Item 1.
Business
Company
Overview
History
We were
incorporated in the state of Nevada on March 13, 2009. On April 20, 2011, we acquired, through our wholly owned subsidiary
American CryoStem Acquisition Corporation, substantially all of the assets from, and assumed substantially all of the
liabilities of, ACS Global, Inc. (“ACS”) in exchange for our issuance of 21,000,000 shares of our common stock,
par value $0.001 per share, to ACS (the “Asset Purchase”). We filed a Current Report on Form 8-K with the
Securities and Exchange Commission (SEC) on April 27, 2011, disclosing the Asset Purchase and certain related matters
including, but not limited to, the appointment of our present officers and directors as well as the resignation by the former
chief executive officer and sole director. Our fiscal year ends September 30 of each calendar year. Upon the closing of the
Asset Purchase: (i) ACS Global became our majority shareholder, (ii) John Arnone was appointed as our chief executive officer
and president Anthony Dudzinski was appointed as our chief operating officer, treasurer and secretary, and (iii) John Arnone
and Anthony Dudzinski were appointed to our board of directors, with Mr. Arnone being appointed as Chairman of the Board. Mr.
Dudzinski is also a director, president and treasurer of ACS Global and Mr. Arnone is a director and secretary of ACS
Global.
Our Business
About American
CryoStem Corporation
American CryoStem
Corporation; (CRYO) founded in 2008, is a biotechnology pioneer, having developed standardized adipose tissue derived technologies
(Adult Stem Cells) for the fields of regenerative and personalized medicine. These standardized technologies which include granted
patents, are the basis for our chemistry, manufacturing, and controls (cGMP Manufacturing) of our ATCell™ autologous cellular
therapy product for use in clinical investigations for Biologic License Applications with the US Food and Drug Administration
(FDA). Our laboratory stem cell products are characterized adult human Mesenchymal Stem Cell (MSC’s) derived from adipose
tissue that work in conjunction with our patented (non-animal) medium lines and knowhow.
The Company
filed its first Investigational New Drug Application (IND) with the FDA for our ATCell™ cellular therapy product. The IND
filing is titled “ATCell™ Expanded Autologous Adipose Derived Mesenchymal Stem Cells deployed via Intravenous Infusion
for the Treatment of Post-Concussion Syndrome (PCS) in Retired Athletes and Military Personnel” File number 19089 was approved
by the FDA on September 17, 2020 to commence the Phase 1 Clinical Trial. Post-concussion syndrome is a chronic, incurable central
nervous system condition affecting a significant number of the United States military and athletes, especially those involved
in contact sports such as football, boxing, soccer, and other sports where participants have suffered one or more concussions
or mild traumatic brain injuries (mTBI). Published research has indicated that up to 30% of all military personal, active and
retired, may suffer from this condition. According to the Department of Defense evaluation of U.S. military casualty statistics,
From 2000-2019 Q3, 413,858 United States Military personnel worldwide experienced a; were considered mild, 9.8% moderate, and
2.3% penetrating or severe.
The Company
built and validated a new cGMP clean room processing and manufacturing area at our facility in Monmouth Junction NJ, implemented
and validated cGMP Standard Operating Procedures (SOPs) and installed a new Quality Management System to support its IND filings
and an increased focus on patent and product development and support additional clinical activities.
The
Company has built a domestic and international patent portfolio consisting of 32 patents. Our 4 primary operating patents
regarding the “collection – processing – cryopreservation and return to point-of-care” of adipose
derived stem cells, have been granted.
The Company
is expanding its efforts to attract and cultivate collaborative partners to accelerate its product development efforts, harnessing
its manufacturing platform and tissue processing platforms. The R&D collaborations are to discover, develop, and commercialize
cellular therapies, laboratory products and combinations thereof with synergistic technologies to create regenerative medicine
applications and develop new intellectual property.
Adipose
Tissue
The
Company’s manufacturing platform technologies, cell transportation products, cell culture mediums and cell therapies are
focused on the acquisition and processing of adipose tissue as the primary raw material. Many of our developed technologies have
been successfully applied to other raw materials such as bone marrow, umbilical and placenta tissue. Adipose tissue, also known
as fat tissue or fatty tissue, is a connective tissue that is mainly composed of fat cells called adipocytes. Adipocytes are energy
storing cells that contain large globules of fat known as lipid droplets surrounded by a structural network of fibers. tissue
and other stromal tissues. The Company is focused on adipose tissue because it contains higher densities of mesenchymal stems
cells (often 500 to 1000 times more) per gram of raw material when compared to other sources (bone marrow, umbilical cord tissue,
etc). The higher cellular density of adipose tissue supports the ability to create regenerative cellular products more efficiently
and with less expansion (lower passages and population doublings), which is preferred when producing cellular therapy products.
Adipose tissue
is considered one of the top human stem cell sources considering its accessibility, abundance, and least painful collection procedure
when compared to other sources such as bone marrow. The adipose derived mesenchymal stem cells (ADSCs) that adipose tissue contains
can be maintained and expanded in culture for long periods of time without losing their differentiation capacity, leading to large
cell quantities being increasingly used in cell therapy purposes. Many published and peer reviewed reports show that ADSC-based
cell therapy products demonstrated optimal efficacy and efficiency in various clinical indications for both autologous and allogeneic
purposes, hence they are increasingly being considered as potential tools for replacing, repairing, and regenerating dead or damaged
cells.
Adipose tissue
is a specialized type of connective tissue that arises from the differentiation of mesenchymal stem cells into adipocytes during
fetal development. Mesenchymal stem cells are multipotent cells that can transform into various cell types, including fat cells,
bone cells, cartilage cells, and muscle cells among others. Adipose tissue can be found in a number of different places throughout
the body. Adipose tissue is the most abundant type of fat in humans. It is distributed within subcutaneous fat, visceral fat,
and bone marrow fat. Subcutaneous fat is found throughout the whole body, in the spaces between the skin and underlying muscles.
Visceral fat is predominantly found around the organs in the abdominal cavity, such as the liver, intestines and kidneys, as well
as in the peritoneum (a serous membrane that lines the outside of the abdominal organs). Adipose tissue is also present in bone
marrow (a sponge-like tissue present in the central cavity of bones). In addition, adipose tissue can be found in the pericardium
surrounding the heart, or cushioning other parts of the body, like the soles of the feet, eyeballs, and certain blood vessels.
The main function
of adipocytes is to store excess energy in the form of fatty molecules, mainly triglycerides. Fat storage is regulated by several
hormones, including insulin, glucagon, catecholamines (adrenaline and noradrenaline), and cortisol. Depending on the body’s
immediate energy requirements, these hormones can either stimulate adipose tissue formation and storage (i.e. lipogenesis) or
initiate the release of fat from adipose tissue (i.e. lipolysis). Under the influence of insulin, for instance, adipocytes can
increase the uptake of blood glucose and transform it into fatty molecules, thereby increasing fat storage.
In addition
to being an energy storing reservoir, adipose tissue performs important endocrine and metabolic roles by secreting several biologically-active
factors known as adipokines. These molecules contribute to a variety of different functions, including regulation of energy balance,
food intake and satiety, inflammatory response, and metabolism of steroid hormones. Finally, adipose tissue also helps cushion
and protect parts of the body, as well as insulate the body from extreme temperatures.
In addition
to adipocytes, adipose tissue contains the stromal vascular fraction (SVF) comprised of cells including preadipocytes, fibroblasts,
vascular endothelial cells, and a variety of immune cells such as adipose tissue macrophages. Far from being hormonally inert,
adipose tissue has, in recent years, been recognized as a major endocrine organ, as it produces hormones such as leptin, estrogen,
resisting, and cytokines (especially TNFα). Adipose tissue contains some of the highest concentrations of adult stem cells,
progenitor cells and immune cells.
Processing
Technology
The FDA considers
processing and expanding cells as the manufacturing of a drug product. The Company’s completed proprietary, patented processing
and manufacturing platform is designed for the collection, preparation and cryo-preservation of pure adipose tissue and adipose
tissue derived cells. The processing platform has been validated to enable the Company to deliver cellular therapy samples with
repeatable and identifiable characteristics of safety, potency, viability, and purity which are the core FDA requirements for
the cGMP manufacturing of all drug products. Our manufacturing platform is approved by FDA for use
in our current clinical study of Post Concussion Syndrome for the manufacturing of the cellular therapy samples. The Company believes
that the platform is suitable to support the Company’s growing pipeline of product development and planned clinical studies,
and future biologic license applications for an array of target diseases and conditions.
The Company
believes the reproducibility of scientific studies is a substantial issue in cellular therapy research, from drug discovery and
development through clinical trials as researchers throughout the world continue to use different protocols for processes associated
with cell sample preparation, cryopreservation, and cold chain management. We believe our validated manufacturing processes for
our ATCell™ product solves this issue. The samples we produce with our patented platform and proprietary products have proven
purity, consistent viabilities above 80 percent, and cell identification panels across six biomarkers and proven sterility. Our
standardizing handling, storage, and transportation protocols substantially improve the quality and reproducibility of adipose
tissue derived stem cells and the adipose tissue collection, processing, storage and retrieval which is designed to permit us
to accelerate the time line of creating and processing cellular therapy products - from lab research to regulatory submission
and FDA approval.
Each
individual process has the potential to create multiple autologous products and to generate multiple revenue streams including
customer fees for storage of biomaterials. Our processing platform and methodology allow the opportunity for continuing revenue
streams from each tissue sample received and processed including, cellular therapy treatments, pure tissue storage for secondary
procedures, processing, and handling fees and CRYO storage and release fees.
We
are leveraging our patented platform and developing our product portfolio to create a global footprint of licensed laboratory
affiliates, physician’ networks, patients, research organizations, and licensees who purchase tissue collection, processing
and storage services or consumables from our Company.
Products
and Services
Therapy Product
Development
During the Company’s
initial stage of developing its manufacturing protocol and products chose adipose tissue as its source material following review
and experiments that included other biomaterials and cell sources such as bone marrow and peripheral blood samples. The selection
of adipose tissue is based upon a number of factors including high cell density and its wide array of other cell types including
precursor and immune cells that may be derived and developed as future products. Although the Company is currently focused on
the development of cellular therapy products utilizing adipose derived mesenchymal cells, the platform is designed to be easily
extendable to permit the acquisition and expansion of additional cellular derivatives from other biomaterials.
A significant
amount of research, case studies and anecdotal evidence has been published over the past several decades concerning the study
of cellular therapies for a wide range of diseases and maladies from ALS and Parkinson’s to wound healing and immunological
support. The Company, recognizing that each new application for therapy approval requires a standalone clinical study, has refined
its development strategy to initially encompass mild traumatic brain injury and immunosuppression as core targets for its development
strategy. We focus our efforts on expanding our product pipelines based upon our intellectual property portfolio, collaborative
development relationships, target market size, medical need, disease classification, and international licensing and partnering
opportunities.
The completion,
submission and approval of our validated manufacturing platform is the culmination of the Company’s development efforts.
Validation of the manufacturing platform for the study has provided the Company with the opportunity to expand its efforts and
resources on the further development of its downstream intellectual property. The objective is to provide deliverable commercial
cell therapy products to address patient populations with large unmet medical needs such as brain injuries and conditions that
include immunologic complications. The Company’s continuing efforts in the development of additional products includes an
increased focus on the recruitment of collaborative partners and the extension of our existing manufacturing capabilities to development
of other adipose tissue derivative and cellular/biomaterial combination products. Leveraging our repeatable processing platform
provides the Company with contributable technology and capabilities to rapidly develop clinical studies, accumulate complementary
scientific data and attract strong collaborative and developmental partners.
Our activities
include supporting collaborations by providing our products and services (ACSelerate™ and ATCELL™)
with the goal and expectation that our products and services become the basis for new cell based Regenerative Medicine and cellular
therapy applications.
Part of this
strategic approach to therapy product development is to design, develop and launch new products and services that rely on our
core processing technology and leverage existing products and services. Examples of this approach are the use of the CELLECT®
collection kit/ box and materials to collect fresh tissue for cellular therapy sample processing, use of our patented non-animal
growth medium for cell culture and use of our storage medium for cryo-storage. Management is currently pursing collaborative product
development agreements with healthcare institutions, universities, and other biotech companies.
2022 Therapy
Pipeline
The Company
has developed and refined its pipeline around its flagship cellular product, ATCell™, for clinical therapeutic use. The
initiation of this pipeline strategy occurred with the filing, approval and commencement of its Post Concussion Syndrome Phase
1 clinical study. During this review process, the US FDA fully reviewed the Company’s manufacturing platform contained in
the Chemistry, Manufacturing and Control section of the Investigational New Drug (IND) submission. The Company’s filing
included unpublished research of ATCell™ use in an animal model as well as a report covering its safety results from a pilot
study that included the treatment of more than 80 patients that received one or more treatments with the ATCell™ product
that resulted in no reported adverse events.
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1.
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The
Company filed its first Investigational New Drug Application (IND) with the US Food and
Drug Administration (FDA) for the ATCELL cellular therapy product. The IND filing is
titled “ATCell™ Expanded Autologous Adipose Derived Mesenchymal Stem Cells
deployed via Intravenous Infusion for the Treatment of Post Concussion Syndrome (PCS)
in Retired Athletes and Military Personnel”, File number 19089, which was approved
by the FDA on September 17, 2020. The Company intends to invite additional developers
of cellular therapies to initiate additional arms of the clinical study focused on the
use of ATCELL™ for use in systemic inflammatory response relief for patient suffering
from systemic diseases. A number of these additional study targets have been identified
and ongoing discussions support the Company’s belief that clinical investigations
can be developed and rapidly added upon completion of the new treatment protocol and
outcome assessment methodologies.
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DMD
– The Company has completed the protocol for the treatment of Duchene Muscular
Dystrophy and is in final discussions with its Collaborative partner, to select the principal
investigator (PI) and clinical trial site selection.
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Long
COVID – The Company has completed the protocol for treatment of Long COVID and
is currently finalizing its FDA filings. We have completed, along with a government partner
the clinical protocol for a new Investigational New Drug (IND) application to be filed
with FDA within the next 90 days for Long COVID. According to the Centers for Disease
Control and Prevention, “post-COVID conditions can be considered a lack of return
to a usual state of health following acute COVID-19 illness.” In the US, following
COVID recovery, it is reported that up to 30% of those afflicted, diagnosed, or treated
for COVID-19 have continuing symptoms and medical complications following recovery from
the acute illness
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Wound
Healing – the creation of topical applications and ingredients used by physicians in
the wound care and cosmetic industries as well as therapeutic cellular applications and
bio-materials development. An initial pilot study involving a minimum of 10 participants
for the assessment of its autologous tissue products for the wound healing market is
underway. The Company is combining its tissue products, which do not require FDA
approval, with current standard-of-care methods to accelerate and improve the healing
of diabetic and non-diabetic wounds and ulcers.
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ATGRAFT™
– products include adipose tissue and cell sample processing and storage as a form of
personal “bio-insurance”, and adipose tissue (fat) storage for cosmetic fat
engraftment procedures. High demand for pure and natural aesthetics in fast growing cosmetic
industry with non-FDA required plastic, cosmetic, and reconstructive surgical “fat
filler”. The global facial fat transfer market alone is expected to growth with
a CAGR of 10.7% to $4.2b by 2027
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About ATCELL™
The Company
has established and trademarked ATCELL™ as the brand name for its line of adipose derived stem cell products. ATCELL™
is a purified sample of adipose tissue derived from adipose tissue through our manufacturing processes that can be incubated and
grown (cultured) to large quantities in cGMP conditions.
ATCELL™
Adipose Derived Mesenchymal Cells Processed and characterized adipose derived cells created using the Company’s
proprietary, validated and patented Standard Operating Procedures (SOPs) of its manufacturing platform and the Company’s
ACSelerate™ patented cell culture media. Cell lines may also be custom created for patients desiring
to store their cells for their own future use in Regenerative Medicine procedures, shipped “On Demand”. Customer samples
are collected by the physician in an mini liposuction procedure and delivered to the Company’s facility utilizing the CELLECT®
collection system and ACSelerate™ transport medium to conform to our validated
quality control standards. The Company charges its customers a fee to process newly collected client tissue samples into cellular
samples.
ATCELL’s
repeatable sample manufacturing process is designed to comply with the requirements of FDA to produce highly consistent and validated
cellular products necessary to achieve regulatory approval. The validation of our manufacturing process and quality control results
are of great value in biomanufacturing and serve as the basis for approval and commercial product development.
The Company’s
ATCELL™ cell lines are cultured in our patented ACSelerate™ cell
culture media. All processed samples: tissue, cells, and research materials are made available for clinical study therapies, tissue
transfer or sale to research institutions. All samples are tested for sterility, disease, lifespan, and population doubling rate
(PDL). Cell morphology is confirmed by (i) flow cytometry (6 markers) and (ii) tri-lineage differentiation analysis using ACSelerate™
differentiation media. Each ATCELL™ line can be further processed and differentiated
allowing the Company to provide genetically matched cell types. We believe this research methodology may provide opportunities
for the Company’s ATCELL™ and ACSelerate™ products to become
the building blocks of additional commercial application development.
The Company
believes it can earn additional fees based upon storage and retrieval fees and for future product creation. Cell culturing and
differentiation may be performed upon receipt of the raw tissue sample or at any time on a previously processed and cryopreserved
tissue or master cell sample. ATCELL™ has shown that it is ideally suited for differentiation into
additional cell types (bone, cartilage, etc.) utilizing our patented ACSelerate™ line of differentiation
mediums.
The ATCELL™
processing, products and services are incorporated into multiple granted patents including the granted claim of:
“Systems and Methods for the Digestion of Adipose Tissue Samples Obtained from a Client for Cryopreservation” US 10,154,664
issued December 18, 2018, and “Business Method for Collection, Processing, Cryogenic Storage and Distribution of a Biologic
Sample Material” US Patent Number 10,014,079, issued July 3, 2018. The ACSelerate™ Medium products are incorporated
into our granted patents “Cell Culture Media, Kits and Methods of Use”; US Patent No. 7,989,205 issued August 2, 2011,
with additional claims granted in US Patent No. 9,487,755 granted November 8, 2016.
Tissue Processing
and Storage Services:
ATGRAFT™– An
adipose tissue (fat) collection, processing and storage solution used by cosmetic and plastic surgeons to provide their patients
with multiple tissue transfer and storage options. The ATGRAFT™ service, through one liposuction procedure,
allows individuals to prepare for multiple future cosmetic or regenerative procedures by using their own stored adipose tissue
as natural biocompatible filler, or for multiple cellular therapy applications over time without the trauma of further liposuctions.
Many physicians currently offering tissue transfer or “stem cell (SVF)” therapies are required to perform a concurrent
tissue harvest for each transfer or procedure which increases the opportunities for infection at the harvest site and the development
of long-term complications related to the formation of scar tissue (stroma) at the harvest site(s).
ATGRAFT™
supported procedures include; breast reconstruction, layered augmentations, buttocks enhancement, volume corrections
of the hands, feet, face and neck areas that experience significant adipose tissue (fat) volume reduction as we age. ATGRAFT™
is processed and stored utilizing our cGMP standards so that any stored fat tissue sample may in the future be further
processed to create, “ATCELL™”, for use in Regenerative Medicine applications. The ATGRAFT™
service is included in our granted patent “Business Method for Collection, Processing, Cryogenic Storage and Distribution
of a Biologic Sample Material” US Patent Number 10,014,079, issued July 3, 2018.
The Company’s
charges processing fees for ATGRAFT™ tissue processing and minimum annual storage fees based on the volume of
tissue processed. These processing and storage fees may be paid by the collecting/treating physician or the consumer. The Company
earns additional fees upon sample retrieval, for the thawing, packaging and shipment of the stored samples to the physician or
clinical “point-of-care” for immediate use upon receipt. Additionally, physicians may request that any stored ATGRAFT™
tissue sample of 25ml or greater be reprocessed utilizing the Company’s ATCELL™ and Autokine-CM™
processing to create topical therapy or cosmetic products, on-demand.
Laboratory
Products; Culture Medium, and Manufacturing Services
CELLECT®
Collection, Transportation, and Storage System – An unbreakable “chain of custody” solution to
collect and deliver tissue samples utilizing proprietary and patent pending methods and materials. The CELLECT®
service is the required platform for the collection and transportation of live adipose tissue samples to American CryoStem Corporation’s
processing facility. Tissue collected and transported in our CELLECT kits is monitored through the transportation process to assures
the highest viability upon laboratory receipt. The CELLECT® system incorporates our ACSelerate–TR™
transport medium to support the health of the tissue during transport. The ability to support the health of the collected
tissue using our proprietary material and services greatly enhances our highly consistent and repeatable manufacturing and processing
protocol. The CELLECT® service is included in our granted patent “Business Method for Collection, Processing,
Cryogenic Storage and Distribution of a Biologic Sample Material” US Patent Number 10,014,079, issued July 3, 2018.
American CryoStem
is the first tissue bank to globally incorporate through its CELLECT® service the International Blood Banking
identification, labeling and product identification coding system. This labeling system is an acceptable machine-readable labeling
standard, product description, and bar-coding system for FDA Center for Biologics Evaluation and Research under 21 CFR 606.12(c)13.
American CryoStem conforms to this standard in its laboratory facility and all cellular and tissue products produced at the facility
carry our W3750 ICCBBA facility identifier allowing any hospital, clinic, laboratory and regulator worldwide to identify the origin
and obtain additional information on any sample produced at an American CryoStem laboratory facility. The Company requires use
of this standard in all laboratories that license or utilize our technology.
ACSelerate™ Cell
Culture Media Products – Manufactured patented cell culture media products for growing human stromal
cells (including all cells found in human skin, fat and other connective tissue). Certain of the Company’s
ACSelerate™ cell culture media lines are available in animal serum free, which may be suitable for
human and therapeutic uses, or in a low serum version for application development and research purposes. The patented
ACSelerate™ cell culture media line(s) were specifically developed to address increasing
industry demand for fetal bovine serum-free cell culture products. The use of fetal bovine serum (FBS) and other animal
products in cellular therapy application development and manufacture raises concerns and generates debates within the
scientific and regulatory community relating to potential human/animal cross-contamination. These same concerns may lead to
additional expensive and expansive testing and documentation requirements with the FDA during the application and approval
process for new cellular therapies manufactured with or containing animal or animal derived products. FDA concerns are
evidenced in their Guidance’s and Guidelines regarding cellular therapy involving human cells, tissues and products
(HCT/Ps) published and maintained by the FDA. Management believes that eliminating or greatly reducing FBS in
cellular manufacturing, applications and products can eliminate or ease these scientific and regulatory concerns and may
prove to be a winning strategy for cellular therapy application developers seeking FDA approval.
The Company
entered into a licensing and manufacturing agreement with PeproTech (April 4, 2016) a life sciences company formed in 1988. PeproTech
is the trusted source for the development and manufacturing of high quality cytokine products for the life-science and cell therapy
markets. PeproTech has grown into a global enterprise with state-of-the-art manufacturing facilities in the US, and offices
around the world. With over 2,000 products PeproTech has developed and refined innovative protocols to ensure quality, reliability
and consistency. The licensed medium is marketed under both PeproTech’s PeproGrow and the Company’s ACSelerate
MAX brands.
On August 2,
2011, the Company was issued US patent number 7,989,205 for “Cell Culture Media, Kits and Methods of Use.” The granted
claims include media variations for cellular differentiation of ADSCs into osteoblasts (bone), chondrocytes (cartilage), adipocytes
(fat), neural cells, and smooth muscles cells in both HSA medium grade and FBS (research) grade. This patent covers both non-GMP
research grades and cGMP grades suitable for cell culture of adipose-derived stem cells. Additionally, on November 8, 2016, the
Company was granted additional claims from the continuation U.S. Serial No. 13/194,900 issued as a new Patent Serial No. 9,487,755.
Prior to the issuance the Company filed a continuation in part (CIP) containing additional claims related to our ongoing media
development.
The Company
supports its marketing efforts by making ATCELL™ samples available for research purposes and for
internal product development through our collaborative and partnering programs. We believe these cell lines may be suitable for
use by private researchers and universities for use in pre-clinical trial studies and in-vitro research. We also believe that
the Company’s ability to provide these materials for these research and development collaborators, partners and other third
parties extends the Company’s ability to become a primary source of clinical grade materials and services necessary to support
approved applications and treatments.
The
Company has created several versions of its ACSelerate™ cell culture media including:
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ACSelerate-MAX™
-xeno serum free cell culture media,
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ACSelerate-SFM™
- animal serum free cell culture media,
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ACSelerate-LSM™
- low FBS (0.05%) cell culture media,
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ACSelerate-CY™-
for differentiation of ATCELL™ into chondrocytes (ATCELL-CY™),
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ACSelerate-OB™-
for differentiation of ATCELL™ into osteoblasts (ATCELL-OB™)
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ACSelerate-AD™
- for differentiation of ATCELL™ into adipocytes (ATCELL-AD™)
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ACSelerate-MY™-
for differentiation of ATCELL™ into myocytes (ATCELL-MY™)
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ACSelerate-CP™-
non-DMSO (Dimethyl Sulfoxide) cellular cryopreservation media
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ACSelerate-TR™-
sterile transportation medium designed to maintain the viability of the tissue during
the shipment of adipose tissue to our processing facility.
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The Company
continues to optimize additional versions of ACSelerate™ media that may be necessary for use in future
applications. On December 31, 2014 the Company filed a patent application for an advanced medium formulation titled Human Albumin
Serum for Cell Culture Medium for Growth of Human Adipose Stromal Cells. (US Serial No. 62/098799) representing the initial results
of this ongoing optimization program. On December 31, 2015, the Company converted the provisional patent application to an international
PCT filing (PCT/US/68350) under the title Human Serum for Cell Culture for Growth of Human Adipose Stromal Cells. To date the
patent has also been filed in the following additional countries: China and Hong Kong, India, Mexico, Brazil, the European Union,
US, Japan, Thailand, Brazil, Russia, Australia, New Zealand, Canada, and Saudi Arabia.
Contract
Manufacturing, Autokine-CM® Anti-Aging, Autologous Skin Care Product Line – Under agreement
with Personal Cell Sciences Corp. (PCS), we manufacture the key ingredient Autokine-CM® (autologous
adipose derived stem cell conditioned medium) for PCS’ U-Autologous™ anti-aging topical formulation. Every
product is genetically unique to the patient and custom blended, deriving its key ingredients from the individual
client’s own adipose derived stem cells. The Company provides its CELLECT® Tissue Collection service to
collect the required tissue to manufacture the U-Autologous™ product and processes it under the same
Standard Operating Procedures (SOP’s) that it developed for the ATGRAFT™ and
ATCELL™ processing services utilizing ACSelerate™ cell culture media. The
Company receives collection, processing and storage fees and earns a royalty on all U-Autologous product sales. The
utilization of the Company’s core services in its contract manufacturing relationships provides opportunities for the
Company to promote ATGRAFT™ and ATCELL™ products.
CRYO’s
contract manufacturing services can be extended to develop custom and/or white label products and services for both local and
global cosmetic and regenerative medicine companies, physicians, wellness clinics and medical spas. The Company intends to expand
its relationships and contract manufacturing regionally through its physician networks and globally through its International
Licensing Program.
International
Licensing Program – COVID RISK FACTOR
The
development of our products could be disrupted and materially adversely affected in the future by a pandemic, epidemic or outbreak
of an infectious disease like the recent outbreak of COVID-19. For example, as a result of measures imposed by the governments
in regions affected by COVID-19 businesses have been suspended due to quarantines or “stay at home” orders intended
to contain this outbreak. Furthermore, many patients had concerns about making hospital and physician office visits for fear of
contracting the virus. These factors may have direct adverse impact on our ability to enroll participants in our clinical trial
programs. In addition, travel restrictions, stay-in-place orders and other measures including information control. specifically
in Asian countries, such as China, imposed by governmental agencies and health organizations to prevent the spread of COVID-19
and protect the citizenry, have had an adverse impact on the flow of information, goods and services between nations. The supply
disruptions have resulted in shortages of goods and materials. This could also impact our ability to produce the products we need
to conduct our clinical trials. In addition, these measures have resulted in delays to the regulatory process, which may also
have an adverse impact on our business. We are still assessing our business plans and the impact COVID-19 may have on our ability
to advance the development of our drug candidates or to raise financing to support the development of our drug candidates, we
cannot assure you that we will be able to avoid part or all of any impact from the spread of COVID-19 or its consequences, including
downturns in business sentiment generally or in our sector in particular.
The Company
is aware many jurisdictions outside the US currently permit cellular therapies and regenerative medicine applications. The Company
has targeted these jurisdictions for licensing its technologies to local operators and facilities and receives numerous unsolicited
international inquiries concerning the sale or licensing of our SOPs, culture medium products and tissue banking services for
use in the Regenerative Medicine and Medical Tourism Markets. The Company believes that the inquiries to date are a result of
the global boom in Medical Tourism, Regenerative and Personalized Medicine and the slow pace of approval of cellular therapies
and regenerative medicine applications in the US. To address the Company’s sales, marketing and branding opportunities globally,
the Company has included in its international licensing program metrics to vet potential partners and collaborators and their
facilities. To date we have licensed our technologies in Hong Kong, China, and Thailand.
The
Company believes it can take advantage of the significant growth of the global cellular therapy market through its international
licensing and marketing efforts. A recently published study by Transparency Market Research predicts the global market for stem cells is expected to register a healthy CAGR of 13.8% during the period from 2017 to 2025 to become
worth US$270.5 bn by 2025.
(https://www.transparencymarketresearch.com/pressrelease/stem-cells-market.htm)
China
On July
12, 2018 the Company announced the national launch of its ATGRAFTTM tissue collection, processing and storage
technology by Baoxin Asia Pacific Biotechnology (Shenzhen) Co. Ltd. (“Baoxin”) in China. The Company’s management
team traveled throughout south east China with the management and marketing team of Baoxin to present the ATGRAFTTM platform
to leading plastic and cosmetic surgery hospitals in Shenzhen, Nanning, Guangzhou, Guangxi and Changsha. Additionally, Mr. Arnone
and Mr. Dudzinski attended the signing of investment documents between Baoxin and Chinese government and Banking officials in
Shenzhen, China as well as the official launch presentation and evening gala hosted by Baoxin in Shenzhen.
The China
launch activities were in support of the Company’s licensing and supply agreement with Baoxin, under which Baoxin agreed to pay
the Company a minimum annual guarantee against a fixed fee per process and purchase certain necessary consumables from CRYO required
for the collection, processing and storage of the collected adipose tissue. Under the terms of the Agreements signed in Fiscal
2018, the Company invested in and currently holds five percent (5%) of Baoxin shares. Additionally, Mr. Arnone and Mr. Dudzinski
were elected to serve as Directors of Baoxin during their visit to Shenzhen, China. Mr. Arnone resigned as a board Member of Baoxin
in 2019. Mr. Dudzinski continues to serve the Company’s interests as a board member of Baoxin.
During
Fiscal 2020 and 2021, due to the continuing effects of the COVID pandemic and associated government policies and regulations Baoxin
suspended its processing activities. Baoxin is an emerging biotechnology company in China that has relied to date on investment
to fund operation and build their facilities, as is typical for these types of companies. During 2020 and 2021, Baoxin developed
a new state of the art facility with sizable clean rooms and biomaterial storage space. The facility was completed in February
2021 and officially opened in May of 2021. Unfortunately, due to the continued effects of COVID and the appearance of new variants
Baoxin has been unable to restart operations and its marketing programs.
Hong
Kong
On June
30, 2014 the Company granted Health Information Technology Company, LTD (“HIT”) exclusive rights to utilize the Company’s
Standard Operating Procedures (SOP’s) to market the Company’s ATGRAFT™ tissue storage service for Hong Kong.
The Agreement calls for upfront fees, royalties and the purchase by HIT of certain consumables manufactured by the Company. The
Company and HIT reached further agreement to extend their relationship on a non exclusive basis to include HIT’s cord blood
laboratory located in Shenzhen, Guangdong Province, one of China’s most successful Special Economic Zones. The HIT agreement
includes initial upfront fees and royalty payments for predetermined gross revenue volumes. HIT will also purchase CRYO ACSelerate™
storage media, CELLECT™ collection and transportation kits as well as other American CryoStem products necessary for clinical
adipose tissue processing and storage at the Shenzhen facility. The final master licensing agreement is for a period of 5 years
with renewal options and was executed between the parties on September 24, 2014. The HIT license has been extended per the terms
of Schedule B of the Term Sheet, dated June 30, 2014, for an additional 3-year period to June 30, 2023.
In 2017
as part of the Company’s transaction with Baoxin, HIT and the Company agreed to transfer certain product and distribution
rights granted to HIT under its 2014 agreement to Baoxin. The Company was paid of fee of US$100,000 in the transaction and was
provided with an initial ownership position in a planned Regenerative Treatment Center to be established by HIT in Hong Kong.
The current
pandemic, changes in Chinese regulations and policies regarding Hong Kong, recent political unrest and the inability of Chinese
citizens to cross the border between Hong Kong and China have significantly curtailed the ability of HIT to implement its business
plans to utilize the Company’s technology and purchase the associated consumables.
Thailand
On April
5, 2018 the Company announced further expansion of its global laboratory and cellular technology footprint by entering into an
agreement to license its ATGRAFT™ and ATCELL™ adipose tissue (fat) processing and storage technologies with CRYOVIVA
(Thailand) Ltd., a Bangkok, Thailand based Cord Blood processing and storage facility. CRYOVIVA, Thailand, currently offers collection,
processing and storage of Cord Blood derived biologics to patients throughout Thailand and South East Asia.
American
CryoStem licensed to CRYOVIVA (Thailand) Ltd., established in 2007, the rights to utilize the Company’s Standard Operating
Procedures (SOP’s) to create and market the Company’s ATGRAFT™ tissue storage service and ATCELL™ adipose
derived stem cell processing and storage services in Thailand. The financial terms generally, call for the payment of certain
training fees and, a percentage of the gross revenue subject to annual minimum payments generated from our products. Additionally,
the Agreement calls for the purchase of CRYO consumable products required for ATGRAFT™ and ATCELL™ sample processing
including CRYO’s ACSelerate™ non-DMSO cryogenic tissue storage media, transportation media, Cellect™ tissue
collection kit, and ACSelerate – Max™ cell culture medium.
The current
COVID pandemic has delayed CRYOVIVA’s scheduled launch of its marketing campaign several times and unfortunately, CRYOVIVA
suspended their tissue banking operations in 2020 and 2021. We are currently in discussions with them concerning the restart of
their operations and initiation of their marketing program for calendar 2022 although there is no certainty that the effects of
the pandemic will ease sufficiently to do so in the near term.
Japan
In June
2015, The Company entered into a licensing agreement with CellSource, LTD. (“CellSource”) located in Shibuya, Tokyo
Japan for the licensing of our AGRAFT™ tissue processing and storage technology and the purchase of our CELLECT®
collection products which include our ACSelerate-TR™ transport medium. The non-exclusive agreement expired
in June of 2020.
Collaborations
/ Partnering Opportunities / Acquisitions
The Company
recognizes the benefits of collaborations with industry and university partners and has increased its efforts to attract and develop
these relationships. Strategically, the Company believes that with a current approved IND application with the US FDA and the
strength of its granted and pending patent portfolio, that it can attract new partners and collaborative arrangements These relationships
are generally covered by Confidential Non-Disclosure Agreements and include Material Transfer Agreements (MTA) under which the
Company may supply ATCELL™ and/or ACSelerate™ medium products for evaluation, testing, and the
development of new cellular therapy applications. The Company has entered into Non-Disclosure and Material Transfer Agreements
with a number of potential collaborators. No assurance can be given that these efforts or relationships will ultimately result
in new technology for future commercialization.
The Company
has developed a strategy to expand the opportunities to commercialize its products by increasing its ability to identify and pursue
collaborative and partnering opportunities by cultivating and engaging new relationships with biotechnology companies engaged
in similar or complimentary development activities. Included in this strategy is the increased recruitment of consultants and
other biotechnology experts to identify potential collaborators, partners and acquisition candidates. The Company’s goal
is to develop additional standardized cellular processing models to support FDA IND treatment protocol approvals. This may be
accomplished by further identifying, and validating certain mechanisms and characteristics of mesenchymal stem cells related to
regulating modulation of immune response(s) and promoting tissue regeneration and stability (homeostasis) for the treatment of
traumatic injuries, inflammation, auto-immune diseases, and brain and organ damage associated with viruses such as SARS-CoV-2
(COVID-19), including, the expanding group of patients dealing with the chronic and debilitating symptoms of what is commonly
termed “Long Haul COVID” or “Long COVID.” To date the Company has completed agreements with the following
entities for development of new products and cellular therapy targets although the successful commercialization of new products
and therapies resulting from these activities cannot be assured or predicted at this time.
WRNMMC
On
December 3, 2020, the Company entered into a Cooperative Research and Development Agreement (CRADA) with Walter Reed National
Military Medical Center (WRNMMC), the nation’s largest and most renowned joint military medical center serving the Army,
Navy, Air Force and Marines located in Bethesda, Maryland.
A
Cooperative Research and Development Agreement (CRADA) is a written agreement between a government agency and a non-federal entity
that allows the federal government and its non-federal partners to optimize and maximize use of their resources, exchange technical
expertise in a protected fashion, share intellectual property resulting from collaborative effort, and speed commercialization
of federally developed technology. The Company has committed to provide materials including ATCell samples and Umbilical Cord
stem cells, ACSelerate Max Growth and differentiation mediums testing and other processing supplies, processing and testing methods.
The Company maintains the rights to commercialize all technology developed under this CRADA Agreement. The technology is centered
on creating in vitro (test tube) assays to standardize and commercialize new treatment protocols; optimizing quality control measures;
and developing standardized protocol potency assays for precise therapy dosing. Management believes that these new assays can
be commercialized to generate substantial sales and licensing revenues and create value for the Company’s stakeholders.
Through
the Collaboration entitled “Stem Cells for Regeneration and Medical Innovation, a multi-faceted and multi-staged research
project with WRNMMC Biomedical Laboratories, the Company plans to develop, validate and standardize baseline and assay metrics
to identify mesenchymal stem cell (MSC) characteristics and quantities across various cell biomarkers and exosome expressions
data sets for its ATCell™ product for biologics developers’ use worldwide. The focus of the Collaboration is to enable
the creation of predictive and prescriptive cellular models which will further enhance American CryoStem’s mission as a
premier biologics’ manufacturer and developer and be highly valuable to the medical community, biotech developers, and the
public at large.
WRNMMC
is part of The Military Health System (MHS) which is the enterprise within the United States Department of Defense
that provides health care to active duty, Reserve component and retired U.S. Military personnel and
their dependents.
The
missions of the MHS are complex and interrelated: To ensure America’s 1.4 million active duty and 331,000 reserve-component
personnel are healthy so they can complete their national security missions.
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·
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To
ensure that all active and reserve medical personnel in uniform are trained and ready to provide medical care in support of operational
forces around the world.
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·
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To
provide a medical benefit commensurate with the service and sacrifice of more than 9.5 million active-duty personnel, military
retirees, and their families.
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The
MHS also provides health care, through the TRICARE health plan, to:
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·
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Active-duty service members
and their families,
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·
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Retired service members and
their families,
|
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·
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Reserve component members
and their families,
|
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·
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Surviving family members,
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·
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Medal of Honor recipients
and their families
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·
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Some former spouses, and
|
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·
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Others identified as eligible
in the Defense Enrollment Eligibility Reporting System
|
The
MHS has a $50+ billion budget and serves approximately 9.5 million beneficiaries. The MHS employs more than 144,217 in 51 hospitals,
424 clinics, 248 dental clinics and 251 veterinary facilities across the nation and around the world, as well as in contingency
and combat-theater operations worldwide.
RACEMD
In March
2022, the Company entered into a collaborative agreement with RACEMD, a 501c(3) charitable organization focused on the improvement
of treatments and therapies for patient with Duchenne Muscular Dystrophy. Duchenne muscular dystrophy (DMD) is a severe type of
muscular dystrophy that primarily affects boys. Muscle weakness usually begins around the age of four and worsens quickly. Muscle
loss typically occurs first in the thighs and pelvis followed by the arms. Most affected individuals are unable to walk by the
age of 12. Some may have intellectual disability. DMD affects about one in 3,500 to 6,000 males at birth. It is the most common
type of muscular dystrophy. The life expectancy is 26; however, with excellent care, some may live into their 30s or 40s. The
disease is much rarer in girls, occurring approximately once in 50,000,000 live female births.
The terms
of the Agreement call for the Company to work with RACEMD to develop clinical therapies and studies focused on mitigating the
effect of the disease, improve muscle strength and quality of life in the short term and to build upon successes to seek a more
curative cellular therapy solution to extend life expectancy over the long term. The Company is in the final stages of completing
its plans with RACEMD to submit an initial safety study for use of ATCell as the treatment protocol and expects to make its initial
filing to FDA in early 2022. RACEMD has committed to funding the initial studies and to assist the Company in creating non-dilutive
funding opportunities for larger advanced studies in the future.
PeproTech,
Inc.
On April
4, 2016 the Company entered into an Agreement with PeproTech, Inc of Rocky Hill, NJ. Under the Agreement PeproTech manufactures,
markets and distributes the Company’s ACSelerate – Max cell growth medium. The Company and PeproTech completed the
optimization and scale up manufacturing studies and the licensed medium is marketed under both PeproTech’s, PeproGrow and
the Company’s ACSelerate MAX brands. PeproTech plans to leverage its current global sales relationships which reach a majority
of all research laboratories worldwide to maximize distribution of the optimized media while the Company will concentrate its
sales efforts on its collaborative and international licensing partners. Additionally, the Company and PeproTech are discussing
the licensing of additional American CryoStem patented media and products for production and distribution by PeproTech, any additional
media licensed to PeproTech will undergo similar optimization and scale up production testing prior to being released for sale.
The Company is in ongoing discussion with PeproTech related to increasing the visibility and sales of the medium and the optimization
of additional medium products focused on the differentiation of adult stem cells that are synergistic to the cell culture medium.
Regulatory
Information
On January 3,
2018, the Company received a warning letter from the U.S. FDA concerning its contract manufacturing services at its Monmouth Junction,
NJ facility. The FDA informed the Company that the Agency determined that its autologous adipose derived cell product, ATCELL™
is a drug under current FDA regulations and guidance. The Company voluntary ceased shipment of its ATCell product within the United
States in January of 2018. Since the Company’s initial response to the warning letter it spent considerable time and effort
to comply with the concerns and observations highlighted in the letter. Specifically, the Company designed and filed it first
Investigation New Drug Application with FDA which was approved on September 17, 2020. The Company implemented, qualified and validated
its completely redesigned manufacturing new clean manufacturing space, SOPs and Quality Management program in its facility in
Monmouth Junction, N.J. Our SOPs are the key to compliantly operating our tissue processing facility. In 2018 the Company hired
a cGMP consultant to assist with the update of all SOP’s, data collection forms, Quality Control Program and laboratory
operations to conform with cGMP in response to the observations made by FDA. To ensure delivery of the highest quality services,
we incorporated into these SOPs, certain accreditation requirements of the American Association of Blood Banks (AABB), the American
Association of Tissue Banks (AATB) and the Foundation for the Accreditation of Cellular Therapy (FACT-JACIE). The Company is planning
to seek accreditation by one or more of the associations in the future.
The Company
filed its final responses to FDA regarding the Warning Letter in early January of 2020. Based upon the Company’s IND approval
and FDA policy, the final dispensation of the Warning Letter is on hold by the FDA Office of Regulatory Affairs (ORA) pending
completion of the study and the filing by the Company of the formal Biologics License Application.
In response
to the Warning Letter and in preparation of the IND filing, the Company expanded its existing facilities and undertook a complete
remediation of its laboratory operations in expectation of the (IND) filing with the FDA for the use of autologous adipose derived
cells for the relief of inflammation associated with certain conditions resulting from mild traumatic Brain Injury (mTBI) or concussive
trauma. The Company also leased additional space, certified and validated a new Clean Room designed specifically for cellular
expansion, medium filling and tissue processing. In addition, the Company retained consultants to assist its personnel in the
review and re-validation of its operating procedures, equipment and processing methods as well as designing new procedures for
upgraded and newly acquired laboratory operating and testing equipment. These new validated manufacturing methods and upgraded
laboratory facility were reviewed by the FDA during the IND application process. Due to the construct of our core technologies,
the FDA regulatory pathway enables the Company to “cross-reference” the Chemistry Manufacturing and Control (CMC)
modules of the current study for use in subsequent new INF treatment applications.
The Company’s
New Jersey laboratory facility is registered with the FDA (FEI 3008307548) as a processing and storage facility for Human Cells,
Tissues and Cellular and Tissue Based Products (HCT/Ps) since 2010. We have discussed our operations with the State of New Jersey
Health Department and Department of Environmental Protection (DEP) to ascertain any special regulations to which we may be subject.
Based upon these discussions, and our use of a registered medical waste disposal company, we do not at this time have any special
registrations or regulations for compliance with the State of New Jersey.
We have consistently
endeavored to ensure that our processes, methodologies and procedures remain among the highest standards in the global tissue
collection, processing and storage market. To this end, we have equipped ourselves with state-of-the-art quality processing and
testing equipment, which we believe helps to ensure that every sample collected and processed is sterile (free from adventitious
agents), viable and capable of significant cellular growth and expansion.
Quality Management
The Company’s
quality management program attempts to ensure that during processing and testing of each adipose tissue, or cellular sample, the
appropriate quality management tests and processing methodologies are performed, and the data is collected, recorded and reviewed
by the laboratory management team. In 2018 the Company hired a Quality Control consultant to assist the Company in updating its
Quality Control Program, laboratory processes, Sops, data collection, and laboratory, product and materials validation programs.
The new system was completed, qualified and validated in 2019 and has been implemented in the new clean processing facility the
Company qualified in 2019 to support our intended clinical studies.
Quality Management
is a significant focus of clinical studies and is subject to both FDA regulation and guidance, as well as The International Council
for Harmonisation of Technical Requirements for Pharmaceuticals for Human Use (ICH). ICH guidelines are applied by a growing number
of global regulatory authorities. ICH’s mission is to achieve greater harmonization worldwide to ensure that safe, effective and
high-quality medicines are developed, and registered and maintained in the most resource efficient manner whilst meeting high
standards. Since October 2015, ICH has grown as an organization and now includes 19 International Members and 35 Observers. The
FDA requires incorporation of the quality standard into clinical study and cGMP manufacturing and the Company has incorporated
the relative requirements of these guidelines into both its approved IND and its cGMP manufacturing standard operating procedures
as required. The Company employs this strategy in its efforts to accelerate regulatory approvals in the US.
Chain
of Custody Control
Central to the
individual sample testing is an unbroken chain of custody and tracking. Sample tracking begins with the creation of each CELLECT
collection box. All samples, processing, quality management, batch, and storage documents and records, are coded with this unique
number. All records and testing samples are cross referenced and verified as required by the standard operating procedures.
Testing
Design and Standard Operating Procedures (SOPs)
Testing methods
are standardized and operate under a complete set of SOPs and Quality Management (QM) processes. All SOPs are designed to be in
compliance with the US Food and Drug Administration’s regulations and guidance for aseptic processing. Strict QM is enforced
to avoid and/or record any process deviations. In 2018 in response to the FDA letter the Company undertook a major reorganization
and upgrade of all of its methods, SOPs, processes and facility to upgrade its facility from a registered tissue bank to a Biologic
Drug Manufacturer. This update was completed concurrently with the validation and qualification of the Company’s new quality
management system that was completed, validated and qualified in 2019.
Intellectual
Property
From the Company’s
formation, our strategy has been to invest time and capital in intellectual property protection. This strategy is intended to
strengthen our Company’s foundation in any defensive or offensive legal challenge. In addition, we are developing our IP
portfolio to ensure and enhance our business flexibility and allow us to gain favorable terms in potential future collaborative
partnerships with third parties. Our intellectual property portfolio currently includes four issued U.S. patents (No. 7,989,205,
and Serial No. 9,487,755, Cell Culture Media Kits and Methods of Use, “Systems and Methods for the Digestion of Adipose
Tissue Samples Obtained from a Client for Cryopreservation” US 10,154,664 issued December 18, 2018, and “Business
Method for Collection, Processing, Cryogenic Storage and Distribution of a Biologic Sample Material” US Patent Number 10,014,079,
issued July 3, 2018); and has additional pending patent applications which are detailed in the following chart:
Title
|
Technology
|
Patent
/ Application Number
|
Cell
culture media, Kits, and Methods of Use
|
ACS cell culture media line
Covers 12 types of Medium
|
US Patent No. 7,989,205
Issued August 2, 2011
|
Cell
culture media, Kits, and Methods of Use
|
ACS cell culture media line
Additional claim Granted
for all 12 medium types
|
US Patent No. 9,487,755
Issued November 8, 2016
Continuation of US Patent
No. 7,989,205
|
Cell
culture media, Kits, and Methods of Use
|
ACS cell culture media line
Continuation of Granted Patent
covering additional improvements
|
US Patent Application No.
15/344,805
Continuation of US Patent
No. 7,989,205
|
Human
serum for cell culture medium for growth of human adipose stromal cells
|
A cell culture medium for
growth of human adipose stromal cells for human and therapeutic applications
|
PCT/US15/68350
30 month National Phase entry
date of June 31, 2017, additional International Filings for China, India, the European Union, Saudi Arabia, Israel, Brazil,
Mexico, Australia and New Zealand.
|
A
Business Method for Collection, Cryogenic Storage and Distribution of a Biological Sample Material
|
Company Core Tissue Collection
Processing and Storage Methodology
Covers CELLECT Kit, Transport
and Cryopreservation Medium for ATGRAFT and ATCELL Products
|
US Serial No 13/194,900
Filed June 6, 2010
Patent Application Published
December 5, 2013 Claims Granted
US Patent No. 10,014,079. Continuation filed upon issuance.
|
A
Business Method for Collection, Cryogenic Storage and Distribution of a Biological Sample Material
|
Company Core Tissue Collection
Processing and Storage Methodology
Continuation covering Improvements
|
Developed
Improvement established; Divisional, Continuation-In-Part claiming priority to US Serial No. 13/194,900 imminent (PCT
Application filing planned)
|
Systems
and Methods for the Digestion of Adipose Tissue Samples Obtained From a Client For Cryopreservation
|
Adipose Tissue Digestion
Laboratory Processing Methods
|
U.S.
Serial No.
13/646,647 filed
October 6, 2011, Claims Granted US Patent No.10,154,664. Continuation filed upon issuance.
|
Title
|
Technology
|
Patent
/ Application Number
|
Systems
and Methods for the Digestion of Adipose Tissue Samples Obtained From a Client For Cryopreservation
|
Adipose
Tissue Digestion Laboratory Processing Methods
|
Developed
Improvement established; Divisional, Continuation-In-Part claiming priority to US Serial No. 13/646,900 imminent (PCT
Application filing planned)
|
Compositions
and Methods for collecting, Washing, Cryoprocessing, Recovering and Return of Lipoaspirate to Physicians for Autologous Adipose
Transfer Procedures”
|
Company
Adipose Tissue Storage Platform for Cosmetic Procedures Covers the core processing adipose tissue for ATGRAFT adipose tissue
dermal filler product
|
U.S.
Serial No. 14/406,203 National Phase entry date of December 5, 2014 based on PCT/US2013/044621
European Union Application
No. EPI3800847.9
China Application No. 2013800391988
|
Compositions
and Methods for “Collecting, Washing, Cryoprocessing, Recovering and Return of Lipoaspirate to Physicians for Autologous
Adipose Transfer Procedures”
|
Company Adipose Tissue Storage
Platform for Cosmetic Procedures Covers additional claims related to ATGRAFT process not included in
original application
|
Developed
Improvement established; Divisional, Continuation-In-Part claiming priority to US Serial No. 14/406,203 imminent (PCT
Application filing planned)
|
Systems
and methods to isolate and expand stem cells from urine
|
Isolation
of stem cells from urine of patients for use in research and therapeutics
|
US
Serial Nos. 62/335,426 and 62/439,106
|
Additionally,
the Company has in-licensed the following IP:
Patent
Title
|
Use
of Patent
|
Application
#
|
Cosmetic compositions
including tropoelastin isomorphs
(wound healing)
|
Protein
Genomics and American CryoStem (Autogenesis) collaboration
|
USPTO
#5,726,040
|
Cosmetic compositions
(wound healing)
|
Protein
Genomics and American CryoStem (Autogenesis) collaboration
|
USPTO
#6,451,326
|
Recombinant hair
treatment compositions
(wound healing)
|
Protein
Genomics and American CryoStem (Autogenesis) collaboration
|
USPTO
#6,572,845
|
Wound healing compositions
and methods using tropoelastin and lysyl oxidase
(wound healing)
|
Protein
Genomics and American CryoStem (Autogenesis) collaboration
|
USPTO:
#6,808,707
|
Business methods,
processes and systems for collection, cryogenic storage and distribution of cosmetic formulations from an obtained stem
cell based a biological
|
Personal
Cell Sciences and American CryoStem collaboration
|
USPTO
application #61/588,841
|
Trademarks
In addition
to patents, the Company has registered the following trademarks with the U.S. Patent and Trademark Office: American CryoStem®,
CELLECT® and ATGRAFT™. We plan to obtain additional registered trademarks for our future
products, slogans and themes to be used in our marketing initiatives, including, for example, ACSelerate-SFM™,
ACSelerate- LSM™ and ATCELL™. The Company has also secured a number of online
domain names relevant to its business, including www.americancryostem.com and www.acslaboratories.com.
Market
Size and Opportunities
By leveraging
our proprietary Adipose Tissue Processing Platform, the Company is working to address multiple high growth, multi-billion dollar
market opportunities prevailing within the Regenerative Medicine, Cosmeceuticals, Medical Tourism and Cell Therapy markets. The
Company regularly reviews independent market research to gauge the market size of its intended domestic and international markets
and to identify additional areas within these markets where the Company’s laboratory products, cell culture medium, and
tissue and cellular processing services can be marketed, sold and/or licensed.
Global
Stem Cells Market
A
report from Transparency Market Research (TMR) forecasts that the global stem cells market is expected to register a
healthy CAGR of 13.8% during the period from 2017 to 2025 to become worth US$270.5 bn by 2025. Depending upon geography, the key
segments of the global stem cells market are North America, Latin America, Europe, Asia Pacific, and the Middle East and Africa.
At present, North America dominates the market because of the substantial investments in the field, impressive economic growth,
rising instances of target chronic diseases, and technological progress. As per the TMR report, the market in North America will
likely retain its dominant share in the near future to become worth US$167.33 bn by 2025.
A
report published by Markets and Markets Research in 2017 titled “ Cell
Expansion Market by Product (Reagent, Media, Flow Cytometer, Centrifuge, Bioreactor), Cell Type (Human, Animal), Application (Regenerative
Medicine & Stem Cell Research, Cancer), End user (Research Institute, Cell Bank) - Global Forecasts to 2021”. The report
states: “ The global cell expansion market is expected to reach USD $18.76 Billion
by 2021 from USD $8.34 Billion in 2016 at a CAGR of 17.6%. Geographically, the cell expansion market is dominated by North America,
followed by Europe, Asia, and the Rest of the World (RoW). Growth in the North American segment is primarily driven by increasing
incidence of chronic diseases in the North American countries. According to the American Medical Association and the American
Medical Group Association, more than 50% of Americans suffered from one or more chronic diseases in 2012; the number of Americans
suffering from chronic diseases was around 133 million in 2005 and this figure is expected to reach around 157 million by 2020.
With this significant growth in the number of patients suffering from chronic diseases, the market for cell expansion is expected
to grow in this region in the coming years.
Regenerative
Medicine Market
The Global
Translational Regenerative Medicine market is expected to grow significantly over the forecast period. The Global Translational
Regenerative Medicine market was valued at $5.8bn in 2016. Vision gain forecasts this market to increase to $14.5bn in
2021. The market is estimated to grow at a CAGR of 19.9% in the first half of the forecast period and 17.7% from 2016 to 2027.
Cell Culture
Market
Cell Culture
Market Global Forecast to 2023, according to “marketsandmarkets” the cell culture market is expected to reach USD $26.28 Billion by 2023 from USD
$15.32 Billion in 2018, at a CAGR of 11.4%. Growth in this market is driven by the growing number of regulatory approvals for
cell culture-based vaccines, increasing demand for monoclonal antibodies (mAbs), funding for cell-based research, growing preference
for single-use technologies, and the launch of advanced cell culture products.
Marketing
and Distribution
The key objective
of our marketing strategy is to position American CryoStem in the market as the “Gold Standard” for adipose tissue
collection, cell processing and cryogenic storage, research/commercial uses and therapeutic applications of adipose tissue within
the current regulatory framework. The combination of a traditional sales approach supported by continuous internal and external
marketing program(s) is closely coordinated with the expansion of our laboratory processing capabilities. Our initial marketing
efforts intend to disseminate current and future uses of adipose tissue and adult stem cells which support our business model,
products and services. We intend to continue to employ both print advertising and social media sales campaigns. In addition, we
plan to continue to utilize key leaders, and early adopters in the medical community as a marketing resource to enhance awareness
of our proprietary, patented products and services and to increase the number of surgeons who join our network, university and
private collaboration and consumers who use our products and services.
We plan to continue
direct marketing programs focused on reaching regenerative medicine physicians and plastic and cosmetic surgeons to join our network
of providers that offer our services to their patients. This marketing initiative has been implemented using a traditional sales
approach common to the pharmaceutical and biotechnology industries. This fundamental sales approach at the core of our marketing
activities is being strategically and tactically expanded using a combination of in-house sales personnel and outside independent
channels.
Our plan, capital
permitting, provides for a comprehensive integrated marketing approach using various traditional and new media, such as the Internet,
social media/blogging, video, print, TV, radio and trade shows to reach targeted potential consumers and promote awareness of
our Company and our branded products and services. The essence of this targeted strategy is to reach the end-users as quickly
as possible and to accelerate the adoption curve of our products and services. We also plan to utilize outside marketing resources
and trade groups to increase the number of surgeons willing to offer our products and services to their patients.
Development of Regional
U.S. Markets
Physician
Network - The Company continues to develop regional relationships to leverage its new products and services through existing
cosmetic surgery and regenerative medicine practices. The Company continues to develop and expand its network of physicians seeking
to adopt its products and services, initially focusing on surgeons performing liposuction, tissue transfer and regenerative procedures
involving the use of adipose tissue. The Company intends to continue expanding its efforts to medical professionals interested
in tissue storage and Regenerative Medicine applications utilizing ASDCs and establish itself as a primary source of collection,
processing, and preparation of cellular therapies as they are developed and approved for patient use by the FDA.
Development
of International Markets
International
Licensing Program – Globally, many jurisdictions outside the US permit the use of adipose tissue based cellular
therapies and regenerative medicine applications. The Company has received numerous inquiries concerning the sale or licensing
of our products and services in these jurisdictions. The Company believes that the inquiries to date are a result of the global
boom in Medical Tourism and the slow pace of approval of cellular therapies and regenerative medicine applications in the US.
To address these inquiries and to expand the Company’s sales, marketing and branding opportunities the Company has designed
and is offering an International Licensing Program.
The program
is designed to permit the licensing of the Company’s products and services to organizations that meet the Company’s
financial and technical criteria. The licensing program allows for a variety of business relationship including franchising, partnering
and joint venturing. Marketing efforts to date have been to clinics, physician and hospitals in foreign jurisdictions capable
of rapidly building or committing the appropriate facilities and personnel to create the required laboratory facilities to operate
the CELLECT®, ATGRAFT™ and ATCELL™ services in their local market. Strategically, the Company’s
international licensees will maintain the branding of the Company’s services along the lines of the “Intel Inside”
branding program.
Qualified
Licensees can quickly take advantage of the rapidly expanding opportunity to collect, process, store and culture individual regenerative
cell samples for their clients with the comfort and confidence that they are providing services that have been developed to conform
to US FDA standards. Core to the relationship is the developed proprietary and patent pending processing and laboratory operational
methodologies contained in our Standard Operating Procedures, Training, and Continuous Quality Management, Testing Program, and
Laboratory Operations manuals.
Licensing
programs may be initiated through a letter of intent (LOI) agreement between the Company and the prospective licensee. This LOI
agreement is designed for due diligence and facility qualifications purposes. The Company receives an initial fee under the agreement
which may or may not be credited toward future royalty payments. Following evaluation of the prospective licensee the Company
will enter into a final Agreement which outlines all upfront fees, minimum royalties and consumable purchase obligations of the
Licensee.
Significant
to our international development activities is the global expansion of the American CryoStem branded services and patented products,
as well as the expansion of the Company’s services, technology and products as the core platform to implement cellular therapies
and regenerative medicine.
Baoxin
Asia Pacific Biotechnology (Shenzhen) Co. Ltd. On July 12, 2018 The Company announced
the national launch of CRYO’s ATGRAFTTM tissue collection, processing and storage technology by Baoxin Asia Pacific
Biotechnology (Shenzhen) Co. Ltd. (“Baoxin”) in China. The management team traveled throughout southeast China with
the management and marketing team of Baoxin to present the ATGRAFTTM platform to leading plastic and cosmetic
surgery hospitals in Shenzhen, Nanning, Guangzhou, Guangxi and Changsha. The China launch activities are in support of the Company’s
previously announced licensing and supply agreement with Baoxin, under which Baoxin will pay the Company a minimum annual guarantee
against a fixed fee per process and purchase certain necessary consumables from CRYO required for the collection, processing and
storage of the collected adipose tissue. Under the terms of the Agreements signed in Fiscal 2018, the Company invested in and
currently holds five percent (5%) of Baoxin shares. Additionally, Mr. Arnone and Mr. Dudzinski were elected to serve as Directors
of Baoxin during their visit to Shenzhen, China. During 2019 Mr. Arnone resigned from the board of Baoxin.
During Fiscal
2020 and 2021, due to the continuing effects of the COVID pandemic and associated government policies and regulations Baoxin suspended
its processing activities. Baoxin is an emerging biotechnology company in China that has relied to date on investment to fund
operation and build their facilities, as is typical for these types of companies. During 2020 and 2021, Baoxin developed a new
state of the art facility with sizable clean rooms and biomaterial storage space. The facility was completed in February 2021
and officially opened in May of 2021. Unfortunately, due to the continued effects of COVID and the appearance of new variants
Baoxin has been unable to restart operations and its marketing programs. See Note 3, Note 13 and Note 14 for additional information.
Health
Information Technology Company, LTD (Hong Kong) - On June 30, 2014 the Company granted Health Information Technology Company,
LTD (“HIT”) exclusive rights to utilize the Company’s Standard Operating Procedures (SOP’s) to market
the Company’s ATGRAFT™ tissue storage service for Hong Kong. The Agreement calls for upfront fees, royalties and the
purchase by HIT of certain consumables manufactured by the Company. The Company and HIT have reached further agreement to extend
their relationship on a non-exclusive basis to include HIT’s cord blood laboratory located in Shenzhen, Guangdong Province,
one of China’s most successful Special Economic Zones. The HIT agreement includes, initial upfront fees and royalty payments
for predetermined gross revenue volumes. HIT will also purchase CRYO ACSelerate™ storage media, CELLECT™ collection
and transportation kits as well as other American CryoStem products necessary for clinical adipose tissue processing and storage
at the Shenzhen facility. The final master licensing agreement is for a period of 5 years with renewal options and was executed
between the parties on September 24, 2014. The HIT license has been extended per the terms of Schedule B of the Term Sheet, dated
June 30, 2014, for an additional 3 year period to June 30, 2023.
In 2017
as part of the Company’s transaction with Baoxin, HIT and the Company agreed to transfer certain product and distribution
rights granted to HIT under its 2014 agreement to Baoxin. The Company was paid a fee in the transaction and was provided with
an initial ownership position in a planned Regenerative Treatment Center to be established by HIT in Hong Kong.
The
current pandemic, changes in Chinese regulations and policies regarding Hong Kong, recent political unrest and the inability of
Chinese citizens to cross the border between Hong Kong and China have significantly curtailed the ability of HIT to implement
its business plans to utilize the Company’s technology and purchase the associated consumables.
CRYOVIVA
(Thailand), Ltd. - On April 5, 2018 the Company announced further expansion of its global laboratory and cellular technology
footprint by entering into an agreement to license its ATGRAFT™ and ATCELL adipose tissue (fat) processing and storage technologies
with Cryoviva (Thailand) Ltd., a Bangkok, Thailand based Cord Blood processing and storage facility. Cryoviva, Thailand, currently
offers collection, processing and storage of Cord Blood derived biologics to patients throughout Thailand and South East Asia.
American
CryoStem has licensed to Cryoviva (Thailand) Ltd., established in 2007, the rights to utilize the Company’s Standard Operating
Procedures (SOP’s) to create and market the Company’s ATGRAFT™ tissue storage service and ATCELL™ adipose
derived stem cell processing and storage services in Thailand. The financial terms generally, call for the payment of certain
training fees and, a percentage of the gross revenue subject to annual minimum payments generated from our products. Additionally,
the Agreement calls for the purchase of CRYO consumable products required for ATGRAFT and ATCELL sample processing including CRYO’s
ACSelerate™ non-DMSO cryogenic tissue storage media, transportation media, Cellect™ tissue collection kit, and ACSelerate
– Max™ cell culture medium.
The
current COVID pandemic has delayed CRYOVIVA’s scheduled launch of its marketing campaign several times and
unfortunately, CRYOVIVA suspended their tissue banking operations in 2020 and 2021. We are currently in discussions with them
concerning the restart of their operations and initiation of their marketing program for calendar 2022 although there is no certainty
that the effects of the pandemic will ease sufficiently to do so in the near term.
CellSource
Tokyo, Japan - In the second quarter of 2015 the Company entered into negotiations with CellSource, LLC in Tokyo, Japan for
the licensing of its ATGRAFT™ products and services and on June 2, 2015 the Company and Cell Source entered into
an initial term sheet licensing the ATGRAFT™ technology to CellSource for Japan. The non- exclusive agreement
expired in June of 2020.
Scientific
and Medical Advisory Board
We continue
to actively recruit and enlist the services of highly qualified peer leaders through our Scientific and Medical Advisory Board
to assist us in our industry speaking engagements and education platform. This education platform is designed to focus on physicians,
and industry needs and demands as they relate to current and future treatments utilizing our adipose tissue platform and adult
stem cell technologies. Additionally, certain members of our advisory board provide assistance and input to management on the
oversight of our research relationships, laboratory development and quality management systems. As of September 30, 2020, the
following are currently members of our Scientific and Medical Advisory Board:
Dayong Gao,
Ph.D. - Dr. Gao is a world-renowned Professor of Mechanical Engineering and Biomedical Engineering at the University of Washington
in Seattle. He has been actively engaged in cryopreservation research for more than 20 years, with specific emphasis on fundamental
and applied cryobiology, which is the investigation of mechanisms in cryo-injury and cryo-protection with respect to living biological
systems at low temperatures; with the development of optimal methods and technologies for the cryopreservation; and with the banking
of living cells and tissues for biomedical applications. Dr. Gao has published 175 research papers in prestigious scientific/biomedical
journals, with over 250 papers/abstracts in conference proceedings. He has obtained 16 patents and authored two scientific books
and numerous chapters in 17 scientific books. He currently serves on the Editorial Board, as Editor-in-Chief, of six scientific
journals, and is the Editor of the Cryopreservation Engineering section of Biopreservation and Biobanking. His research
in cryobiology and cryopreservation has been funded by the National Institutes of Health, the American Cancer Society, the Bill
and Melinda Gates Foundation, the American Heart Association, the Whitaker Foundation, the Washington Research Foundation and
the Kentucky Science Foundation, among others. Dr. Gao graduated with B.Sc. degree from the University of Science and Technology
in China and received a Ph.D. in Mechanical Engineering from Concordia University, Montreal, Canada.
Fredric A.
Stern, MD. F.A.C.S. - Dr. Stern is the founder and Medical Director of the Stern Center for Aesthetic Surgery in Bellevue,
Washington. Following his education at Columbia University Medical School, Dr. Stern earned his Board Certification in Ophthalmology
at the University of Washington, and underwent extensive additional training in oculofacial plastic and laser surgery. In 1987,
he joined Virginia Mason Medical Center in Seattle, serving as Director of the Oculoplastic Surgery Division for ten years. While
at Virginia Mason, Dr. Stern performed an extensive number of cosmetic laser procedures. He is honored to have been chosen as
one of a select group of instructors of the Botox Cosmetic® National Education Faculty, as well as the Radiesse™
Medical Education Faculty. Dr. Stern is also an instructor for the Sciton™Laser. In 2011,
he was voted the Best Plastic Surgeon in Western Washington by KING 5 (NBC affiliate) TV’s viewing audience. Dr.
Stern is a Fellow of the American College of Surgeons, the American Academy of Facial Plastic and Reconstructive Surgeons, the
American Academy of Cosmetic Surgery, and the American Society of Liposuction Surgery, as well as a member of the International
Society of Hair Restoration Surgery. In addition, over the past several years, he has appeared on Northwest Afternoon,
Evening Magazine, as well as KOMO, KIRO and Q13 news, discussing and demonstrating the latest techniques
in facial and eyelid laser cosmetic surgery, Botox® and laser-assisted liposuction. He is also an accomplished
winemaker & published novelist. Dr. Stern’s latest novel is a medical thriller titled, The Sigma Project.
Vincent
Giampapa, MD F.A.C.S - Dr. Giampapa is the founder /director of the Regenerative Medicine Institute located in
Costa Rica, the Plastic Surgery Center International and The Giampapa Institute for Anti-Aging Medical Therapy located in Montclair,
NJ. Dr. Giampapa’s research focuses on stem cell technologies and their applications to improve the cellular aging process
in order to enhance health span and quality of life. As a result of his research, Dr. Giampapa has been awarded medical and intellectual
property patents with the United States Patent and Trademark Office for developments involving unique cell culture delivery techniques,
new drug delivery systems, stem cell reprogramming, DNA repair, and telomerase maintenance. He is a co-founder of The Academy
of Anti-Aging Medicine (A4M), comprised of over 26,000 members representing over 110 nations, the first president of the Board
of Anti-Aging Medicine and the founder of healthycell®, an advanced cell health nutritional supplement and StemBank™,
a blood derived stem cell extraction and storage company. Dr. Giampapa will have an active role assisting the Company with the
development of its “From laboratory to clinic/physician’s office” services and applications platform.
Rand McClain,
DO - Dr. McClain earned his medical degree at Western University and completed his internship at the University of Southern
California’s Keck School of Medicine Residency Program (U.S.C. California Hospital). Dr. McClain has
dedicated over 35 years of his personal and professional life studying nutrition, exercise, herbs and supplements and is also
a Master of Acupuncture and Traditional Chinese Medicine. Dr. McClain has participated in professional and elite amateur sport
as an individual participant and as well as a member of two U.S. teams and continues to participate competitively. His work is
published in peer-reviewed and popular journals and he enjoys sharing and participating in the beneficial changes he helps create
in people’s lives. Dr. McClain has worked with some of the best and original innovators in Sports, Regenerative Medicine
(“Anti-Aging”), Cosmetic and Family Medicine. He also practices as part of the Regenerative Medicine Institute
an organization dedicated to advancing cellular treatments, procedures and research in the use of all available avenues to slow
or reverse physiological and cosmetic effects of aging. Dr. McClain currently serves as Chief Medical Officer of Live Cell Research,
a company dedicated to the discovery and development of products designed to enhance health and quality of life through epigenomic
manipulation. Dr. McClain is also a Medical Advisory Board member of American Cryostem Corporation a publicly traded company operating
laboratories dedicated to the collection, processing, bio-banking, culturing and differentiation of autologous adipose tissue
(fat) and adipose derived stem cells (ADSCs). Dr. McClain is a Board Member of Z.E.N. Foods, a gourmet food delivery and nutrition
service company that provides individually designed meal programs in conjunction with health providers and its own registered
dietician. Dr. McClain is also proud to be a member of the National Veteran Foundation’s Advisory Board. Dr. McClain has
also joined the investigative team of the Company’s recently approved clinical study to assist the team with the review
of prospective candidates and for the review of study data.
John
“Jay” Schwartz, PhD - Dr. Schwartz, holds a PhD in biochemistry and molecular biology and, served as an academic
researcher at Harvard and MIT for over 10 years. He is an accomplished life sciences entrepreneur, business mentor, consultant,
and investor with a demonstrated track record of identifying and driving commercially-viable early-stage companies from initial
bench conceptualization and funding to clinical development and exist. Dr. Schwartz 30+ years of entrepreneurship spans technical
development and commercialization of drugs, medical devices, combination products, and diagnostics; regulatory approval, Orphan
Drug/accelerated approval, clinical reimbursement, as well as intellectual property strategies. Most recently, he led AcuityBio
Corp to a successful acquisition by Cook Biotech. Over his career, he had led and advised multiple companies to successful exits
via acquisition in transactions ranging from $35 to $500 million
Corporate
Information
Our principal
executive offices are located at 1 Meridian Road, Eatontown, New Jersey 07724 and our telephone number is (732) 747-1007. Our
website is www.americancryostem.com. We also lease and operate a tissue processing laboratory at Princeton Corporate
Plaza in Monmouth Junction NJ. Our laboratory website address is www.acslaboratories.com.
Employees
Currently,
we have six (6) employees and continue to use consultants on an as needed basis. As we grow, we will need to attract an unknown
number of additional qualified employees, however we could be unsuccessful in attracting and retaining the persons needed.
Available
information
We file electronically
with the U.S. Securities and Exchange Commission (SEC) our annual reports on Form 10-K, quarterly reports on Form 10-Q, current
reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange
Act of 1934. The public can obtain materials that we file with the SEC through the SEC’s website at http://www.sec.gov or
at the SEC’s Public Reference Room at 100 F Street, NE, Washington, DC 20549. Information on the operation of
the Public Reference Room is available by calling the SEC at 800-SEC-0330.
Item
1A. Risk Factors
An
investment in our Common Stock involves a high degree of risk. Before making an investment decision, you should give careful consideration
to the following risk factors, in addition to the other information included in this prospectus, including our financial statements
and related notes, before deciding whether to invest in shares of our Common Stock. The occurrence of any of the adverse developments
described in the following risk factors could materially and adversely harm our business, financial condition, results of operations
or prospects. In that case, the trading price of our Common Stock could decline, and you may lose all or part of your investment.
Risks
Related to our Financial Position
We
have generated minimal product related revenues to date and do not expect to generate significant revenues in the near future
if at all. To obtain revenues from sales of our product candidates, we must succeed, either alone or with third parties, in developing,
obtaining regulatory approval for, manufacturing and marketing products with commercial potential. We may never succeed in these
activities, and we may not generate sufficient revenues to continue our business operations or achieve profitability.
We
have a history of net losses. We expect to continue to incur increasing net losses for the foreseeable future, and we may never
achieve or maintain profitability.
We
incurred significant net losses in each year since our inception in 2009. We had an accumulated deficit as of September 30, 2021,
and 2020 of $19,277,765 and $16,398,179, respectively. Our net losses have resulted principally from costs incurred in our development
activities. We anticipate that our net losses will substantially increase over the next several years as we plan to expand our
research and development activities, including the clinical development of ATCell and ATGraft products.
Because
of the numerous risks and uncertainties associated with drug product development and commercialization, we are unable to accurately
predict the timing or amount of future expenses or when, or if, we will be able to achieve or maintain profitability. We have
financed our operations primarily through the sale of equity securities, the issuance of convertible debt securities and upfront
and milestone payments pursuant to our collaboration and license agreements. The size of our future net losses will depend, in
part, on the rate of growth or contraction of our expenses and the level and rate of growth, if any, of our revenues. Our ability
to achieve profitability depends on our ability, alone or with others, to complete the development of our products successfully,
obtain the required regulatory approvals, manufacture, and market our proposed products successfully or have such products manufactured
and marketed by others and gain market acceptance for such products. These are formidable, time consuming and costly challenges
and we may never achieve commercialization or profitability.
We
have significant payment obligations under certain Notes due through 2021. Any non-payment of the Notes when due in the absence
of an extension of the maturity date would constitute event of default under the Notes, and our financial condition may be adversely
affected.
As
of September 30, 2021, the Company had issued and outstanding: $226,500 aggregate principal amount of Bridge Notes, which matured,
between January through July 2015 and bear interest at the rate of 8% per annum; $83,500 aggregate principal amount of Convertible
Notes which matured in September 2014, convertible into shares of Common Stock and the rate of one (1) share of Common Stock for
each $0.35 of principal amount and/or interest so converted; $45,000 of 8% convertible notes which matured in September of 2016,
convertible into shares of Common Stock and the rate of one (1) share of Common Stock for each $0.30 of principal amount and/or
interest so converted; $150,000 of 5% convertible notes which mature in Fiscal 2021, convertible into shares of Common Stock at
the rate of one (1) share of Common Stock for each $0.33 of principal amount and/or interest so converted; $155,000 of 8% convertible
notes which matured on January 31, 2018, convertible into shares of Common Stock at the rate of one (1) share of Common Stock
for each $0.20 of principal amount and/or interest so converted; $40,000 of 8% convertible notes which matured in January 31,
2018 convertible into shares of Common Stock and the rate of one (1) share of Common Stock for each $0.15 of principal amount
and/or interest so converted; and $100,000 aggregate principal amount of Convertible Notes which matured in Fiscal 2020, convertible
into shares of Common Stock and the rate of one (1) share of Common Stock for each $0.40 of principal amount and/or interest so
converted; $150,000 of 8% convertible notes which matures in December 31, 2022 convertible into shares of Common Stock and the
rate of one (1) share of Common Stock for each $0.75 of principal amount and/or interest so converted. No assurances can be given
that the Company will have sufficient funds to repay the principal and/or interest on such Bridge Notes when due or on the Convertible
Notes; such Convertible Notes are converted into Common Stock prior to maturity. In such event, we might be subject to, among
other things, non-payment claims of the Note holders, and our financial condition may be adversely affected.
We
will require substantial additional capital in the future. If additional capital is not available, we will have to delay, reduce
or cease operations.
Development
of our ATCell and other product candidates we may acquire in the future will require substantial additional funds to conduct
research, development and clinical trials necessary to bring each of these product candidates to market and to establish or contract
for manufacturing, marketing and distribution capabilities. Our future capital requirements will depend on many factors, including,
the following:
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·
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the
scope, rate of progress, results and costs of our non-clinical studies, clinical trials,
and other research and development activities;
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·
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the
scope, rate of progress and costs of our manufacturing development and commercial manufacturing
activities;
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·
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the
cost, timing and outcomes of regulatory proceedings, including NDAs and SPAs we file
with the FDA and similar filings with the EMA and other foreign regulatory authorities;
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·
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payments
required with respect to development milestones we achieve under our in-licensing agreements;
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·
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the
costs involved in preparing, filing, prosecuting, maintaining and enforcing patent claims;
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·
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the
costs associated with commercializing our product candidates, if they receive regulatory
approval;
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·
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the
cost and timing of establishing sales and marketing capabilities;
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·
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competing
technological efforts and market developments;
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·
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our
ability to maintain and establish collaborative and distribution arrangements to the
extent necessary;
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·
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revenues
received from any future products;
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·
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the
ability to achieve and receive milestone payments and co-development payments for our
candidates licensed to collaborators; and,
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·
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payments
received under any future strategic collaborations.
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We
anticipate that we will continue to generate significant net losses for at least the next several years as we continue to incur
increasing pipeline expenses to complete our clinical trial programs for ATCell, seek regulatory approvals, build commercial capabilities,
acquire and develop new drug candidate programs, and expand our corporate infrastructure. We believe that the net proceeds from
our financing efforts, together with our existing cash and cash equivalents will allow us to fund our operating plan through 2022.
However, our operating plan may change as a result of factors currently unknown to us. Changing circumstances may cause us to
consume capital faster or slower than we currently anticipate or to alter our operations. We have based our estimates of future
net losses on assumptions that may prove to be wrong, and we could utilize our available financial resources sooner than we currently
expect.
Our
revenue and expense forecasts may prove to be inaccurate, and any change in the foregoing assumptions could require us to obtain
additional financing earlier than anticipated. There is a risk of delay or failure at any stage of developing a product candidate,
and the time required, and costs involved in successfully accomplishing our objectives cannot be accurately predicted. Actual
drug research and development costs could substantially exceed budgeted amounts, which could force us to delay, reduce the scope
of or eliminate one or more of our development programs.
We
may never be able to generate sufficient product revenue, if at all, to cover our expenses. Until we do, we expect to seek additional
funding through public or private equity or debt financings, collaborative relationships, capital lease transactions or other
available financing transactions. However, additional financing may not be available on acceptable terms, if at all, and such
financings could be dilutive to existing security holders. Moreover, if additional funds are obtained through arrangements with
collaborators, such arrangements may require us to relinquish rights to certain of our technologies, product candidates or products
that we would otherwise seek to develop or commercialize ourselves.
If
adequate funds are not available, we may be required to delay, reduce the scope of or eliminate one or more of our development
programs. Our failure to obtain adequate financing when needed and on acceptable terms would have a material adverse effect on
our business, financial condition and results of operations.
The
report of our independent registered public accounting firm included a “going concern” explanatory paragraph.
The
accompanying financial statements have been prepared on a going-concern basis which contemplates the continuation of operations,
realization of assets and liquidation of liabilities in the ordinary course of business. However, primarily as a result of our
recurring losses and limited cash balances, the report of our independent registered public accounting firm on our financial statements
as of and for the years ended September 30, 2020 and 2021 included an explanatory paragraph indicating that there is substantial
doubt about our ability to continue as a going concern. If we are unable to raise sufficient capital in this offering or otherwise
as and when needed, our business, financial condition and results of operations will be materially and adversely affected, and
we will need to significantly modify our operational plans to continue as a going concern.
The
Company may not have complied with various state securities laws in connection with prior issuances/sales of its securities.
Since
April 2011, the date of the closing of the Asset Purchase, through September 30, 2021, the Company sold approximately $5,288,127
gross amount of its equity and debt securities. In connection with such sales, the Company may have violated various state securities
laws. If the Company was determined by a court, FINRA or regulatory body with the required jurisdiction to have violated such
laws, any such violation could result in the Company being required to offer rescission rights to each such prior purchase from
the Company to rescind such purchases and pay to the prior purchaser an amount of funds equal to the purchase price paid by such
prior investors plus interest from the date of any such purchase. No assurances can be given the Company will, if it is required
to offer such purchasers rescission right, have sufficient funds to pay the prior purchasers the amount required. In addition,
if the Company violated one or more securities laws of a state in connection with prior offers and/or sales of its securities,
each such state could bring an enforcement, regulatory and/or other legal action against the Company which, among other things,
could result in the Company having to pay substantial fines, not being able to sell securities in such states in the future and/or
having a determination made by any such states against the Company that the Company failed to comply with such states’ securities
laws, which could result in the Company, among other untoward effects including those set forth above, not being able to have
its Common Stock be eligible for continued quotation on the OTC pink sheets and/or other trading markets and/or mediums that the
Common Stock is then trading and/or eligible for quotation on and/or in the future seeks to be quoted or traded on.
Shares
eligible for future sale may adversely affect the market for our Common Stock.
As of September 30, 2021, we had 11,536,500
of Common Stock issuable upon exercise of all outstanding stock options and warrants, and 2,334,784 shares issuable on the conversion
of outstanding Convertible Notes. When these securities are exercised or converted into shares of our Common Stock, the number
of our shares of Common Stock outstanding will increase. Such increase in our outstanding shares, and any sales of such shares
into the public market, could have a material adverse effect on the market for our Common Stock and the market price of our Common
Stock.
In
addition, from time to time, certain of our shareholders may be eligible to sell all or some of their shares of Common Stock by
means of ordinary brokerage transactions in the open market pursuant to Rule 144, promulgated under the Securities Act, subject
to certain limitations. In general, pursuant to Rule 144, after satisfying a six-month holding period: (i) affiliated shareholders
(or shareholders whose shares are aggregated) may, under certain circumstances, sell within any three month period a number of
securities which does not exceed the greater of 1% of the then outstanding shares of common stock and (ii) non-affiliated shareholders
may sell without such limitations, provided we are current in our public reporting obligations. Rule 144 also permits the sale
of securities by non-affiliates that have satisfied a one year holding period without any limitation or restriction. Any substantial
sale of our common stock pursuant to Rule 144 or pursuant to any resale prospectus may have a material adverse effect on the market
price of our securities.
Risks
Related to Our Business
Cell
therapy is a developing field and a significant market for our services has yet to emerge in the US.
Cell
therapy and regenerative medicine is a developing field, which we believe few cell therapy products or services approved for and/or
commercial use. We are wholly dependent on the acceptance of cell therapy (and specifically stem cells) to develop into a large
and profitable industry. We hope to develop services related to the collection, processing, storage of stem cells and application
development. We believe the market for stem cell and tissue-based therapies is in its infancy, substantially research oriented
and financially speculative and has yet to achieve substantial commercial success. Stem cell products and services may in general
be susceptible to various risks, including undesirable and unintended side effects, unintended immune system responses, inadequate
therapeutic efficacy, lack of acceptance by physicians, hospital and consumers, or other characteristics that may prevent or limit
their approval or commercial use. Management believes that the demand for tissue processing and stem cell processing and the number
of people who may use cell or tissue-based therapies is difficult, if not impossible, to forecast. Our success is dependent on,
among other items, the establishment of a market for our proposed services and our ability to capture a share of this market.
Our
proposed services may not attain commercial acceptance absent endorsement by physicians.
Our
proposed services will compete against individual adipose tissue and cellular samples derived from alternate sources, such as
bone marrow, umbilical cord blood and perhaps embryos. We believe that physicians and hospitals are historically slow to adopt
new technologies like ours, whatever the merits, when older technologies continue to be supported by established providers. Overcoming
such inertia often requires very significant marketing expenditures or definitive product performance and/or pricing superiority.
Management currently believes physicians’ and hospitals’ inertia and skepticism to be a significant barrier as we
attempt to gain market penetration with our proposed services. Failure to achieve market acceptance of our proposed services would
have a material adverse effect on our future prospects.
Our
facilities may require compliance with PHS and FDA regulations and there is no assurance we are in and/or in the future will be
in compliance with these protocols or that the PHS or FDA may find deficiencies upon inspection of our facility.
The
Company believes that its processing methodologies, and its Monmouth Junction, New Jersey laboratory facilities to be in compliance
with all current applicable regulations and guidelines as defined by the United States Public Health Service Act (“PHS”
or the “PHS Act”) and the Food and Drug Administration (“FDA”) regulations
and guidance as they relate to the operation of a tissue processing and storage facility.
On
January 3, 2018 the Company received a warning letter from the US. FDA concerning its contract manufacturing services provided
to Cells on Ice. The FDA informed the Company through the letter that the FDA determined that its autologous adipose derived cell
product ATCELL is a drug under current FDA regulations and guidance. In response to the letter the Company ceased shipment of
its ATCELL product within the United States. Since receiving the Warning Letter from the FDA the Company undertook a complete
reorganization and remediation of its laboratory facility and operations and an expansion of its existing facility. The Company
believes that its effort, new clean room laboratory facility, SOP and Quality Management system upgrades, and filing the IND application
(No. 19089) on October 22, 2019 and approved by FDA on September 17, 2020, will satisfy the FDA’s concerns; no assurance
can be given that we are in fact in compliance and/or in the future will be in compliance with these regulations or that upon
inspection by PHS and/or FDA that we will not be required to amend our procedures or limit our operations based upon the finding
of the inspection. Based upon discussions with the FDA Office of Regulatory Affairs (ORA), the disposition of the warning letter
is deferred, per current FDA policy, until the completion of the clinical studies and the submission of a Biologics License Application
filing by the Company.
Clinical
trials involve a lengthy and expensive process with an uncertain outcome, and results of earlier studies and trials may not be
predictive of future trial results.
Our
product candidates may not prove to be safe and efficacious in clinical trials and may not meet all the applicable regulatory
requirements needed to receive regulatory approval. To receive regulatory approval for the commercialization of our product candidates,
we must conduct, at our own expense, extensive preclinical testing and clinical trials to demonstrate safety and efficacy of these
product candidates for the intended indication of use. Clinical testing is expensive, can take many years to complete, if at all,
and its outcome is uncertain. Failure can occur at any time during the clinical trial process.
The
results of preclinical studies and early clinical trials of new drugs do not necessarily predict the results of later-stage clinical
trials. The design of our clinical trials is based on many assumptions about the expected effects of our product candidates, and
if those assumptions are incorrect the clinical trials may not produce statistically significant results. Preliminary results
may not be confirmed on full analysis of the detailed results of an early clinical trial. Product candidates in later stages of
clinical trials may fail to show safety and efficacy sufficient to support intended use claims despite having progressed through
initial clinical testing. The data collected from clinical trials of our product candidates may not be sufficient to support the
filing of an NDA or to obtain regulatory approval in the United States or elsewhere. Because of the uncertainties associated with
drug development and regulatory approval, we cannot determine if or when we will have an approved product for commercialization
or achieve sales or profits.
If
we experience delays or difficulties in enrolling patients in our ongoing or planned clinical trials, our receipt of necessary
regulatory approvals could be delayed or prevented.
We
may not be able to initiate or continue our ongoing or planned clinical trials for our product candidates if we are unable to
identify and enroll a sufficient number of eligible patients to participate in these trials as required by the FDA or comparable
foreign regulatory authorities. If our strategies for patient identification and enrollment prove unsuccessful, we may have difficulty
enrolling or maintaining patients appropriate for our product candidates. The conditions for which we currently plan to evaluate
our product candidates include orphan or rare diseases, and diseases with high unmet medical needs with limited patient pools
from which to draw for clinical trials. Clinical investigators will need to decide whether to offer their patients enrollment
in clinical trials of our product candidates versus treating these patients with commercially available drugs that have established
safety and efficacy profiles. The eligibility criteria of our clinical trials, once established, will further limit the pool of
available trial participants. Some of our competitors may have ongoing or planned clinical trials for product candidates that
would treat the same patients as our clinical product candidates, and patients who would otherwise be eligible for our clinical
trials may instead enroll in clinical trials of our competitors’ product candidates. Patient enrollment is also affected
by other factors, including:
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severity
of the disease under investigation;
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our
ability to recruit clinical trial investigators of appropriate competencies and experience;
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the
incidence and prevalence of our target indications;
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clinicians’
and patients’ awareness of, and perceptions as to the potential advantages and
risks of our product candidates in relation to other available therapies, including any
new drugs that may be approved for the indications we are investigating;
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competing
studies or trials with similar eligibility criteria;
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invasive
procedures required to enroll patients and to obtain evidence of the product candidate’s
performance during the clinical trial;
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availability
and efficacy of approved medications for the disease under investigation;
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eligibility
criteria defined in the protocol for the trial in question;
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the
size and nature of the patient population required for analysis of the trial’s
primary endpoints;
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efforts
to facilitate timely enrollment in clinical trials;
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whether
we are subject to a partial or full clinical hold on any of our clinical trials;
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reluctance
of physicians or patient advocacy organizations to encourage patient participation in
clinical trials;
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the
ability to monitor patients adequately during and after treatment;
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our
ability to obtain and maintain patient consents; and
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proximity
and availability of clinical trial sites for prospective patients.
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Our
inability to enroll and maintain a sufficient number of patients for our clinical trials would result in significant delays or
may require us to abandon one or more clinical trials altogether. There may be competing trials, as well as the limited bandwidth
of pediatric oncology institutions for running trials, which can lead to the prioritization of certain trials, leading to delays
in our clinical trials. Enrollment delays in our clinical trials, including delays due to the COVID-19 pandemic, may result in
increased development costs, which would cause our value to decline and limit our ability to obtain additional financing.
We
may experience delays in clinical testing of our product candidates. We do not know whether planned clinical trials will begin
on time, will need to be redesigned or will be completed on schedule, if at all. In addition to delays in patient enrollment,
clinical trials can be delayed for a variety of reasons, including delays in obtaining regulatory approval to commence a clinical
trial, in securing clinical trial agreements with prospective sites with acceptable terms, in obtaining institutional review board
approval to conduct a clinical trial at a prospective site or in obtaining sufficient supplies of clinical trial materials. Any
delays in completing our clinical trials will increase our costs, slow down our product development and timeliness and approval
process and delay our ability to generate revenue.
We
may be required to suspend or discontinue clinical trials due to unexpected side effects or other safety risks that could preclude
approval of our product candidates.
Our
clinical trials may be suspended at any time for a number of reasons. For example, we may voluntarily suspend or terminate our
clinical trials if at any time we believe that they present an unacceptable risk to the clinical trial patients. In addition,
the FDA or other regulatory agencies may order the temporary or permanent discontinuation of our clinical trials at any time if
they believe that the clinical trials are not being conducted in accordance with applicable regulatory requirements or that they
present an unacceptable safety risk to the clinical trial patients.
Administering
any product candidate to humans may produce undesirable side effects. These side effects could interrupt, delay or halt clinical
trials of our product candidates and could result in the FDA or other regulatory authorities denying further development or approval
of our product candidates for any or all targeted indications. Ultimately, some or all of our product candidates may prove to
be unsafe for human use. Moreover, we could be subject to significant liability if any volunteer or patient suffers, or appears
to suffer, adverse health effects as a result of participating in our clinical trials.
Our
clinical trials may not result in drugs approved for commercialization.
The
grant of regulatory approvals for the commercial sale of any of our proposed products will depend, in part, on us and/or any collaborators
successfully conducting extensive clinical testing to demonstrate safety and efficacy in humans. The results of preclinical and
clinical testing may prove to be negative or inconclusive. As results of particular clinical trials are received, we and/or our
collaborators, if any, may abandon projects that we might have otherwise believed to be promising. Our interpretation of clinical
trial results may not be accepted by governmental regulators. The products that are successfully developed, if any, will be subject
to requisite regulatory approval prior to their commercial sale, and the approval, even if obtainable, may take several years.
Generally, only a very small percentage of new pharmaceutical products initially developed are approved for sale. Even if a new
pharmaceutical product is approved for sale, it may not be commercially successful. We may encounter unanticipated problems relating
to development, manufacturing, distribution and marketing, some of which may be beyond our financial and technical capacity to
resolve. The failure to address such problems adequately could have a materially adverse effect on our business, financial condition
or results of operations. We may not succeed in the development and marketing of any new drug products, and any products we are
able to get approved for marketing may be rendered obsolete or uncompetitive by products of competitors.
Many
factors may affect the outcome of prospective clinical trials. The design of prospective clinical trials is often based on limited
or incomplete data. The current Phase I clinical trial design of the ATCell PCS program is based in part on data collected from
a Pilot Treatment Program, and a retrospective analysis of that data. Retrospective analysis of clinical trial results may lead
to incorrect conclusions. In addition, standard of care will change over time. Patients enrolling in the current clinical trial
may have been exposed to and treated with therapeutics and other therapies different than patients enrolled in the prior Pilot
Study. Thus, the results of the prior Pilot Study may not be predictive of results in the current Phase I clinical trial. Our
current clinical Phase I trial of ATCell may not enroll a sufficient number of patients or it may not be ultimately concluded
according to the current design and protocol, for reasons including, but not limited to, the study drug administration regimen
and participation requirements, changes in standard of care, and acceptability by patients and investigators of the study control.
We
may not be able to fulfill the extensive, time consuming and costly regulatory requirements to enable us to develop and market
our drug candidates.
Our
drug development programs are subject to regulatory control by multiple federal, state, local, national, and multinational regulatory
agencies, including the FDA and the EMA. Before we can market and commercialize our drug candidates, we will need to apply for
and receive regulatory approval by multiple federal, state, local, national, and multinational regulatory agencies, including
the FDA and EMA. If the data, information, applications, files, and regulatory documentation from our drug development programs
are incomplete or inadequate, we could be subject to suspension or withdrawal of permission to conduct clinical trials from the
regulatory authorities, including the FDA and EMA. We can make no assurances as to the completeness or adequacy of the data, information,
applications, files, and regulatory documentation from our drug development programs and we may never receive approval for marketing
and commercialization from the regulatory authorities, including the FDA and EMA, or such approval could be delayed substantially,
requiring us to conduct costly additional clinical trials.
Furthermore,
regulatory authorities’ assessment of the data and results required to demonstrate safety and efficacy can change over time
and can be affected by many factors, such as the emergence of new information, including on other products, changing policies
and agency funding, staffing and leadership. We cannot be sure whether future changes to the regulatory environment will be favorable
or unfavorable to our business prospects. For example, average review times at the FDA for marketing approval applications can
be affected by a variety of factors, including budget and funding levels and statutory, regulatory and policy changes.
Guidelines
and recommendations published by various organizations can impact the use of our products candidates.
Government
agencies promulgate regulations and guidelines directly applicable to us and to our product candidates. In addition, professional
societies, practice management groups, private health and science foundations and organizations involved in various diseases from
time to time may also publish guidelines or recommendations to the health care and patient communities. Recommendations of government
agencies or these other groups or organizations may relate to such matters as usage, dosage, route of administration and use of
concomitant therapies. Recommendations or guidelines suggesting the reduced use of our product candidates or the use of competitive
or alternative products that are followed by patients and health care providers could result in decreased use of our proposed
product candidates.
Results
of earlier clinical trials may not be predictive of the results of later-stage clinical trials.
The
results of preclinical studies and early clinical trials of product candidates may not be predictive of the results of later-stage
clinical trials. Product candidates in later stages of clinical trials may fail to show the desired safety and efficacy results
despite having progressed through preclinical studies and initial clinical trials. Many companies in the biopharmaceutical industry
have suffered significant setbacks in advanced clinical trials due to adverse safety profiles or lack of efficacy, notwithstanding
promising results in earlier studies. Similarly, our future clinical trial results may not be successful for these or other reasons.
This
product candidate development risk is heightened by any changes in the planned clinical trials compared to the completed clinical
trials. As product candidates are developed through preclinical to early to late-stage clinical trials towards approval and commercialization,
it is customary that various aspects of the development program, such as manufacturing and methods of administration, are altered
along the way in an effort to optimize processes and results. While these types of changes are common and are intended to optimize
the product candidates for late-stage clinical trials, approval and commercialization, such changes carry the risk that they will
not achieve these intended objectives.
Any
of these changes could make the results of our planned clinical trials or other future clinical trials we may initiate less predictable
and could cause our product candidates to perform differently, including causing toxicities, which could delay completion of our
clinical trials, delay approval of our product candidates, and/or jeopardize our ability to commence product sales and generate
revenues.
Reimbursement
may not be available for our product candidates, which would impede sales.
Market
acceptance and sales of our product candidates may depend on coverage and reimbursement policies of third-party insurers as well
as health care reform measures. Decisions about formulary coverage as well as levels at which government authorities and third-party
payers, such as private health insurers and health maintenance organizations, reimburse patients for the price they pay for our
products as well as levels at which these payors pay directly for our products, where applicable, could affect whether we are
able to commercialize these products as well as market acceptance of our products. We cannot assure that reimbursement will be
available for any of our products or that coverage or reimbursement policies will not reduce the demand for, or the price of,
our products. We have not commenced efforts to have our product candidates reimbursed by government or third-party payors. If
coverage and reimbursement are not available or are available only at limited levels, we may not be able to commercialize our
products.
In
recent years, officials have made numerous proposals to change the health care system in the United States. These proposals include
measures that would limit or prohibit payments for certain medical treatments or subject the pricing of drugs to government control.
In addition, in many foreign countries, particularly the countries of the European Union, the pricing of prescription drugs is
subject to government control. If our products are or become subject to government regulation that limits or prohibits payment
for our products, or that subjects the price of our products to governmental control, we may not be able to generate revenue,
attain profitability or commercialize our products.
As
a result of legislative proposals and the trend towards managed health care in the United States, third-party payors are increasingly
attempting to contain health care costs by limiting both coverage and the level of reimbursement of new drugs. They may also impose
strict prior authorization requirements and/or refuse to provide any coverage of uses of approved products for medical indications
other than those for which the FDA has granted market approvals. As a result, significant uncertainty exists as to whether and
how much third-party payors will reimburse patients for their use of newly approved drugs, which in turn will put pressure on
the pricing of drugs.
If
we lose key personnel, our development programs could be delayed, and our business could be harmed.
Our
future success will depend, in part, on the leadership and efforts of our senior executive officers, directors, members of our
Scientific Advisory Board and consultants. In particular, we rely and will continue to rely on the leadership and expertise provided
by our founder and Chief Executive Officer, John S Arnone and Chief Operating Officer, Anthony Dudzinski. We do not maintain “key
man” insurance for Mr. Arnone or Mr. Dudzinski However, we do have an employment agreement with them but that does not guarantee
that they will always remain with the company. If Mr. Arnone or Mr. Dudzinski were to terminate their relationship with us for
any reason, or if they were to become disabled or die, it would have a material adverse impact on our business.
In
addition to Mr. Arnone and Dudzinski, we have other key personnel that are critical to our business. Most of these persons are
currently “contract employees”, which means they perform services for us on a contractual basis. Nevertheless, if
their relationship with us were to terminate, it could have a material adverse impact on our business and operations.
In
addition, to execute our growth strategy we also must attract, train, retain and motivate additional highly skilled employees
and knowledgeable advisors required for the expansion of our activities. Our failure to do so could have a materially adverse
effect on our business, including delays in our drug development programs. Given the current state of the U.S. job market in general,
that the pool of qualified personnel with experience in the pharmaceutical and biotechnology industry is limited overall, and
that we will be competing with other companies that have far greater resources than we have and that can offer prospective employees
greater opportunities than we can, we expect to experience difficulty in hiring and retaining highly skilled personnel with appropriate
qualifications. In sum, we cannot assure you that we will be able to retain the services of our existing personnel or attract
additional qualified employees and such failure would likely have a materially adverse effect on us.
We
will need to increase the size of our organization, and we may experience difficulties in managing growth.
We
are a small company with four (4) full-time employees and two (2) contract employees who provide services to us under contractual
arrangement but who are not treated as statutory employees. We anticipate that most, if not all, these contract employees will
become statutory employees upon consummation an additional planned funding. To continue our clinical trials and commercialize
our product candidates, we need to expand our employee base for managerial, operational, financial and other resources. Future
growth will impose significant added responsibilities on members of management, including the need to identify, recruit, maintain
and integrate additional employees. We plan to add additional employees to assist us with our clinical and commercial programs.
Our future financial performance and our ability to commercialize our product candidates and to compete effectively will depend,
in part, on our ability to manage any future growth effectively. To that end, we must be able to:
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manage
development efforts effectively;
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manage
our clinical trials effectively;
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integrate
additional management, administrative, manufacturing and sales and marketing personnel;
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maintain
sufficient administrative, accounting and management information systems and controls;
and
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hire
and train additional qualified personnel.
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We
may not be able to accomplish these tasks, and our failure to accomplish any of them could harm our financial results and impact
our ability to achieve development milestones.
We
currently have no sales and marketing organization. If we are unable to establish a direct sales force or build appropriate relationships
in the United States to promote our products, the commercial opportunity for our products may be diminished.
We
currently have no sales and marketing organization. If any of our product candidates are approved by the FDA, we will need to
create a sales and marketing team from the ground up or hire a third-party to provide those services. Our current intention is
to create our own, in-house sales and marketing team to market our products domestically. Whether we pursue that strategy or opt
to outsource that function, we will incur significant additional expenses. In addition, if we decide to build our own sales and
marketing team, the effort will require us to commit a significant additional management resources. We will also have to compete
with other pharmaceutical and biotechnology companies, many of whom have greater financial resources than we have, to recruit,
hire and train sales and marketing personnel. We cannot assure you that our efforts will be successful no matter how much time,
effort and capital we commit. In addition, we cannot assure you that we will be able to a retain a third party to perform those
services on acceptable terms, if at all, should that be necessary. If we elect to rely on third parties to sell our product candidates
in the United States, we may receive less revenue than if we sold our products directly. In addition, although we would intend
to use due diligence in monitoring their activities, we may have little or no control over the sales efforts of those third parties.
In the event we are unable to develop our own sales force or collaborate with a third party to sell our product candidates, we
may not be able to commercialize our product candidates which would negatively impact our ability to generate revenue.
Security
breaches and other disruptions could compromise our information and expose us to liability, which would cause our business and
reputation to suffer.
In
the ordinary course of our business, we collect and store sensitive data, including intellectual property, our proprietary business
information and that of our suppliers and business partners, as well as personally identifiable information of storage customers,
clinical trial participants and employees. Similarly, our business partners and third-party providers possess certain of our sensitive
data. The secure maintenance of this information is critical to our operations and business strategy. Despite our security measures,
our information technology and infrastructure may be vulnerable to attacks by hackers or breached due to employee error, malfeasance
or other disruptions. Any such breach could compromise our networks and the information stored there could be accessed, publicly
disclosed, lost or stolen. Any such access, disclosure or other loss of information, including our data being breached at our
business partners or third-party providers, could result in legal claims or proceedings, liability under laws that protect the
privacy of personal information, disrupt our operations, and damage our reputation which could adversely affect our business.
Risks
Relating to Manufacturing Activities
We
have limited manufacturing capabilities and may not be able to obtain and maintain adequate manufacturing from contractors.
We
have limited manufacturing capability of our own. We may not be able to establish or maintain arrangements with contractors that
can manufacture products at a cost or in quantities, of sufficient quality and timeliness, necessary to meet the supply requirements
of our clinical study programs. In addition, we anticipate that we will need to rely on third parties to manufacture certain products
even if they have been approved for use. We will need to establish and rely upon third party contractors to develop methods to
scale-up manufacturing of commercial quantities of any of our products that receives regulatory approval. In addition, we may
experience significant growth upon approval of our products and be required to build large scale manufacturing facilities and
laboratories to meet demand and may not be able to complete the facilities on time or at all.
We
may not be able to manufacture our product candidates in commercial quantities, which would prevent us from commercializing our
product candidates.
To
date, our product candidates have been manufactured in small quantities for preclinical studies and clinical trials. If any of
our product candidates is approved by the FDA or comparable regulatory authorities in other countries for commercial sale, we
will need to manufacture such product candidate in larger quantities. We may not be able to successfully increase the manufacturing
capacity for any of our product candidates in a timely or economic manner, or at all. Significant scale-up of manufacturing may
require additional validation studies, which the FDA must review and approve. If we are unable to successfully increase the manufacturing
capacity for a product candidate, the clinical trials as well as the regulatory approval or commercial launch of that product
candidate may be delayed or there may be a shortage in supply. Our product candidates require precise, high-quality manufacturing.
Our failure to achieve and maintain these high-quality manufacturing standards in collaboration with our third-party manufacturers,
including the incidence of manufacturing errors, could result in patient injury or death, product recalls or withdrawals, delays
or failures in product testing or delivery, cost overruns or other problems that could harm our business, financial condition
and results of operations.
Materials
necessary to manufacture our product candidates may not be available on commercially reasonable terms, or at all, which may delay
the development and commercialization of our product candidates.
If
we rely on the third-party manufacturers of our product candidates to purchase from third-party suppliers the materials necessary
to produce the product candidates for our clinical trials, and we will rely on such manufacturers to purchase such materials to
produce finished products for any commercial distribution of our products if we obtain marketing approval. Suppliers may not sell
these materials to our manufacturers at the time they need them to meet our required delivery schedule or on commercially reasonable
terms, if at all. We do not have any control over the process or timing of the acquisition of these materials by our manufacturers.
If our manufacturers are unable to obtain these materials for our clinical trials, testing of the affected product candidate would
be delayed, which may significantly impact our ability to develop the product candidate. If we, or our manufacturers, are unable
to purchase these materials after regulatory approval has been obtained for one of our products, the commercial launch of such
product would be delayed or there would be a shortage in supply of such product, which would harm our ability to generate revenues
from such product and achieve or sustain profitability.
Risks
Relating to Regulation of Our Industry
The
biopharmaceutical industry is subject to significant regulation and oversight in the United States; in addition to approval
of products for sale and marketing, our failure to comply could be costly and hurt our business.
In
addition to FDA restrictions on marketing of biopharmaceutical products, several other types of state and federal laws have been
applied to restrict certain marketing practices in the biopharmaceutical industry in recent years. These laws include anti-kickback
statutes and false claims statutes. If we or our representatives are found to have engaged in practices that involve remuneration
intended to induce prescribing, purchases or recommendations, we may be subject to anti-kickback liability.
If
we or our representatives are found, for example, to have marketed a product for unapproved, and thus non-reimbursable, uses,
or to have provided free product to customers with the expectation that the customers would bill government programs for the product,
we could be subject to liability under federal or state false claims laws. Sanctions under these federal and state laws may include
civil monetary penalties, exclusion of a manufacturer’s products from reimbursement under government programs, criminal
fines and imprisonment.
Because
of the breadth of these laws and the narrowness of the safe harbors, it is possible that some of our business activities could
be subject to challenge under one or more of these laws, which could have a material adverse effect on our reputation and results
of operations.
We
may be subject to federal and state healthcare fraud and abuse laws and health information privacy and security laws. If we do
not fully comply with such laws, we could face substantial penalties.
If
we obtain FDA approval for any of our product candidates and begin commercializing those products in the United States, our operations
may be directly, or indirectly through our customers, subject to various federal and state fraud and abuse laws, including, without
limitation, the federal anti-kickback statute. These laws may impact, among other things, our proposed sales, marketing and education
programs. In addition, we may be subject to patient privacy regulation by both the federal government and the states in which
we conduct our business. The laws that may affect our ability to operate include but are not limited to:
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HIPAA,
which created new federal criminal statutes that prohibit executing a scheme to defraud
any healthcare benefit program and making false statements relating to healthcare matters;
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HIPAA,
as amended by the Health Information Technology and Clinical Health Act and its implementing
regulations, which impose certain requirements relating to the privacy, security and
transmission of individually identifiable health information;
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the
federal physician sunshine requirements under the Affordable Care Act requires manufacturers
of drugs, devices, biologics and medical supplies to report annually to HHS information
related to payments and other transfers of value to physicians, other healthcare providers,
and teaching hospitals, and ownership and investment interests held by physicians;
and
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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, and state laws governing the privacy and security of health information
in certain circumstances, many of which differ from each other in significant ways and
may not have the same effect, thus complicating compliance efforts.
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If
our operations are found to be in violation of any of the laws described above or any other governmental regulations that apply
to us, we may be subject to penalties, including civil and criminal penalties, damages, fines and the curtailment or restructuring
of our operations, any of which could adversely affect our ability to operate our business and our results of operations.
Our
employees may engage in misconduct or other improper activities, including noncompliance with regulatory standards and requirements,
which could subject us to sanctions, damage our reputation, and otherwise hurt our business.
We
are exposed to the risk of employee fraud or other misconduct. Misconduct by employees could include intentional failures to comply
with FDA regulations, provide accurate information to the FDA, comply with manufacturing standards we have established, comply
with federal and state health-care fraud and abuse laws and regulations, report financial information or data accurately or disclose
unauthorized activities to us. In particular, sales, marketing and business arrangements in the healthcare industry are subject
to extensive laws and regulations intended to prevent fraud, kickbacks, self-dealing and other abusive practices. These laws and
regulations may restrict or prohibit a wide range of pricing, discounting, marketing and promotion, sales commission, customer
incentive programs and other business arrangements. Employee misconduct could also involve the improper use of information obtained
during clinical trials, which could result in regulatory sanctions and serious harm to our reputation. It is not always possible
to identify and deter employee misconduct, and the precautions we take to detect and prevent misconduct may not be effective in
controlling unknown or unmanaged risks or losses or in protecting us from governmental investigations or other actions or lawsuits
stemming from a failure to comply with 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, including
the imposition of significant fines or other sanctions.
If
we decide to pursue a Fast Track Designation by the FDA, it may not lead to a faster development or regulatory review or approval
process.
We
may seek Fast Track Designation for one or more of our product candidates. If a drug is intended for the treatment of a serious
or life-threatening condition and the drug demonstrates the potential to address unmet medical needs for this condition, the product
sponsor may apply for FDA Fast Track Designation. The FDA has broad discretion whether to grant this designation, so even if we
believe a particular product candidate is eligible for this designation, we cannot assure you that the FDA would decide to grant
it. Even if we do receive Fast Track Designation, we may not experience a faster development process, review or approval compared
to conventional FDA procedures. The FDA may withdraw Fast Track Designation if it believes that the designation is no longer supported
by data from our clinical development program.
We
may seek Orphan Drug Designation from the FDA and/or EMA for additional product candidates that we acquire or develop in the future.
However, we may be unsuccessful in obtaining or may be unable to maintain the benefits associated with Orphan Drug Designation,
including the potential for market exclusivity.
We
may seek Orphan Drug Designation for product candidates we obtain in the future from the FDA and/or the EMA; however, we
may be unsuccessful. There can be no assurance that the FDA or EMA will grant orphan designation for any indication for which
we apply, or that we will be able to maintain such designation for our current or any future candidates.
In
the United States, Orphan Drug Designation entitles a party to financial incentives such as opportunities for grant funding towards
clinical trial costs, tax advantages and user-fee waivers. If a product candidate with an Orphan Drug Designation subsequently
receives the first marketing approval for the indication for which it has such designation, the product is entitled to a period
of orphan drug exclusivity, which precludes the EMA or the FDA from approving another marketing application for the same drug
or biologic for that time period, except in limited circumstances, such as a showing of clinical superiority to the product with
orphan drug exclusivity or where the manufacturer is unable to assure sufficient product quantity. The applicable exclusivity
period is ten years in Europe, but such exclusivity period can be reduced to six years if a product no longer meets the criteria
for orphan designation or if the product is sufficiently profitable so that market exclusivity is no longer justified. Moreover,
orphan drug exclusive marketing rights in the United States may be lost if the FDA later determines that the request for designation
was materially defective or if the manufacturer is unable to assure sufficient quantities of the drug to meet the needs of patients
with the rare disease or condition.
Even
if we obtain orphan drug exclusivity for a product, that exclusivity may not effectively protect the product from competition
because different products can be approved for the same condition. Even after an orphan drug is approved, the FDA or comparable
foreign regulatory authority can subsequently approve the same drug for the same condition if such regulatory authority concludes
that the later drug is clinically superior if it is shown to be safer, more effective or makes a major contribution to patient
care. Orphan drug exclusivity may also be lost if the FDA later determines that the initial request for designation was materially
defective.
In
addition, orphan drug exclusivity does not prevent the FDA from approving competing drugs for the same or similar indication containing
a different active ingredient. In addition, if a subsequent drug is approved for marketing for the same or a similar indication
as any of our product candidates that receive marketing approval, we may face increased competition and lose market share regardless
of orphan drug exclusivity. Orphan drug designation neither shortens the development time or regulatory review time of a drug
nor gives the drug any advantage in the regulatory review or approval process.
Health
care reform measures could adversely affect our business.
In
the United States and foreign jurisdictions, there have been a number of legislative and regulatory changes to the healthcare
system that could hurt our future results of operations. In particular, there have been, and continue to be, a number of initiatives
at the federal and state levels that seek to reduce healthcare costs. Legally mandated price controls on payment amounts by third-party
payors or other restrictions could harm our ability to generate revenues. Bidding procedures to determine what pharmaceutical
products and which suppliers will be included in prescription drug and other healthcare programs could reduce ultimate demand
for our products or put pressure on our product pricing.
Increases
in importation or re-importation of pharmaceutical products from foreign countries into the United States could put competitive
pressure on our ability to profitably price our products, which, in turn, could adversely affect our results of operations. We
might elect not to seek approval for or market our products in foreign jurisdictions to minimize the risk of re-importation, which
could also reduce the revenue we generate from our product sales. It is also possible that other legislative proposals having
similar effects will be adopted.
Risks
Relating to Competitive Factors
We
operate in an environment of intense competition and our products, if approved, will be subject to intense market competition.
The
biotechnology industry generally and our drug development programs in particular are characterized by intensive competition. Multiple
companies are currently marketing products otherwise being used for indications in which we are developing products. In addition,
many companies, research institutes, hospitals and universities are working to develop products. Many of these entities have substantially
greater financial, technical, manufacturing, marketing, distribution and other resources than we have. Certain of such companies
have experience in undertaking testing and clinical trials of new or improved products for indications in which we are developing
products. In addition, certain competitors have already begun testing biopharmaceuticals for indications in which we are developing
products and may introduce such products before we do.
Risk
Relating to Our Arrangements with Third Parties
If
the collaborators, licensees and others on which we depend do not perform as expected, we may not be able to develop, manufacture
and commercialize drug products.
If
we cannot maintain our existing collaborative arrangements, product development and license agreements, contract manufacturing
arrangements and other agreements with third parties for services we need on acceptable terms, or at all, and/or enter into new
arrangements, then we will experience delays, added costs and missed opportunities in the development, manufacture or sale of
our proposed products. In particular, we have limited capability to discover or conduct pre-clinical development of new products,
and therefore rely on collaborators, partners, or licensors to be the source of our drug development programs.
Our
lack of sales and marketing experience could limit our revenue from any approved drugs.
We
have limited experience in sales, marketing or distribution of pharmaceutical and related products. In the event any of our product
candidates receive regulatory approval for commercialization, we intend to pursue third party arrangements regarding the sales
and marketing of any products we develop internationally. We also may pursue such relationships to market our products domestically,
although that is not our current intention. However, we may not be able to establish or maintain such arrangements or have effective
sales forces and distribution systems necessary to make any products commercially viable. To the extent that we decide not to,
or are unable to, enter into third party arrangements with respect to the sales and marketing of our proposed products, significant
capital expenditures, management resources and time will be required to establish and develop our own marketing and sales force
with technical expertise and with supporting distribution capabilities. To the extent that we depend on third parties for marketing
and distribution, any revenues received by us will depend upon the efforts of such third parties, and their efforts may not be
successful. Licensing and purchase agreements pursuant to which we may acquire drug candidate programs may require the consent
of the licensor or seller for sublicenses or other third-party sales, marketing, or drug development arrangements. If licensors
or sellers do not provide such consent, the development and commercialization of our product candidates could be severely impaired.
We,
currently and in the future will, continue to rely on third parties to conduct our clinical trials. If these third parties do
not successfully carry out their contractual duties or meet expected deadlines, we may not be able to seek or obtain regulatory
approval for or commercialize our product candidates.
We
currently, and will in the future, enter into agreements with third-party CROs under which we have delegated to the CROs the responsibility
to coordinate and monitor the conduct of our clinical trials and to manage data for our clinical programs. We, our CROs and our
clinical sites are required to comply with current cGCPs, regulations and guidelines issued by the FDA and by similar governmental
authorities in other countries where we are conducting clinical trials. We have an ongoing obligation to monitor the activities
conducted by our CROs and at our clinical sites to confirm compliance with these requirements. In the future, if we, our CROs
or our clinical sites fail to comply with applicable cGCPs, the clinical data generated in our clinical trials may be deemed unreliable
and the FDA may require us to perform additional clinical trials before approving our marketing applications. In addition, our
clinical trials must be conducted with product produced under cGMP regulations and will require a large number of test subjects.
Our failure to comply with these regulations may require us to repeat clinical trials, which would delay the regulatory approval
process.
If
CROs do not successfully carry out their contractual duties or obligations or meet expected deadlines, if they need to be replaced,
or if the quality or accuracy of the clinical data they obtain is compromised due to their failure to adhere to our clinical protocols,
regulatory requirements or for 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 our product candidates. As a result, our financial results and
the commercial prospects for our product candidates would be harmed, our costs could increase, and our ability to generate revenue
could be delayed.
We
may need to rely on third parties to market and commercialize our product candidates in international markets.
In
the future, if appropriate regulatory approvals are obtained, we may commercialize our product candidates in international markets.
However, we have not decided how to commercialize our product candidates in those markets. We may decide to build our own sales
force or sell our products through third parties. If we decide to sell our product candidates in international markets through
a third party, we may not be able to enter into any marketing arrangements on favorable terms or at all. In addition, these arrangements
could result in lower levels of income to us than if we marketed our product candidates entirely on our own. If we are unable
to enter into a marketing arrangement for our product candidates in international markets, we may not be able to develop an effective
international sales force to successfully commercialize those products in international markets. If we fail to enter into marketing
arrangements for our products and are unable to develop an effective international sales force, our ability to generate revenue
would be limited.
Risks
Relating to Protecting Our Intellectual Property
It
is difficult and costly to protect our proprietary rights, and we may not be able to ensure protection of such rights.
Our
commercial success will depend in part on obtaining and maintaining patent protection and trade secret protection of our product
candidates, and the methods used to manufacture them, as well as successfully defending these patents against third-party challenges.
We will only be able to protect our product candidates from unauthorized making, using, selling and offering to sell or importation
by third parties to the extent that we have rights under valid and enforceable patents or trade secrets that cover these activities
or from orphan status designations from regulatory authorities in certain markets.
If
we are unable to protect our proprietary rights, we may not be able to compete effectively or operate profitably.
Our
success will depend, in part, on our ability to obtain patents and maintain trade secrets, both in the United States and other
countries. Patent matters in the biotechnology and pharmaceutical industries can be highly uncertain and involve complex legal
and factual questions. Accordingly, the validity, breadth and enforceability of our patents and the existence of potentially blocking
patent rights of others cannot be predicted, either in the United States or in other countries.
We
may not be able to develop patentable products or processes or have patents issue from any of the currently pending patent applications,
and the claims granted on issued patents may not be sufficient to protect our technology or adequately cover the actual products
we may eventually sell. Potential competitors or other researchers in the field may have filed patent applications, been issued
patents, published articles or otherwise created prior art that could restrict or block our efforts to obtain additional patents.
Our issued patents or pending patent applications if issued, may be challenged, invalidated, rendered unenforceable or circumvented
or the rights granted thereunder might not provide us with adequate proprietary protection or competitive advantages. Our patent
rights also depend on our compliance with technology and patent licenses upon which our patent rights are based and upon the validity
of assignments of patent rights from consultants, licensors and other inventors that were, or are, not employed by us.
In
addition, competitors may manufacture and sell our potential products in those foreign countries where we have not filed for patent
protection or where patent protection may be unavailable, not obtainable or, ultimately, not enforceable. Even where patent protection
is obtained, third-party competitors may challenge our patent claims in the various patent offices, for example via opposition
in the European Patent Office or reexamination or interference proceedings in the USPTO. The ability of such competitors to sell
such products in the United States or in foreign countries where we have obtained patents is usually governed by the patent laws
of the countries in which the product is sold.
We
will incur significant ongoing expenses in maintaining our patent portfolio. Should we lack the funds to maintain our patent portfolio
or to enforce our rights against infringers, we could be adversely impacted. Litigation, which could result in substantial costs
to us (even if determined in our favor), may also be necessary to enforce any patents and patent applications issued or licensed
to us or to determine the scope and validity of the proprietary rights of others.
Intellectual
property rights do not necessarily address all potential threats to our competitive advantage.
The
degree of future protection afforded by our intellectual property rights is uncertain because intellectual property rights have
limitations, and may not adequately protect our business, or permit us to maintain our competitive advantage. The following examples
are illustrative:
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Others
may be able to make products that are similar to our product candidates but that are
not covered by the claims of the patents that we own.
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We
or our licensors or strategic collaborators might not have been the first to make the
inventions covered by the issued patent or pending patent application that we own.
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We
or our licensors or strategic collaborators might not have been the first to file patent
applications covering certain of our inventions.
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Others
may independently develop similar or identical products to our product candidates or
alternative technologies or duplicate any of our technologies without infringing our
intellectual property rights.
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Our
pending patent applications may not lead to issued patents or patents with claims that
are sufficiently broad to adequately protect our products and technologies.
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Issued
patents and patent applications we own or have exclusively licensed may not provide us
with any competitive advantages, or may be held invalid or unenforceable, as a result
of legal challenges by our competitors.
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Our
competitors might conduct research and development activities in countries where we do
not have patent rights and then use the information learned from such activities to develop
competitive products for sale in our major commercial markets.
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We
may not develop additional proprietary technologies that are patentable.
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The
patents of others may have an adverse effect on our business.
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Should
any of these events or others occur, they could significantly harm our ability to sell products and earn revenue.
Patent
reform legislation could increase the uncertainties and costs surrounding the prosecution of our patent applications and the enforcement
or defense of our issued patents.
The
Leahy-Smith Act, which was signed into law in September 2011, includes a number of significant changes to U.S. patent law. These
include provisions that affect the way patent applications will be prosecuted and may also affect patent litigation. Although
the USPTO has developed some regulations and procedures to govern administration of the Leahy-Smith Act, uncertainty remains as
to how some aspects of the Act and regulations will be interpreted and applied by the USPTO. Accordingly, it is not clear what,
if any, impact the Leahy-Smith Act will have on the operation of our business, our current and pending patent portfolio and future
intellectual property strategy. However, the Leahy-Smith Act and its implementation could increase the uncertainties and costs
surrounding the prosecution of our patent applications and the enforcement or defense of our issued patents, all of which could
have a material adverse effect on our business.
We
may be subject to litigation with respect to the ownership and use of intellectual property that will be costly to defend or pursue
and uncertain in its outcome.
Our
success also will depend, in part, on our refraining from infringing patents or otherwise violating intellectual property owned
or controlled by others. Pharmaceutical companies, biotechnology companies, universities, research institutions and others may
have filed patent applications or have received, or may obtain, issued patents in the United States or elsewhere relating to aspects
of our intellectual property. It is uncertain whether the issuance of any third-party patents will require us to alter our products
or processes, obtain licenses, or cease certain activities. Some third-party applications or patents may conflict with our issued
patents or pending applications. Any such conflict could result in a significant reduction of the scope or value of our issued
or licensed patents. Even if claims of infringement are without merit, any such action could divert the time and attention of
management and impair our ability to access additional capital and/or cost us significant funds to defend.
In
addition, if patents issued to other companies contain blocking, dominating or conflicting claims and such claims are ultimately
determined to be valid, we may be required to obtain licenses to these patents or to develop or obtain alternative non-infringing
technology and cease manufacturing or selling any products deemed to infringe those patents. If any licenses are required, we
may not be able to obtain any such licenses on commercially favorable terms, if at all, and if these licenses are not obtained,
we might be prevented from pursuing the development and commercialization of certain of our potential products. Our failure to
obtain a license on favorable terms to any technology that we may require to commercialize our products could prevent us from
earning revenue on a product that we developed.
In
addition, if our competitors file or have filed patent applications in the United States or other countries that claim technology
also claimed by us, we may have to participate in interference proceedings to determine priority of invention. These proceedings,
if initiated by the USPTO or by foreign patent agencies, could result in substantial costs to us, even if the eventual outcome
is favorable to us. Such proceedings can be lengthy, are costly to defend and involve complex questions of law and fact, the outcomes
of which are difficult to predict. Moreover, we may have to participate in post-grant proceedings or third-party ex parte or
inter partes reexamination proceedings under the USPTO or foreign patent agencies. An adverse outcome with respect to a
third-party claim or in an interference proceeding could subject us to significant liabilities, require us to license disputed
rights from third parties, or require us to cease using such technology, any of which could substantially increase our expenses
and impair or delay our ability to earn revenue from product sales.
If
we cannot adequately protect our trade secrets, we could lose potential competitive advantage.
We
also rely on trade secrets to protect technology, especially where patent protection is not believed to be appropriate or obtainable
or where patents have not issued. For example, our manufacturing process involves a number of trade secret steps, processes, and
conditions. We attempt to protect our proprietary technology and processes, in part, with confidentiality agreements and assignment
of invention agreements with our employees and confidentiality agreements with our consultants and certain contractors. However,
these agreements may be breached and we may not have adequate remedies for any breach. In addition, our trade secrets may become
known or be independently discovered by competitors. We may fail in certain circumstances to obtain the necessary confidentiality
agreements, or their scope or term may not be sufficiently broad to protect our interests.
If
our trade secrets or other intellectual property become known to our competitors, it could result in a material adverse effect
on our business. To the extent that we or our consultants or research collaborators use intellectual property owned by others
in work for us, disputes may also arise as to the rights to related or resulting know- how and inventions.
If
our licensors do not adequately prosecute and protect patents we rely on, then our product development could be impaired.
While
we normally seek and gain the right to fully prosecute the patents and patent applications relating to our product candidates,
there may be times when platform technology patents or product-specific patents that relate to our product candidates are controlled
by our licensors. In addition, our licensors and/or licensees may have back-up rights to prosecute patent applications if we do
not do so or choose not to do so, and our licensees may have the right to assume patent prosecution rights after certain milestones
are reached. If any of our licensing collaborators fails to appropriately prosecute and maintain patent protection for patents
covering any of our product candidates, our ability to develop and commercialize those product candidates may be adversely affected
and we may not be able to prevent competitors from making, using and selling competing products.
Our
patent portfolio may be incomplete or inadequate.
Although
our patent portfolio consists of issued patents and patent applications and includes composition of matter patents and method/use
patents and patent applications, it may not be adequate to protect our products. We do not know if our current or future patent
applications will be approved or if our existing patents or patents issue in the future will adequately protect our products and
technologies.
Obtaining
and maintaining our patent protection depends on compliance with various procedural, document submissions, 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.
The
USPTO and various foreign governmental patent agencies require compliance with a number of procedural documentaries, fee payment
and other provisions during the patent process. There are situations in which noncompliance can result in abandonment or lapse
of a patent or patent application, resulting in partial or complete loss of patent rights in the relevant jurisdiction. In such
an event, competitors might be able to enter the market earlier than would otherwise have been the case.
Confidentiality
agreements with employees and others may not adequately prevent disclosure of our trade secrets and other proprietary information
and may not adequately protect our intellectual property, which could limit our ability to compete.
Because
we operate in the highly technical field of research and development of biopharmaceutical drugs, we rely in part on trade secret
protection to protect our proprietary trade secrets and unpatented know-how. However, trade secrets are difficult to protect,
and we cannot be certain that others will not develop the same or similar technologies on their own. We have taken steps, including
entering into confidentiality agreements with our employees, consultants, outside scientific collaborators, sponsored researchers
and other advisors, to protect our trade secrets and unpatented know-how. These agreements generally require that the other party
keep confidential and not disclose to third parties all confidential information developed by the party or made known to the party
by us during the party’s relationship with us. We also typically obtain agreements from these parties that provide that
inventions conceived by the party in the course of rendering services to us will be our exclusive property. However, these agreements
may not be honored and may not effectively assign intellectual property rights to us. Enforcing a claim that a party illegally
obtained and is using our trade secrets or know-how is difficult, expensive and time consuming, and the outcome is unpredictable.
In addition, courts outside the United States may be less willing to protect trade secrets or know-how. The failure to obtain
or maintain trade secret protection could adversely affect our competitive position.
Risks
Relating to Our Exposure to Litigation
We
are exposed to potential product liability or similar claims, and insurance against these claims may not be available to us at
a reasonable rate in the future.
Our
business exposes us to potential liability risks that are inherent in the testing, manufacturing and marketing of human therapeutic
products. Clinical trials involve the testing of product candidates on human subjects or volunteers under a research plan and
carry a risk of liability for personal injury or death to patients due to unforeseen adverse side effects, improper administration
of the product candidate, or other factors. Many of these patients are already seriously ill and are therefore particularly vulnerable
to further illness or death.
We
currently carry liability insurance in the amount of $1,000,000 million in the aggregate, but we may not be able to maintain such
insurance or the amount of such insurance may not be adequate to cover claims. We could be materially and adversely affected if
we were required to pay damages or incur defense costs in connection with a claim outside the scope of indemnity or insurance
coverage, if the indemnity is not performed or enforced in accordance with its terms, or if our liability exceeds the amount of
applicable insurance. In addition, insurance may not continue to be available on terms acceptable to us, if at all, or if obtained,
the insurance coverage may be insufficient to cover any potential claims or liabilities. Similar risks, but with larger potential
liability amounts, would exist upon the commercialization or marketing of any products by our collaborators or us. Regardless
of their merit or eventual outcome, product liability claims may result in:
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decreased
demand for our products;
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injury
to our reputation and significant negative media attention;
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withdrawal
of clinical trial volunteers;
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distraction
of management; and
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substantial
monetary awards to plaintiffs.
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Should
any of these events occur, it could have a material adverse effect on our reputation and financial condition.
Claims
for indemnification by our directors and officers may reduce our available funds to satisfy successful third-party claims against
us and may reduce the amount of money available to us.
Our
amended and restated certificate of incorporation provides that we will indemnify our directors to the fullest extent permitted
by Nevada law. In addition, as our bylaws provide, we may enter into indemnification agreements with our directors and executive
officers. If we are required to indemnify one or more of our directors or executive officers, it may reduce our available funds
to satisfy successful third-party claims against us, may reduce the amount of money available to us and may have a material adverse
effect on our results of operations.
Risks
Related to this Offering of Common Stock
The
price of our Common Stock may fluctuate substantially.
You
should consider an investment in our Common Stock to be highly risky, and you should invest in our Common Stock only if you can
withstand a significant or entire loss and wide fluctuations in the market value of your investment. Some factors that may cause
the market price of our Common Stock to fluctuate, in addition to the other risks mentioned in this “Risk Factors”
section and elsewhere in this prospectus, are:
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sales
of our Common Stock by our stockholders, executives, and directors;
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volatility
and limitations in trading volumes of our shares of Common Stock;
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our
ability to obtain financings to conduct and complete research and development activities
including, but not limited to, our current and proposed clinical trials, and other business
activities;
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the
timing and success of introductions of new applications or our competitors or any other
change in the competitive dynamics of our industry, including consolidation among competitors,
customers or strategic partners;
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network
outages or security breaches;
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our
ability to secure resources and the necessary personnel to conduct clinical trials on
our desired schedule;
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commencement,
enrollment or results of our clinical trials for our drug candidates or any future clinical
trials we may conduct;
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changes
in the development status of our drug candidates;
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any
delays or adverse developments or perceived adverse developments with respect to the
FDA’s review of our planned preclinical and clinical trials;
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any
delay in our submission for studies or drug approvals or adverse regulatory decisions,
including failure to receive regulatory approval for our drug candidates;
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unanticipated
safety concerns related to the use of our drug candidates;
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failures
to meet external expectations or management guidance;
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changes
in our capital structure or dividend policy, future issuances of securities, sales of
large blocks of Common Stock by stockholders;
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announcements
and events surrounding financing efforts, including debt and equity securities;
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our
inability to enter into new markets and/or obtain and/or develop new drug candidates;
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competition
from existing technologies and drugs or new technologies and drugs that may emerge;
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announcements
of acquisitions, partnerships, collaborations, joint ventures, new drugs, capital commitments,
or other events by us or our competitors;
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changes
in general economic, political and market conditions in or any of the regions in which
we conduct our business;
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changes
in industry conditions or perceptions;
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changes
in valuations of similar companies or groups of companies;
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analyst
research reports, recommendation and changes in recommendations, price targets, and withdrawals
of coverage;
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departures
and additions of key personnel;
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disputes
and litigations related to intellectual properties, proprietary rights, and contractual
obligations;
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changes
in applicable laws, rules, regulations, or accounting practices and other dynamics;
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possible
delays in the expected recognition of revenue due to lengthy and sometimes unpredictable
sales timelines;
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the
lack of market acceptance and sales growth for our drug candidates, if any, that receive
sales and marketing approval; and
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other
events or factors, many of which may be unforeseeable and/or out of our control.
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In
addition, if the market for stocks in biotechnology and/or pharmaceutical companies in general or in related industries or the
stock market in general experiences a loss of investor confidence, the trading price of our Common Stock could decline for reasons
unrelated to our business, financial condition and results of operations. If any of the foregoing occurs, it could cause the trading
price of the shares of our Common Stock price to fall as well, which could expose us to lawsuits that, even if unsuccessful, could
be costly to defend and a distraction to our management.
We
are authorized to issue 300,000,000 shares of Common Stock and 50,000,000 shares of “blank check” preferred stock,
the issuance of which could, among other things, reduce the proportionate ownership interests of current shareholders.
We
are authorized to issue 300,000,000 shares of Common Stock and 50,000,000 shares of “blank check” preferred stock.
As of September 30, 2020, there were 59,570,666 shares of Common Stock issued, (excluding 11,536,500 shares issuable upon exercise
of all issued and outstanding stock options and warrants, and 2,344,784 shares issuable on the conversion of all outstanding Convertible
Notes). No shares of preferred stock were issued and outstanding as of September 30, 2021. Our board of directors has the ability,
without seeking shareholder approval, to issue additional shares of Common Stock and/or to designate, establish the terms and
conditions of, and issue shares of preferred stock for such consideration, if any, as the board of directors may determine. Any
such shares of preferred stock could have dividend, liquidation, conversion, voting or other rights, which could adversely affect
the voting power or other rights of the holders of shares of Common Stock. In the event of such issuance, the preferred stock
could, among other items, be used as a method of discouraging, delaying or preventing a change in control of our Company, which
could have the effect of discouraging bids for our Company and thereby prevent security-holders from receiving the maximum value
for their shares of our Common Stock.
Our
Common Stock is currently traded on the OTC pink sheets and is subject to additional trading restrictions as a “penny stock,”
which could adversely affect the liquidity and price of such stock. If our Common Stock remains subject to the SEC’s penny
stock rules, broker-dealers may experience difficulty in completing customer transactions and trading activity in our securities
may be adversely affected.
Our
Common Stock currently trades on the OTC pink sheets. The OTC pink sheets may be viewed by investors as a less desirable, and
less liquid, marketplace. As a result, an investors may find it more difficult to purchase, dispose of or obtain accurate quotations
as to the value of our Common Stock.
Because
our Common Stock is not listed on any national securities exchange, such shares will also be subject to the regulations regarding
trading in “penny stocks,” which are those securities trading for less than $5.00 per share, and that are not otherwise
exempted from the definition of a penny stock under other exemptions provided for in the applicable regulations. The following
is a list of the general restrictions on the sale of penny stocks:
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Before
the sale of penny stock by a broker-dealer to a new purchaser, the broker-dealer must
determine whether the purchaser is suitable to invest in penny stocks. To make that determination,
a broker-dealer must obtain, from a prospective investor, information regarding the purchaser’s
financial condition and investment experience and objectives. Subsequently, the broker-dealer
must deliver to the purchaser a written statement setting forth the basis of the suitability
finding and obtain the purchaser’s signature on such statement.
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A
broker-dealer must obtain from the purchaser an agreement to purchase the securities.
This agreement must be obtained for every purchase until the purchaser becomes an “established
customer.”
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The
Exchange Act requires that before effecting any transaction in any penny stock, a broker-dealer
must provide the purchaser with a “risk disclosure document” that contains,
among other things, a description of the penny stock market and how it functions and
the risks associated with such investment. These disclosure rules are applicable to both
purchases and sales by investors.
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A
dealer that sells penny stock must send to the purchaser, within 10 days after the end
of each calendar month, a written account statement including prescribed information
relating to the security.
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These
requirements can severely limit the liquidity of securities in the secondary market because fewer brokers or dealers are likely
to be willing to undertake these compliance activities. As a result of our Common Stock not being listed on a national securities
exchange and the rules and restrictions regarding penny stock transactions, an investor’s ability to sell to a third party
and our ability to raise additional capital may be limited. We make no guarantee that market-makers will make a market in our
Common Stock, or that any market for our Common Stock will continue.
We
may acquire other companies or technologies, which could divert our management’s attention, result in dilution to our stockholders
and otherwise disrupt our operations and adversely affect our operating results.
We
may in the future seek to acquire or invest in businesses, applications and services or technologies that we believe could complement
or expand our current product portfolio, enhance our technical capabilities or otherwise offer growth opportunities. The pursuit
of potential acquisitions may divert the attention of management and cause us to incur various expenses in identifying, investigating
and pursuing suitable acquisitions, whether or not they are consummated.
In
addition, we do not have any experience in acquiring other businesses. If we acquire additional businesses, we may not be able
to integrate the acquired personnel, operations and technologies successfully or effectively manage the combined business following
the acquisition. We also may not achieve the anticipated benefits from the acquired business due to a number of factors, including:
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inability
to integrate or benefit from acquired technologies or services in a profitable manner;
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unanticipated
costs or liabilities associated with the acquisition;
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difficulty
integrating the accounting systems, operations and personnel of the acquired business;
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difficulties
and additional expenses associated with supporting legacy pharmaceutical products and
hosting infrastructure of the acquired business;
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diversion
of management’s attention from other business concerns;
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adverse
effects to our existing business relationships with business partners and customers as
a result of the acquisition;
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the
potential loss of key employees;
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use
of resources that are needed in other parts of our business; and
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use
of substantial portions of our available cash to consummate the acquisition.
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In
addition, a significant portion of the purchase price of companies we acquire may be allocated to acquired goodwill and other
intangible assets, which must be assessed for impairment at least annually. In the future, if our acquisitions do not yield expected
returns, we may be required to take charges to our operating results based on this impairment assessment process, which could
adversely affect our results of operations.
Acquisitions
could also result in dilutive issuances of equity securities or the incurrence of debt, which could adversely affect our operating
results. In addition, if an acquired business fails to meet our expectations, our operating results, business and financial position
may suffer.
Market
and economic conditions may negatively impact our business, financial condition and share price.
Concerns
over inflation, energy costs, geopolitical issues, the U.S. mortgage market and a declining real estate market, unstable global
credit markets and financial conditions, and volatile oil prices have led to periods of significant economic instability, diminished
liquidity and credit availability, declines in consumer confidence and discretionary spending, diminished expectations for the
global economy and expectations of slower global economic growth going forward, increased unemployment rates, and increased credit
defaults in recent years. Our general business strategy may be adversely affected by any such economic downturns, volatile business
environments and continued unstable or unpredictable economic and market conditions. If these conditions continue to deteriorate
or do not improve, it may make any necessary debt or equity financing more difficult to complete, more costly, and more dilutive.
Failure to secure any necessary financing in a timely manner and on favorable terms could have a material adverse effect on our
growth strategy, financial performance, and share price and could require us to delay or abandon development or commercialization
plans.
If
securities or industry analysts do not publish research or reports, or publish unfavorable research or reports about our business,
our stock price and trading volume may decline.
Any
future trading market for our Common Stock will rely in part on the research and reports that industry or financial analysts publish
about us, our business, our markets and our competitors. We do not control these analysts. If securities analysts do not cover
our Common Stock, the lack of research coverage may adversely affect the market price of our Common Stock. Furthermore, if one
or more of the analysts who do cover us downgrade our Common Stock or if those analysts issue other unfavorable commentary about
us or our business, the market price of the shares of our Common Stock would likely decline. If one or more of these analysts
cease coverage of us or fails to regularly publish reports on us, we could lose visibility in the market and interest in our Common
Stock could decrease, which in turn could cause the market price of, or the trading volume in, the shares of Common Stock to decline
and may also impair our ability to expand our business with existing customers and attract new customers.
We
currently are wholly dependent on John Arnone and Anthony Dudzinski, Conflicts of Interest.
We
currently are wholly dependent on John Arnone and Anthony Dudzinski, our only executive officers and directors. Our future performance
will depend on the continued services of such persons and our ability to retain such persons and to hire additional qualified
persons. The loss of either of Mr. Arnone or Mr. Dudzinski, or both, would materially and adversely affect our proposed business.
There are no assurances they will continue to do so. The employment agreements among other terms permit each of Mr. Arnone and
Mr. Dudzinski to conduct other business activities outside of their employment with us. Each such employment agreement has been
extended to 2025.We have not obtained any “key-man” life insurance policies, nor do we presently plan to obtain or
maintain any such policies on Mr. Arnone, Mr. Dudzinski or any other of our employees.
Mr.
Arnone and Mr. Dudzinski collectively beneficially own in excess of 50.1% of our issued and outstanding voting stock and as a
result have the ability to directly and/or indirectly make all decisions for us.
Mr.
Arnone owns the majority of the issued and outstanding voting stock of Personal Cell Sciences Corporation, a Florida corporation
(“PCS”). PCS is in the cosmetic business and has entered into a contract manufacturing and royalty agreement
with the company to manufacture conditioned medium. We also receive a royalty of 10% of the gross sales of any autologous products
sold by PCS containing the conditioned medium that we manufacture. Mr. Arnone is also the CEO of Regenerative BioTherapy Corp.
Regenerative BioTherapy Corp, a Florida corporation which entered into a licensing Agreement with the Company in September of
2014. The licensing agreement Permits Regenerative BioTherapy the use of the Company’s Standard Operating Procedures, Quality
Management and General Operations procedures and process for the Company’s product lines and IP; to construct and operate
a laboratory and treatment facility in the Caribbean. We may in the future seek to expand our business relationship with, and/or
acquire PCS and/or Regenerative BioTherapy Corp. Management cannot assure you that any such business relationship or acquisition,
if consummated, would be on terms favorable to us.
Because
certain of our stockholders control a significant number of shares of our Common Stock, they may have effective control over actions
requiring stockholder approval.
Our
directors, executive officers and principal stockholders, and their respective affiliates, beneficially own approximately 51.09%
of our outstanding shares of Common Stock. In particular, AMCY, our largest stockholder of record, owns approximately 33.40% of
our issued and outstanding shares of Common and John Arnone, CEO and Chairman beneficially own approximately 40.59% of our issued
and outstanding shares of Common Stock and Anthony Dudzinski, COO and director will beneficially own approximately 40.38 % of
our issued and outstanding Common Stock. As a result, these stockholders, acting together, have the ability to control the outcome
of matters submitted to our stockholders for approval, including the election of directors and any merger, consolidation or sale
of all or substantially all of our assets. In addition, these stockholders, acting together, have the ability to control the management
and affairs of our company. Accordingly, this concentration of ownership might harm the market price of our Common Stock by:
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delaying,
deferring or preventing a change in corporate control;
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impeding
a merger, consolidation, takeover or other business combination involving us; or
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discouraging
a potential acquirer from making a tender offer or otherwise attempting to obtain control
of us.
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Future
sales and issuances of shares of our Common Stock could result in additional dilution of the percentage ownership of our stockholders
and could cause our share price to fall.
We
expect that significant additional capital will be needed in the future to continue our planned operations, including increased
marketing, hiring new personnel, commercializing our drugs, and continuing activities as an operating public company. To the extent
we raise additional capital by issuing equity securities; our stockholders may experience substantial dilution. We may sell
Common Stock, convertible securities or other equity securities in one or more transactions at prices and in a manner we determine
from time to time. If we sell Common Stock, convertible securities or other equity securities in more than one transaction, investors
may be materially diluted by subsequent sales. Such sales may also result in material dilution to our existing stockholders, and
new investors could gain rights superior to our existing stockholders.
We
do not intend to pay cash dividends on our shares of our Common Stock so any returns will be limited to the value of our shares.
We
currently anticipate that we will retain future earnings for the development, operation and expansion of our business and do not
anticipate declaring or paying any cash dividends for the foreseeable future. Any return to stockholders will therefore be limited
to the increase, if any, of our share price.
Our
ability to use our net operating loss carry-forwards and certain other tax attributes is limited by Sections 382 and 383 of the
Internal Revenue Code.
Net
operating loss carryforwards allow companies to use past year net operating losses to offset against future years’ profits,
if any, to reduce future tax liabilities. Sections 382 and 383 of the Internal Revenue Code of 1986 limit a corporation’s
ability to utilize its net operating loss carryforwards and certain other tax attributes (including research credits) to offset
any future taxable income or tax if the corporation experiences a cumulative ownership change of more than 50% over any rolling
three-year period. State net operating loss carryforwards (and certain other tax attributes) may be similarly limited. An ownership
change can therefore result in significantly greater tax liabilities than a corporation would incur in the absence of such a change
and any increased liabilities could adversely affect the corporation’s business, results of operations, financial condition
and cash flow. Even if another ownership change has not occurred and does not occur as a result of this offering, additional ownership
changes may occur in the future as a result of additional equity offerings or events over which we will have little or no control,
including purchases and sales of our equity by our five percent security holders, the emergence of new five percent security holders,
redemptions of our securities or certain changes in the ownership of any of our five percent security holders.
We
are an “emerging growth company” and a “smaller reporting company” and intend to avail ourselves of reduced
disclosure requirements applicable to emerging growth companies, which could make our Common Stock less attractive to investors.
We
are an “emerging growth company,” as defined in the JOBS Act, and we intend to take advantage of certain exemptions
from various reporting requirements that are applicable to other public companies that are not “emerging growth companies”
including not being required to comply with the auditor attestation requirements of Section 404(b) 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 executive compensation and stockholder approval of any golden parachute
payments not previously approved. In addition, Section 107 of the JOBS Act also provides that an “emerging growth company”
can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act, for complying with
new or revised accounting standards. In other words, an “emerging growth company” can delay the adoption of certain
accounting standards until those standards would otherwise apply to private companies. We are not electing to delay such adoption
of new or revised accounting standards, and as a result, we will comply with new or revised accounting standards on the relevant
dates on which adoption of such standards is required for non-emerging growth companies. We cannot predict if investors will find
our Common Stock less attractive because we rely on these exemptions. If some investors find our Common Stock less attractive
as a result, there may be a less active trading market for our Common Stock and our stock price may be more volatile. We may take
advantage of these reporting exemptions until we are no longer an “emerging growth company.” We will remain an “emerging
growth company” until the earliest of (i) the last day of the fiscal year in which we have total annual gross revenues of
$1.07 billion or more; (ii) the last day of our fiscal year following the fifth anniversary of the date of the completion
of an offering; (iii) the date on which we have issued more than $1 billion in nonconvertible debt during the previous three
years; or (iv) the date on which we are deemed to be a large accelerated filer under the rules of the SEC.
We
are also a smaller reporting company as defined in the Exchange Act. We may continue to be a smaller reporting company even after
we are no longer an emerging growth company. We may take advantage of certain of the scaled disclosures available to smaller reporting
companies and will be able to take advantage of these scaled disclosures for so long as our voting and non-voting (of which we
have none at this time) Common Stock held by non-affiliates is less than $250 million measured on the last business day of our
second fiscal quarter, or our annual revenue is less than $100 million during the most recently completed fiscal year.
We
may be at risk of securities class action litigation.
We
may be at risk of securities class action litigation. In the past, biotechnology and pharmaceutical companies have experienced
significant stock price volatility, particularly when associated with binary events such as clinical trials and drug approvals.
If we face such litigation, it could result in substantial costs and a diversion of management’s attention and resources,
which could harm our business and results in a decline in the market price of our Common Stock.
Our
amended and restated certificate of incorporation, our bylaws, may have anti-takeover effects that could discourage, delay or
prevent a change in control, which may cause the market price of the shares of our Common Stock to decline.
Our
amended and restated certificate of incorporation and our bylaws may make it more difficult for a third-party to acquire us, even
if closing such a transaction would be beneficial to our stockholders. We will be authorized to issue up to 50 million shares
of preferred stock upon the completion of this offering and the filing of our amended and restated certificate of incorporation
with the State of Nevada. This preferred stock may be issued in one or more series, the terms of which may be determined at the
time of issuance by our board of directors without further action by stockholders. The terms of any series of preferred stock
may include voting rights (including the right to vote as a series on particular matters), preferences as to dividend, liquidation,
conversion and redemption rights and sinking fund provisions. No preferred stock is currently outstanding. The issuance of any
preferred stock could materially adversely affect the rights of the holders of our Common Stock, and therefore, reduce the value
of our Common Stock. In particular, specific rights granted to future holders of preferred stock could be used to restrict our
ability to merge with, or sell our assets to, a third-party and thereby preserve control by the present management.
Provisions
of our amended and restated certificate of incorporation and our bylaws also could have the effect of discouraging potential acquisition
proposals or making a tender offer or delaying or preventing a change in control, including changes a stockholder might consider
favorable. Such provisions may also prevent or frustrate attempts by our stockholders to replace or remove our management. For
example, our amended and restated certificate of incorporation, bylaws and provisions of the DGCL, as applicable, among other
things:
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provide
the board of directors with the ability to alter the bylaws without stockholder approval;
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establishing
advance notice requirements for nominations for election to the board of directors or
for proposing matters that can be acted upon at stockholder meetings; and
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provide
that vacancies on the board of directors may be filled by a majority of directors in
office, although less than a quorum.
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Financial
reporting obligations of being a public company in the United States require well defined disclosure and financial controls and
procedures that we did not have as a private company and that are expensive and time-consuming requiring our management to devote
substantial time to compliance matters.
These
reporting obligations associated with being a public company in the United States require significant expenditures and will place
significant demands on our management and other personnel, including costs resulting from our reporting obligations under the
Exchange Act, the rules and regulations regarding corporate governance practices, including those under the Sarbanes-Oxley Act, the (the “Dodd-Frank Act”), and the listing requirements of the stock exchange on which our securities may be listed.
These rules require the establishment and maintenance of effective disclosure and financial controls and procedures, internal
control over financial reporting and changes in corporate governance practices, among many other complex rules that are often
difficult to implement, monitor and maintain compliance with. Moreover, despite recent reforms made possible by the JOBS Act,
the reporting requirements, rules, and regulations will make some activities more time-consuming and costly, particularly after
we are no longer an “emerging growth company.” In addition, we expect these rules and regulations to make it more
difficult and more expensive for us to obtain director and officer liability insurance. Our management and other personnel will
need to devote a substantial amount of time to ensure that we comply with all these requirements and to keep pace with new regulations,
otherwise we may fall out of compliance and risk becoming subject to litigation or being delisted, among other potential problems.
If
we fail to comply with the rules under the Sarbanes-Oxley Act related to accounting controls and procedures in the future, or,
if we discover additional material weaknesses and other deficiencies in our internal control and accounting procedures, our stock
price could decline significantly and raising capital could be more difficult.
Section
404 of the Sarbanes-Oxley Act requires annual management assessments of the effectiveness of our internal control over financial
reporting after a transition period ending with our second annual report on Form 10-K filed under Section 13(a) of the Exchange
Act. If we fail to comply with the rules under the Sarbanes-Oxley Act related to disclosure controls and procedures in the future,
or, if in the future we discover additional material weaknesses and other deficiencies in our internal control and accounting
procedures, our stock price could decline significantly and raising capital could be more difficult.
Risks
related to COVID-19
Our
business may be materially adversely affected by the recent coronavirus (COVID-19) outbreak.
The
development of our drug candidates could be disrupted and materially adversely affected in the future by a pandemic, epidemic
or outbreak of an infectious disease like the recent outbreak of COVID-19. For example, as a result of measures imposed by the
governments in regions affected by COVID-19 businesses and schools have been suspended due to quarantines or “stay at home”
orders intended to contain this outbreak. Furthermore, many patients had concerns about making hospital and physician office visits
for fear of contracting the virus. These factors had an direct adverse impact on our ability to enroll participants in our clinical
trial programs. In addition, travel restrictions, stay-in-place orders and other measures imposed by governmental agencies and
health organizations to prevent the spread of COVID-19 and protect the citizenry, have had an adverse impact on the flow of goods
and services between nations. The supply disruptions have resulted in shortages of goods and materials. This could also impact
our ability to produce the products we need to conduct our clinical trials. In addition, these measures have resulted in delays
to the regulatory process, which may also have an adverse impact on our business. Finally, initially, the outbreak of COVID-19
led to steep declines in the Dow Industrial Average and other domestic and international stock indices at the end of February
and during March and April 2020. While the markets have rebounded nicely since then, recent concerns over the “Delta variant”
and the impact it may have on the U.S. and global economies, have led to “risk-off” sessions in the global markets.
We are still assessing our business plans and the impact COVID-19 may have on our ability to advance the development of our drug
candidates or to raise financing to support the development of our drug candidates, we cannot assure you that we will be able
to avoid part or all of any impact from the spread of COVID-19 or its consequences, including downturns in business sentiment
generally or in our sector in particular.
SPECIAL
NOTE REGARDING FORWARD-LOOKING STATEMENTS
This
report including the sections titled “Prospectus Summary,” “Risk Factors,” “Use of Proceeds,”
“Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and “Business,”
contains forward-looking statements about us and our industry. These statements involve known and unknown risks, uncertainties
and other factors which may cause our actual results, performance or achievements to be materially different from any future results,
performances or achievements expressed or implied by the forward-looking statements. These risks and uncertainties include, but
are not limited to, the factors described in the section captioned “Risk Factors” below. In some cases, you can identify
forward-looking statements by terms such as “anticipate,” “believe,” “could,” “estimate,”
“expect,” “intend,” “seek,” “may,” “plan,” “potential,”
“predict,” “project,” “should,” “would,” and similar expressions intended to identify
forward-looking statements. Forward- looking statements reflect our current views with respect to future events and are based
on assumptions and subject to risks and uncertainties. You should read these factors and the other cautionary statements made
in this report and in the documents we incorporate by reference into this report as being applicable to all related forward-looking
statements wherever they appear in this report or the documents we incorporate by reference. If one or more of these factors materialize,
or if any underlying assumptions prove incorrect, our actual results, performance or achievements may vary materially from any
future results, performance or achievements expressed or implied by these forward-looking statements.
Given
these uncertainties, you should not place undue reliance on these forward-looking statements. These forward-looking statements
include, among other things, statements relating to:
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our
plans to develop and commercialize our product candidates;
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our
ability to timely secure sufficient funding for our current and proposed operations,
including funding necessary for the development and commercialization of our product
candidates and to complete additional product candidates;
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our
anticipated growth strategies and our ability to manage the expansion of our business
operations effectively;
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future
agreements with third parties in connection with the commercialization of our product
candidates;
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the
success, cost and timing of our product candidate development activities and planned
clinical trials;
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our
expectations regarding the impact of the COVID-19 pandemic and its potentially material
adverse impact on our business, the economy, and the execution of our clinical trials;
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the
rate and degree of market acceptance and clinical utility of our product candidates;
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our
commercialization, marketing and manufacturing capabilities and strategy;
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the
success of competing therapies that are or may become available;
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our
ability to attract and retain key management and technical personnel;
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our
expectations regarding our ability to obtain, maintain and enforce intellectual property
protection for our product candidates;
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our
ability to diversify our product offerings and capture new market opportunities;
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our
use of our existing cash and cash equivalents and the net proceeds from this offering;
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our
estimates regarding expenses, future revenue, capital requirements and needs for additional
financing; and
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the
possibility that we in the future may acquire certain businesses and/or additional drug
candidates.
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Also, forward-looking statements
represent our estimates and assumptions only as of the date of this prospectus. You should read this prospectus and the documents
that we reference and file as exhibits to this prospectus completely and with the understanding that our actual future results
may be materially different from what we expect. Except as required by law, we assume no obligation to update any forward-looking
statements publicly, or to update the reasons actual results could differ materially from those anticipated in any forward-looking
statements, even if new information becomes available in the future.