilled personnel; and experience any delays or
encounter issues with any of the above.
Until such time as we can generate substantial product revenue, if
ever, we expect to finance our cash needs through a combination of
equity or debt financings and collaboration agreements. We do not
currently have any committed external sources of capital.
To the extent that we raise additional capital through the future
sale of equity or debt, the ownership interest of our stockholders
will be diluted, and the terms of these securities may include
liquidation or other preferences that adversely affect the rights
of our existing stockholders.
If we raise additional funds through collaboration agreements in
the future, we may have to relinquish valuable rights to our
technologies, future revenue streams or product candidates or 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 product development or future commercialization
efforts or grant rights to develop and market product candidates
that we would otherwise prefer to develop and market ourselves.
The table below sets forth selected cash flow data for the periods
presented:
|
|
|
Year Ended December 31,
|
|
|
Change
|
|
|
Change
|
|
|
|
|
2020
|
|
|
2019
|
|
|
$
|
|
|
%
|
|
|
Net cash from:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating activities
|
|
$ |
(3,725,692 |
)
|
|
$ |
(218,444 |
)
|
|
|
(3,507,248 |
)
|
|
|
(1,606 |
)
|
|
Financing activities
|
|
$ |
12,485,961 |
|
|
$ |
100,000 |
|
|
|
12,385,961 |
|
|
|
12,386 |
|
|
Net increase (decrease) in cash and cash equivalents
|
|
$ |
8,760,269 |
|
|
$ |
(118,444 |
)
|
|
|
|
|
|
|
|
|
Net Cash Used in Operating Activities
Net cash used in operating activities for the year ended
December 31, 2020 was $2.7 million, consisting primarily of a
net loss of $3.8 million and an increase in net operating
assets of $2.3 million, offset by non-cash charges of $2.4
million. Non-cash charges largely related to change in fair value
of warrant liability of $1.1 million, noncash interest expense
related to beneficial conversion feature of $962,000 and issuance
of common stock in lieu of deferred compensation of $341,000. The
increase in net operating assets was primarily due
to decreases in the deferred costs and accrued expenses and
other liabilities, offset by increases in accounts payable and
accrued interest.
Net cash used in operating activities for the year ended
December 31, 2019 was $218,000, consisting primarily of a net
loss of $847,000 and a decrease in net operating assets of
$634,000. The decrease in net operating assets was due to
increases in accounts payable, accrued interest and accrued
expenses and other liabilities.
Net Cash Provided by Financing Activities
Net cash provided by financing activities in the year ended
December 31, 2020 of $12.5 million primarily related to
proceeds of $9.4 million from the Business Combination and $3.1
million from the issuance of convertible promissory notes.
Net cash provided by financing activities in the year ended
December 31, 2019 of $100,000 related to proceeds from the issuance
of convertible promissory notes.
Off-Balance Sheet Arrangements
We did not have during the periods presented, and do not currently
have, any off-balance sheet arrangements, as defined under SEC
rules.
JOBS Act Accounting Election
As an emerging growth company under the JOBS Act, we are eligible
to take advantage of certain exemptions from various reporting
requirements that are applicable to other public companies that are
not emerging growth companies. We have elected not to opt out of
such extended transition period. Accordingly, when a standard is
issued or revised and it has different application dates for public
or private companies, we, as an emerging growth company, will adopt
the new or revised standard at the time private companies adopt the
new or revised standard, unless early adoption is permitted by the
standard, and we elect early adoption. This may make comparison of
our financial statements with another public company which is
neither an emerging growth company nor an emerging growth company
which has opted out of using the extended transition period
difficult or impossible because of the potential differences in
accounting standards used.
BUSINESS
Company Overview
We are a clinical-stage biopharmaceutical company that discovers,
develops and seeks to commercialize next-generation therapeutics
for diseases representing significant unmet medical needs and
burden to society, patients, and their families. Our current
pipeline focuses on the central nervous system, respiratory, and
metabolic diseases. We use a chemical genomics driven technology
platform and proprietary chemistry to develop new medicines. Our
pipeline currently has two drug candidates, RP5063 (Brilaroxazine)
and RP1208. Both are new chemical entities discovered in-house. We
have been granted composition of matter patents for both RP5063 and
R1208 in the United States (U.S.), Europe, and several other
countries.
Our lead drug candidate, RP5063, is ready for continued clinical
development for multiple neuropsychiatric indications. These
include schizophrenia, bipolar disorder (BD), major depressive
disorder (MDD), behavioral and psychotic symptoms, dementia or
Alzheimer’s disease (BPSD), Parkinson’s disease psychosis (PDP),
and attention deficit hyperactivity disorder (ADHD). Furthermore,
RP5063 is also ready for clinical development for two respiratory
indications — pulmonary arterial hypertension (PAH) and idiopathic
pulmonary fibrosis (IPF). The U.S. Food and Drug Administration
(FDA) has granted Orphan Drug designation to RP5063 for the
treatment of PAH in November 2016 and IPF in
April 2018.
Our primary focus is to complete the clinical development of RP5063
for the treatment of acute and maintenance schizophrenia.
Subject to the receipt of additional financing, we may also
continue the clinical development of RP5063 for the treatment of
BD, MDD, BPSD, PDP, ADHD, PAH and IPF. Moreover, subject to the
receipt of additional financing, we may also advance the
development of our second drug candidate, RP1208, for the treatment
of depression and obesity.
The development status of the Reviva product pipeline is presented
below:
Impact of COVID-19
In response to the spread of COVID-19, we have taken temporary
precautionary measures intended to help minimize the risk of the
virus to our employees and community, including temporarily
requiring employees to work remotely and suspending all
non-essential travel for our employees.
As a result of the COVID-19 pandemic, we may experience disruptions
that could adversely impact our business. The COVID-19 pandemic may
negatively affect clinical site initiation, patient recruitment and
enrollment, patient dosing, distribution of drug to clinical sites
and clinical trial monitoring for our clinical trials. The COVID-19
pandemic may also negatively affect the operations of the
third-party contract research organizations that we intend to rely
upon to assist us in conducting our clinical trials and the
contract manufacturers who manufacture our drug candidates.
We are continuing to assess the potential impact of the COVID-19
pandemic on our business and operations. For additional information
on the various risks posed by the COVID-19 pandemic, refer to the
section titled “Risk Factors” of this prospectus.
Business Combination and Domestication
On December 14, 2020, our predecessor company, formerly known
as Tenzing Acquisition Corp., a British Virgin Islands exempted
company (“Tenzing”), and Reviva Pharmaceuticals, Inc., a
Delaware corporation (together with its consolidated subsidiaries,
“Old Reviva”), consummated the transactions contemplated by the
Agreement and Plan of Merger, dated as of July 20, 2020 (as
amended, the “Merger Agreement”), by and among Tenzing, Tenzing
Merger Subsidiary Inc., a Delaware corporation and wholly-owned
subsidiary of Tenzing (“Merger Sub”), Old Reviva, and the other
parties thereto. Pursuant to the Merger Agreement, Merger Sub
merged with and into Old Reviva, with Old Reviva surviving as our
wholly owned subsidiary. We refer to this transaction as the
Business Combination. In connection with and one day prior to the
completion of the Business Combination, Tenzing re-domiciled out of
the British Virgin Islands and continued as a company incorporated
in the State of Delaware, and changed its name to Reviva
Pharmaceuticals Holdings, Inc. Prior to the completion of the
Business Combination, the Company was a shell company. Following
the Business Combination, the business of Old Reviva is the
business of the Company.
Old Reviva was incorporated in the state of Delaware on May 1,
2006 and its subsidiary, Reviva Pharmaceuticals India Pvt. Ltd.,
was incorporated on December 23, 2014. Tenzing was formed
pursuant to the laws of the British Virgin Islands on
March 20, 2018.
About RP5063
Our RP5063 drug candidate is a novel, multimodal serotonin (5HT),
dopamine (DA), and nicotinic receptors modulator. Our compound
displays a high affinity for 5HT2A/2B//7 and
DA2/3/4 receptors and a moderate affinity for nicotinic (nACh-
α4β2) receptors (Rajagopal et al., 2017). The binding affinity of
RP5063 to dopamine and serotonin sub-receptors in radioligand
binding assays is the following (Ki, nM): dopamine D2S (0.28),
D2L (0.45), D3 (3.7), and D4.4 (6.0); Serotonin
5HT1A (1.5), 5-HT2A (2.5), 5-HT2B (0.19),
5-HT2C (39), 5-HT6 (51), and 5-HT7 (2.7). RP5063
displayed moderate binding affinity to nicotine- nAChR,
α4β2 (Ki = 36.3 nM).
Radioactive and non-radioactive studies in rat and dog models show
that the gastrointestinal tract completely absorbs orally
administered RP5063-related material, with acceptable
bioavailability in rat (22%) and dog (85%) animal models. Exposure
to RP5063 increased in a dose-dependent manner. Once absorbed,
RP5063 rapidly and extensively distributes into various tissues.
Noteworthy is the brain with a brain:plasma ratio of ~3.5, despite
high plasma protein binding (>99%) characteristics. Rat and dog
hepatocytes rapidly metabolize RP5063; however, human hepatocytes
metabolize this compound slower. This finding suggests that this
compound will show a low clearance in humans. We believe the risk
of RP5063 inducing or inhibiting cytochrome P450 (CYP) at
anticipated pharmacologically relevant concentrations in humans is
low. Hepatic metabolism via the cytochrome P450s is the primary
route of elimination with CYP3A4/5, undertaking most of the
metabolism (69%), a small contribution from CYP2D6 (17%) and minor
contributions by other cytochromes including extra-hepatic CYP2J2.
Two metabolites in human plasma and urine display no
pharmacological activity. We believe there is a low risk of
inhibition and induction of human cytochromes by RP5063 at expected
plasma concentrations clinically.
A full battery of regulatory compliant toxicology and safety
pharmacology studies is complete. We believe the results from these
tests support the chronic administration of RP5063 in clinical
trials. We believe the completed safety pharmacology and toxicology
studies report several significant safety findings. These include
(1) RP5063 is neither genotoxic nor clastogenic, (2) it
does not affect the function of cardiovascular (QT interval or
blood pressure) or respiratory systems, and (3) it is not
phototoxic in the 3T3 in vitro assay.
DEVELOPMENT OF RP5063 FOR NEUROPSYCHIATRIC DISEASES
RP5063 Development for Schizophrenia
Schizophrenia is a complex, chronic, and debilitating psychiatric
syndrome. As presented in 2020, the Schizophrenia and Related
Disorders Alliance of America (“SARDAA”) estimates schizophrenia
can be found in approximately 1.1% of the world’s population,
regardless of racial, ethnic or economic background, with
approximately 3.5 million people diagnosed in the U.S. It is a
complex disease involving a mix of positive and negative symptoms,
along with mood disorder and cognitive impairment. While the
pathology of schizophrenia is not yet fully understood, scientists
implicate the dysregulation or disruption of both dopaminergic and
serotonergic functions in the development of this condition. The
dysregulation of serotonergic function in the brain also
contributes to schizoaffective disorders, such as bipolar, major
depression, and mania. Thus, the optimal treatment for
schizophrenia may not rely solely on dopamine blockade.
Hypothetically, it may also include the stabilization of both the
dopaminergic and serotonergic systems in the brain.
Current pharmacologic treatment involves antipsychotic therapy.
There are two types of antipsychotics, typical and atypical agents.
Tolerability issues (e.g., neuroleptic side effects with typical
agents; metabolic and cardiovascular problems with atypical
medications) limit compliance and the effectiveness of both classes
of medications. Hence, compliance is poor. We estimate, pursuant to
a review of multiple peer reviewed articles published between 1998
and 2015, discontinuation rates of 30 – 50% in the short-term
management of acute patients and 42 – 74% in the long-term
treatment. Also, both classes of antipsychotics fail to provide a
broad spectrum of efficacy across the various symptom classes.
Thus, we believe the optimal treatment of schizophrenia requires
new compounds with broader efficacy and better safety profiles.
We believe the majority of approved antipsychotics in the last two
decades block dopamine (D) and serotonin (5HT) receptors,
particularly D2 and 5HT2A receptors. RP5063 possesses a
potent binding and functional activity for both D2 and
5HT2A receptors. We believe these targets are critical for
treating schizophrenia besides having potent activities for D4,
5HT1A, 5HT2B and 5HT7 receptors implicated as targets for
comorbid conditions associated with schizophrenia such as negative
symptoms, mood symptoms (e.g., depression, anxiety) and cognitive
impairment. RP5063 also exerts a moderate activity for nicotinic
(nAChR, α4β2) receptor, implicated as a target for comorbid
conditions in schizophrenia depression and cognitive
impairment.
Preclinical studies define the activity, pharmacokinetic, and
safety profiles of RP5063 in animals. Rodent models of
pharmacologic-induced behaviors associated with schizophrenia have
demonstrated that RP5063 limits both psychosis and cognitive
symptoms.
We have completed a clinical Phase 1a study in healthy
subjects, a Phase 1b study in stable schizophrenia patients,
and a Phase 2 study in acute schizophrenia and schizoaffective
patients. We are currently focusing our efforts on initiating a
pivotal Phase 3 study in acute schizophrenia.
RP5063 Phase 1 Clinical Study in Stable
Schizophrenia
Phase 1a and 1b studies have defined the initial clinical
experience with RP5063. The first-in-human study Phase 1a involved
a single-dose ascending study of 24 individuals. Initially, it
examined patient cohorts receiving individual doses of 10 and 15 mg
fasting, followed by a food-effect cohort (food versus fasting,
crossover), with a 15 mg dose (Figure 1a). The multiple-dose study
Phase 1b study examined multiple doses of 10, 20, 50, and 100
mg given with food over ten days in 32 randomized patients (Figure
1b). Both studies characterized the initial safety and
pharmacokinetic profiles in normal healthy volunteers (Caucasian or
Japanese men, 20 – 45 years) and stable patients with
schizophrenia (18 – 65 years, chronic, all types with Total
Positive and Negative Syndrome Scale (PANSS)
score < 90 points). RP5063 displayed a
dose-dependent Cmax at 4 to 6 h, a linear dose proportionality
for both Cmax and AUC, and a half-life between 40 and 71 h. In
the single-dose study, food slightly increased the extent of drug
absorption. In the multiple-dose study, drug concentrations
approached steady-state after 120 h (5 days) of daily dosing.
Pooled data in the single-dose study indicate that the
pharmacokinetic profile appeared to be comparable between
Caucasians and Japanese. Study data have suggested a
straightforward pharmacokinetic profile for RP5063 that we believe
supports once-daily dosing as an orally administered agent for
Phase 2 and Phase 3 evaluation.
Figure 1. RP5063 Phase 1 Clinical Studies, Pharmacokinetics in
Healthy Subjects and Stable Schizophrenia Patients
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1A. Single-dose pharmacokinetics profile
of RP5063 (15 mg) in healthy subjects
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1B. Multiple-dose pharmacokinetics
profile of RP5063 (10, 20, 50 or 100
mg/day) in stable schizophrenia patients
for 10 days
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As the multiple-dose study used patients with stable schizophrenia,
the data from this study provided an early assessment of the
pharmacodynamics behavior and activity of RP5063 in this
population. Notable were the secondary analysis to explore the
Positive and Negative Syndrome Scale (“PANSS”) observations to
evaluate the effect of RP5063 on positive symptoms and Trails A and
B tests to assess the effect on cognition. Pooled analysis of
patients’ PANSS scores ≥50 at baseline showed a statistically
significant reduction in positive symptoms subscale scores (Figure
2a). Furthermore, study analysis identified favorable trends in
reducing PANSS total scores from baseline and in the General
Psychopathology Score from baseline vs. placebo. Similarly, a
pooled analysis of Trials A and B scores from baseline to day 16
showed favorable trends in the improvement of cognition in the
RP5063 treatment groups vs. placebo.
Figure 2. RP5063 Efficacy in the Phase 1B Clinical Study in
Stable Schizophrenia Patients
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2A. A decrease in positive symptoms in stable
schizophrenia patients (PANSS positive data)
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2B. An improvement in cognition in stable
schizophrenia patients (Trails A and B data)
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● PANSS Baseline
scores for sub-analysis: > 50
● Pooled data of
RP5063 (10-100mg/day), N=19
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● PANSS Baseline
scores: 39-69
● Pooled data of
RP5063 (10-100mg/day), N=32
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The Phase 1b study in stable schizophrenia patients found that
RP5063 appears to be generally well-tolerated at doses ranging from
10 – 100 mg administered over ten days. Most adverse events were
mild and occurred at the higher doses 50mg and 100 mg. Notable was
the lack of clinically significant changes in glucose or prolactin
levels, lipid profiles, and weight or ECG findings. A
pharmacodynamic analysis of the multiple-dose Phase 1b study data
provided early insight regarding the clinical activity of RP5063
relevant to psychosis, along with mood and cognitive comorbidities,
in patients with stable schizophrenia. Although we believe the
Phase 1b study safety and efficacy findings are encouraging, it is
important to recognize its power limitations due to the relatively
small sample size.
RP5063 Phase 2 Clinical Study in Acute
Schizophrenia
The Phase 2 clinical study involved patients with acute
exacerbations of schizophrenia or schizoaffective disorder in
evaluating the efficacy, safety, tolerability, and pharmacokinetics
of RP5063 versus placebo. This evaluation utilized a double-blind,
randomized, placebo-controlled 4-week study. Aripiprazole inclusion
in the study was purely for the assay sensitivity analysis, and not
as a comparator. Investigators randomized 234 eligible
subjects into one of five treatment groups (15, 30, 50mg RP5063,
aripiprazole 15mg, or placebo; 3:3:3:1:2, respectively).
Recruitment of male and female subjects included 22 sites in the
US, India, Philippines, Malaysia, and Moldova.
Statistical plans calculated sample sizes based on expected
differences between the target dose of RP5063 and placebo 8.3
points (standard deviation of 11.3 points, effect size = 0.735) in
the primary efficacy analysis (mean change from baseline in PANSS
Total Score). This plan projected a sample size of 180 completing
subjects (i.e., 45 subjects in each RP5063 dose group, this cohort
included 15 subjects in the aripiprazole group and 30 subjects in
the placebo group) to achieve at least an 85% power at an alpha
level of 0.05% (two-sided). This level employed a t-test statistic
for unequal group sizes, without controlling the alpha error in the
pair-wise comparisons of the treatment groups with placebo. The
statistical plan did not power the aripiprazole arm for statistical
comparisons with other arms, as evaluation of this compound only
assessed the study sensitivity; the study randomized 234 subjects
to ensure that 180 would complete.
We conducted this study in compliance with the International
Conference on Harmonization (ICH) Good Clinical Practice (GCP)
Consolidated Guidelines. The FDA approved the protocol,
investigational review boards/independent ethics committees, and
all participating subjects provided informed consent.
The primary efficacy endpoint was the change from baseline to Day
28 or End of Treatment (EOT) on PANSS Total Score. The secondary
efficacy endpoints were the change from baseline to Day 4, Day 8,
Day 15, Day 22 and Day 28 on the following items: PANSS Total,
PANSS Positive, and Negative subscales; 20% improvement in PANSS
Total Score; Improvement by at least 1 point on the Clinical Global
Impression (CGI-S); cognition by trail-making Tests A and B and the
Digit Symbol Substitution Test (DSST). Safety variables included
adverse events (A.E.), physical examinations, vital signs, body
weight, laboratory measurements (hematology, serum chemistry
including prolactin, urinalysis, and pregnancy tests), and
electrocardiograms (ECGs). The measurement of extrapyramidal
symptoms (EPS) utilized the Simpson Angus Scale (SAS), Abnormal
Involuntary Movement Scale (AIMS), and the Barnes Akathisia Rating
Scale (BARS). The Columbia-Suicide Severity Rating Scale (C-SSRS)
assessed and classified reported suicidal behavior and depression
by the Calgary Depression Scale for Schizophrenia (CDSS).
Investigators collected blood samples throughout the dosing period
and for 220 h beyond using a sparse sampling routine. Analysis of
these samples defined the population pharmacokinetics (PK) and
correlated pharmacokinetic and pharmacodynamic (PK/PD) effects.
RP5063 demonstrated a sustained decrease in the total PANSS scores
from Day 1 to 28 with statistically significant improvement within
the group for all doses of RP5063 (p=<0.001) and aripiprazole
(p=0.013), as compared with placebo (Figure 3).
Figure 3. RP5063 Efficacy in the Phase 2 Clinical Study in Acute
Schizophrenia patients, Total PANSS Scores, ITT Population (4
weeks, N = 234)
For the primary efficacy endpoint, the change in PANSS Total Score
from baseline to Day 28/EOT demonstrated a statistically
significant treatment difference from placebo for the RP5063 15-mg
and 50-mg arms (p = 0.0212 and p = 0.0167), with a statistically
significant difference versus placebo seen as early as the Day 15
assessment (mixed-effect model with repeated measures (MMRM)
analyses). The 30-mg arm did not reach statistical significance
(p=0.2733), although it was numerically superior. Investigators
attributed the lack of significance of the RP5063 30 mg dose to a
larger than normal early discontinuations (within 2-7 days)
for reasons that were not related to the medication. Aripiprazole
only showed efficacy in PANSS negative scores. PANSS subscales
scores showed greater RP5063 improvement versus placebo in the
PANSS Negative and Prosocial symptoms than the Positive symptoms
(Figure 4). Both the RP5063 15-mg and 50-mg treatment groups
displayed statistical significance from placebo as early as Day 15
for the PANSS Negative and Prosocial scales. The 50-mg treatment
group showed statistical significance at Day 28 for PANSS Positive.
All RP5063 groups were numerically superior to placebo.
Figure 4. RP5063 Phase 2 Clinical Efficacy for Acute
Schizophrenia and Major Comorbid Symptoms
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4A. Efficacy Data for Acute Schizophrenia
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4B. Efficacy Data for Negative Symptoms
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4C. Efficacy Data for Positive Symptoms
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Fig 4D. Efficacy Data for Social Functioning
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At Day 28/EOT, the frequency of a 30% improvement in total PANSS
from baseline to EOT was 41%, 26%, and 39% for the respective
RP5063 groups, versus 22% for the placebo cohort. RP5063 subjects
improved ≥2 points on the CGI-S by Day 28/EOT at twice the
frequency of those on placebo. RP5063 15-mg, 30-mg, and 50-mg
groups resulted in 46%, 37%, and 40% improvements, respectively,
versus placebo showing a 19% change. Further, relative to >1
point changes, the 15-mg, 30-mg, and 50-mg RP5063 groups produced
73%, 58%, and 72% improvements, respectively, in the CGI-S, as
compared to placebo showing 57% change. The CGI-S changes from
baseline to Day 28/EOT were statistically superior to placebo for
RP5063 15 mg and 50 mg, while the change for 30 mg was numerically
superior. Overall, RP5063 (15, 30, and 50mg) treated patients
showed between 30-46% remission of acute schizophrenia symptoms, as
compared with 22% in the placebo group (Figure 5a). As expected in
a short study in patients with acute schizophrenia, there were no
statistically significant differences in change from baseline for
cognition scores. However, there were numerical improvements in
RP5063 groups in the DSST, Trails A and Trails B scores.
Figure 5. RP5063 Phase 2 Study, Remission of Acute Schizophrenia
and Discontinuation due to Side Effects
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5A. Remission of Schizophrenia Symptoms
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5B. Discontinuation due to Side Effects
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Patients tolerated doses of RP5063 up to 50 mg with no side effect
related discontinuation in the 15 mg and 30 mg dose groups. Only
<2% of patients discontinued the treatment in the 50 mg dose
group compared to 10% of patients in the aripiprazole 15 mg group
(Figure 5b). Treatment discontinuation for any reason with 15 mg,
30 mg, and 50 mg doses of RP5063; the 15 mg dose of aripiprazole;
and placebo were 14%, 25%, 12%, 35%, and 26%, respectively.
Investigators attribute the higher discontinuation in the 30 mg
group of RP5063 to a larger than the normal number of early
discontinued patients (~10%) due to non-treatment reasons. Such
early discontinuation is not uncommon in acute schizophrenia. The
discontinuation rates with aripiprazole (35% for any reason, and
10% due to side effects) are consistent with findings in published
clinical studies. Common treatment-emergent adverse events (TEAEs)
were EPS (3%, 5%, and 9%) and akathisia (2%, 5%, and 10%), and as
expected there seemed to be a dose-related increase in TEAEs in the
15, 30, and 50 mg RP5063 treatment groups, respectively (Figure
6).
There were no clinically relevant changes from baseline in weight
or body mass index (BMI); no subject had weight gain reported as a
TEAE. This observation offered a clinically relevant finding
because weight gain has been a common side effect of
second-generation antipsychotics and identified as a key risk
factor associated with increased morbidity and mortality in
patients with schizophrenia with a major impact on compliance.
There were no clinically meaningful trends in laboratory parameters
(including glucose, cholesterol, triglycerides or thyroid hormone
T4), ECG, or vital signs. The study observed small mean decreases
from baseline in prolactin levels in all treatment groups at Day
28. There were no reports of sexual side effects (Figure 6).
Figure 6. RP5063 Side Effect Profile in the Phase 2
Clinical Study in Acute Schizophrenia (4 weeks, N=234)
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6A. CNS or Neuroleptic Side effects
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Extrapyramidal Side effects (%)
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Akathisia (%)
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6B. Endocrine Side Effects
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Change in Prolactin (mIU/L)
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Change in Thyroid T-4 (pmol/L)
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6C. Metabolic Side Effects
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Body weight Increase (%)
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Diabetes / Blood Sugar (mmol/L)
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Cholesterol (mmol/L)
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Lipids/Triglyceride (mmol/L)
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The analysis of RP5063 pharmacokinetic-pharmacodynamics
relationship (PK-PD) reflected a linear, dose-proportional increase
in exposure with dose and with no evidence of time dependency.
Noteworthy was that of RP5063 drug exposure, reflected by Cmax and
AUC. These parameters increased in direct proportion to dose
irrespective of the population studied (e.g., healthy volunteers,
patients with stable schizophrenia, patients with acute
exacerbations of schizophrenia or schizoaffective disorder). In
Phase 1 multi-dose study, drug levels approached steady-state
after 120 h (5 days) of daily dosing, with doses between 10
and 100 mg with maximum steady-state concentrations of 70.1 and 696
ng/mL and AUCs of 1361 and 12526 ng*h/mL at the 10 and 100 mg dose,
respectively.
We believe these findings offer important clinical benefits. We
believe the lack of excessive drug accumulation should translate to
a potential clinical benefit of not needing for the titration of
therapy. Such might be the case with other atypical antipsychotics
(e.g., aripiprazole). We believe the long half-life (~40-50 h)
should translate easily to a once-daily dosing schedule. We believe
this schedule is of clinical importance for the schizophrenic
patient population since medication adherence, and missing doses
with shorter half-life drugs can be a clinical issue leading to
destabilization of clinical control. Such can lead to poor
long-term functional outcomes in the treatment of schizophrenia.
With RP5063, if a patient misses a single dose or two, we believe
sufficient plasma concentrations remain for clinical control.
Furthermore, the pharmacokinetic profile of RP5063 is independent
of gender, age, ethnicity, glomerular filtration rate, smoking,
concomitant medications, geographic location of the clinical site,
and type of schizophrenia (acute or stable) patients treated. These
observations mean that clinicians may not need dose adjustments
based on the patient population (Figure 7b).
Investigators performed the PK-PD modeling correlation with actual
data using the observed and predicted PANSS demonstrating high
predictability with relatively low variability. As shown in the
graph below, both the regression line and line of identity are very
close to each other. We believe this relationship indicates that
the model is providing a very good fit (Figure 7a). The regression
line is the line when one plots and regresses the observed data
against the data predicted from the population model. The line of
identity is when there is a perfect fit of the observed and
predicted data (i.e., when each of the observed data is exactly
equal to those of the corresponding predicted data, so the slope of
the line is in exact unity). The dose-response curve showed that
the total PANSS decrease was approaching its maximum response after
a dose of approximately 15 mg. Thus, we believe RP5063 doses of 15
to 50 mg daily appear to be an effective clinical range of dosing
(Figure 7b).
Figure 7. RP5063 Phase 2 Clinical Study Pharmacokinetics and
Pharmacodynamics Correlation
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7A. Treatment PANSS vs. Predicted PANSS Scores
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7B. Predicted Dose-Response Relationship
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RP5063 Phase 3 Studies in Schizophrenia
The Phase 1 and Phase 2 clinical experience in multiple populations
(healthy volunteers, stable schizophrenia, and acute schizophrenia
and schizoaffective disorder patients) reflect the promise of
RP5063 as an addition to the treatment armamentarium of this
disease. Both healthy volunteers and patients tolerated RP5063 well
in both Phase 1 and 2 studies. It did not produce any
cardiometabolic, cardiovascular, prolactin, or neurologic effects,
which would complicate current treatments. Investigators observed
the early activity in Phase 1 after 10-days of dosing in
stable patients and we believe that results from the Phase 2
trial may support the NDA for RP5063, as RP5063 demonstrated
significance versus placebo in Total PANSS Score at Day 28 as
compared to baseline. The pharmacokinetics proved to be highly
predictable and consistent between Phase 1 and 2 studies,
participant type (healthy volunteer, patient), and racial
characteristics (Caucasian, Black, Indian, and Japanese).
Analyses showed substantive and relatively rapid oral absorption,
linear, dose-proportional increases in Cmax and AUC, lack of undue
accumulation, and a relatively long terminal half-life over 40
hours. We believe these findings translate to a straightforward
once-daily dosing regimen with no need for titration or adjustments
for the type of patient. These characteristics set the stage for
further evaluation in Phase 3.
As part of the Phase 3 development plan, we had a successful
end of Phase 2 (EOP2) meeting with the FDA in 2013. In the
EOP2 meeting, we presented the Phase 2 schizophrenia study
results, discussed the Phase 3 development plans, and sought
guidance from the FDA concerning a “Superior Safety Label Claim” to
RP5063 for the treatment of schizophrenia. We received a favorable
response from the FDA, as the agency agreed to consider granting
RP5063 a “Superior Safety Label Claim” for the treatment of
schizophrenia if there is a positive outcome on a relevant endpoint
in a pivotal Phase 3 study in schizophrenia. Further to
support the “Superior Safety Label Claim” for RP5063, the FDA
agreed to waive the requirement to conduct a drug interaction
clinical study with CYP2D6 inhibitors in Phase 3 development.
We have accordingly planned Phase 3 development of RP5063 for
acute and maintenance schizophrenia. We have completed the required
regulatory compliant non-clinical studies. These include safety
pharmacology studies, toxicology studies, and chemistry,
manufacturing, and controls (CMC) development for initiating
pivotal Phase 3 studies. Furthermore, the FDA has reviewed the
results of these non-clinical studies and the Phase 3 protocols. We
are currently focusing our efforts on initiating a pivotal Phase 3
study in acute schizophrenia.
RP5063 Clinical Development for Bipolar Disorder (BD) and Major
Depressive Disorder (MDD)
Like schizophrenia, BD and MDD are major neuropsychiatric diseases.
These neuropsychiatric diseases exhibit distinct symptoms yet share
varying degrees of overlapping conditions that include psychosis,
depression, and cognitive impairments. BD, a medical illness with
substantial morbidity and mortality, involves episodic, recurrent
mania or hypomania, and major depression. An article published in
2018 in the journal Therapeutic Advances in Psychopharmacology
estimated that the global prevalence of bipolar spectrum disorders
is approximately 2.4%, with approximately 0.6% for bipolar I and
approximately 0.4% for bipolar II. The same journal article
indicates prevalence of bipolar I in the U.S. has been found to be
1%, slightly higher than in other countries. Similarly, MDD is a
common, chronic, recurrent, and debilitating psychiatric condition,
leading to significant impairments in personal functional
capacities. The National Institute of Mental Health (NIMH)
estimated the prevalence of MDD among U.S. adults aged 18 or older
at 17.3 million in 2017. NIMH also indicated the prevalence
was higher among females (8.7%) compared to males (5.3%).
The clinical community also uses the antipsychotic drugs (e.g.,
olanzapine, risperidone, quetiapine, and aripiprazole) for the
treatment of BD and/or MDD. We believe a majority of these
antipsychotics display pharmacological activities for dopamine
(D) and serotonin (5HT) receptors. The majority are selective
for D2 and 5HT2A receptors, and may also be active for
one or more of D4, 5HT1A, 5HT2B, and 5HT7 receptors. RP5063
exhibits potent activity for D2 and 5HT2A receptors, and
each of D4, 5HT1A, 5HT2B, and 5HT7 receptors are implicated as
pharmacological targets for depression and cognitive impairment
conditions.
Subject to the receipt of additional financing, we may proceed with
Phase 2 studies for RP5063 in BD and MDD.
RP5063 Clinical Development for Psychosis and Behavioral
Symptoms in Alzheimer’s Disease (BPSD), Parkinson’s
Disease Psychosis (PDP) and Attention Deficit Hyperactivity
Disorder (ADHD)
Patients with Alzheimer’s disease (AD) manifest not only
progressive memory impairment, cognitive deficits, and functional
alterations but also a variety of neuropsychiatric symptoms
(agitation, aggression, hallucinations, and delusions). An article
published in 2002 in the journal Archives of General Psychiatry
(now JAMA Psychiatry) states these symptoms ultimately affect up to
75% of individuals with dementia and, once present, sustain, or
recur. Similarly, patients with Parkinson’s disease also suffer
from neuropsychiatric symptoms. There are very limited
pharmacological treatment options for managing psychotic and
behavioral symptoms in Alzheimer’s and Parkinson’s diseases.
Without an approved drug, clinicians often manage the psychosis and
behavioral symptoms in Alzheimer’s disease with antipsychotics
(e.g., quetiapine and olanzapine). Primavanserin (Nuplazid), a
serotonin 5HT2A inverse agonist, is the only FDA approved
treatment for the treatment of hallucinations and delusions
associated with Parkinson’s disease psychosis. However, clinicians
do use some antipsychotics (e.g., quetiapine, and olanzapine) as an
off-label treatment.
ADHD is a common developmental disorder in children and often
continues into adulthood. The prevalence of ADHD in children is
5-12% worldwide, according to an article published in 2016 in the
Journal of Advanced Pharmaceutical Technology & Research.
ADHD has a high rate of comorbid psychiatric disorders.
Subject to the receipt of additional financing, we may also
continue the clinical development of RP5063 for the treatment of
BPSD, PDP, and ADHD.
DEVELOPMENT OF RP5063 FOR RESPIRATORY DISEASES
Development of RP5063 for Pulmonary Arterial Hypertension
(PAH)
PAH is a progressive, debilitating condition characterized by
pulmonary vascular resistance leading to right ventricular failure
and death. According to an article published in 2016 in the journal
The Lancet Respiratory Medicine, the global prevalence of PAH is
estimated at 6.6 – 26.0 cases per million with 1.1 – 7.6 incidences
per million adults per year. The same article indicates PAH is
frequently diagnosed in older patients, particularly those
65 years and older. As presented in 2020, the National
Organization for Rare Disorders (“NORD”) estimates PAH occurs 3 – 5
times more frequently in females than in males, and it tends to
affect females between the ages of 30 and 60. Pursuant to a study
published in 2012 post-diagnosis of PAH, survival rates are
approximately 1 year in 85%, 3 years in 68%, and 5 years in 57% of
patients, respectively (Benza RL et al, CHEST 2012,
142(2):448-456).
PAH occurs when the pulmonary arteries have narrowed, thickened, or
become blocked due to the constricting and remodeling of the
pulmonary vasculature. Endothelial dysfunction occurs early in the
disease pathogenesis. Such pathology leads to the proliferation of
the endothelium and smooth muscle tissue, the remodeling of
pulmonary arteriole walls, the impaired production of vasodilators,
and the overexpression of vasoconstrictors. Remodeling can involve
a variety of smooth muscle (e.g., hyperplasia, medial hypertrophy,
perivascular fibrosis) and other extrinsic pathologic changes
(e.g., microthrombosis, inflammatory cell infiltration,
angioproliferative plexiform lesions).
Current treatment involves influencing smooth muscle tone:
1 — decreasing the increased expression of phosphodiesterase 5
(PDE-5) inhibition (e.g., sildenafil) and increasing nitric oxide;
2 — antagonizing endothelin (e.g., bosentan); and 3 — providing
exogenous prostacyclins (e.g., epoprostenol, iloprost,
treprostinil) to address the reduced production of prostaglandin
I2. Such treatments can reduce symptoms, improve the performance of
activities of daily living, delay disease progression, and improve
survival somewhat (e.g., epoprostenol). However, they fail to stem
the ongoing cytoproliferative processes that significantly modify
the pulmonary vascular structure and lead to progressive disease
and/or the need for lung transplantation.
Serotonin (5-hydroxytryptamine; 5HT) plays a role in both the
proliferative and functional components of the pathogenesis of PAH,
which involve a variety of contributing factors, including
inflammatory cytokines and chemokines. Pulmonary arteries express
several 5HT receptors, including the 5HT2A, 5HT2B, and 5HT7. The
presence of 5HT in the pulmonary circulation activates vascular
smooth muscle (VSM), 5HT2A and 5HT2B receptors, and SERT
to cause constriction, the proliferation of pulmonary vascular
smooth muscle cells, and fibroblast proliferation. Coupled with
stimulating of the transforming growth factor β pathway, the
5HT pathway facilitates cell proliferation and vascular remodeling.
These changes lead to the thickening of the medial layer. These
accompany the narrowing and the remodeling of the pulmonary artery.
Together these define the characteristics of PAH.
RP5063 is a novel candidate for the management of PAH. As a potent
antagonist of the 5-HT receptor, it possesses a high binding
affinity for several relevant targets associated with PAH. These
include 5HT2A (2.5 nM), 5HT2B (0.19 nM), and
5HT7 (2.7 nM), as well as a moderate affinity for SERT (107
nM) in preclinical models.
RP5063 Preclinical Development for PAH
In November 2016, the FDA granted RP5063 Orphan Designation
Status for clinical investigation in PAH. The agency based its
decision on encouraging preclinical results with RP5063 in PAH,
including disease-modifying antiproliferative effects. Two studies
using the monocrotaline (MCT) and Sugen hypoxia (Su-Hx) models
evaluated the effectiveness of RP5063 as monotherapy. Further, an
additional study with the MCT model assessed this compound’s
effectiveness as an adjunct with several other standard treatments
for PAH.
The monotherapy MCT-induced model involved a 28-day treatment on
single-agent RP5063. On Day 0, adult male Wistar–Kyoto rats,
randomized into five groups of 10 animals, received a single
intravenous 60-mg/kg MCT dose. Subsequently, on Days 0 to 27, the
rats were gavaged twice daily (BID) with vehicle (MCT+Veh; 5%
glucose solution), RP5063 (1, 3, or 10 mg/kg), or sildenafil (50
mg/kg). On Day 28, during terminal surgery, investigators obtained
blood samples, hemodynamic readings, and harvested tissues.
In this study, RP5063 produced significant functional and
structural changes, as compared with those in the MCT+Veh group.
Functionally, RP5063 displayed healthier pulmonary hemodynamic
parameters, translating to reduced right ventricle (R.V.)
hypertrophy and suggesting greater pulmonary vascular elasticity.
This activity led to improved respiratory resistance and hemoglobin
oxygen saturation, as compared with PAH animals without treatment.
Structurally, RP5063 appeared to prevent the remodeling of the
smooth muscle cells in the pulmonary vasculature. The 10 mg dose
prevented vascular intimal thickening (endothelial and smooth
muscle hyperplasia, and the multiplication of vascular smooth
muscle cells) in the smaller vessels, mostly non-muscular in
healthy animals. In exploring the cytokine response, the study
found that all doses of RP5063 produced lower levels of tumor
necrosis factor (TNF) α and interleukin (IL) β, and
facilitated a significant reduction of IL-6 (p<0.05). These
observations suggest an antiproliferative capacity.
In the SuHx-induced PAH study, investigators gave RP5063 treatment
for 21 days. On Day 0, 4 groups of adult male Wistar–Kyoto
rats received a subcutaneous injection of Sugen 5416 (20 mg/kg).
Investigators kept them at FiO2 of 10% (Days 0 – 21) and 21%
(Days 22 – 35). During the treatment period starting at Day 14,
rats were gavaged twice daily (BID) with vehicle (SuHx+Veh; 5%
glucose solution), RP5063 (10 or 20 mg/kg; RP-10 and RP-20,
respectively), or sildenafil 50 mg) on Days 14 to 35. On Day 35,
during terminal surgery, investigators obtained blood samples,
hemodynamic readings, and harvested tissues.
Both doses of RP5063 and sildenafil produced a significant effect
on functional and structural parameters, as compared with the
induced group treated with vehicle (SuHx+Veh). Functionally, RP5063
improved pulmonary hemodynamics and respiratory function, resulting
in higher oxygen saturation, as compared to non-treated,
Sugen-induced animals. Structurally, RP5063 decreased small-vessel
wall thickness and the percentage of muscular vessels. Most
significantly, RP5063 limited arterial obliteration and prevented
the formation of plexiform lesions. These observations suggest that
the compound might exert antiproliferative effects and,
potentially, a disease-modifying capacity. Concerning the cytokine
effect, both RP5063 dose groups reflect lower levels of
leukotriene-B4 at Days 21, 28, and 35.
Considering the initial observations with RP5063 as a single-agent
treatment in both the MCT and SuHx models in rats, we undertook an
additional MCT study with this compound to evaluate its role as
adjunctive therapy to standard PAH treatments (Bhat et al., 2018).
In the same MCT model as previously described, investigators
examined RP5063 as monotherapy and as an adjunct to current
standards of PAH care (bosentan, sildenafil, treprostinil).
As a single agent, RP5063 produced functional and structural
effects seen in the MCT+Veh group and was consistent with those
seen in the initial monotherapy MCT study. Furthermore, these
effects were like (and in some cases, better than) the standard
treatments. As an adjunct to all treatments, RP5063 significantly
(p<0.05) lowered mean and systolic pulmonary artery pressures
and R.V. systolic pressure, and improved oxygen saturation, as
compared with the untreated, induced animals. The combination of
RP5063 and sildenafil displayed the most consistent and robust
effects. The most notable was on pulmonary hemodynamics,
respiratory parameters, and histopathologic changes.
Figure 8. Effect of RP5063 Treatment in MCT (8A) and
Sugen-Hypoxia (8B) Induced PAH in Rats
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8A. Treatment Effects on PAH
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8B. Treatment Effects on Lung Vascular Structure
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RP5063 Clinical Development for PAH
In November 2016, the FDA granted Orphan Drug Designation to
RP5063 for the treatment of PAH. We had a pre-IND meeting with the
FDA, in which we presented RP5063 preclinical development data
including efficacy results for PAH in rodent models, the data of
regulatory compliant non-clinical studies (e.g., safety
pharmacology studies, toxicology studies, and Chemistry,
Manufacturing, and Controls (CMC) development), and the data of
clinical Phase 1 studies. We discussed the Phase 2 clinical
development plan with FDA and sought the agency’s guidance for our
clinical development plan for a “Disease Modifying Label Claim”
based on the positive specific clinical outcome. Pursuant to the
agency’s guidance, we designed our clinical development plan to
meet the Disease Modifying Label Claim.
Subject to the receipt of additional financing, we may also develop
the clinical protocols and proceed with a Phase 2 clinical
trial for RP5063 in PAH.
Development of RP5063 for Idiopathic Pulmonary Fibrosis
(IPF)
IPF is a chronic, progressive, and debilitating lung disease. In
2019, Medscape reported the worldwide prevalence of IPF is
estimated at 20 cases per 100,000 persons for males and 13 cases
per 100,000 persons for females. Medscape also reported that in the
U.S., the prevalence among individuals aged 50 years or older
ranges from 27.9 to 63 cases per 100,000. Medscape also reported,
for patients suffering from IPF, the estimated mean survival is
2-5 years from the time of diagnosis and that mortality rates
are estimated at 64.3 deaths per million in men and 58.4 deaths per
million in women.
IPF involves chronic inflammation and progressive fibrosis of the
alveoli. This pathology leads to destroyed lung architecture,
reduced lung capacity, impaired oxygenation, and a decline in lung
function.
Treatment involves early referral for lung transplantation,
palliative care, and clinical trials. Limitations exist with
various interventions, including commonly used agents (e.g.,
corticosteroids and immunosuppressants), and current guidelines do
not support them. Clinical studies of two Food and Drug
Administration approved treatments — Nintedanib (Ofev), and
Pirfenidone (Esbriet) — have not demonstrated significant relief to
functional decline and disease progression (Maher & Strek,
Respiratory Research (2019)). Hence, we believe survival continues
as an unmet need.
Various studies have implicated 5HT in the pathophysiology of IPF.
It exerts a vasoactive effect on pulmonary arteries and stimulates
lung myofibroblast actions. Pulmonary 5HT appears to mediate
effects through 5-HT2A/2B/7 receptors.
RP5063 may be a new candidate for the management of IPF. As a
potent antagonist of the 5HT receptor, it possesses a high binding
affinity for several relevant targets associated with IPF. These
include 5HT2A (2.5 nM), 5HT2B (0.19 nM), and
5HT7 (2.7 nM), as well as a moderate affinity for SERT (107
nM) in preclinical models.
RP5063 Preclinical Development for IPF
A bleomycin (BLM)-induced model involved a 21-day protocol using 34
Sprague Dawley rats divided into four groups- Group 1 (no
induction, vehicle control), Group 2 (induction, vehicle control),
Group 3 (induction, RP5063, 15 mg/kg, intervention at Day 1), and
Group 4 (induction, RP5063, 15 mg/kg, intervention at Day 10). On
Day 21, during terminal surgery, investigators obtained blood
samples, hemodynamic readings, harvested tissues, and
bronchoalveolar lavage fluid (BALF) samples. The histological
analysis to evaluate effects on fibrosis involved several tests.
Tissue stained with Masson’s Trichrome and visualized using a
scanner to determine the percentage of the fibrotic tissue,
reflective of excessive collagen disposition in the lung. A
colorimetric assay assessed the content of hydroxyproline, an amino
acid for fibrillar collagens, from the right lung tissue sample.
Finally, cytokine analysis of the BALF samples evaluated the
effects on Macrophage inflammatory protein 1 (MIP1), Monocyte
chemoattractant protein 1 (MCP1), Interleukin
(IL)-6, Interferon gamma-induced protein 10 (IP10) and RANTES
levels.
Compared with the bleomycin-induced vehicle group, the use of
RP5063 at Day 0 and Day 10 sustained animal survival at 90.5% and
89.5%, respectively (P<0.05). Furthermore, animals maintained
their weight with both RP5063 interventions, as compared with the
vehicle group (P<0.01). Animals in both RP5063 groups restored
cardiac output, with the Day 0 group displaying a significant
effect as compared to those treated with vehicle (P<0.01). The
Day 0 RP5063 also normalized pulse pressure.
RP5063 treatment influenced multiple functional, histological, and
cytokine parameters reflective of pulmonary fibrosis. Animals in
the RP5063 Day 0 group displayed a significant reduction in
respiratory resistance (P<0.05). Those in Day 10 group showed
improvement (P=0.10). Both RP5063 interventions produced a
significant diminution in the concentration of hydroxyproline
(P<0.05, Day 0; P<0.01, Day 10). Lung weights, which
increased in the vehicle group suggesting the presence of edema,
were significantly lower in the RP5063 Day 0 group (P<0.05).
From the BALF samples, total cell count (inflammation) was lower in
both RP5063 groups (P<0.05), as well as total protein content
(edema) in the RP5063 Day 0 group (P<0.05). Ashcroft Score from
stained lung tissue reflected a significant reduction in the lung
parenchymal fibrotic changes in the Day 0 group (P<0.001).
Concerning the percent of fibrosis areas measured with
Masson’s trichrome staining, the Day 0 RP5063 group significantly
reduced these changes (P<0.001), as compared with the vehicle
group (Figure 9B). Furthermore, the Day 0 group showed
significantly improved blood oxygen levels (P<0.05). Both groups
induced a diminution of blood lactate levels (P<0.01, Day 0;
P<0.05, Day 5). Finally, both RP5063 groups reduced
proinflammatory and fibrotic cytokines, with significant effects on
MCP-1 (P<0.05, Day 0), IP10 (P<0.01, both RP5063
interventions), and RANTES (P<0.01, both RP5063
interventions).
Figure 9. Effect of RP5063 as a Monotherapy and Co-administered
with Standard of Care Nintedanib and Pirfenidone in Bleomycin (BLM)
Induced IPF in Rats
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9A. Treatment Effects on Lung Hydroxyproline
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9B. Treatment Effects on Lung Alveoli Fibrosis
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RP5063, PO: 15mg/kg, BID
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A follow-up preclinical study utilized the same BLM-induced model
and methods. This study evaluated the effect of RP5063 (15 mg/kg
twice daily) in combination with either nintedanib or pirfenidone
(both dosed at 100 mg/kg once daily). Both nintedanib and
pirfenidone are the current standard of care for patients with IPF.
Single-agent treatment with nintedanib and pirfenidone (both dosed
at 100 mg/kg once daily) served as controls. Treatment started on
Day 7 following BLM-induction and continued until Day 20. Terminal
surgery occurred on Day 21, in which harvesting of lung tissue and
collecting of BALF occurred. Similar histological investigations
evaluated the effects of treatment on mitigating the development of
fibrosis via BLM-induction.
Figure 10. Effect of RP5063 Treatment in Bleomycin (BLM) Induced
IPF in Rats
RP5063, as an adjunct to nintedanib and pirfenidone, significantly
augmented the functional and histological effects of nintedanib and
pirfenidone, two standard treatments for IPF, as evidenced by
reduction in hydroxyproline level (Fig 9A) and fibrosis (Fig 9B) in
the lungs. The RP5063 treatment demonstrated a reduction in
respiratory resistance (P<0.05), an increase in blood
oxygenation P<0.05), and an improvement in survival rate (95%),
as compared with vehicle control (62%) (Figure 10). Furthermore,
RP5063, as an adjunct, mitigated lung fibrosis, and collagen
disposition, the hallmarks of pulmonary fibrosis, as evidenced by
the significantly (P<0.001) reduced concentration of
hydroxyproline in the lungs produced by the treatment combinations
(Figure 9A), as compared with vehicle control.
RP5063 Clinical Development for IPF
In April 2018, the FDA has granted Orphan Drug Designation to
RP5063 for the treatment of IPF. We had a pre-IND meeting with the
FDA in which we presented RP5063 preclinical development data
including efficacy results for IPF in rodent models, the data of
regulatory compliant non-clinical studies (e.g., safety
pharmacology studies, toxicology studies, and Chemistry,
Manufacturing, and Controls (CMC) development), and the data of
clinical Phase 1 studies. We have discussed the Phase 2 clinical
development plan with FDA and sought the agency’s guidance for our
clinical development plan for a “Disease Modifying Label Claim”
based on the positive specific clinical outcome. Pursuant to the
agency’s guidance, we designed our clinical development plan to
meet the Disease Modifying Label Claim.
Subject to the receipt of additional financing, we may also develop
the clinical protocols and proceed with a Phase 2 clinical
trial for RP5063 in IPF.
DEVELOPMENT OF RP1208 FOR DEPRESSION AND OBESITY
About RP1208
Our RP1208 drug candidate, a new chemical entity (NCE), is a novel
triple reuptake inhibitor (TRI) which we believe is ready to be in
IND enabling studies for depression and ready to be in animal
efficacy studies for obesity, following the receipt of adequate
additional financing. We possess a granted composition of matter
patent for RP1208 in the USA, Europe, and several other
countries.
Depression is a debilitating illness characterized by symptoms like
anhedonia, depressed mood leading to suicidal thoughts, impaired
cognitive functions, slowing of speech, and other actions. The NIMH
estimated the prevalence of MDD among U.S. adults aged 18 or older
at 17.3 million in 2017. NIMH also indicated the prevalence
was higher among females (8.7%) compared to males (5.3%). Although
there are many antidepressants in the market, an article published
in 2003 indicates clinicians believe that approximately 50 – 60% of
patients do not respond to the therapy (Fava M. Biological
Psychiatry 2003, 53:649-659), which we believe reflects an unmet
need to develop novel therapeutics to combat depression. The
persistence of anhedonia originating from a depressed dopaminergic
activity is one of the most treatment-resistant symptoms of
depression. Currently, six major classes of antidepressant drugs,
which target mainly monoamine transporters serotonin (SERT) and
norepinephrine transporters (NET), are available. Therefore, though
leaders have hypothesized that triple reuptake inhibitors (TRIs),
with their potency to block dopamine reuptake by blocking dopamine
transporter (DAT), in addition to serotonin transporter (SERT) and
norepinephrine transporter (NET) should produce higher
efficacy.
Triple reuptake inhibitor active compounds stimulate satiety and
act as an appetite suppressant. Pharmacological studies have
demonstrated that stimulated monoaminergic activity induces
profound effects on feeding behaviors and, thus, energy intake.
Furthermore, they have shown that agents that enhance synaptic
levels of norepinephrine (NE), serotonin (5HT), or dopamine (DA) by
stimulating release or reducing reuptake can decrease feeding and
weight gain.
We have conducted several in vitro and in
vivo studies on RP1208. In the radioligand binding assays,
it has shown potent binding affinities for monoamine transporters
DAT (Ki = 1.2 nM), SERT (0.8 nM), and NET (11 nM). Studies using in
vitro functional assays assessed the functional activity of RP1208
for monoamine transporters. RP1208 showed potent functional
inhibitory activities for monoamine transporters with
IC50 values <1 nM for DAT, 6.6 nM for SERT, and 2 nM for
NET. In the in vivo studies, RP1208 has shown acceptable
bioavailability of 9% (t½=2.3 h) in rat and 50% (t½=13.1 h) in dog
models. RP1208 rapidly and extensively distributes into tissues,
including the brain with a brain:plasma ratio of ~1:1 (rat),
despite high plasma protein binding (>99%).
RP1208 Preclinical Studies for Depression and Obesity.
We evaluated the antidepressant activity of RP1208 in the
tail-suspension test in the mouse model. The tail-suspension test
is a mouse behavioral test useful in the screening of potential
antidepressant drugs, and assessing other manipulations that
investigators expect to affect depression-related behaviors. Mice
are suspended by their tails with tape, in such a position that it
cannot escape or hold on to nearby surfaces. During this test,
typically six minutes in duration, the resulting escape oriented
behaviors are quantified. A tail-suspension test is a valuable tool
in drug discovery for high-throughput screening of prospective
antidepressant compounds.
The tail-suspension test in male BALB/c mice with 1, 3, 10, and
30mg/kg doses evaluated the antidepressant activity of RP1208.
Venlafaxine, an approved antipsychotic drug, 60 mg/kg, was the
positive control in the study. RP1208 has shown statistically
robust significant reduction in immobility time at 3 mg/kg (p
= <0.05), 10 mg/kg (p = <0.01), and 30 mg/kg (p = <0.001)
doses. The antidepressant activity of RP1208, as measured by
reduction in immobility time at different dose levels, was
dose-dependent with no adverse effects (Figure 11).
Subject to the receipt of additional financing, we may also advance
the development of RP1208 for depression and obesity.
Figure 11. Effect of RP1208 in Immobility Time in Male BALB/c
Mice in Tail Suspension Test
MARKET
Neuropsychiatric Diseases Schizophrenia, Bipolar Disorder (BD)
and Major Depressive Disorder (MDD)
Schizophrenia, BD, and MDD are major neuropsychiatric diseases
often chronic in nature. These neuropsychiatric diseases exhibit
distinct symptoms yet share varying degrees of overlapping
conditions that include psychosis, depression, and cognitive
impairments. Schizophrenia is a complex debilitating psychiatric
disease involving a mix of positive and negative symptoms, along
with mood disorder (e.g. depression and anxiety) and cognitive
impairment. As presented in 2020, SARDAA estimates schizophrenia
can be found in approximately 1.1% of the world’s population,
regardless of racial, ethnic or economic background, with
approximately 3.5 million people diagnosed in the U.S.
Schizophrenia imposes substantial burden on patients, their
families and overall society. Treatment and other economic costs
due to schizophrenia are enormous, estimated by SARDAA to be
between $32.5 and $65 billion annually. Antipsychotic drugs
are the first-line treatment for patients with schizophrenia.
Increasing awareness among patients and physicians in the field of
mental health, particularly schizophrenia is likely to increase the
penetration of antipsychotic drugs in the market. Currently, second
and third-generation antipsychotics capture significant market
share. Pipeline drugs undergoing clinical trials intend to block
specific subtypes of serotonin and dopamine receptors which would
help to mitigate the symptoms, and address unmet medical needs.
According to a 2017 report from Grand View Research, Inc., the
total estimated drugs market size for schizophrenia is anticipated
to reach approximately $7.9 billion by 2022 (Figure 12).
Figure 12. Global Antipsychotics Market Insights for
Schizophrenia, Bipolar Disorder (BD) and Major Depressive Disorder
(MDD)
BD, a medical illness with substantial morbidity and mortality,
involves episodic, recurrent mania or hypomania, and major
depression. An article published in 2018 in the journal Therapeutic
Advances in Psychopharmacology estimates that the global prevalence
of bipolar spectrum disorders is approximately 2.4%, with
approximately 0.6% for bipolar I and approximately 0.4% for bipolar
II. The same journal article indicates prevalence of bipolar I in
the U.S. has been found to be 1%, slightly higher than in other
countries. In recent years, the general public awareness of
the symptoms and treatment of BD is on the rise. Typically, the
treatment for BD is for a lifetime. Antipsychotic drugs are the
standard of care for patients with BD. According to a 2020 article
from Market Data Forecast, the total estimated drugs market size
for BD treatment is estimated to reach approximately
$5.4 billion by the year 2024 (Figure 12).
MDD is a common, chronic, recurrent, and debilitating psychiatric
condition, leading to significant impairments in personal
functional capacities. MDD is one of the most common mental
disorders in the United States. NIMH has estimated the prevalence
of MDD among U.S. adults aged 18 or older at 17.3 million in
2017. NIMH also indicated the prevalence was higher among females
(8.7%) compared to males (5.3%). Antipsychotic drugs are standard
of care either as a monotherapy or as an adjuvant treatment for
patients with MDD. According to a 2019 report from Allied Market
Research, the total estimated drugs market size for the treatment
of depression is estimated to reach approximately
$15.9 billion by the year 2023.
Respiratory Diseases Pulmonary Arterial Hypertension (PAH) and
Idiopathic pulmonary Fibrosis (IPF)
PAH and IPF are serious fatal lung diseases. Currently, there is no
cure for PAH and IPF diseases. PAH is a progressive, debilitating
condition characterized by pulmonary vascular resistance leading to
right ventricular failure and death. According to an article
published in 2016 in the journal The Lancet Respiratory Medicine,
the global prevalence of PAH is estimated at 6.6 – 26.0 cases per
million with 1.1 – 7.6 incidences per million adults per year. The
same article indicates PAH is frequently diagnosed in older
patients, particularly those 65 years and older. As presented
in 2020, NORD estimates PAH occurs 3 – 5 times more frequently in
females than in males, and it tends to affect females between the
ages of 30 and 60. Pursuant to a study published in 2012
post-diagnosis of PAH, survival rates are approximately 1 year in
85%, 3 years in 68%, and 5 years in 57% of patients,
respectively (Benza RL et al, CHEST 2012, 142(2):448-456). We
believe the PAH treatment market may exhibit growth as drivers
accountable for the potential market growth include a globally
growing older population coupled with causative diseases, including
interstitial lung diseases (ILD), human immunodeficiency virus
(HIV) infection, connective tissue disorders, chronic liver
diseases, sedentary lifestyle and other idiopathic conditions. The
presence of favorable government support in the U.S. such as Orphan
Drug Act (ODA) 1983 and the Rare Disease Act (RDA) of 2002 to
facilitate the development of orphan drugs with benefits including
tax incentives (reduced taxes/tax credits equal to half of the
development costs), clinical research subsidies, and improved
patent protection and marketing rights. According to a 2018 report
from Credence Research, the global PAH treatment market is
projected to reach USD 14.64 billion by 2026 (Figure 13).
Figure 13. Global Market Insights for Pulmonary Arterial
Hypertension (PAH) and Idiopathic Pulmonary Fibrosis (IPF)
IPF is a chronic, progressive, and fatal lung disease. In 2019,
Medscape reported the worldwide prevalence of IPF is estimated at
20 cases per 100,000 persons for males and 13 cases per 100,000
persons for females. Medscape also reported that in the U.S., the
prevalence among individuals aged 50 years or older ranges
from 27.9 to 63 cases per 100,000. Medscape also reported, for
patients suffering from IPF, the estimated mean survival is
2 – 5 years from the time of diagnosis and that mortality
rates are estimated at 64.3 deaths per million in men and 58.4
deaths per million in women.
IPF involves chronic inflammation and progressive fibrosis of the
alveoli. This pathology leads to destroyed lung architecture,
reduced lung capacity, impaired oxygenation, and a decline in lung
function.
Treatment involves the FDA approved drugs Nintedanib (Ofev), and
Pirfenidone (Esbriet), lung transplantation or palliative care.
According to a 2018 report from iHealthcare Analyst, the total
estimated drugs market size for IPF is anticipated to reach
approximately $5.9 billion by 2023 (Figure 13).
Competition
The pharmaceutical industry is highly competitive and characterized
by rapidly evolving technology and intense research and development
efforts. We expect to compete with companies, including major
international pharmaceutical companies, that have substantially
greater financial, research and development, and marketing and
sales capabilities, and have substantially greater experience in
undertaking preclinical and clinical testing of products, obtaining
regulatory approvals, and marketing and selling pharmaceutical
products. We will face competition based on, among other things,
product efficacy and safety, the timing and scope of regulatory
approvals, product ease of use, and price.
At the highest level, our potential competitors are any company
developing treatments for schizophrenia, PAH, IPF, BD, MDD,
BPSD, PDP, and ADHD.
There are numerous therapies currently used to treat schizophrenia
patients, including olanzapine, risperidone, quetiapine, and
aripiprazole. Such products are also often used for the treatment
of comorbid neuropsychiatric disorders, including BD, MDD, BPSD,
PDP, and ADHD. While these offer some clinical benefit, they are
associated with adverse side effects, which include neuroleptic
side effects (e.g. EPS, akathisia), metabolic side effects (e.g.
weight gain, obesity, type 2 diabetes, dyslipidemia) and endocrine
side effects (e.g. hypothyroidism, prolactin increase leading to
sexual dysfunction). Thus, we believe there is an unmet medical
need for safe and effective drugs for the treatment of
schizophrenia, and related comorbid neuropsychiatric disorders,
that could potentially address the totality of the disorders and
help patients function and feel better, with minimal side
effects.
Additionally, there are numerous therapies currently used to treat
PAH and IPF patients, including sildenafil, bosentan and
treprostinil for PAH and nintedanib and pirfenidone for IPF. While
these offer some clinical benefit, they are associated with
treating the symptoms of such diseases, and not the underlying
structural modification that causes the disease. Thus, we believe
there is an unmet medical need for safe and effective drugs for the
treatment of PAH and IPF that could potentially address the
underlying cause for the disease while also treating known comorbid
mental illness to potentially improve quality of life.
Sales and Marketing
We currently have no sales and marketing personnel. As a clinical
stage pharmaceutical company, we currently have no customers. We
intend to develop domestic and international marketing, commercial
operation, distribution, market access and reimbursement
capabilities, or collaborate with third parties that have such
infrastructure, in connection with the potential for FDA approval
for RP5063 and RP1208.
Manufacturing and Supply
We have developed and validated a good manufacturing practice
(“GMP”), process to manufacture the active pharmaceutical
ingredient (“API”) for our RP5063 drug candidate through contract
manufacturers. We have an API contract manufacturer to produce bulk
batches under GMP for our anticipated clinical studies and
anticipate entering into agreements to produce sufficient API
required prior to submitting a New Drug Application (“NDA”) filing
with the FDA. We do not own or operate manufacturing facilities for
the production of RP5063. We expect to depend on third-party
suppliers and manufacturing organizations for all of our clinical
trial quantities of raw materials and drug substance. We believe
there are readily available supplies of all raw materials necessary
for the manufacture of RP5063 and RP1208.
Employees
We have five full-time employees, and utilize consultants, clinical
research organizations and third parties to perform our
pre-clinical studies, clinical studies, manufacturing, regulatory,
administrative, and financial functions. We believe our relations
with our employees are good. We anticipate that the number of
people we employ may grow significantly as we continue to develop
our current products or if we develop new product candidates in the
future.
Intellectual Property
We strive to protect our intellectual property through a
combination of patent, copyright, trademark and trade secrets laws,
as well as through confidentiality provisions in our contracts.
We strive to protect our intellectual property that we believe is
important to our business, including our proprietary technology
platform, our product candidates, and our processes. We seek patent
protection in the U.S. and internationally for our products, their
methods of use and processes of manufacture, and any other
technology to which we have rights, where available and when
appropriate. We also rely on trade secrets that may be important to
the development of our business.
We also plan to seek trademark protection in the U.S. and outside
of the U.S. where available and when appropriate. We intend to use
these registered marks in connection with our pharmaceutical
research and development as well as our product candidates.
We are the sole owner of a patent portfolio that includes issued
patents and pending patent applications covering compositions of
matter and methods of use of our product candidates RP5063 and
RP1208, as well as related compounds. As of April 7, 2021, our
portfolio of intellectual property consists of 57 granted active
patents and 22 pending patent applications in the United States and
in 25 foreign countries.
RP5063 is our first intended commercial product. The original
RP5063 patents include composition of matter, and methods of use in
treating acute mania, autism, BD, depression, psychosis, and
schizophrenia. One RP5063 (brilaroxazine) original patent (U.S.
Patent No. 8,188,076) and its 7 divisional/continuation
patents have been granted in US. The original RP5063 patents have
also been granted in the following foreign countries: Australia,
Brazil, Canada, Germany, Spain, France, Great Britain, Hong
Kong, Israel, India, Italy, Japan, S. Korea,
Liechtenstein, Mexico, Russia, and Slovakia; and pending in China,
Columbia, Hong Kong, and Thailand. We believe that our patent
portfolio provides good protection of RP5063. All of the US and
foreign original RP5063 granted patents and pending patent
applications will expire or are expected to expire in 2030, if a
patent term extension is not obtained. If and when RP5063 receives
regulatory approval, we intend to apply for patent term extensions
on patents covering RP5063 in any jurisdiction where patent term
extension is available. For example, the expiration date of the
first US original RP5063 may be extendable up to 2035.
We also own additional RP5063 granted patents and pending patent
applications for additional indications such as attention
hyperactivity disorder (U.S. Patent No.9,907,803, which will expire
in 2036), pulmonary arterial hypertension (U.S. Patent
No.10,441,590, Japanese Patent No. 6787926, and pending
applications in China, Hong Kong, and Europe; all of which will
expire or are expected to expire in 2036), Alzheimer’s Disease
(pending applications in China, Hong Kong, and Europe, which are
expected to expire in 2036), Parkinson’s Disease (pending
application in China and Hong Kong, which are expected to expire in
2036) and pulmonary fibrosis (pending applications in Brazil,
China, Europe, Hong Kong, Japan, and US, which are expected to
expire in 2038).
We further own three US patents (U.S. Patent Nos. 8,207,163;
8,247,420; 8,575,185; all of which will expire in 2030) directed to
composition and use of compounds related to RP5063.
We intend to continue to file patent applications to cover
additional patentable aspects of RP5063 including new indications
and to endeavor to exclude competitors from entering the field.
RP1208 may be our second intended commercial product. The RP1208
patents include composition of matter, and methods of use in
treating depression and obesity. Three RP1208 patents have been
granted in the US. RP1208 patents have also been granted in the
following foreign countries: Australia, China, Columbia, Germany,
Spain, France, Great Britain, Hong Kong, Italy, Mexico, Malaysia,
Russia, Singapore, and South Africa; and are pending in Canada,
India, Philippine, and Thailand. We believe that our patent
portfolio provides good protection of RP1208. The first RP1208 US
patents will expire in 2033 and may be extendable up to 2038. The
other two RP1208 continuation US patents will expire in 2032. All
foreign RP1208 granted patents and pending patent applications will
expire or are expected to expire in 2032. If and when RP1208
receives regulatory approval, we intend to apply for patent term
extensions on patents covering RP1208 in any jurisdiction where
patent term extension is available.
We also own two families of US patents directed to related
compounds of RP1208 covering composition and use. The first family
consists of US Patent No. 7,989,500 and its 5 granted
continuation patents, which will expire in 2027 or 2028. The second
family consists of US Patent No. 8,604,244 and its 2 granted
continuation patents, which will expire in 2031.
In addition to patents, we also rely upon proprietary know-how
(including trade secrets) to protect our technology and maintain
and develop our competitive position. In some situations,
maintaining information such as a trade secret may be more
appropriate to protect the type of technology than filing a patent
application. We seek to protect our confidential and proprietary
information in part by confidentiality agreements, and it is our
policy generally to have our employees, consultants, scientific
advisors, outside scientific collaborators, sponsored researchers,
investors, prospective investors and contractors execute such
agreements upon the commencement of a relationship with us.
Our success will depend on 1) the ability to obtain and maintain
patent and other proprietary rights in commercially important
technology, inventions and know-how related to our business, 2) the
validity and enforceability of our patents, 3) the continued
confidentiality of our trade secrets, and 4) our ability to operate
without infringing the valid and enforceable patents and
proprietary rights of third parties. We also rely on continuing
technological innovation and potential in-licensing opportunities
to develop and maintain our proprietary position.
We cannot be certain that patents will be granted with respect to
any of our pending patent applications, nor can we be certain that
any of our existing patents will be successful in protecting our
technology. For this and more comprehensive risks related to our
intellectual property, please see “Risk Factors — Risks Related to
our Intellectual Property.”
Regulatory Matters
The FDA and other federal, state, local and foreign regulatory
agencies impose substantial requirements upon the clinical
development, approval, labeling, manufacture, marketing and
distribution of drug products. These agencies regulate, among other
things, research and development activities and the testing,
approval, manufacture, quality control, safety, effectiveness,
labeling, storage, record keeping, advertising and promotion of our
product candidates. The regulatory approval process is generally
lengthy and expensive, with no guarantee of a positive result.
Moreover, failure to comply with applicable requirements by the FDA
or other requirements may result in civil or criminal penalties,
recall or seizure of products, injunctive relief including partial
or total suspension of production, or withdrawal of a product from
the market.
The FDA regulates, among other things, the research, manufacture,
promotion and distribution of drugs in the U.S. under the Federal
Food, Drug and Cosmetic Act (“FDCA”) and other statutes and
implementing regulations. The process required by the FDA before
prescription drug product candidates may be marketed in the U.S.
generally involves the following:
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completion of extensive non-clinical laboratory tests, animal
studies and formulation studies, all performed in accordance with
the FDA’s Good Laboratory Practice regulations;
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submission to the FDA of an Investigational New Drug application
(“IND”), which must become effective before human clinical trials
may begin;
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performance of adequate and well-controlled human clinical trials
in accordance with the FDA’s regulations, including Good Clinical
Practices, to establish the safety and efficacy of the product
candidate for each proposed indication;
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submission to the FDA of an NDA for drug products, or a Biologics
License Application (“BLA”), for biologic products;
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satisfactory completion of a preapproval inspection by the FDA of
the manufacturing facilities at which the product is produced to
assess compliance with current GMP (“cGMP”) regulations; and
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the FDA’s review and approval of the NDA or BLA prior to any
commercial marketing, sale or shipment of the drug.
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The testing and approval process requires substantial time, effort
and financial resources, and we cannot be certain that any
approvals for our product candidates will be granted on a timely
basis, if at all.
Non-clinical tests include laboratory evaluations of product
chemistry, formulation and stability, as well as studies to
evaluate toxicity in animals and other animal studies. The results
of non-clinical tests, together with manufacturing information and
analytical data, are submitted as part of an IND to the FDA. Some
non-clinical testing may continue even after an IND is submitted.
The IND also includes one or more protocols for the initial
clinical trial or trials and an investigator’s brochure. An IND
automatically becomes effective 30 days after receipt by the
FDA, unless the FDA, within the 30-day time period, raises concerns
or questions relating to the proposed clinical trials as outlined
in the IND and places the clinical trial on a clinical hold. In
such cases, the IND sponsor and the FDA must resolve any
outstanding concerns or questions before any clinical trials can
begin. Clinical trial holds also may be imposed at any time before
or during studies due to safety concerns or non-compliance with
regulatory requirements. An independent Institutional Review Board
(“IRB”), at each of the clinical centers proposing to conduct the
clinical trial must review and approve the plan for any clinical
trial before it commences at that center. An IRB considers, among
other things, whether the risks to individuals participating in the
trials are minimized and are reasonable in relation to anticipated
benefits. The IRB also approves the consent form signed by the
trial participants and must monitor the study until completed.
Clinical Trials
Clinical trials involve the administration of the product candidate
to human subjects under the supervision of qualified medical
investigators according to approved protocols that detail the
objectives of the study, dosing procedures, subject selection and
exclusion criteria, and the parameters to be used to monitor
participant safety. Each protocol for a U.S. study is submitted to
the FDA as part of the IND.
Human clinical trials are typically conducted in three sequential
phases, but the phases may overlap, or be combined.
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Phase 1 clinical trials typically involve the initial
introduction of the product candidate into healthy human
volunteers. In Phase 1 clinical trials, the product candidate
is typically tested for safety, dosage tolerance, absorption,
metabolism, distribution, excretion and pharmacodynamics.
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Phase 2 clinical trials are generally conducted in a limited
patient population to gather evidence about the efficacy of the
product candidate for specific, targeted indications; to determine
dosage tolerance and optimal dosage; and to identify possible
adverse effects and safety risks. Phase 2 clinical trials, in
particular Phase 2b trials, can be undertaken to evaluate
clinical efficacy and to test for safety in an expanded patient
population at geographically dispersed clinical trial sites.
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Phase 3 clinical trials are undertaken to evaluate clinical
efficacy and to test for safety in an expanded patient population
at geographically dispersed clinical trial sites. The size of
Phase 3 clinical trials depends upon clinical and statistical
considerations for the product candidate and disease. Phase 3
clinical trials are intended to establish the overall risk-benefit
ratio of the product candidate and provide an adequate basis for
product labeling.
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Post-approval clinical trials, sometimes referred to as
Phase 4 clinical trials, may be conducted after initial
approval. These clinical trials are used to gain additional
experience from the treatment of patients in the intended
therapeutic indication, particularly for long-term safety
follow-up.
Clinical testing must satisfy the extensive regulations of the FDA.
Reports detailing the results of the clinical trials must be
submitted at least annually to the FDA and safety reports must be
submitted for serious and unexpected adverse events. Success in
early-stage clinical trials does not assure success in later-stage
clinical trials. We, or the FDA or an IRB, may suspend a clinical
trial at any time on various grounds, including a finding that the
research subjects or patients are being exposed to an unacceptable
health risk.
New Drug Applications
Assuming successful completion of the required clinical trials, the
results of product development, non-clinical studies and clinical
trials are submitted to the FDA as part of an NDA (or BLA, in the
case of a biologic product). An NDA or BLA also must contain
extensive manufacturing information, as well as proposed labeling
for the finished product. An NDA or BLA applicant must develop
information about the chemistry and physical characteristics of the
drug and finalize a process for manufacturing the product in
accordance with cGMP. The manufacturing process must be capable of
consistently producing quality product within specifications
approved by the FDA. The manufacturer must develop methods for
testing the quality, purity and potency of the final product. In
addition, appropriate packaging must be selected and tested, and
stability studies must be conducted to demonstrate that the product
does not undergo unacceptable deterioration over its shelf life.
Prior to approval, the FDA will conduct an inspection of the
manufacturing facilities to assess compliance with cGMP.
The FDA reviews all NDAs and BLAs submitted before it accepts them
for filing. The FDA may request additional information rather than
accept an NDA for filing. In this event, the NDA or BLA must be
resubmitted with the additional information and is subject to
review before the FDA accepts it for filing. After an application
is filed, the FDA may refer the NDA or BLA to an advisory committee
for review, evaluation and recommendation as to whether the
application should be approved and under what conditions. The FDA
is not bound by the recommendations of an advisory committee, but
it considers them carefully when making decisions. The FDA may deny
approval of an NDA or BLA if the applicable regulatory criteria are
not satisfied. Data obtained from clinical trials are not always
conclusive and the FDA may interpret data differently than we
interpret the same data. The FDA may issue a complete response
letter, which may require additional clinical or other data or
impose other conditions that must be met in order to secure final
approval of the NDA or BLA. If a product receives regulatory
approval, the approval may be significantly limited to specific
diseases and dosages or the indications for use may otherwise be
limited, which could restrict the commercial value of the product.
In addition, the FDA may require us to conduct Phase 4 testing
which involves clinical trials designed to further assess a drug’s
safety and effectiveness after NDA or BLA approval, and may require
surveillance programs to monitor the safety of approved products
which have been commercialized. Once issued, the FDA may withdraw
product approval if ongoing regulatory requirements are not met or
if safety or efficacy questions are raised after the product
reaches the market.
Section 505(b) NDAs
There are two types of NDAs: the Section 505(b)(1) NDA,
or full NDA, and the Section 505(b)(2) NDA. A full NDA is
submitted under Section 505(b)(1) of the FDCA, and must
contain full reports of investigations conducted by the applicant
to demonstrate the safety and effectiveness of the drug. A
Section 505(b)(2) NDA may be submitted for a drug for
which one or more of the investigations relied upon by the
applicant was not conducted by or for the applicant and for which
the applicant has no right of reference from the person by or for
whom the investigations were conducted. A
Section 505(b)(2) NDA may be submitted based in whole or
in part on published literature or on the FDA’s finding of safety
and efficacy of one or more previously approved drugs, which are
known as reference drugs. Thus, the filing of a
Section 505(b)(2) NDA may result in approval of a drug
based on fewer clinical or non-clinical studies than would be
required under a full NDA. The number and size of studies that need
to be conducted by the sponsor depends on the amount and quality of
data pertaining to the reference drug that are publicly available,
and on the similarity of and differences between the applicant’s
drug and the reference drug. In some cases, extensive,
time-consuming, and costly clinical and non-clinical studies may
still be required for approval of a
Section 505(b)(2) NDA.
Patent Protections
An applicant submitting a Section 505(b)(2) NDA must
certify to the FDA with respect to the patent status of the
reference drug upon which the applicant relies in support of
approval of its drug. With respect to every patent listed in the
FDA’s Orange Book, which is the FDA’s list of approved drug
products, as claiming the reference drug or an approved method of
use of the reference drug, the
Section 505(b)(2) applicant must certify that:
(1) there is no patent information listed in the orange book
for the reference drug; (2) the listed patent has expired;
(3) the listed patent has not expired, but will expire on a
particular date; (4) the listed patent is invalid or will not
be infringed by the manufacture, use, or sale of the product in the
Section 505(b)(2) NDA; or (5) if the patent is a use
patent, that the applicant does not seek approval for a use claimed
by the patent. If the applicant files a certification to the effect
of clause (1), (2) or (5), FDA approval of the
Section 505(b)(2) NDA may be made effective immediately
upon successful FDA review of the application, in the absence of
marketing exclusivity delays, which are discussed below. If the
applicant files a certification to the effect of clause (3), the
Section 505(b)(2) NDA approval may not be made effective
until the expiration of the relevant patent and the expiration of
any marketing exclusivity delays.
If the Section 505(b)(2) NDA applicant provides a
certification to the effect of clause (4), referred to as a
paragraph IV certification, the applicant also must send notice of
the certification to the patent owner and the holder of the NDA for
the reference drug. The filing of a patent infringement lawsuit
within 45 days of the receipt of the notification may prevent
the FDA from approving the Section 505(b)(2) NDA for
30 months from the date of the receipt of the notification
unless the court determines that a longer or shorter period is
appropriate because either party to the action failed to reasonably
cooperate in expediting the action. However, the FDA may approve
the Section 505(b)(2) NDA before the 30 months have
expired if a court decides that the patent is invalid or not
infringed, or if a court enters a settlement order or consent
decree stating the patent is invalid or not infringed.
Notwithstanding the approval of many products by the FDA pursuant
to Section 505(b)(2), over the last few years certain
brand-name pharmaceutical companies and others have objected to the
FDA’s interpretation of Section 505(b)(2). If the FDA’s
interpretation of Section 505(b)(2) is successfully
challenged in court, the FDA may be required to change its
interpretation of Section 505(b)(2) which could delay or
even prevent the FDA from approving any
Section 505(b)(2) NDA that we submit. The pharmaceutical
industry is highly competitive, and it is not uncommon for a
manufacturer of an approved product to file a citizen petition with
the FDA seeking to delay approval of, or impose additional approval
requirements for, pending competing products. If successful, such
petitions can significantly delay, or even prevent, the approval of
the new product. Moreover, even if the FDA ultimately denies such a
petition, the FDA may substantially delay approval while it
considers and responds to the petition.
Marketing Exclusivity
Market exclusivity provisions under the FDCA can delay the
submission or the approval of Section 505(b)(2) NDAs, thereby
delaying a Section 505(b)(2) product from entering the
market. The FDCA provides five-year marketing exclusivity to the
first applicant to gain approval of an NDA for a new chemical
entity (“NCE”), meaning that the FDA has not previously approved
any other drug containing the same active moiety. This exclusivity
prohibits the submission of a Section 505(b)(2) NDA for
any drug product containing the active ingredient during the
five-year exclusivity period. However, submission of a
Section 505(b)(2) NDA that certifies that a listed patent
is invalid, unenforceable, or will not be infringed, as discussed
above, is permitted after four years, but if a patent
infringement lawsuit is brought within 45 days after such
certification, FDA approval of the Section 505(b)(2) NDA
may automatically be stayed until 7½ years after the NCE
approval date. The FDCA also provides three years of marketing
exclusivity for the approval of new and supplemental NDAs for
product changes, including, among other things, new indications,
dosage forms, routes of administration or strengths of an existing
drug, or for a new use, if new clinical investigations, other than
bioavailability studies, that were conducted or sponsored by the
applicant are deemed by FDA to be essential to the approval of the
application. Five-year and three-year exclusivity will not delay
the submission or approval of another full NDA; however, as
discussed above, an applicant submitting a full NDA under
Section 505(b)(1) would be required to conduct or obtain
a right of reference to all of the non-clinical and adequate and
well-controlled clinical trials necessary to demonstrate safety and
effectiveness.
Other types of exclusivity in the United States include orphan drug
exclusivity and pediatric exclusivity. The FDA may grant orphan
drug designation to a drug intended to treat a rare disease or
condition, which is generally 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 and for which there is no
reasonable expectation that the cost of developing and making
available in the United States a drug for this type of disease or
condition will be recovered from sales in the United States for
that drug. Seven-year orphan drug exclusivity is available to a
product that has orphan drug designation and that receives the
first FDA approval for the indication for which the drug has such
designation. Orphan drug exclusivity prevents approval of another
application for the same drug for the same orphan indication, for a
period of seven years, regardless of whether the application
is a full NDA or a Section 505(b)(2) NDA, except in
limited circumstances, such as a showing of clinical superiority to
the product with orphan exclusivity. Pediatric exclusivity, if
granted, provides an additional six months to an existing
exclusivity or statutory delay in approval resulting from a patent
certification. This six-month exclusivity, which runs from the end
of other exclusivity protection or patent delay, may be granted
based on the voluntary completion of a pediatric study in
accordance with an FDA-issued “Written Request” for such a
study.
Section 505(b)(2) NDAs are similar to full NDAs filed
under Section 505(b)(1) in that they are entitled to any
of these forms of exclusivity if they meet the qualifying criteria.
They also are entitled to the patent protections described above,
based on patents that are listed in the FDA’s Orange Book in the
same manner as patents claiming drugs and uses approved for NDAs
submitted as full NDAs.
Breakthrough Therapy Designation
On July 9, 2012, the Food and Drug Administration Safety and
Innovation Act (“FDASIA”), was signed. FDASIA Section 902
provides for a new drug designation, Breakthrough Therapy. A
Breakthrough Therapy is a drug:
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intended alone or in combination with one or more other drugs to
treat a serious or life-threatening disease or condition; and
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preliminary clinical evidence indicates that the drug may
demonstrate substantial improvement over existing therapies on one
or more clinically significant endpoints, such as substantial
treatment effects observed early in clinical development.
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Fast Track Designation
A Fast Track is a designation by the FDA of an investigational drug
which:
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intended alone or in combination with one or more other drugs to
treat a serious or life-threatening disease or condition; and
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non-clinical or clinical data demonstrate the potential to address
an unmet medical need
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Fast Track is a process designed to facilitate the development and
expedite the review of drugs to treat serious conditions and fill
an unmet medical need. The benefits of a Fast Track designation
include rolling submission of portions of the NDA for the drug
candidate and eligibility for priority review of the NDA.
Additionally, more frequent meetings and written communication with
the FDA regarding the development plan and trial design for the
drug candidate are encouraged throughout the entire drug
development and review process, with the goal of having earlier
drug approval and access for patients.
Other Regulatory Requirements
Maintaining substantial compliance with appropriate federal, state
and local statutes and regulations requires the expenditure of
substantial time and financial resources. Drug manufacturers are
required to register their establishments with the FDA and certain
state agencies, and after approval, the FDA and these state
agencies conduct periodic unannounced inspections to ensure
continued compliance with ongoing regulatory requirements,
including cGMPs. In addition, after approval, some types of changes
to the approved product, such as adding new indications,
manufacturing changes and additional labeling claims, are subject
to further FDA review and approval. The FDA may require
post-approval testing and surveillance programs to monitor safety
and the effectiveness of approved products that have been
commercialized. Any drug products manufactured or distributed by us
pursuant to FDA approvals are subject to continuing regulation by
the FDA, including:
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record-keeping requirements;
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reporting of adverse experiences with the drug;
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providing the FDA with updated safety and efficacy information;
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reporting on advertisements and promotional labeling;
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drug sampling and distribution requirements; and
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complying with electronic record and signature requirements.
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In addition, the FDA strictly regulates labeling, advertising,
promotion and other types of information on products that are
placed on the market. There are numerous regulations and policies
that govern various means for disseminating information to
health-care professionals as well as consumers, including to
industry sponsored scientific and educational activities,
information provided to the media and information provided over the
Internet. Drugs may be promoted only for the approved indications
and in accordance with the provisions of the approved label.
The FDA has very broad enforcement authority and the failure to
comply with applicable regulatory requirements can result in
administrative or judicial sanctions being imposed on us or on the
manufacturers and distributors of our approved products, including
warning letters, refusals of government contracts, clinical holds,
civil penalties, injunctions, restitution and disgorgement of
profits, recall or seizure of products, total or partial suspension
of production or distribution, withdrawal of approvals, refusal to
approve pending applications, and criminal prosecution resulting in
fines and incarceration. 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 uses may be subject to significant liability. In
addition, even after regulatory approval is obtained, later
discovery of previously unknown problems with a product may result
in restrictions on the product or even complete withdrawal of the
product from the market.
Coverage and Reimbursement
Sales of our product candidates, if approved, will depend, in part,
on the extent to which such products will be covered by third-party
payors, such as government health care programs, commercial
insurance and managed healthcare organizations. These third-party
payors are increasingly limiting coverage or reducing
reimbursements for medical products and services. In addition, the
U.S. government, state legislatures and foreign governments have
continued implementing cost-containment programs, including price
controls, restrictions on reimbursement and requirements for
substitution of generic products. Third-party payors decide which
therapies they will pay for and establish reimbursement levels.
Third-party payors often rely upon Medicare coverage policy and
payment limitations in setting their own coverage and reimbursement
policies. However, decisions regarding the extent of coverage and
amount of reimbursement to be provided for any drug candidates that
we develop will be made on a payor-by-payor basis. Each payor
determines whether or not it will provide coverage for a therapy,
what amount it will pay the manufacturer for the therapy, and on
what tier of its formulary it will be placed. The position on a
payor’s list of covered drugs, or formulary, generally determines
the co-payment that a patient will need to make to obtain the
therapy and can strongly influence the adoption of such therapy by
patients and physicians. Adoption of price controls and
cost-containment measures, and adoption of more restrictive
policies in jurisdictions with existing controls and measures,
could further limit our net revenue and results. Decreases in
third-party reimbursement for our product candidates or a decision
by a third-party payor to not cover our product candidates could
reduce physician usage of our product candidates, once approved,
and have a material adverse effect on our sales, results of
operations and financial condition.
Other Healthcare Laws
Because of our current and future arrangements with healthcare
professionals, principal investigators, consultants, customers and
third-party payors, we will also be subject to healthcare
regulation and enforcement by the federal government and the states
and foreign governments in which we will conduct our business,
including our clinical research, proposed sales, marketing and
educational programs. Failure to comply with these laws, where
applicable, can result in the imposition of significant civil
penalties, criminal penalties, or both. The U.S. laws that may
affect our ability to operate, among others, include: HIPAA,
as amended by the Health Information Technology for Economic and
Clinical Health Act, which governs the conduct of certain
electronic healthcare transactions and protects the security and
privacy of protected health information; certain state laws
governing the privacy and security of health information in certain
circumstances, some of which are more stringent than HIPAA and many
of which differ from each other in significant ways and may not
have the same effect, thus complicating compliance efforts; the
federal healthcare programs’ Anti-Kickback Statute, which
prohibits, among other things, persons from knowingly and willfully
soliciting, receiving, offering or paying remuneration, directly or
indirectly, in exchange for or to induce 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 federal
healthcare programs such as the Medicare and Medicaid programs;
federal false claims laws which prohibit, among other things,
individuals or entities from knowingly presenting, or causing to be
presented, claims for payment from Medicare, Medicaid, or other
third-party payors that are false or fraudulent; federal criminal
laws that prohibit executing a scheme to defraud any healthcare
benefit program or making false statements relating to healthcare
matters; the Physician Payments Sunshine Act, which requires
manufacturers of drugs, devices, biologics, and medical supplies to
report annually to the U.S. Department of Health and Human Services
information related to payments and other transfers of value to
physicians (defined to include doctors, dentists, optometrists,
podiatrists and chiropractors) and teaching hospitals, and
ownership and investment interests held by physicians and their
immediate family members; and state law equivalents of each of the
above federal laws, such as anti-kickback and false claims laws
which may apply to items or services reimbursed by any third-party
payor, including commercial insurers.
In addition, many states have similar laws and regulations, such as
anti-kickback and false claims laws that may be broader in scope
and may apply regardless of payor, in addition to items and
services reimbursed under Medicaid and other state programs.
Additionally, to the extent that our products are sold in a foreign
country, we may be subject to similar foreign laws.
The Impact of New Legislation and Amendments to Existing
Laws
The FDCA is subject to routine legislative amendments with a broad
range of downstream effects. In addition to new legislation, such
as the FDA Reauthorization Act of 2017 or the FDASIA in 2012,
Congress introduces amendments to reauthorize drug user fees and
address emerging concerns every five years. We cannot predict
the impact of these new legislative acts and their implementing
regulations on our business. The programs established or to be
established under the legislation may have adverse effects upon us,
including increased regulation of our industry. Compliance with
such regulation may increase our costs and limit our ability to
pursue business opportunities. In addition, the FDA’s regulations,
policies and guidance are often revised or reinterpreted by the
agency or the courts in ways that may significantly affect our
business and products.
We expect that additional federal and state, as well as foreign,
healthcare reform measures will be adopted in the future, any of
which could result in reduced demand for our products or additional
pricing pressure.
Facilities
Our principal offices are located at 19925 Stevens Creek Blvd.,
Suite 100, Cupertino, California 95014. We are subject to a
one-year lease, commencing February 2020. Basic rent is $1,196
per month. This lease was renewed for an additional twelve months
beginning February 2021. The facility is used for office space
only, and we believe the facility is adequate for our foreseeable
needs. We operate primarily as a virtual company
Legal Matters
We may, from time to time, become involved in various lawsuits and
legal proceedings, which arise in the ordinary course of business.
Litigation is subject to inherent uncertainties, and an adverse
result in these or other matters may arise from time to time that
may harm our business. We are currently not aware of any such legal
proceedings or claims that may be, individually or in the
aggregate, material to us.
MANAGEMENT
The following sets forth certain information with respect to our
officers and directors.
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Name
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Age
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Position
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Laxminarayan Bhat
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56
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President Chief Executive Officer, Director
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Marc Cantillon, MD
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62
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Chief Medical Officer
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Narayan Prabhu
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49
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Chief Financial Officer
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Parag Saxena
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66
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Chairman of the Board
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Richard Margolin
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70
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Director
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Purav Patel
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38
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Director
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Les Funtleyder
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51
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Director
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Management
Laxminarayan Bhat - see description below under the
heading “Directors.”
Marc Cantillon has served as Chief Medical Officer of
Reviva Pharmaceuticals, Inc. since 2013, and previously served
as Consulting Medical Director of Reviva from 2008 to 2013.
Dr. Bhat became the Company’s Chief Medical Officer in
December 2020. From 1995 to 1997, Dr. Cantillon served as
Sr. Director at AstraZeneca plc, (NYSE: AZN), a public company
engaged in the biopharmaceuticals business. From 1997 to 1999, he
served as US Lead at Sanofi- Aventis S.A. (Nasdaq: SNY), also a
publicly-traded biopharmaceuticals company. From 2000 to 2002, he
served as Global CNS Lead Medical Affairs at Wyeth/Pfizer (NYSE:
PFE), another publicly-traded biopharmaceuticals company, and, from
2006 to 2010, served as AVP at Schering-Plough/Merck
Sharp & Dohme Corp., now Merck & Co., Inc.
(NYSE: MRK), another public company engaged in the
biopharmaceuticals business. Dr. Cantillon has over
25 years of experience in translational Proof-of-Mechanism
(POM), Proof-of-Concept (POC) and Phases 1 through IV trials and
development in multiple therapeutics areas. Dr. Cantillon
earned his MD from the Karolinska Institute of Medicine. He is
board certified by the American Board of Neurology and
Psychiatry.
Narayan Prabhu joined the Company as Chief Financial
Officer in December 2020. Since May 2019, Mr. Prabhu
served as an independent consultant providing Interim Chief
Financial Officer and Controller services. Mr. Prabhu
previously served as the Chief Financial Officer of Sony
Biotechnology Inc., a biotechnology company focused on reagents,
flow cytometry and spectral imaging from November 2014 to
April 2019. From September 2009 to October 2014,
Mr. Prabhu served as the M&A Controller at Cisco
Systems, Inc. (Nasdaq: CSCO). Mr. Prabhu is a CPA and
received his B.S. in Accounting & Finance from Indiana
University at Bloomington - Kelley School of Business and MBA from
the University of California at Berkeley - Haas School of
Business.
Directors
Laxminarayan Bhat is the founder of our company and
has served as our President, Chief Executive Officer and Director
since inception of Reviva in 2006. From 2000 to 2004, Dr. Bhat
served as research scientist at XenoPort, Inc., now a part of Arbor
Pharmaceuticals, LLC (NYSE: ABR), a public company engaged in the
pharmaceuticals business. Dr. Bhat also served as a research
scientist, from 2004 to 2006, at ARYx Therapeutics Inc, (previously
trading under OTCM: ARYX), a former public company that focused on
the development of pharmaceutical products. From 1997 to 2000, Dr.
Bhat served as a post-doctoral researcher in the Drug Discovery
Program at the Higuchi Biosciences Center, a biomedical research
center at the University of Kansas. Dr. Bhat has over 20 years’
experience in drug discovery and development. Dr. Bhat has received
a global post-doctoral training at the University of Kansas, USA,
the Georg-August-Universität, Göttingen, Germany and the Université
du Maine, France. In 1995, he was selected for the Alexander von
Humboldt fellowship, an internationally recognized award for young
scientists to pursue advanced research in Germany. Dr. Bhat
received his Ph.D. in synthetic organic chemistry from the Central
University (NEHU), India.
We believe Dr. Bhat’s history as the founder of Reviva and his
experience in drug discovery and development qualifies him to serve
on our board of directors.
Les Funtleyder has served as a
member of our Board of Directors since December 2020. Mr.
Funtleyder has served as a member of the board of directors of
Applied Therapeutics Inc. (NASDAQ: APLT), a clinical-stage
biopharmaceutical company, since June 2016 and served as its
interim Chief Financial Officer from December 2018 to April 2019.
Mr. Funtleyder has also served as a healthcare portfolio manager at
E Squared Capital Management, LLC since January 2014, a senior
external advisor with McKinsey and Co. since June 2017, and a
consulting partner at Bluecloud Health, a private equity healthcare
fund, since December 2013. Mr. Funtleyder previously served as the
director of strategic investments and communications of OPKO Health
Inc. (NASDAQ: OPK), a publicly traded healthcare company, from
April 2014 to June 2016. Mr. Funtleyder currently serves on the
board of directors of several private healthcare companies and
foundations. Mr. Funtleyder is also an adjunct professor at
Columbia University Medical Center. Mr. Funtleyder received his
B.A. from Tulane University and MPH from Columbia University
Mailman School of Public Health.
We believe Mr. Funtleyder’s extensive experience managing and
investing in the healthcare industry and his experience serving as
the CFO of another publicly-traded pharmaceutical company qualifies
him to serve on our board of directors.
Richard Margolin has served as a
member of our Board of Directors since December 2020. Since
February 2020, Dr. Margolin has served as Senior Vice President,
Translational Sciences and Clinical Development at TauC3 Biologics
Ltd., a privately held British biopharmaceutical company. Dr.
Margolin also currently serves as the Chief Medical Officer of
Eikonizo Therapeutics, Inc., a biotechnology company since January
2020, and he is the Founder and Principal Consultant of CNS
Research Solutions LLC, a consulting firm supporting the
development of novel therapeutics for CNS disorders since May 2018.
From December 2016 to April 2018, Dr. Margolin served as Executive
Director, Internal Medicine Research Unit at Pfizer, Inc. (NYSE:
PFE), a publicly-traded pharmaceutical company. From November 2013
to December 2016, Dr. Margolin served as the Vice President,
Clinical Development at CereSpir, Inc., a biotechnology company.
Previously, he held positions in two major pharmaceutical
companies, and earlier in his career he held leadership positions
in psychiatry departments of two major U.S. medical schools. Dr.
Margolin earned his AB from Harvard College and his MD from the
University of California, Irvine and received research training at
the National Institutes of Health.
We believe Dr. Margolin’s 30 years of experience in
pharmaceutical research and development qualifies him to serve on
our board of directors.
Purav Patel has served as a member of our Board of
Directors since May 2017. Mr. Patel has also been Founder and
Managing Partner of Buena Vista Fund I, a company engaged in the
business of startup investments since 2014. Mr. Patel has over 14
years of experience in business operations and scaling startups.
Mr. Patel serves on the Board of Pratham, a charitable organization
with the mission to vastly improve the quality of education for
underprivileged children and youth across India. Mr. Patel holds a
Bachelor’s Degree in Biology and Business from the University of
Texas. Mr. Patel is skilled at financial analysis, business
operations and fundraising.
We believe Mr. Patel’s 12 years of knowledge of Reviva’s
history, team, investors and product candidates qualifies him to
serve on our board of directors.
Parag Saxena served as Chairman of the board of
directors of Tenzing since 2018, and continues to serve as Charmian
of our board of directors. Mr. Saxena has extensive investment
experience in the U.S. and in the Indian subcontinent. Mr. Saxena
co-founded Vedanta Management LP (or Vedanta) and NSR Advisors in
2006, private equity investment management firms, which currently
collectively manage over $1 billion in assets. He is the Managing
Partner and Chief Executive Officer of both firms. Previously, he
was Chief Executive Officer of INVESCO Private Capital (and its
predecessor firms), a venture capital firm in the U.S. During his
23-year tenure, over 300 investments were made, including Amgen,
Costco, PictureTel, Polycom, Staples and Starbucks. Mr. Saxena led
more than 90 investments for INVESCO Private Capital (and its
predecessor firms), a third of which went on to become public
companies. These investments include Alkermes, Celgene, Genomic
Health, Indigo, Masimo, Transgenomic, Xenon Pharmaceuticals, Amber
Networks, ARM Holdings, MetroPCS, and Volterra. Mr. Saxena has
served on committees advising the Prime Minister of India on
foreign direct investments, and the Planning Commission of India on
venture capital. He was also a Director of the Indian Institute of
Technology, Bombay’s Heritage Fund as well as a Trustee of the
Bharatiya Vidya Bhavan. He is on the Advisory Board of the Center
for Advanced Studies on India at the University of Pennsylvania and
is on the Indian Advisory Council of Brown University. Mr. Saxena
was the President of TiE Tri-State (NY, CT, NJ) from 2003 to 2010.
He was also on Mayor Bloomberg’s Applied Sciences NYC Advisory
Committee. Mr. Saxena received an M.B.A. from the Wharton School of
the University of Pennsylvania. He earned a B.Tech. from the Indian
Institute of Technology, Bombay and an M.S. in Chemical Engineering
from the West Virginia College of Graduate Studies.
We believe Mr. Saxena’s deep financial, entrepreneurial and
business expertise and extensive experience as a member of the
boards and board committees of other public companies qualifies him
to serve on our board of directors.
Committees of the Board of Directors
Our board of directors has an audit committee, compensation
committee and nominating and corporate governance committee. All of
the committees comply with all applicable requirements of the
Sarbanes-Oxley Act, Nasdaq and SEC rules and regulations as
further described below. The responsibilities of each of the
committees of our board of directors is described below. Members
will serve on these committees until their resignation or until as
otherwise determined by our board of directors.
Audit Committee
The members of our audit committee are Mr. Funtleyder,
Mr. Patel and Dr. Margolin, and Mr. Funtleyder
serves as the chairperson of the audit committee. Each of the
members of our audit committee satisfies the requirements for
independence and financial literacy under the applicable
rules and regulations of the SEC and rules of Nasdaq. We
have determined that Mr. Funtleyder qualifies as an “audit
committee financial expert” as defined in the SEC rules and
satisfies the financial sophistication requirements of Nasdaq. Our
audit committee is responsible for, among other things:
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appointing (and recommending that our board of directors submit for
stockholder ratification, if applicable) compensate, retain and
oversee the work performed by the independent auditor retained for
the purpose of preparing or issuing an audit report or performing
other audit or audit-related services;
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reviewing the performance and independence of the independent
auditor;
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pre-approving all audit, review, and non-audit services (including
any internal control-related services) to be provided to us or its
subsidiaries by the independent auditor;
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discussing the scope and results of the audit with the independent
registered public accounting firm and reviewing, with management
and the independent registered public accounting firm, our interim
and year-end financial statements;
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developing procedures for employees to submit concerns anonymously
about questionable accounting or audit matters;
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reviewing our policies on and oversees risk assessment and risk
management, including enterprise risk management; and
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reviewing the adequacy and effectiveness of internal control
policies and procedures and our disclosure controls and
procedures.
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Our board of directors has adopted a written charter for the audit
committee which is available on our website.
Compensation Committee
The members of our compensation committee are Mr. Patel,
Dr. Margolin and Mr. Saxena, and Mr. Patel serves as
the chairperson of the compensation committee. Each of the members
of our compensation committee meets the requirements for
independence under the under the applicable rules and
regulations of the SEC and rules of Nasdaq. Our compensation
committee is responsible for, among other things:
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developing and reviewing compensation policies and practices
applicable to executive officers;
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determining bases for and fixing compensation levels executive
officers;
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reviewing, approving and determining compensation and benefits,
including equity awards, to directors for service on our board of
directors or any committee thereof; supervising, administering and
evaluating incentive, equity-based and our other compensatory plans
in which executive officers and key employees participate; and
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reviewing, approving and making recommendations to our board of
directors regarding incentive compensation and equity compensation
plans.
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Our board of directors has adopted a written charter for the
compensation committee which is available on our website.
Nominating and Corporate Governance Committee
The members of our nominating and corporate governance committee
are Mr.Saxena, Mr. Funtleyder and Mr. Patel, and
Mr. Saxena serves as the chairperson of the nominating and
corporate governance committee. Each of the members of the
nominating and corporate governance committee meets the
requirements for independence under the applicable rules and
regulations of the SEC and rules of Nasdaq. Our nominating and
corporate governance committee is responsible for, among other
things:
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making recommendations to our board of directors regarding, the
size of our board of directors, the composition of our board of
directors, the process for filling vacancies on our board of
directors and the tenure of our board of directors;
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making recommendations to our board of directors regarding the
criteria for our board of directors and committee membership;
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developing, reviewing and overseeing our corporate governance
practices and procedures; and
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making recommendations to our board of directors regarding
corporate governance guidelines and matters.
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Our board of directors has adopted a written charter for the
nominating and corporate governance committee which is available on
our website.
Director Independence
Our board of directors undertook a review of its composition, the
composition of its committees and the independence of each
director. Based upon information requested from and provided by
each director concerning his or her background, employment and
affiliations, including family relationships, our board of
directors has determined that Mr. Saxena, Mr. Funtleyder,
Dr. Margolin, and Mr. Patel do not have a relationship
that would interfere with the exercise of independent judgment in
carrying out the responsibilities of a director and that each of
these directors is “independent” as that term is defined under the
Rules of the Nasdaq Market and the SEC.
Code of Business Conduct and Ethics
We have adopted a written code of business conduct and ethics that
applies to our employees, officers and directors. A current copy of
the code is posted on the Corporate Governance section of our
website, which is located at http://revivapharma.com/. We intend to
disclose future amendments to certain provisions of our code of
business conduct and ethics, or waivers of such provisions
applicable to any principal executive officer, principal financial
officer, principal accounting officer or controller, or persons
performing similar functions, and our directors, on our website
identified above or in filings with the SEC.
Limitations on Liability and Indemnification of Officers and
Directors
The DGCL authorizes corporations to limit or eliminate the personal
liability of directors to corporations and their stockholders for
monetary damages for breaches of directors’ fiduciary duties,
subject to certain exceptions. Our certificate of incorporation, as
amended, includes a provision that eliminates the personal
liability of directors for monetary damages for any breach of
fiduciary duty as a director, except for liability (i) for any
breach of the director’s duty of loyalty to the Company or its
stockholders, (ii) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law,
(iii) under Section 174 of the DGCL or (iv) for any
transaction from which the director derived an improper personal
benefit. The effect of these provisions is to eliminate the rights
of the Company and its stockholders, through stockholders’
derivative suits on the Company’s behalf, to recover monetary
damages from a director for breach of fiduciary duty as a director,
including breaches resulting from grossly negligent behavior.
However, exculpation does not apply to any director if the director
has acted in bad faith, knowingly or intentionally violated the
law, authorized illegal dividends or redemptions or derived an
improper benefit from his or her actions as a director.
Our certificate of incorporation, as amended and our bylaws provide
that we must indemnify and advance expenses to directors and
officers to the fullest extent authorized by the DGCL. We are also
expressly authorized to carry directors’ and officers’ liability
insurance providing indemnification for directors, officers and
certain employees for some liabilities. We believe that these
indemnification and advancement provisions and insurance are useful
to attract and retain qualified directors and executive
officers.
The limitation of liability, indemnification and advancement
provisions in our certificate of incorporation, as amended, and our
bylaws may discourage stockholders from bringing a lawsuit against
directors for breach of their fiduciary duty. These provisions also
may have the effect of reducing the likelihood of derivative
litigation against directors and officers, even though such an
action, if successful, might otherwise benefit the Company and its
stockholders. In addition, your investment may be adversely
affected to the extent we pays the costs of settlement and damage
awards against directors and officers pursuant to these
indemnification provisions. We believe that these provisions,
liability insurance and the indemnity agreements are necessary to
attract and retain talented and experienced directors and
officers.
Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to our directors, officers and
controlling persons pursuant to the foregoing provisions, or
otherwise, we have been advised that in the opinion of the SEC such
indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable.
There is currently no pending material litigation or proceeding
involving any of our respective directors, officers or employees
for which indemnification is sought.
EXECUTIVE
COMPENSATION
As we are an emerging growth company, we have opted to comply with
the executive compensation disclosure rules applicable to
emerging growth companies. The scaled down disclosure
rules are those applicable to “smaller reporting companies,”
as such term is defined in the rules promulgated under the
Securities Act, which require compensation disclosure for our
principal executive officer and our two most highly compensated
executive officers, other than the principal executive officer,
whose total compensation for 2020 exceeded $100,000 and who were
serving as executive officers as of December 31, 2020. We
refer to these individuals as “named executive officers.” Our named
executive officers, consisting of our principal executive officer
and the next two most highly compensated executive officers, for
the year ended December 31, 2020, were:
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Laxminarayan Bhat, our Chief Executive Officer and President;
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Narayan Prabhu, our Chief Financial Officer; and
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Marc Cantillon, our Chief Medical Officer.
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2020 Summary Compensation Table
The following table presents information regarding the total
compensation awarded to, earned by, or paid to our named executive
officers during the fiscal years ended December 31, 2020
and 2019.
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Name and Principal Position
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Year
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Salary ($) (4)
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Total ($)
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Laxminarayan Bhat, PhD(1)
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2020
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247,952 |
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247,952 |
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Chief Executive Officer and President
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2019
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240,000 |
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240,000 |
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Narayan Prabhu (2)
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2020
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— |
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Chief Financial Officer
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2019
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— |
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— |
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Marc Cantillon, MD(3)
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2020
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— |
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Chief Medical Officer
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2019
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— |
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(1) Laxminarayan Bhat has served as Chief Executive Officer
and President since the formation of Old Reviva in
May 2006.
(2) Narayan Prabhu began serving as our Chief Financial
Officer on December 14, 2020. Total compensation earned by Mr.
Prabhu did not exceed $100,000 during the fiscal year ended
December 31, 2020. Executive compensation and outstanding equity
award disclosures are not provided for Mr. Prabhu because his total
compensation for the fiscal year ended December 31, 2020 did not
exceed the $100,000 reporting threshold established by SEC rules
for “smaller reporting companies.”
(3) Marc Cantillon has served as our Chief Medical Officer
since 2013. Total compensation earned by Dr. Cantillon did not
exceed $100,000 during each of the fiscal years ended
December 31, 2020 and 2019. Executive compensation and
outstanding equity award disclosures are not provided for
Dr. Cantillon because his total compensation for each of the
fiscal years ended December 31, 2020 and 2019 did not exceed
the $100,000 reporting threshold established by SEC rules for
“smaller reporting companies.”
(4) The “Salary ($)” column includes salary amounts earned but
deferred for each named executive officer during the fiscal years
ended December 31, 2020 and 2019. The total salary amounts
paid, or to be paid, in cash to Dr. Bhat during the fiscal
years ended December 31, 2020 and 2019 is approximately
$187,952 and $70,000, respectively. Pursuant to a Stock Issuance
Agreement and Release entered into as of September 24, 2020 with
Dr. Bhat, 132,506 shares of common stock of Reviva were issued to
Dr. Bhat in full satisfaction of the entire deferred salary
balance owed to Dr. Bhat.
Employment Agreements
Laxminarayan Bhat. On
December 14, 2020 we entered into a customary employment
agreement with Dr. Bhat (the “Bhat Employment Agreement”). The
Bhat Employment Agreement provides for Dr. Bhat to serve as
Chief Executive Officer reporting to our board of directors and
provides for an annual base salary of $400,000 (the “Base Salary”).
In addition, Dr. Bhat is eligible to receive an annual bonus
of up to fifty percent (50%) of his then-Base Salary (the
“Target Bonus”), subject to the satisfaction of certain subjective
or objective criteria established and approved by our compensation
committee. Pursuant to the terms of the Bhat Employment Agreement,
Dr. Bhat is eligible to receive equity awards under the
Company’s equity incentive plan. The Bhat Employment Agreement
contains customary confidentiality and assignment of inventions
provisions. In addition, we will indemnify and hold Dr. Bhat
harmless, to the maximum extent permitted under applicable law,
from and against any liabilities, costs, claims and expenses
incurred in defense of any Proceeding (as defined in the Bhat
Employment Agreement) that Dr. Bhat is made a party to.
If we terminate Dr. Bhat’s employment without Cause or
Dr. Bhat terminates his employment for Good Reason (each as
defined in the Bhat Employment Agreement), Dr. Bhat will be
entitled to receive (i) the Accrued Amounts (as defined in the
Bhat Employment Agreement), and subject to Dr. Bhat’s
execution and nonrevocation of a release of claims,
(ii) eighteen (18) months of his Base Salary plus one and
one-half times his annual Target Bonus (reduced to six
(6) months of Base Salary and one-half of his annual Target
Bonus if Dr. Bhat’s employment is terminated after the third
anniversary of the effective date of the Bhat Employment Agreement)
payable in equal installments in accordance with the Company’s
normal payroll practices, (iii) twelve (12) months of service
credit under all outstanding unvested equity incentive awards
granted during Dr. Bhat’s employment (reduced to six
(6) months of service credit if Dr. Bhat’s employment is
terminated after the third anniversary of the effective date of the
Bhat Employment Agreement) and (iv) reimbursement of COBRA
coverage for up to eighteen (18) months. If Dr. Bhat’s
employment is terminated on account of his death or Disability (as
defined in the Bhat Employment Agreement), Dr. Bhat will be
entitled to receive the Accrued Amounts and a lump sum payment
equal to eighteen (18) months Base Salary and Target Bonus. In
addition, if we terminate Dr. Bhat’s employment without Cause
or Dr. Bhat terminates his employment for Good Reason within
twelve (12) months following a Change in Control (as defined in the
Bhat Employment Agreement), Dr. Bhat will be entitled to
receive (i) the Accrued Amounts and, subject to
Dr. Bhat’s execution and nonrevocation of a release of claims,
(ii) a lump sum payment equal to 1.5 times his Base Salary and
Target Bonus for the year in which the termination occurs,
(iii) accelerated vesting of all of his outstanding equity
incentive awards and cash incentive payments and
(iv) reimbursement of COBRA coverage for up to eighteen (18)
months.
Simultaneously with the execution of the Merger Agreement,
Dr. Bhat entered into non-competition and non-solicitation
agreement (the “Non-Competition Agreement”) , which became
effective on December 14, 2020, pursuant to which
Dr. Bhat agreed not to compete with Tenzing, Reviva and their
respective affiliates during the three (3) year period
following the Closing in North America, Europe or India or in any
other markets in which Tenzing and Reviva are engaged.
Dr. Bhat also agreed that during such three (3) year
restricted period to not solicit employees or customers of such
entities. The Non-Competition Agreement also contains customary
confidential and mutual non-disparagement provisions.
Narayan Prabhu. On
December 14, 2020, an offer letter Reviva entered into with
Narayan Prabhu, dated October 19, 2020, became effective (the
“Prabhu Offer Letter”). The Prabhu Offer Letter provides for
Mr. Prabhu to serve as Chief Financial Officer reporting to
our Chief Executive Officer or our board of directors and provides
for an annual base salary of $275,000. Pursuant to the Prabhu Offer
Letter, Mr. Prabhu’s employment with the Company will be
at-will.
In addition, Mr. Prabhu is eligible for a discretionary bonus.
Pursuant to the Prabhu Offer Letter, on April 14, 2021,
Mr. Prabhu was granted options to purchase up to fifty
thousand (50,000) shares of our common stock pursuant to our 2020
Equity Incentive Plan. Pursuant to the terms of the Prabhu Offer
Letter, Mr. Prabhu is also eligible to receive, from time to
time, equity awards under our 2020 Equity Incentive Plan, or any
other equity incentive plan that we may adopt in the future, and
the terms and conditions of such awards, if any, will be determined
by our board of directors, or a committee thereof, in their
discretion.
The Prabhu Offer Letter contains customary confidentiality and
assignment of inventions provisions.
Marc Cantillon. Old Reviva entered into an
Offer Letter on December 12, 2012 with Marc Cantillon as its
Chief Medical Officer (the “2012 Offer Letter”). In
October 2015, Dr. Cantillon entered into a letter
agreement with Old Reviva pursuant to which Dr. Cantillon
agreed to a reduction in his base annual salary to $100,000.00 for
an indefinite period of time (the “2015 Reduction Letter”). In
March 2016, Dr. Cantillon entered into a letter agreement
with Old Reviva pursuant to which Dr. Cantillon agreed to a
reduction in his base annual salary to $30,000.00 for an indefinite
period of time (the “2016 Reduction Letter,” together with the 2012
Offer Letter and the 2015 Reduction Letter, the “Cantillon Offer
Letter”). The Cantillon Offer Letter was assumed by us at the
Effective Time and constitutes an at-will employment agreement.
On April 14, 2021, we entered into an Employment Letter with Dr.
Cantillon (the “2021 Employment Letter’), which superseded the 2012
Offer Letter. The 2021 Employment Letter provides for Dr. Cantillon
to continue to serve as our Chief Medical Officer reporting
to our Chief Executive Officer or our board of directors and
provides for an annual base salary of $385,000, retroactive to
December 15, 2020 (the day following the Business Combination).
Under the 2021 Employment Letter, Dr. Cantillon is eligible
for annual bonuses in the discretion of our board of directors, but
will receive a minimum bonus for 2021 equal to 30% of his 2021 base
salary. To receive any bonus, Dr. Cantillon must be employed
by the Company at the time of payment. Dr. Cantillon may also
receive, in the discretion of our board of directors, equity
awards under the Company’s 2020 Equity Incentive Plan or any other
equity incentive plan that the Company may adopt in the future. The
2021 Employment Letter also contains customary confidentiality and
assignment of inventions provisions.
Outstanding Equity Awards at Fiscal
Year-End — 2020
As of December 31, 2020, our principal executive officer did
not hold any outstanding equity awards. Executive compensation and
outstanding equity award disclosures are not provided for Mr.
Prabhu or Dr. Cantillon because each of their total
compensation for the fiscal year ended December 31, 2020 did
not exceed the $100,000 reporting threshold established by SEC
rules for “smaller reporting companies.”
Director Compensation
Prior to the Business Combination, Old Reviva did not pay any
compensation to its two non-employee directors (Purav Patel, a
current member of our board of directors, and Bradley Thompson, a
former director of Old Reviva) during the fiscal year ended
December 31, 2020. After the Business Combination, we did not
pay any compensation to the current members of our board of
directors during the fiscal year ended December 31, 2020. On
November 5, 2018, in connection with their appointments to,
and service on, the board of directors of Old Reviva, the board of
directors of Old Reviva proposed approving the grant of options to
purchase up to 100,000 shares of common stock of Old Reviva to each
of Purav Patel and Bradley Thompson, to be approved by subsequent
action of the board of directors of Old Reviva (the “Promised
Options”). On April 14, 2021, Mr. Patel was granted options to
purchase up to 15,227 shares of our common stock pursuant to our
2020 Equity Incentive Plan, in satisfaction of the obligation to
issue the Promised Options to Mr. Patel. Effective
July 19, 2020, Old Reviva issued Mr. Thompson a Former
Service Provider Warrant for 100,000 shares of common stock of Old
Reviva, in satisfaction of the obligation to issue the Promised
Options to Mr. Thompson.
Our board of directors intends to consider and adopt a director
compensation policy for its non-employee directors. Our board of
directors anticipates that such policy will include equity grants
determined by the compensation committee and reimbursement for
reasonable expenses incurred in connection with attending board and
committee meetings.
Equity Incentive Plans
2020 Equity Incentive Plan
General
On December 14, 2020, the Reviva Pharmaceuticals
Holdings, Inc. 2020 Equity Incentive Plan (the “2020 Equity
Incentive Plan”) became effective. The general purpose of the 2020
Equity Incentive Plan is to provide a means whereby employees,
officers, directors, consultants, advisors or other individual
service providers may develop a sense of proprietorship and
personal involvement in our development and financial success, and
to encourage them to devote their best efforts to us, thereby
advancing our interests and the interests of our stockholders. The
2020 Equity Incentive Plan provides for a broad array of equity
incentives and performance cash incentives. Employees, officers,
directors, consultants, advisors and our other individual service
providers who, in the opinion of our compensation committee, are in
a position to contribute to our success, or any person who is
determined by our composition committee to be a prospective
employee, officer, director, consultant, advisor or other
individual service provider of the Company or any subsidiary are
eligible for grants under the 2020 Equity Incentive Plan.
Description of the 2020 Equity Incentive Plan
The following is a summary description of the principal terms of
the 2020 Equity Incentive Plan and is qualified in its entirety by
the full text of the 2020 Equity Incentive Plan.
Available Shares. As of January 1,
2021, an aggregate of 1,384,761 shares of Common Stock may be
issued under the 2020 Equity Incentive Plan, subject to equitable
adjustment in the event of stock splits and other capital changes
(the “Share Reserve”). In addition, the Share Reserve will
automatically increase on January 1st of each year, for a
period of not more than ten years, commencing on
January 1st of the year following the year in which the
effective date of the 2020 Equity Incentive Plan occurs, and ending
on (and including) January 1, 2030, in an amount equal to the
lesser of (i) ten percent (10%) of the total number of
shares of Common Stock outstanding on December 31st of the
preceding calendar year or (ii) such number of shares of
common stock determined by the Company’s board of directors (the
“Annual Increase”). Notwithstanding the foregoing and, subject to
adjustment as provided in the 2020 Equity Incentive Plan, the
maximum number of shares which may be issued in respect of
Incentive Stock Options shall be equal to 461,587.
In applying the aggregate share limitation under the 2020 Equity
Incentive Plan, shares of Common Stock (i) subject to awards
that are forfeited, cancelled, returned to the Company for failure
to satisfy vesting requirements or otherwise forfeited, or
terminated without payment being made thereunder and (ii) that
are surrendered in payment or partial payment of taxes required to
be withheld with respect to the exercise of stock options or in
payment with respect to any other form of award are not counted
and, therefore, may be made subject to new awards under the 2020
Equity Incentive Plan.
Non-Employee Director Compensation Limit
Under the 2020 Equity Incentive Plan, the maximum number of shares
of Common Stock subject to stock awards granted under the 2020
Equity Incentive Plan during any one calendar year to any
non-employee director may not exceed a number equal to
twenty-five percent (25%) of all shares of Common Stock
available for awards under the 2020 Equity Incentive Plan shares of
Common Stock.
Eligibility. Any employee, officer,
director, consultant, advisor or other individual service provider
of the Company or any of its subsidiaries, or any person who is
determined by the compensation committee to be a prospective
employee, officer, director, consultant, advisor or other
individual service provider of the Company or any of its
subsidiaries is eligible to participate in the 2020 Equity
Incentive Plan.
Administration. The 2020 Equity
Incentive Plan will be administered by our compensation committee.
Our compensation committee will have discretion to determine the
individuals to whom awards may be granted under the 2020 Equity
Incentive Plan, the number of shares Common Stock, units or other
rights subject to each award, the type of award, the manner in
which such awards will vest, and the other conditions applicable to
awards. Our compensation committee will be authorized to interpret
the 2020 Equity Incentive Plan, to prescribe, amend and rescind any
rules and regulations relating to the 2020 Equity Incentive
Plan and to make any other determinations necessary or desirable
for the administration of the 2020 Equity Incentive Plan. All
interpretations, determinations and actions by our compensation
committee will be final, conclusive and binding on all parties.
Types of Awards. Under the 2020
Equity Incentive Plan, our compensation committee may grant
nonqualified stock options (or NSOs), ISOs, stock appreciation
rights (or SARs), restricted stock, stock units, performance
shares, performance units, other cash-based awards and other
stock-based awards. The terms of each award will be set forth in a
written agreement with the recipient.
Stock Options. Our compensation
committee will determine the exercise price and other terms for
each option and whether the options will be NSOs or ISOs. The
exercise price per share of each option will not be less than 100%
of the fair market value of the Common Stock on the date of grant
or, if there are no trades on such date, then the closing price of
a share of the Common Stock on the most recent date preceding the
date of grant on which shares of Common Stock were publicly traded
(or 110% of the fair market value per share in the case of ISOs
granted to a ten-percent or more shareholder). However, if
permissible under law and the rules of the exchange on which
the Company is listed, options to participants who are not
residents of the U.S. may be granted at a price below fair market
value on the date of grant.
ISOs may be granted only to employees and are subject to certain
other restrictions. To the extent an option intended to be an ISO
does not qualify as an ISO, it will be treated as a nonqualified
option. A participant may exercise an option by written notice and
payment of the exercise price in cash, or, as determined by our
compensation committee, through delivery of previously owned
shares, the withholding of shares deliverable upon exercise, a
cashless exercise program implemented by our compensation committee
in connection with the 2020 Equity Incentive Plan, and/or such
other method as approved by our compensation committee and set
forth in an award agreement. The maximum term of any option granted
under the 2020 Equity Incentive Plan is ten years from the
date of grant. The Compensation Committee may, in its discretion,
permit a holder of an NSO to exercise the option before it has
otherwise become exercisable, in which case the shares of the
Company’s Common Stock issued to the recipient will be restricted
stock having analogous vesting restrictions to the unvested NSO
before exercise.
No option may be exercisable for more than ten years
(five years in the case of an ISO granted to a ten-percent or
more shareholder) from the date of grant. Options granted under the
2020 Equity Incentive Plan will be exercisable at such time or
times as our compensation committee prescribes at the time of
grant. No employee may receive ISOs that first become exercisable
in any calendar year in an amount exceeding $100,000.
Unless an award agreement provides otherwise, if a participant’s
Service (as defined in the 2020 Equity Incentive Plan) terminates
(i) by reason of his or her death or Disability (as defined in
the 2020 Equity Incentive Plan), any option held by such
participant may be exercised, to the extent otherwise exercisable,
by the participant or his or her estate or personal representative,
as applicable, at any time in accordance with its terms for up to
one year after the date of such participant’s death or termination
of Service, as applicable, (ii) for Cause (as defined in the
2020 Equity Incentive Plan), any option held by such participant
will be forfeited and cancelled as of the date of termination of
Service and (iii) for any reason other than death,, Disability
or Cause, any option held by such participant may be exercised, to
the extent otherwise exercisable, up until ninety (90) days
following termination of Service.
Stock Appreciation
Rights. Our compensation committee
may grant SARs independent of or in connection with an option. Our
compensation committee will determine the other terms applicable to
SARs. The base price per share of each SAR will not be less than
100% of the closing price of a share of Common Stock on the date of
grant or, if there are no trades on such date, then the closing
price of a share of the Company’s Common Stock on the most recent
date preceding the date of grant on which shares of Common Stock
were publicly traded. The maximum term of any SAR granted under the
2020 Equity Incentive Plan will be ten years from the date of
grant. Generally, each SAR will entitle a participant upon exercise
to an amount equal to:
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the excess of the fair market value on the exercise date of one
share of our Common Stock over the base price, multiplied by
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the number of shares of Common Stock as to which the SAR is
exercised.
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Payment may be made in shares of Common Stock, in cash, or partly
in shares of Common Stock and partly in cash, all as determined by
our compensation committee.
Restricted Stock and Stock
Units. Our compensation committee
may award restricted Common Stock and/or stock units under the
2020 Equity Incentive Plan. Restricted stock awards consist of
shares of stock that are transferred to a participant subject to
restrictions that may result in forfeiture if specified conditions
are not satisfied. Stock units confer the right to receive
shares of the Company’s Common Stock, cash, or a combination of
shares and cash, at a future date upon or following the attainment
of certain conditions specified by our compensation committee,
subject to applicable tax withholding requirements. Our
compensation committee will determine the restrictions and
conditions applicable to each award of restricted stock or
stock units, which may include performance-based conditions.
Unless our compensation committee determines otherwise at the time
of grant, holders of restricted stock will have the right to vote
the shares and receive all dividends and other distributions.
Performance Shares and Performance
Units. Our compensation committee may
award performance shares and/or performance units under the
2020 Equity Incentive Plan. Performance shares and
performance units are awards, payable in shares of Common
Stock, cash or a combination thereof, which are earned during a
specified time period subject to the attainment of performance
goals, as established by our compensation committee. Our
compensation committee will determine the restrictions and
conditions applicable to each award of performance shares and
performance units.
Incentive Bonus Awards. Our
compensation committee may award incentive bonus awards payable in
cash or shares of Common Stock, as set forth in an award agreement.
Incentive bonus awards may be based upon the attainment of
specified levels of Company or subsidiary performance. The amount
of an incentive bonus award to be paid upon the attainment of each
targeted level of performance will equal a percentage of a
participant’s base salary for the fiscal year, a fixed dollar
amount or such other formula, as determined by our compensation
committee. Our compensation committee will determine the terms and
conditions applicable to each incentive bonus award.
Other Stock-Based and Cash-Based
Awards. Our compensation committee
may award other types of stock-based or cash-based awards under the
2020 Equity Incentive Plan, including the grant or offer for sale
of unrestricted shares of Common Stock, in such amounts and subject
to such terms and conditions as our compensation committee
determines.
Transferability. Awards granted
under the 2020 Equity Incentive Plan will not be transferable other
than by will or by the laws of descent and distribution, except
that our compensation committee may permit NSOs, share-settled
SARs, restricted stock, performance share or share-settled other
stock-based awards to be transferred to family members and/or for
estate planning or charitable purposes.
Change in Control. Our compensation
committee may, at the time of the grant of an award, provide for
the effect of a change in control (as defined in the 2020 Equity
Incentive Plan) on any award, including (i) accelerating or
extending the time periods for exercising, vesting in, or realizing
gain from any award, (ii) eliminating or modifying the
performance or other conditions of an award, (iii) providing
for the cash settlement of an award for an equivalent cash value,
as determined by our compensation committee, or (iv) such
other modification or adjustment to an award as our compensation
committee deems appropriate to maintain and protect the rights and
interests of participants upon or following a change in control.
Unless otherwise provided by an award agreement, our compensation
committee may, in its discretion and without the need for the
consent of any recipient of an award, also take one or more of the
following actions contingent upon the occurrence of a change in
control: (a) cause any or all outstanding options and SARs to
become immediately exercisable, in whole or in part; (b) cause
any other awards to become non-forfeitable, in whole or in part;
(c) cancel any option or SAR in exchange for a substitute
option and/or SAR; (d) cancel any award of restricted stock,
stock units, performance shares or performance units in
exchange for a similar award of the capital stock of any successor
corporation; (e) redeem any restricted stock for cash and/or
other substitute consideration with a value equal to the fair
market value of an unrestricted share of the Company’s Common Stock
on the date of the change in control; or (f) terminate any
award in exchange for an amount of cash and/or property equal to
the amount, if any, that would have been attained upon the exercise
of such award or realization of the participant’s rights as of the
date of the occurrence of the Change in Control (the “Change in
Control Consideration”); provided, however that if the Change in
Control Consideration with respect to any option or SAR does not
exceed the exercise price of such option or SAR, our compensation
committee may cancel the option or SAR without payment of any
consideration therefor. Any such Change in Control Consideration
may be subject to any escrow, indemnification and similar
obligations, contingencies and encumbrances applicable in
connection with the change in control to holders of the Company’s
Common Stock. Without limitation of the foregoing, if as of the
date of the occurrence of the change in control our compensation
committee determines that no amount would have been attained upon
the realization of the participant’s rights, then such award may be
terminated by the Company without payment. The Compensation
Committee may cause the Change in Control Consideration to be
subject to vesting conditions (whether or not the same as the
vesting conditions applicable to the award prior to the change in
control) and/or make such other modifications, adjustments or
amendments to outstanding Awards or the 2020 Equity Incentive Plan
as our compensation committee deems necessary or appropriate.
Term; Amendment and
Termination. No award may be
granted under the 2020 Equity Incentive Plan on or after the 10th
anniversary of the date of the adoption of the 2020 Equity
Incentive Plan by the Tenzing Board. The board of directors may
suspend, terminate, or amend the 2020 Equity Incentive Plan in any
respect at any time, provided, however, that (i) no amendment,
suspension or termination may materially and adversely affect the
rights of a participant under any awards previously granted,
without his or her consent, (ii) the Company shall obtain
stockholder approval of any 2020 Equity Incentive Plan amendment as
required to comply with any applicable law, regulation or stock
exchange rule and (iii) stockholder approval is required
for any amendment to the 2020 Equity Incentive Plan that
(x) increases the number of shares of Common Stock available
for issuance thereunder or (y) changes the persons or class of
persons eligible to receive awards.
Summary of Material United States Federal Income Tax
Consequences of the 2020 Equity Incentive Plan
The following is a summary of the principal federal income tax
consequences of option grants and other awards under the 2020
Equity Incentive Plan. Optionees and recipients of other rights and
awards granted under the 2020 Equity Incentive Plan are advised to
consult their personal tax advisors before exercising an option or
stock appreciation right or disposing of any stock received
pursuant to the exercise of an option or stock appreciation right
or following vesting of a restricted stock award or restricted
stock unit or upon grant of an unrestricted stock award. In
addition, the following summary is based upon an analysis of the
Code as currently in effect, existing laws, judicial decisions,
administrative rulings, regulations and proposed regulations, all
of which are subject to change and does not address state, local or
other tax laws.
Nonqualified Stock
Options. There will be no federal
income tax consequences to a participant or to the Company upon the
grant of a nonqualified stock option. When the participant
exercises a nonqualified option, he or she will recognize ordinary
income in an amount equal to the excess of the fair market value of
the option shares on the date of exercise over the exercise price,
and the Company will be allowed a corresponding tax deduction,
subject to any applicable limitations under Code
Section 162(m). Any gain that a participant realizes when the
participant later sells or disposes of the option shares will be
short-term or long-term capital gain, depending on how long the
participant held the shares.
Incentive Stock
Options. There will be no federal
income tax consequences to a participant or to the Company upon the
grant of an ISO. If the participant holds the option shares for the
required holding period of at least two years after the date
the option was granted and one year after exercise of the option,
the difference between the exercise price and the amount realized
upon sale or disposition of the option shares will be long-term
capital gain or loss, and the Company will not be entitled to a
federal income tax deduction. If the participant disposes of the
option shares in a sale, exchange, or other disqualifying
disposition before the required holding period ends, the
participant will recognize taxable ordinary income in an amount
equal to the difference between the exercise price and the lesser
of the fair market value of the shares on the date of exercise or
the disposition price, and the Company will be allowed a federal
income tax deduction equal to such amount, subject to any
applicable limitations under Code Section 162(m). Any amount
received by the participant in excess of the fair market value on
the exercise date will be taxed to the participant as capital gain,
and the Company will receive no corresponding deduction. While the
exercise of an ISO does not result in current taxable income, the
excess of the fair market value of the option shares at the time of
exercise over the exercise price will be a tax preference item that
could subject a participant to alternative minimum tax in the year
of exercise.
Stock Appreciation Rights. A
participant will not recognize income, and the Company will not be
allowed a tax deduction, at the time a SAR is granted. When a
participant exercises a SAR, the cash or fair market value of any
Common Stock received will be taxable to the participant as
ordinary income, and the Company will be allowed a federal income
tax deduction equal to such amount, subject to any applicable
limitations under Code Section 162(m).
Restricted Stock. Unless a
participant makes an election to accelerate recognition of income
to the grant date as described below, the participant will not
recognize income, and the Company will not be allowed a
compensation tax deduction, at the time restricted stock is
granted. When the restrictions lapse, the participant will
recognize ordinary income equal to the fair market value of the
Common Stock as of that date, less any amount paid for the stock,
and the Company will be allowed a corresponding tax deduction,
subject to any applicable limitations under Code
Section 162(m). If the participant files an election under
Code Section 83(b) within 30 days after the grant
date, the participant will recognize ordinary income as of the
grant date equal to the fair market value of the stock as of that
date, less any amount paid for the stock, and the Company will be
allowed a corresponding compensation tax deduction at that time,
subject to any applicable limitations under Code
Section 162(m). Any future appreciation in the stock will be
taxable to the participant at capital gains rates. However, if the
stock is later forfeited, such participant will not be able to
recover the tax previously paid pursuant to the Code
Section 83(b) election.
Stock Units, Performance Awards, and Incentive Bonus
Awards. A participant will not
recognize income, and the Company will not be allowed a
compensation tax deduction, at the time a stock unit, performance
award or incentive bonus award is granted. When a participant
receives payment under a stock unit, performance award or incentive
bonus award, the amount of cash received and the fair market value
of any shares of stock received will be ordinary income to the
participant, and the Company will be allowed a corresponding
compensation tax deduction at that time, subject to any applicable
limitations under Code Section 162(m).
Section 409A. If
an award is subject to Section 409A of the Code, but does not
comply with the requirements of Section 409A of the Code, the
taxable events as described above could apply earlier than
described, and could result in the imposition of additional taxes
and penalties. Participants are urged to consult with their tax
advisors regarding the applicability of Section 409A of the
Code to their awards.
Potential Limitation on Company
Deductions. Section 162(m) of
the Code generally disallows a tax deduction for compensation in
excess of $1 million paid in a taxable year by a publicly held
corporation to its chief executive officer and certain other
“covered employees”. The Company’s board of directors and our
compensation committee intend to consider the potential impact of
Section 162(m) on grants made under the 2020 Equity
Incentive Plan, but reserve the right to approve grants of options
and other awards for an executive officer that exceeds the
deduction limit of Section 162(m).
Tax Withholding. As and when
appropriate, each optionee purchasing shares of the Company’s
Common Stock and each grantee receiving an award of shares of the
Company’s Common Stock under the 2020 Equity Incentive Plan will be
required to pay any federal, state or local taxes required by law
to be withheld.
THE FOREGOING IS ONLY A SUMMARY OF THE EFFECT OF THE U.S.
FEDERAL INCOME TAXATION UPON PARTICIPANTS AND THE COMPANY UNDER THE
2020 EQUITY INCENTIVE PLAN. IT DOES NOT PURPORT TO BE COMPLETE AND
DOES NOT DISCUSS THE TAX CONSEQUENCES OF A PARTICIPANT’S
DEATH OR THE PROVISIONS OF THE INCOME TAX LAWS OF ANY MUNICIPALITY,
STATE, OR FOREIGN COUNTRY IN WHICH THE PARTICIPANT
MAY RESIDE.
2006 Equity Incentive Plan
Reviva’s board of directors adopted, and Reviva’s stockholders
approved, the Reviva Pharmaceuticals, Inc. 2006 Equity
Incentive Plan, effective as of August 2006. The Reviva
Pharmaceuticals, Inc. 2006 Equity Incentive Plan provided for
the grant of incentive stock options, or ISOs, within the meaning
of Section 422 of the Code, to Reviva’s employees, and for the
grant of nonstatutory stock options, or NSOs, and restricted stock
awards to Reviva’s employees, officers, directors and consultants;
provided such consultants render bona fide services not in
connection with the offer and sale of securities in a
capital-raising transaction. As of 2016, no new grants of awards
are permitted under the Reviva Pharmaceuticals, Inc. 2006
Equity Incentive Plan.
As of the Effective Time, the Reviva Pharmaceuticals, Inc.
2006 Equity Incentive Plan was amended to change its name to the
Reviva Pharmaceuticals Holdings, Inc. 2006 Equity Incentive
Plan (the “2006 Equity Incentive Plan”), and each outstanding
option to acquire Reviva common stock (whether vested or unvested)
under the 2006 Equity Incentive Plan was assumed by the Company and
automatically converted into an option to acquire shares of Common
Stock, with its price and number of shares equitably adjusted based
on the conversion of the shares of common stock of Reviva into
shares of the Common Stock pursuant to the Merger Agreement.
Pursuant to such assumption and automatic conversion, as of the
Effective Time there are outstanding options under the 2006 Equity
Incentive Plan exercisable for an aggregate of 65,471 shares of
Company Common Stock, and no new grants of awards are permitted
under the 2006 Equity Incentive Plan.
Indemnification Agreements
On December 14, 2020, our board of directors adopted and
entered into (a) a form of indemnification
agreement (the “Indemnification Agreement”) between the
Company and each of its directors and executive officers,
except for Parag Saxena, and (b) a form of indemnification
agreement (the “Saxena Indemnification Agreement”) with Parag
Saxena.
The Indemnification Agreement requires us to indemnify
each director and officer to the fullest extent permitted by
applicable law, for certain expenses, including attorneys’ fees,
judgments, penalties, fines and settlement amounts actually and
reasonably incurred in any threatened, pending or completed action,
suit, claim, investigation, inquiry, administrative hearing,
arbitration or other proceeding to which the director or officer
was, or is threatened to be made, a party by reason of the fact
that such director or officer is or was a director, officer,
employee or agent of us. Subject to certain limitations, the
Indemnification Agreement provides for the advancement of expenses
incurred by the indemnitee, and the repayment to us of the amounts
advanced to the extent that it is ultimately determined that the
indemnitee is not entitled to be indemnified by us. The
Indemnification Agreement also creates certain rights in favor of
us, including the right to assume the defense of claims and to
consent to settlements. The Indemnification Agreement does not
exclude any other rights to indemnification or advancement of
expenses to which the indemnitee may be entitled under applicable
law, the certificate of incorporation or our bylaws, any agreement,
a vote of stockholders or disinterested directors, or
otherwise.
The Saxena Indemnification Agreement is on substantially the same
form as the Indemnification Agreement, except that it includes a
provision specifying that we will act as the indemnitor of first
resort and that we will not assert that Mr. Saxena, as
indemnitee under the Saxena Indemnification Agreement, must seek
expense advancement or reimbursement, or indemnification, from any
stockholder of the Company and/or certain of any such stockholder’s
affiliates who Mr. Saxena may have rights to indemnification,
advancement of expenses and/or insurance from, before we must
perform our expense advancement and reimbursement, and
indemnification obligations, under the Saxena Indemnification
Agreement.
CERTAIN RELATIONSHIPS AND RELATED PERSON
TRANSACTIONS
The following includes a summary of transactions since
March 20, 2018 (inception), to which we or Tenzing have been a
participant in which the amount involved exceeded or will exceed
the lesser of (i) $120,000 or (ii) 1% of our average
total assets of at year end for the last two completed fiscal
years, and in which any of our directors, executive officers or
beneficial owners of more than 5% of our capital stock or any
member of the immediate family of any of the foregoing persons had
or will have a direct or indirect material interest, other than
equity and other compensation, termination, change in control and
other arrangements, which are described in the section entitled
“Executive Compensation.”
Tenzing Related Person Transactions
Founder Shares
In June 2018, Tenzing issued an aggregate of 1,437,500 Founder
Shares to Sponsor for an aggregate purchase price of $25,000 in
cash. On August 20, 2018, Tenzing effectuated a 1.1-for-1
share dividend resulting in an aggregate of 1,581,250 Founder
Shares outstanding. The Founder Shares included an aggregate of up
to 206,250 shares subject to forfeiture by Sponsor to the extent
that the underwriters’ over-allotment was not exercised in full or
in part, so that Sponsor would collectively own 20% of Tenzing’s
issued and outstanding shares after the IPO. On August 30,
2018, as a result of the underwriters’ election to fully exercise
their over-allotment option, 206,250 Founder Shares are no longer
subject to forfeiture.
Sponsor agreed not to transfer, assign or sell any of the Founder
Shares (except to certain permitted transferees) until the earlier
of (i) one year after the date of the consummation of the
Business Combination, or (ii) the date on which the closing
price of our Common Stock equals or exceeds $12.00 per share (as
adjusted for stock splits, stock dividends, reorganizations and
recapitalizations) for any 20 trading days within any 30-trading
day period commencing 150 days after the Business Combination.
On December 28, 2020, Sponsor conducted a liquidating distribution
of all of the shares of Company Common Stock that it held on such
date, including the Founder Shares, Sponsor’s Private Placement
Shares, and Working Capital Shares, to its members (as permitted
transferees pursuant to a liquidating distribution) and assigned
its registration rights in connection with the distribution. As a
result, each of the members of Sponsor have the same registration
rights and transfer restrictions with respect to the shares of
Company Common Stock, including the Founder Shares, Sponsor’s
Private Placement Shares, and Working Capital Shares, received by
such member pursuant to the liquidating distribution.
Related Party Advances
Through August 23, 2018, Tenzing’s Chief Executive Officer
advanced an aggregate of $363,436 to be used for the payment of
costs related to the IPO. The advances were non-interest bearing,
unsecured and due on demand. The advances were repaid upon the
consummation of the IPO on August 23, 2018.
Related Party Loans
In order to finance transaction costs in connection with a business
combination, Sponsor or an affiliate of Sponsor, or Tenzing’s
officers and directors were permitted, but were not obligated to,
making working capital loans. Such working capital loans were
evidenced by promissory notes. The notes were to be repaid upon
consummation of a business combination, without interest, or, at
the lender’s discretion, up to $2,000,000 of notes were permitted
to be converted upon consummation of a business combination into
additional Private Placement Units (as defined in the Prospectus)
at a price of $10.00 per Unit.
On February 10, 2020, Tenzing entered into a convertible
promissory note with Sponsor, pursuant to which Tenzing borrowed an
aggregate amount of $750,000 (the “February Working Capital
Loan”). Of such amount, $567,182 was used to fund an extension loan
into the Trust Account and the balance was used to finance
transaction costs in connection with a business combination. The
February Working Capital Loan was non-interest bearing and
became due to be paid upon the consummation of the Business
Combination. The February Working Capital Loan was converted
into units at a purchase price of $10.00 per unit.
The units were identical to the Private Placement Units.
On May 21, 2020, Tenzing entered into a convertible promissory
note with Sponsor, pursuant to which Tenzing borrowed an aggregate
amount of $375,000 (the “May Working Capital Loan”). Of such
amount, $210,836 was used to fund the extension loan into the Trust
Account and the balance was used to finance transaction costs in
connection with a business combination. The May Working
Capital Loan was non-interest bearing and became due to be paid
upon the consummation of the Business Combination. The
May Working Capital Loan was converted into units at a
purchase price of $10.00 per unit. The units were identical to
the Private Placement Units.
On July 24, 2020, Tenzing entered into a convertible
promissory note with Sponsor, pursuant to which Tenzing borrowed an
aggregate amount of $175,000 (the “July Working Capital
Loan”). Of such amount, $105,418.17 was used to fund the extension
loan into the Trust Account. The July Working Capital Loan was
non-interest bearing and became due to be paid upon the
consummation of the Business Combination. The July Working
Capital Loan was converted into units at a purchase price of
$10.00 per unit. The units were identical to the Private
Placement Units.
On August 18, 2020, Tenzing entered into a convertible
promissory note with Sponsor, pursuant to which Tenzing borrowed an
aggregate amount of $125,000 (the “August Working Capital
Loan”). Of such amount, $105,418.17 was used to fund the extension
loan into the Trust Account and the balance was used to finance
transaction costs in connection with a business combination. The
August Working Capital Loan was non-interest bearing and
became due to be paid upon the consummation of the Business
Combination. The August Working Capital Loan was converted
into units at a purchase price of $10.00 per unit.
The units were identical to the Private Placement Units.
On September 24, 2020, Tenzing entered into a convertible
promissory note with Sponsor, pursuant to which Tenzing borrowed an
aggregate amount of $350,000 (the “September Working Capital
Loan”). Of such amount, $105,084.14 was used to fund the extension
loan into the Trust Account and the balance was used to finance
transaction costs in connection with a business combination and to
fund additional contributions in connection with the extension. The
September Working Capital Loan was non-interest bearing and
became due to be paid upon the consummation of the Business
Combination. The September Working Capital Loan was converted
into units at a purchase price of $10.00 per unit, provided
that conversion greater than $75,000 of the unpaid balance of the
note was subject to the approval of Tenzing shareholders, which
approval was obtained at the Shareholders Meeting. The units
were identical to the Private Placement Units.
On November 12, 2020, Tenzing entered into a convertible
promissory note with Sponsor, pursuant to which Tenzing borrowed an
aggregate amount of $200,000 (the “November Working Capital
Loan”, together with the February Working Capital Loan, the
May Working Capital Loan, the July Working Capital Loan,
the August Working Capital Loan and the September Working
Capital Loan, the “Working Capital Loans”). Of such amount,
$105,084.14 was used to fund the extension loan into the Trust
Account and the balance was used to finance transaction costs in
connection with a business combination and to fund additional
contributions in connection with the extension. The
November Working Capital Loan was non-interest bearing and
became due to be paid upon the consummation of the Business
Combination. The November Working Capital Loan was converted
into units at a purchase price of $10.00 per unit, provided
that conversion of the unpaid balance of the note was subject to
the approval of Tenzing shareholders, which approval was obtained
at the Shareholders Meeting. The units were identical to the
Private Placement Units.
On December 14, 2020, in connection with the consummation of
the Business Combination, Sponsor elected to have the Working
Capital Loans converted, pursuant to the terms of the Working
Capital Loans, into Private Placement Units, resulting in the
issuance of an aggregate of 197,500 shares of the Company’s Common
Stock (the “Working Capital Shares”) and warrants to purchase
197,500 shares of the Company’s Common Stock (the “Working Capital
Warrants,” together with the Working Capital Shares, the
“Conversion Securities”). Upon issuance of the Conversion
Securities all of the existing obligations of the Company under the
Working Capital Loans were satisfied in full and irrevocably
discharged, terminated and released, and Sponsor retained no rights
with respect to such Working Capital Loans, other than the
registration rights provided pursuant to such Working Capital
Loans.
On December 28, 2020, Sponsor conducted a liquidating distribution
of all of the shares of Company Common Stock that it held on such
date, including the Founder Shares, Sponsor’s Private Placement
Shares, and Working Capital Shares, to its members (as permitted
transferees pursuant to a liquidating distribution) and assigned
its registration rights in connection with the distribution. As a
result, each of the members of Sponsor have the same registration
rights and transfer restrictions with respect to the shares of
Company Common Stock, including the Founder Shares, Sponsor’s
Private Placement Shares, and Working Capital Shares, received by
such member pursuant to the liquidating distribution.
Related Party Non-Redemption Agreement
Pursuant to the Non-Redemption Agreement, on December 14, 2020
Sabby Volatility Warrant Master Fund, Ltd. (“Sabby) received
(a) fifty-five thousand fifty (55,050) shares of Common Stock
that was issued by the Company, (b) three hundred forty-three
thousand (343,000) Private Placement Warrants that were acquired by
Sponsor as part of the private placement units issued to Sponsor in
connection with Tenzing’s IPO, which Sponsor transferred to Sabby
on December 15, 2020 pursuant to the terms of the
Non-Redemption Agreement and (c) the Working Capital Warrants,
which Sponsor transferred to Sabby on December 15, 2020.
Reviva Related Person Transactions
Promissory Notes
On July 11, 2016, Reviva issued a note to Purav Patel, one of
Reviva’s directors, in the name of PENSCO Trust Company, Custodian,
FBO Purav Patel IRA, pursuant to which Reviva borrowed an aggregate
principal amount of $50,000.00. The entire balance of the note was
used to help finance Reviva’s operations. The note initially
accrued interest at a rate of 8% per annum with a maturity date of
July 11, 2017. The convertible promissory note had been in
default since the maturity date, and was accruing interest at a
default rate of 12% per annum. Pursuant to an amendment to the
note, on December 14, 2020, immediately prior to the
consummation of the Business Combination, the note converted into a
number of shares of Reviva common stock equal to the quotient
(rounded down to the nearest whole share) obtained by dividing
(A) the sum of all then outstanding principal and accrued but
unpaid interest on a date that was no more than five (5) days
prior to the consummation of the Business Combination (which
interest balance was approximately $24,499) by (B) a
conversion price equal to $1.329698. Upon issuance of such shares
of Reviva common stock all of the existing obligations of Reviva
under the note were satisfied in full and irrevocably discharged,
terminated and released, and Mr. Patel retained no rights with
respect to such note.
On July 11, 2016, Reviva issued a note to Purav Patel, one of
Reviva’s directors, pursuant to which Reviva borrowed an aggregate
principal amount of $50,000. The entire balance of the note was
used to help finance Reviva’s operations. The note initially
accrued interest at a rate of 8% per annum with a maturity date of
July 11, 2017. The convertible promissory note had been in
default since the maturity date, and was accruing interest at a
default rate of 12% per annum. Pursuant to an amendment to the
note, on December 14, 2020, immediately prior to the
consummation of the Business Combination, the note converted into a
number of shares of Reviva common stock equal to the quotient
(rounded down to the nearest whole share) obtained by dividing
(A) the sum of all then outstanding principal and accrued but
unpaid interest on a date that was no more than five (5) days
prior to the consummation of the Business Combination (which
interest balance was approximately $24,499) by (B) a
conversion price equal to $1.329698. Upon issuance of such shares
of Reviva common stock all of the existing obligations of Reviva
under the note were satisfied in full and irrevocably discharged,
terminated and released and Mr. Patel retained no rights with
respect to such note.
On November 13, 2018, Reviva issued a note to Purav Patel, one
of Reviva’s directors, pursuant to which Reviva borrowed an
aggregate principal amount of $50,000. The entire balance of the
note was used to help finance Reviva’s operations. The note accrued
interest at a rate of 8% per annum with a maturity date of
May 13, 2019. Pursuant to an amendment to the note, on
December 14, 2020, immediately prior to the consummation of
the Business Combination, the note converted into a number of
shares of Reviva common stock equal to the quotient (rounded down
to the nearest whole share) obtained by dividing (A) the sum
of all then outstanding principal and accrued but unpaid interest
on a date that was no more than five (5) days prior to the
consummation of the Business Combination (which interest balance
was approximately $8,296) by (B) a conversion price equal to
$0.831018. Upon issuance of such shares of Reviva common stock all
of the existing obligations of Reviva under the note were satisfied
in full and irrevocably discharged, terminated and released and
Mr. Patel retained no rights with respect to such note.
On December 13, 2018, Reviva issued a note to Buena Vista
Fund II, LLC of which Purav Patel, one of Reviva’s directors,
is Managing Member, in the principal amount of $25,000. The entire
balance of the note was used to help finance Reviva’s operations.
The note accrued interest at a rate of 8% per annum with a maturity
date of June 13, 2019. Pursuant to an amendment to the note,
on December 14, 2020, immediately prior to the consummation of
the Business Combination, the note converted into a number of
shares of Reviva common stock equal to the quotient (rounded down
to the nearest whole share) obtained by dividing (A) the sum
of all then outstanding principal and accrued but unpaid interest
on a date that was no more than five (5) days prior to the
consummation of the Business Combination (which interest balance
was approximately $3,984) by (B) a conversion price equal to
$1.330045. Upon issuance of such shares of Reviva common stock all
of the existing obligations of Reviva under the note were satisfied
in full and irrevocably discharged, terminated and released and
Buena Vista Fund II, LLC retained no rights with respect to such
note.
On October 14, 2016, Reviva issued a note to The Firdos Sheikh
Family Trust of which Firdos Sheikh, a holder of greater than 5% of
Reviva’s preferred stock, is Trustee, in the principal amount of
$100,000. The entire balance of the note was used to help finance
Reviva’s operations. The note initially accrued interest at a rate
of 8% per annum with a maturity date of October 14, 2017. The
note had been in default since the maturity date, and was accruing
interest at a default rate of 12% per annum. Pursuant to an
amendment to the note, on December 14, 2020, immediately prior
to the consummation of the Business Combination, the note converted
into a number of shares of Reviva common stock equal to the
quotient (rounded down to the nearest whole share) obtained by
dividing (A) the sum of all then outstanding principal and
accrued but unpaid interest on a date that was no more than five
(5) days prior to the consummation of the Business Combination
(which interest balance was approximately $45,874) by (B) a
conversion price equal to $1.329698. Upon issuance of such shares
of Reviva common stock all of the existing obligations of Reviva
under the note were satisfied in full and irrevocably discharged,
terminated and released and The Firdos Sheikh Family Trust retained
no rights with respect to such note.
On April 2, 2020, Reviva issued a note to The Firdos Sheikh
Family Trust of which Firdos Sheikh, a holder of greater than 5% of
Reviva’s preferred stock, is Trustee, in the principal amount of
$100,000. The entire balance of the note was used to help finance
Reviva’s operations. The note accrued interest at a rate of 8% per
annum with a maturity date of October 2, 2020. Pursuant to an
amendment to the note, on December 14, 2020, immediately prior
to the consummation of the Business Combination, the note converted
into a number of shares of Reviva common stock equal to the
quotient (rounded down to the nearest whole share) obtained by
dividing (A) the sum of all then outstanding principal and
accrued but unpaid interest on a date that was no more than five
(5) days prior to the consummation of the Business Combination
(which interest balance was approximately $5,523) by (B) a
conversion price equal to $1.329770. Upon issuance of such shares
of Reviva common stock all of the existing obligations of Reviva
under the note were satisfied in full and irrevocably discharged,
terminated and released and The Firdos Sheikh Family Trust retained
no rights with respect to such note.
On September 9, 2016, Reviva issued a note to the Thaker
Family Limited Partnership, of which Pankaj Thaker, a holder of
greater than 5% of Reviva’s preferred stock, is the General
Partner, in the principal amount of $25,000. The entire balance of
the note was used to help finance Reviva’s operations. The note
initially accrued interest at a rate of 8% per annum with a
maturity date of September 9, 2017. The note had been in
default since the maturity date, and was accruing interest at a
default rate of 12% per annum. Pursuant to an amendment to the
note, on December 14, 2020, immediately prior to the
consummation of the Business Combination, the note converted into a
number of shares of Reviva common stock equal to the quotient
(rounded down to the nearest whole share) obtained by dividing
(A) the sum of all then outstanding principal and accrued but
unpaid interest on a date that was no more than five (5) days
prior to the consummation of the Business Combination (which
interest balance was approximately $11,756) by (B) a
conversion price equal to $1.329698. Upon issuance of such shares
of Reviva common stock all of the existing obligations of Reviva
under the note were satisfied in full and irrevocably discharged,
terminated and released and Thaker Family Limited Partnership
retained no rights with respect to such note.
On September 9, 2016, Reviva issued a note to the 2012 Satyen
P. Thaker Revocable Trust, of which Satyen Thaker, a holder of
greater than 5% of Reviva’s preferred stock, is the Trustee, in the
principal amount of $25,000. The entire balance of the note was
used to help finance Reviva’s operations. The note initially
accrued interest at a rate of 8% per annum with a maturity date of
September 9, 2017. The 2016 Note had been in default since the
maturity date, and was accruing interest at a default rate of 12%
per annum. Pursuant to an amendment to the note, on
December 14, 2020, immediately prior to the consummation of
the Business Combination, the note converted into a number of
shares of Reviva common stock equal to the quotient (rounded down
to the nearest whole share) obtained by dividing (A) the sum
of all then outstanding principal and accrued but unpaid interest
on a date that was no more than five (5) days prior to the
consummation of the Business Combination (which interest balance
was approximately $11,756) by (B) a conversion price equal to
$1.329698. Upon issuance of such shares of Reviva common stock all
of the existing obligations of Reviva under the note were satisfied
in full and irrevocably discharged, terminated and released and
2012 Satyen P. Thaker Revocable Trust retained no rights with
respect to such note.
Related Party Payable
Reviva had related party payables due to Laxminarayan Bhat,
Reviva’s Chief Executive Officer, for expenses that were incurred
on Reviva’s behalf by Dr. Bhat totaling $75,707 as of
December 4, 2020, which amount was reimbursed to Dr. Bhat
on December 7, 2020.
Indian Subsidiary
Mr. Krishnamurthy Bhat, an Indian resident and the brother of
Dr. Bhat, Reviva’s Chief Executive Officer’s, holds a 1%
ownership stake and is a director of the Company’s subsidiary,
Reviva Pharmaceuticals India Private Limited. The Indian government
regulates ownership of Indian companies by non-residents. Foreign
investment in Indian securities is generally regulated by the
Consolidated Policy on Foreign Direct Investment issued by the
Government and the Foreign Exchange Management Act, 1999, which
prevents 100% ownership by a foreign parent company of its Indian
subsidiary.
Employment
Reviva employs Seema R. Bhat, the spouse of Laxminarayan Bhat,
Reviva’s Chief Executive Officer, as its Vice President for
Program & Portfolio Management, pursuant to an Offer
Letter dated March 1, 2011 (the “Bhat 2011 Offer Letter”). In
October 2015, Ms. Bhat entered into a letter agreement
with Reviva pursuant to which Ms. Bhat agreed to a reduction
in her base annual salary to $30,000.00 for an indefinite period of
time. Effective since October 2018, Ms. Bhat had agreed
to defer her entire salary, without interest. Effective as of
October 2, 2020, 35,385 shares of Reviva common stock were
issued to Ms. Bhat in full satisfaction of the entire deferred
salary balance owed to Ms. Bhat, pursuant to a Stock Issuance
Agreement and Release.
Reviva has proposed to enter into an Employment Letter with Ms.
Bhat (the “Bhat 2021 Employment Letter’), which will supersede the
Bhat 2011 Offer Letter. The Bhat 2021 Employment Letter would
provide for Ms. Bhat to continue to serve as our Vice President for
Program & Portfolio Management reporting to our Chief
Executive Officer or our board of directors and would provide for
an annual base salary of $277,000, retroactive to December 15, 2020
(the day following the Business Combination). Under the Bhat 2021
Employment Letter, Ms. Bhat would be eligible for annual bonuses in
the discretion of our board of directors. The Bhat 2021
Employment Letter would provide that to receive any bonus,
Ms. Bhat must be employed by the Company at the time of
payment. The Bhat 2021 Employment Letter would provide that Ms.
Bhat may also receive, in the discretion of our board of directors,
equity awards under the Company’s 2020 Equity Incentive Plan or any
other equity incentive plan that the Company may adopt in the
future. The Bhat 2021 Employment Letter would contain customary
confidentiality and assignment of inventions provisions. The Bhat
2021 Employment Letter remains subject to approval by our
compensation committee and our audit committee.
Effective since October 2018, Dr. Cantillon had agreed to
defer his entire salary, without interest. Effective as of
October 2, 2020, 35,385 shares of Reviva common stock were
issued to Dr. Cantillon in full satisfaction of the entire
deferred salary balance owed to Dr. Cantillon, pursuant to a
Stock Issuance Agreement and Release.
Effective since April 2019, Dr. Bhat had agreed to the
deferral of his past salary as necessary, without interest.
Effective as of October 2, 2020, 132,506 shares of Reviva
common stock were issued to Dr. Bhat in full satisfaction of
the entire deferred salary balance owed to Dr. Bhat, pursuant
to a Stock Issuance Agreement and Release.
Indemnification Agreements
The Company has entered into indemnification agreements with each
of its directors and named executive officers. These agreements
require the Company to indemnify these individuals to the fullest
extent permitted under Delaware law against liabilities that may
arise by reason of their service to the Company, and to advance
expenses incurred as a result of any proceeding against them as to
which they could be indemnified. The Company also intends to enter
into indemnification agreements with its future directors and
executive officers. For a more fulsome description of the
indemnification agreements refer to the disclosure in “Executive
Compensation”.
Participation in Proposed Offering
Vedanta Associates, LP (“VA”), an affiliate of Parag Saxena, the
Chairman of our Board, or one or more accounts affiliated with VA
(such funds or accounts, together with VA, the “Vedanta Accounts”)
has indicated an interest in purchasing an aggregate of up to a
maximum of $2.0 million in shares of common stock in our proposed
offering as described in our Registration Statement on Form
S-1(333-255323) as filed with the SEC on April 19, 2021, including
any amendments thereto, at the public offering price. Because this
indication of interest is not a binding agreement or commitment to
purchase, such Vedanta Accounts could determine to purchase more,
less or no shares of common stock in such offering, or the
underwriters could determine to sell more, less or no shares to
such Vedanta Accounts. The underwriters will receive the same
discount on any of our shares of common stock purchased by the
Vedanta Accounts as they will from any other shares sold to the
public in such offering.
Policies and Procedures for Related Party Transactions:
Our board of directors has adopted a policy that its executive
officers, directors, nominees for election as a director,
beneficial owners of more than 5% of any class of its Common Stock,
any members of the immediate family of any of the foregoing persons
and any firms, corporations or other entities in which any of the
foregoing persons is employed or is a partner or principal or in a
similar position or in which such person has a 5% or greater
beneficial ownership interest (collectively “related parties”), are
not permitted to enter into a transaction with the Company without
the prior consent of our board of directors acting through the
Audit Committee or, in certain circumstances, the chairman of the
Audit Committee. Any request for the Company to enter into a
transaction with a related party, in which the amount involved
exceeds $100,000 and such related party would have a direct or
indirect interest must first be presented to the Audit Committee,
or in certain circumstances the chairman of the Audit Committee,
for review, consideration and approval. In approving or rejecting
any such proposal, the Audit Committee, or the chairman of the
Audit Committee, is to consider the material facts of the
transaction, including, but not limited to, whether the transaction
is on terms no less favorable than terms generally available to an
unaffiliated third party under the same or similar circumstances,
the extent of the benefits to us, the availability of other sources
of comparable products or services and the extent of the related
party’s interest in the transaction.
PRINCIPAL STOCKHOLDERS
The following table sets forth information regarding the beneficial
ownership of the Company on April 15, 2021 by:
| |
●
|
each person known by the Company to be, or expected to be, the
beneficial owner of more than 5% of shares of the Company’s Common
Stock; and
|
| |
●
|
each of the Company’s executive officers and directors.
|
Beneficial ownership is determined according to the rules of
the SEC, which generally provide that a person has beneficial
ownership of a security if he, she or it possesses sole or shared
voting or investment power over that security, including options
and warrants that are currently exercisable or exercisable within
60 days.
The beneficial ownership of the Common Stock of the Company is
based on 9,231,737 shares of Common Stock issued and
outstanding as of April 15, 2021.
|
Name of Beneficial Owner
|
|
Number of
Shares
Beneficially
Owned
|
|
|
Percentage of
Shares
Beneficially
Owned
|
|
| |
|
|
|
|
|
|
|
|
|
Officers and Directors (1)
|
|
|
|
|
|
|
|
|
|
Laxminarayan Bhat (2)
|
|
|
2,490,334 |
|
|
|
26.96 |
%
|
|
Marc Cantillon (3)
|
|
|
69,012 |
|
|
|
* |
|
|
Les Funtleyder
|
|
|
- |
|
|
|
- |
|
|
Richard Margolin
|
|
|
- |
|
|
|
- |
|
|
Purav Patel (4)
|
|
|
72,607 |
|
|
|
* |
|
|
Narayan Prabhu (5)
|
|
|
- |
|
|
|
- |
|
|
Parag Saxena (6) (7)
|
|
|
970,876 |
|
|
|
10.52 |
%
|
|
All Directors and Officers as a Group (seven persons)
|
|
|
3,602,829 |
|
|
|
38.78 |
%
|
| |
|
|
|
|
|
|
|
|
|
Greater than Five Percent Holders:
|
|
|
|
|
|
|
|
|
|
Sabby Volatility Warrant Master Fund, Ltd. (8)
|
|
|
790,447 |
|
|
|
8.25 |
%
|
|
Rahul Nayar (9)
|
|
|
561,964 |
|
|
|
6.09 |
%
|
* Less than one percent.
| |
(1)
|
The business address of each of the officers and directors is c/o
Reviva Pharmaceuticals Holdings, Inc., 19925 Stevens Creek
Blvd., Suite 100, Cupertino, CA 95014.
|
| |
(2)
|
Includes (a) 5,388 shares of common stock held by
Dr. Bhat’s spouse and (b) 6,090 shares of common stock
issuable upon the exercise of Assumed Options held by
Dr. Bhat’s spouse that are exercisable or will be exercisable
within 60 days of April 15, 2021.
|
| |
(3)
|
Includes 53,292 shares of common stock issuable upon the exercise
of Assumed Options held by Dr. Cantillon that are exercisable or
will be exercisable within 60 days of April 15, 2021.
|
| |
(4)
|
Does not include 15,227 shares of common stock issuable upon the
exercise of stock options that are not exercisable within 60 days
of April 15, 2021.
|
| |
(5)
|
Does not include 50,000 shares of common stock issuable upon the
exercise of stock options that are not exercisable within 60 days
of April 15, 2021.
|
| |
(6)
|
Includes 99,539 shares held by Vedanta Associates, LP. Vedanta
Partners, LLC is the general partner of Vedanta Associates, LP.
Vedanta Partners, LLC has voting and dispositive power over the
securities held by Vedanta Associates, LP. Parag Saxena is the
majority owner of Vedanta Partners, LLC and controls Vedanta
Partners, LLC, and may be deemed to be the beneficial owner of such
securities. Mr. Saxena, however, disclaims beneficial ownership
over any securities owned by Vedanta Associates, LP. in which he
does not have any pecuniary interest.
|
| |
(7)
|
The business address of Vedanta Associates, LP and Vedanta
Partners, LLC is c/o Vedanta Partners, LLC, 250 West 55th Street,
New York, New York 10019.
|
| |
(8)
|
Includes 350,000 shares of common stock issuable upon the exercise
of warrants that are exercisable or will be exercisable within 60
days. Sabby Management, LLC serves as the investment manager of
Sabby Volatility Warrant Master Fund, Ltd. Hal Mintz is the
manager of Sabby Management, LLC and has voting and investment
control of the securities held by Sabby Volatility Warrant Master
Fund, Ltd. Each of Sabby Management, LLC and Hal Mintz
disclaims beneficial ownership over the securities beneficially
owned by Sabby Volatility Warrant Master Fund, Ltd., except to
the extent of their respective pecuniary interest therein. The
business address for Sabby is c/o Ogier Fiduciary Services (Cayman)
Limited, 89 Nexus Way, Camana Bay, Grand Cayman KY1-9007, Cayman
Islands. The address for Sabby Management, LLC and Mr. Mintz
is 10 Mountainview Road, Suite 205, Upper Saddle River, New
Jersey 07458.
|
| |
(9)
|
Mr. Nayar was the Chief Executive Officer and a director of Tenzing
since its inception and resigned from such positions on December
14, 2020 in connection with the Business Combination. The address
of Mr. Nayar is 6700 Indian Creek Drive, Apt 1007, Miami Beach,
Florida 33141.
|
MARKET
PRICE OF OUR COMMON STOCK AND RELATED STOCKHOLDER MATTERS
The Company’s Common Stock and warrants trade on Nasdaq under the
symbols “RVPH” and “RVPHW,” respectively.
As of April 15, 2021, there were approximately 151 holders of
record of the Company’s Common Stock and 2 holders of record of the
Company’s warrants. This number does not include beneficial owners
whose shares were held in street name. The actual number of holders
of our Common Stock and warrants is greater than this number of
record holders and includes stockholders and warrant holders who
are beneficial owners, but whose shares or warrants are held in
street name by brokers or held by other nominees.
DESCRIPTION OF CAPITAL STOCK
Authorized and Outstanding Stock
Our authorized capital stock consists of:
| |
●
|
115,000,000 shares of Common Stock, par value $0.0001 per share;
and
|
| |
●
|
10,000,000 shares of preferred stock, par value $0.0001 per
share.
|
As of April 15, 2021, there were 9,231,737 shares of our Common
Stock outstanding, and no shares of preferred stock
outstanding.
The following statements are summaries only of provisions of our
authorized capital stock and are qualified in their entirety by our
certificate of incorporation, as amended. You should review these
documents for a description of the rights, restrictions and
obligations relating to our capital stock. Copies of our
certificate of incorporation may be obtained from the Company upon
written request.
Common Stock
Voting. The holders of our Common Stock are
entitled to one vote for each share held of record on all matters
on which the holders are entitled to vote (or consent pursuant to
written consent). Directors are elected by a plurality of the votes
present in person or represented by proxy and entitled to vote.
Dividends. The holders of Common Stock are
entitled to receive, ratably, dividends only if, when and as
declared by our board of directors out of funds legally available
therefor and after provision is made for each class of capital
stock having preference over the Common Stock.
Liquidation Rights. In the event of the
Company’s liquidation, dissolution or winding-up, the holders of
Common Stock will be entitled to share, ratably, in all assets
remaining available for distribution after payment of all
liabilities and after provision is made for each class of capital
stock having preference over the Common Stock.
Conversion Right. The holders of Common
Stock have no conversion rights.
Preemptive and Similar Rights. The holders
of Common Stock have no preemptive or similar rights.
Redemption/Put Rights. There are no
redemption or sinking fund provisions applicable to the Common
Stock. All of the outstanding shares of Common Stock will be
fully-paid and nonassessable.
Preferred Stock
Our board of directors has the authority to issue shares of
preferred stock from time to time on terms it may determine, to
divide shares of preferred stock into one or more series and to fix
the designations, preferences, privileges, and restrictions of
preferred stock, including dividend rights, conversion rights,
voting rights, terms of redemption, liquidation preference, sinking
fund terms, and the number of shares constituting any series or the
designation of any series to the fullest extent permitted by the
DGCL.
Warrants
As of April 15, 2021, there were Public Warrants outstanding to
purchase an aggregate of 6,325,000 shares of Common Stock, Private
Warrants outstanding to purchase an aggregate of 556,313 shares of
Common Stock, and Assumed Warrants outstanding to purchase an
aggregate of 126,268 shares of Common Stock.
Each Warrant entitles the holder thereof to purchase one share of
Common Stock at a price of $11.50 per share, subject to adjustment
as described in this prospectus. No Public Warrants will be
exercisable for cash unless we have an effective and current
registration statement covering the issuance of the shares of
Common Stock issuable upon exercise of the Public Warrants and a
current prospectus relating to such shares of Common Stock.
Notwithstanding the foregoing, if a registration statement covering
the issuance of the shares of Common Stock issuable upon exercise
of the Public Warrants is not effective within 90 days from
the closing of the Business Combination, the holders of the Public
Warrants may, until such time as there is an effective registration
statement and during any period when we shall have failed to
maintain an effective registration statement, exercise the Public
Warrants on a cashless basis pursuant to an available exemption
from registration under the Securities Act. If an exemption from
registration is not available, holders will not be able to exercise
their warrants on a cashless basis. The warrants will expire
five years from the closing of the Business Combination at
5:00 p.m., New York City time or earlier redemption.
The Private Warrants are identical to the Public Warrants except
that such Private Warrants will be exercisable for cash (even if a
registration statement covering the issuance of the ordinary shares
issuable upon exercise of such warrants is not effective) or on a
cashless basis, at the holder’s option, and will not be redeemable
by us, in each case so long as they are still held by the initial
purchasers or their affiliates. In addition, for as long as the
Private Warrants are held by Maxim (or its designees or
affiliates), they may not be exercised after five years from
the effective date of the registration statement relating to the
IPO.
We may call the Public Warrants for redemption, in whole and not in
part, at a price of $0.01 per warrant:
| |
●
|
at any time while the Public Warrants are exercisable,
|
| |
●
|
upon not less than 30 days’ prior written notice of
redemption to each warrant holder,
|
| |
●
|
if, and only if, the reported last sale price of the Common Stock
equals or exceeds $21.00 per share (as adjusted for stock splits,
stock dividends, reorganizations and recapitalizations), for any 20
trading days within a 30 trading day period ending on the third
trading business day prior to the notice of redemption to holders
of the Public Warrants, and
|
| |
●
|
if, and only if, there is a current registration statement in
effect with respect to the issuance of the shares of Common Stock
underlying such Public Warrants at the time of redemption and for
the entire 30-day trading period referred to above and continuing
each day thereafter until the date of redemption.
|
The right to exercise will be forfeited unless the Public Warrants
are exercised prior to the date specified in the notice of
redemption. On and after the redemption date, a record holder of a
Public Warrant will have no further rights except to receive the
redemption price for such holder’s warrant upon surrender of such
warrant.
The redemption criteria for the Public Warrants has been
established at a price which is intended to provide the holders
thereof a reasonable premium to the initial exercise price and
provide a sufficient differential between the then-prevailing share
price and the warrant exercise price so that if the share price
declines as a result of our redemption call, the redemption will
not cause the share price to drop below the exercise price of the
warrants.
If we call the Public Warrants for redemption as described above,
our management will have the option to require all holders that
wish to exercise Public Warrants to do so on a “cashless basis.” In
such event, each holder would pay the exercise price by
surrendering the Public Warrants for that number of shares of
Common Stock equal to the quotient obtained by dividing
(x) the product of the number of ordinary shares underlying
the warrants, multiplied by the difference between the exercise
price of the Public Warrants and the fair market value by
(y) the fair market value. The “fair market value” shall mean
the average reported last sale price of the shares of Common Stock
for the 10 trading days ending on the third trading day prior to
the date on which the notice of redemption is sent to the holders
of the Public Warrants. For example, if a holder held 150 Public
Warrants to purchase 150 shares of Common Stock and the fair market
value on the trading date prior to exercise was $15.00, that holder
would receive 35 shares without the payment of any additional cash
consideration. Whether we will exercise its option to require all
holders to exercise their Public Warrants on a “cashless basis”
will depend on a variety of factors including the price of our
Common Stock at the time the Public Warrants are called for
redemption, our cash needs at such time and concerns regarding
dilutive share issuances.
The Warrants are issued in registered form under a warrant
agreement between Continental Stock Transfer & Trust
Company, as warrant agent, and us. The warrant agreement provides
that the terms of the Warrants may be amended without the consent
of any holder to cure any ambiguity or correct any defective
provision, but requires the approval, by written consent or vote,
of the holders of a majority of the then outstanding warrants in
order to make any change that adversely affects the interests of
the registered holders.
The exercise price and number of shares of Common Stock issuable on
exercise of the Warrants may be adjusted in certain circumstances
including in the event of a share dividend, extraordinary dividend
or a recapitalization, reorganization, merger or consolidation.
However, the Warrants will not be adjusted for issuances of Common
Stock at a price below their respective exercise prices.
The Warrants may be exercised upon surrender of the warrant
certificate on or prior to the expiration date at the offices of
the warrant agent, with the exercise form on the reverse side of
the warrant certificate completed and executed as indicated,
accompanied by full payment of the exercise price (or on a cashless
basis, if applicable), by certified or official bank check payable
to us, for the number of Warrants being exercised. The holders of
the Warrants do not have the rights or privileges of holders of
Common Stock and any voting rights until they exercise their
Warrants and receive shares of Common Stock. After the issuance of
shares of Common Stock upon exercise of the Warrants, each holder
will be entitled to one vote for each share held of record on all
matters to be voted on by our shareholders.
Except as described above, no Public Warrants will be exercisable
and we will not be obligated to issue shares of Common Stock unless
at the time a holder seeks to exercise such Public Warrant, a
prospectus relating to the shares of Common Stock issuable upon
exercise of the Public Warrants is current and the shares of Common
Stock have been registered or qualified or deemed to be exempt
under the securities laws of the state of residence of the holder
of the Private Warrants. Under the terms of the warrant agreement,
we have agreed to use its best efforts to meet these conditions and
to maintain a current prospectus relating to the shares of Common
Stock issuable upon exercise of the Public Warrants until the
expiration of the Public Warrants. However, we cannot assure you
that we will be able to do so and, if we do not maintain a current
prospectus relating to the shares of Common Stock issuable upon
exercise of the Public Warrants, holders will be unable to exercise
their Public Warrants and we will not be required to settle any
such warrant exercise. If the prospectus relating to the shares of
Common Stock issuable upon the exercise of the Public Warrants is
not current or if the shares of Common Stock are not qualified or
exempt from qualification in the jurisdictions in which the holders
of the Public Warrants reside, we will not be required to net cash
settle or cash settle the warrant exercise, the Public Warrants may
have no value, the market for the Public Warrants may be limited
and the warrants may expire worthless.
Warrant holders may elect to be subject to a restriction on the
exercise of their warrants such that an electing Warrant holder
would not be able to exercise their Warrants to the extent that,
after giving effect to such exercise, such holder would
beneficially own in excess of 9.8% of the shares of Common Stock
outstanding.
No fractional shares will be issued upon exercise of the Warrants.
If, upon exercise of the Warrants, a holder would be entitled to
receive a fractional interest in a share, we will, upon exercise,
round down to the nearest whole number the number of shares of
Common Stock to be issued to the Warrant holder.
Anti-Takeover Effects of the Certificate of Incorporation, our
bylaws and Certain Provisions of Delaware Law
Our, certificate of incorporation, as amended, our bylaws and the
DGCL each contain provisions, which are summarized in the following
paragraphs, which are intended to enhance the likelihood of
continuity and stability in the composition of our board of
directors and to discourage certain types of transactions that may
involve an actual or threatened acquisition of the Company. These
provisions are intended to avoid costly takeover battles, reduce
the Company’s vulnerability to a hostile change of control or other
unsolicited acquisition proposal, and enhance the ability of our
board of directors to maximize stockholder value in connection with
any unsolicited offer to acquire the Company. However, these
provisions may have the effect of delaying, deterring or preventing
a merger or acquisition of the Company by means of a tender offer,
a proxy contest or other takeover attempt that a stockholder might
consider in its best interest, including attempts that might result
in a premium over the prevailing market price for the shares of
Common Stock. Our certificate of incorporation, as amended,
provides that any action required or permitted to be taken by the
Company’s stockholders must be effected at a duly called annual
meeting of such stockholders and may not be effected by any consent
in writing by such holders unless such action is recommended by all
directors of our board of directors then in office, except that
holders of one or more series of Preferred Stock, if such series
are expressly permitted to do so by the certificate of designation
relating to such series, may take any action by written consent if
such action permitted to be taken by such holders and the written
consent is signed by the holders of outstanding shares of the
relevant class or series having not less than the minimum number of
votes that would be necessary to authorize or take such action at a
meeting.
Authorized but Unissued Capital Stock
Delaware law does not require stockholder approval for any issuance
of authorized shares. However, the listing requirements of Nasdaq,
which apply so long as the Common Stock remains listed on Nasdaq,
require stockholder approval of certain issuances equal to or
exceeding 20% of the then outstanding voting power or then
outstanding number of shares of Common Stock. Additional shares
that may be issued in the future may be used for a variety of
corporate purposes, including future public offerings, to raise
additional capital or to facilitate acquisitions.
One of the effects of the existence of unissued and unreserved
Common Stock may be to enable our board of directors to issue
shares to persons friendly to current management, which issuance
could render more difficult or discourage an attempt to obtain
control of the Company by means of a merger, tender offer, proxy
contest or otherwise and thereby protect the continuity of
management and possibly deprive stockholders of opportunities to
sell their shares of Common Stock at prices higher than prevailing
market prices.
Election of Directors and Vacancies
Our certificate of incorporation, as amended, provides that our
board of directors will determine the number of directors who will
serve on our board of directors, subject to the rights of the
holders of any series of preferred stock to elect additional
directors. The exact number of directors will be fixed solely and
exclusively by resolution duly adopted from time to time by our
board of directors.
Our certificate of incorporation, as amended, provides that any
vacancy on our board of directors, including a vacancy that results
from an increase in the number of directors or a vacancy that
results from the death, resignation, disqualification or removal of
a director, may be filled only by a majority of the directors then
in office, even if less than a quorum, subject to the rights, if
any, of the holders of preferred stock.
Notwithstanding the foregoing provisions of this section, each
director will serve until his successor is duly elected and
qualified or until his earlier death, resignation or removal. No
decrease in the number of directors constituting our board of
directors will shorten the term of any incumbent director.
Business Combinations
We are subject to the provisions of Section 203 of the DGCL.
In general, Section 203 prohibits a publicly held Delaware
corporation from engaging in a “business combination” with an
“interested stockholder” for a period of three years after the
date of the transaction in which the person became an interested
stockholder, unless the business combination is approved in the
following prescribed manner:
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●
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prior to the time of the transaction, the board of directors of the
corporation approved either the business combination or the
transaction which resulted in the stockholder becoming an
interested stockholder;
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●
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upon completion of the transaction that resulted in the stockholder
becoming an interested stockholder, the stockholder owned at least
85% of the voting stock of the corporation outstanding at the time
the transaction commenced, excluding for purposes of determining
the number of shares outstanding (1) shares owned by persons
who are directors and also officers and (2) shares owned by
employee stock plans in which employee participants do not have the
right to determine confidentially whether shares held subject to
the plan will be tendered in a tender or exchange offer; and
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●
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on or subsequent to the time of the transaction, the business
combination is approved by the board and authorized at an annual or
special meeting of stockholders, and not by written consent, by the
affirmative vote of at least 66 2/3% of the outstanding voting
stock which is not owned by the interested stockholder.
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Generally, for purposes of Section 203, a “business
combination” includes a merger, asset or stock sale, or other
transaction resulting in a financial benefit to the interested
stockholder. An “interested stockholder” is a person who, together
with affiliates and associates, owns or, within three years
prior to the determination of interested stockholder status, owned
15% or more of a corporation’s outstanding voting securities.
Such provisions may encourage companies interested in acquiring us
to negotiate in advance with our board of directors because the
stockholder approval requirement would be avoided if our board of
directors approves either the business combination or the
transaction that results in the stockholder becoming an interested
stockholder. However, such provisions also could discourage
attempts that might result in a premium over the market price for
the shares held by stockholders. These provisions also may make it
more difficult to accomplish transactions that stockholders may
otherwise deem to be in their best interests.
Quorum
Our bylaws provide that at any meeting of our board of directors, a
majority of the directors then in office constitutes a quorum for
all purposes.
No Cumulative Voting
Under Delaware law, the right to vote cumulatively does not exist
unless the certificate of incorporation expressly authorizes
cumulative voting. Our certificate of incorporation, as amended,
does not authorize cumulative voting.
General Stockholder Meetings
Our certificate of incorporation, as amended, provides that special
meetings of stockholders may be called only by our board of
directors acting pursuant to a resolution approved by the
affirmative vote of a majority of our board of directors, subject
to the rights, if any, of the holders of any series of preferred
stock.
Requirements for Advance Notification of Stockholder Meetings,
Nominations and Proposals
Our bylaws establish advance notice procedures with respect to
stockholder proposals and the nomination of candidates for election
as directors, other than nominations made by or at the direction of
our board of directors. For any matter to be “properly brought”
before a meeting, a stockholder will have to comply with advance
notice requirements and provide us with certain information.
Generally, to be timely, a stockholder’s notice must be received by
the Secretary at our principal executive offices not less than
90 days nor more than 120 days prior to the one-year
anniversary of the date of the preceding annual meeting of
stockholders (for the purposes of the first annual meeting of our
stockholders following the adoption of our bylaws, a stockholder’s
notice must be received by the Secretary at the Company’s principal
executive offices not later than (i) 90 days prior to the
date of the first annual meeting or (ii) less than
10 days following the date the first annual meeting is
publicly announced). Our bylaws also specify requirements as to the
form and content of a stockholder’s notice. Our bylaws allow our
board of directors or a committee of our board of directors to
determine whether a nomination or any business proposed to be
brought before a special meeting of the stockholders was made in
accordance with our bylaws. These provisions may also defer, delay
or discourage a potential acquirer from conducting a solicitation
of proxies to elect the acquirer’s own slate of directors or
otherwise attempting to influence or obtain control of us.
Amendment Provisions
Our certificate of incorporation, as amended and our bylaws provide
that our board of directors, by the affirmative vote of a majority
of our board of directors, is expressly authorized to make, alter,
amend, change, add to, rescind or repeal, in whole or in part, our
bylaws without a stockholder vote in any matter not inconsistent
with the laws of the State of Delaware. Any amendment, alteration,
rescission or repeal of our bylaws by our stockholders requires the
affirmative vote of the holders of at least a majority in voting
power of all the then outstanding shares of stock entitled to vote
thereon, voting together as a single class.
Our certificate of incorporation, as amended, provides that it may
be amended, altered, changed or repealed in accordance with the
DGCL.
Exclusive Forum
Our certificate of incorporation, as amended, provides that, unless
we consent to the selection of an alternative forum, any
(i) derivative action or proceeding brought on our behalf,
(ii) action asserting a claim of breach of a fiduciary duty
owed by any director, officer or other employee of the Company to
us or our stockholders, creditors or other constituents,
(iii) action asserting a claim against the Company or any of
our directors or officers arising pursuant to, or a claim against
the Company or any director or officer of the Company with respect
to the interpretation or application of any provision of, the DGCL,
our certificate of incorporation, as amended, or our bylaws or
(iv) action asserting a claim against the Company or any
director or officer of the Company governed by the internal affairs
doctrine will, to the fullest extent permitted by law, be solely
and exclusively brought in the Court of Chancery of the State of
Delaware or, if such court does not have subject matter
jurisdiction thereof, any other court located in the State of
Delaware with subject matter jurisdiction. To the fullest extent
permitted by law, any person or entity purchasing or otherwise
acquiring or holding any interest in shares of capital stock of the
Company will be deemed to have notice of and consented to the forum
provisions in our certificate of incorporation, as amended.
However, it is possible that a court could find our forum selection
provisions to be inapplicable or unenforceable. Although we believe
this provision benefits it by providing increased consistency in
the application of Delaware law in believe types of lawsuits to
which it applies, the provision may have the effect of discouraging
lawsuits against our directors and officers.
Our certificate of incorporation, as amended, provides that, unless
we consent to the selection of an alternative forum, the federal
district courts of the United States of America shall, to the
fullest extent permitted by law, be the sole and exclusive forum
for the resolution of any complaint asserting a cause of action
arising under the Securities Act of 1933, as amended; provided,
however, that this provision will not apply to suits brought to
enforce any liability or duty created by the Securities Exchange
Act of 1934, as amended, or any other claim for which the federal
courts have exclusive jurisdiction.
Lock-Up Restrictions
Simultaneously with the execution and delivery of the Merger
Agreement, Dr. Bhat and certain other Reviva Stockholders who
(i) were executive officers or directors of Reviva or
(ii) own more than 5% of the issued and outstanding shares of
Reviva Stock immediately prior to the Effective Time (each, a
“Significant Stockholder”) each entered into a Lock-Up Agreement
with Tenzing and the purchaser representative named in the Merger
Agreement (each, a “Merger Lock-Up Agreement”). Pursuant to
Dr. Bhat’s Merger Lock-Up Agreement, Dr. Bhat agreed not
to, during the period commencing from the Closing and ending on the
three (3) year anniversary of the Closing, with 1/3rd of
his securities being released after the end of each anniversary of
the Closing (subject to early release if the Company consummates a
liquidation, merger, share exchange or other similar transaction
with an unaffiliated third party that results in all of the
shareholders having the right to exchange their equity holdings in
the Company for cash, securities or other property): (x) lend,
offer, pledge, hypothecate, encumber, donate, assign, sell,
contract to sell, sell any option or contract to purchase, purchase
any option or contract to sell, grant any option, right or warrant
to purchase, or otherwise transfer or dispose of, directly or
indirectly, any restricted securities, (y) enter into any swap
or other arrangement that transfers to another, in whole or in
part, any of the economic consequences of ownership of the
restricted securities, or (z) publicly disclose the intention
to do any of the foregoing, whether any such transaction described
in clauses (x), (y) or (z) above is to be settled by
delivery of restricted securities or other securities, in cash or
otherwise (any of the foregoing described in clauses (i),
(ii) or (iii), a “Prohibited Transfer”). Pursuant to the other
Merger Lock-Up Agreements, the other Significant Stockholders
agreed not to consummate a Prohibited Transfer during the period
commencing from Closing and ending on the one (1) year
anniversary of the Closing (subject to early release if the closing
price of Common Stock equals or exceeds $12.00 per share for any 20
out of 30 trading days commencing 150 days after the Closing
and also subject to early release if the Company consummates a
liquidation, merger, share exchange or other similar transaction
with an unaffiliated third party that results in all of the
Company’s shareholders having the right to exchange their equity
holdings in the Company for cash, securities or other
property).
Sponsor has agreed not to transfer, assign or sell any of the
Founder Shares (except to certain permitted transferees) until the
earlier of (i) one year after the date of the consummation of
the Business Combination, or (ii) the date on which the
closing price of Tenzing’s ordinary shares equals or exceeds $12.00
per share (as adjusted for stock splits, stock dividends,
reorganizations and recapitalizations) for any 20 trading days
within any 30-trading day period commencing 150 days after the
Business Combination. On December 28, 2020, Sponsor conducted a
liquidating distribution of all of the shares of Company Common
Stock that it held on such date, including the Founder Shares,
Sponsor’s Private Placement Shares, and Working Capital Shares, to
its members (as permitted transferees pursuant to a liquidating
distribution) and assigned its registration rights in connection
with the distribution. As a result, each of the members of Sponsor
have the same registration rights and transfer restrictions with
respect to the shares of Company Common Stock, including the
Founder Shares, Sponsor’s Private Placement Shares, and Working
Capital Shares, received by such member pursuant to the liquidating
distribution.
Pursuant to the Subscription Agreement in which Maxim Group
purchased the Private Units at the time of Tenzing’s IPO, Maxim
Group could not, subject to certain exceptions, economically
transfer any of its Private Placement Warrants or shares underlying
the Private Units until 180-days after the effective date of
the registration statement underlying the prospectus for the IPO.
Additionally, Maxim Group could not, subject to certain exceptions,
sell, transferor assign any of its Private Placement Warrants or
shares underlying the Private Units until thirty (30) days
after the Closing.
Transfer Agent and Registrar
The transfer agent for our Common Stock and warrant agent for the
Warrants is Continental Stock Transfer & Trust
Company.
Listing
Our Common Stock and Warrants are listed on Nasdaq under the symbol
“RVPH” and “RVPHW”, respectively.
SELLING SECURITYHOLDERS
The Common Stock and Warrants being offered by the Selling
Securityholders are those previously issued to the Selling
Securityholders, and, with respect to the Common Stock, those
issuable to the selling shareholders, upon exercise of the Private
Warrants. For additional information regarding the issuances of
those shares of Common Stock and warrants, see the Introductory
Note to this Registration Statement. We are registering the
shares of Common Stock and Private Warrants in order to permit the
Selling Securityholders to offer the securities for resale from
time to time. Except for the ownership of shares of Common Stock
and Warrants and the information referred to under the heading
“Material Relationships with the Selling Securityholders”
below, the Selling Securityholders have not had any material
relationship with us within the past three years.
The table below lists the Selling Securityholders and other
information regarding the beneficial ownership of the shares of
Common Stock and Private Warrants by each of the Selling
Securityholders. The second and sixth columns list the number of
Private Warrants and shares of Common Stock, respectively,
beneficially owned by each Selling Securityholder, based on its
ownership of the Private Warrants and shares of Common Stock, as of
December 28, 2020. The third and seventh columns list the
Private Warrants and shares of Common Stock, respectively being
offered by this prospectus by the Selling Securityholders. Under
the terms of the Private Warrants, a Selling Securityholder may
elect to be subject to a restriction preventing the exercise the
Private Warrants to the extent such exercise would cause such
Selling Securityholders, together with its affiliates, to
beneficially own a number of shares of Common Stock which would
exceed 9.8% of our then outstanding shares of Common Stock
following such exercise, excluding for purposes of such
determination shares of Common Stock issuable upon exercise of the
Private Warrants which have not been exercised (the "Beneficial
Ownership Blocker"). The table below does not reflect this
limitation for any Selling Securityholder that has made such
election.
In accordance with the terms of certain registration rights
agreements and other arrangements with the Selling Securityholders,
this prospectus generally covers the resale of the sum of
(i) the number of shares of Common Stock issued to the Selling
Securityholders pursuant to such arrangements in the
Introductory Note described above and (ii) the maximum
number of shares of Common Stock issuable upon exercise of the
related warrants, determined as if the outstanding warrants were
exercised in full as of the trading day immediately preceding the
date this registration statement was initially filed with the
Securities and Exchange Commission, each as of the trading day
immediately preceding the applicable date of determination and all
subject to adjustment as provided in the registration right
agreement, without regard to any limitations on the exercise of the
warrants.
Under the terms of the Private Warrants, if affirmatively elected
by a holder thereof, a selling shareholder may not exercise the
warrants to the extent such exercise would cause such selling
shareholder, together with its affiliates, to beneficially own a
number of shares of Common Stock which would exceed 9.8% of our
then outstanding Common Stock following such exercise, excluding
for purposes of such determination shares of Common Stock issuable
upon exercise of the warrants which have not been exercised. The
number of shares in the sixth column does not reflect this
limitation. The Selling Securityholders may sell all, some or none
of their shares in this offering. See “Plan of
Distribution.”
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Name of Selling
Securityholder
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Private
Warrants
Beneficially
Owned
Prior to
Offering
|
|
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Private
Warrants
Available
Pursuant to
this
Prospectus
|
|
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Existing
Warrants
Beneficially
Owned
After
Offering
|
|
|
Percentage
of
Private
Warrants
Beneficially
Owned
After
Offering(1)
|
|
|
Common
Stock
Beneficially
Owned
Prior to
Offering
|
|
|
Common
Stock
Available
Pursuant to
this
Prospectus
|
|
|
Common
Stock
Beneficially
Owned
After
Offering
|
|
|
Percentage
of
Common
Stock
Beneficially
Owned
After
Offering (2)
|
|
|
Sabby Volatility Warrant Master Fund, Ltd.(3)
|
|
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540,500 |
|
|
|
540,500 |
|
|
|
- |
|
|
|
- |
|
|
|
971,061 |
(4) |
|
|
595,550 |
|
|
|
375,511 |
|
|
|
3.84 |
%
|
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Maxim Partners LLC(5)(6)
|
|
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15,813 |
|
|
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15,813 |
|
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