As
filed with the Securities and Exchange Commission on December 19,
2022
Registration
No. 333-265817
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
Amendment No. 2
to
FORM
S-1
REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OF 1933
EOM
PHARMACEUTICAL HOLDINGS, INC.
(Exact
name of registrant as specified in its charter)
|
Delaware |
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2834 |
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93-1301885 |
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(State
or other jurisdiction of |
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(Primary
Standard Industrial |
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(I.R.S.
Employer |
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incorporation
or organization) |
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Classification
Code Number) |
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Identification
Number) |
136
Summit Avenue
Montvale,
NJ 07645
Telephone:
(201) 351-0605
(Address,
including zip code, and telephone number, including area code, of
registrant’s principal executive offices)
Eli
Goldberger
Chairman
and Chief Operating Officer
136
Summit Avenue
Montvale,
NJ 07645
Telephone:
(201) 351-0605
(Name,
address, including zip code, and telephone number, including area
code, of agent for service)
With copies to:
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Louis
A. Brilleman, Esq.
1140
Avenue of the Americas, 9th Floor
New
York, NY 10036
(212)
537-5852
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Jeffrey
Fessler, Esq.
Sheppard,
Mullin, Richter & Hampton LLP
30
Rockefeller Plaza
New
York, NY 10112
(212)
653-8700
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Approximate
date of commencement of proposed sale to the public:
As
soon as practicable after this Registration Statement is declared
effective.
If
any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under
the Securities Act of 1933, check the following box: ☐
If
this Form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act, please
check the following box and list the Securities Act registration
statement number of the earlier effective registration statement
for the same offering. ☐
If
this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list
the Securities Act registration statement number of the earlier
effective registration statement for the same offering.
☐
If
this Form is a post-effective amendment filed pursuant to Rule
462(d) under the Securities Act, check the following box and list
the Securities Act registration statement number of the earlier
effective registration statement for the same offering.
☐
Indicate
by check mark whether the registrant is a large accelerated filer,
an accelerated filer, a non-accelerated filer, smaller reporting
company, or an emerging growth company. See the definitions of
“large accelerated filer,” “accelerated filer,” “smaller reporting
company,” and “emerging growth company” in Rule 12b-2 of the
Exchange Act.
|
Large
accelerated filer ☐ |
Accelerated
filer ☐ |
| Non-accelerated
filer ☒ |
Smaller
reporting company ☒ |
| |
Emerging
growth company ☐ |
If an
emerging growth company, indicate by check mark if the registrant
has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided
pursuant to Section 7(a)(2)(B) of the Securities Act. ☐
The
Registrant hereby amends this registration statement on such date
or dates as may be necessary to delay its effective date until the
registrant shall file a further amendment which specifically states
that this registration statement shall thereafter become effective
in accordance with section 8(a) of the Securities Act of 1933 or
until the registration statement shall become effective on such
date as the Securities and Exchange Commission, acting pursuant to
section 8(a), may determine.
The information in this prospectus is not complete and may be
changed. These securities may not be sold until the registration
statement filed with the Securities and Exchange Commission is
effective. This prospectus is not an offer to sell and is not
soliciting an offer to buy these securities in any jurisdiction
where the offer or sale is not permitted.
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PRELIMINARY PROSPECTUS |
SUBJECT TO COMPLETION |
DATED DECEMBER 19, 2022 |
EOM
PHARMACEUTICAL HOLDINGS, INC.
____________
Shares of Common Stock
This
is a firm commitment underwritten public offering of common stock,
par value $0.0001 per share (“Common Stock”) of EOM Pharmaceutical
Holdings, Inc., a Delaware corporation. We expect the public
offering price of our Common Stock to be between [$.00 and $.00]
per share.
Our
Common Stock is currently traded on the Pink Sheets of the OTC
Markets under the symbol “IMUC.” As of December 16, 2022, the
reported closing price of our Common Stock as quoted on the Pink
Sheets was $0.81 per share.
We
have applied to list our Common Stock on The Nasdaq Capital Market
under the symbol “EOM.”
The
offering price of the Common Stock will be determined between us
and EF Hutton, division of Benchmark Investments, LLC, the
representative of the underwriters in connection with this
offering, taking into consideration our historical performance and
capital structure, prevailing market conditions, and overall
assessment of our business, and will not be based upon the price of
our common stock on the Pink Sheets of the OTC. Therefore, the
assumed public offering price of the Common Stock used throughout
this prospectus may not be indicative of the actual public offering
price for our Common Stock.
Investing
in our securities involves a high degree of risk. Before buying any
of our securities, you should carefully read the discussion of the
material risks of investing in our securities under the heading
“Risk Factors” beginning on page 11 of this
prospectus.
Neither
the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or
passed upon the adequacy or accuracy of this prospectus. Any
representation to the contrary is a criminal
offense.
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Per
Share |
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Total |
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Public
offering price |
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$ |
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$ |
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| Underwriting
discounts and commissions (1) |
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$ |
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$ |
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| Proceeds
to us, before expenses |
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$ |
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$ |
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(1) |
We
refer you to “Underwriting” beginning on page 98 of this
prospectus for additional information regarding underwriting
compensation. |
We
have granted the underwriters a 45-day option to purchase up to
____ additional shares, solely to cover over-allotments, if any
(the “Over-Allotment Option”). If the underwriters exercise the
Over-Allotment Option in full, the total underwriting discounts
payable by us will be $_____ and the total proceeds to us, before
expenses, will be $ ______.
The
underwriters expect to deliver the securities against payment to
the investors in this offering on or about _____, 2023.
Sole
Book-Running Manager
EF
HUTTON
division
of Benchmark Investments, LLC
The
date of this prospectus is ____________, 2023
TABLE
OF CONTENTS
You
should rely only on the information contained in this prospectus or
in any free writing prospectus that we may specifically authorize
to be delivered or made available to you. We have not authorized
anyone to provide you with any information other than that
contained in this prospectus or in any free writing prospectus we
may authorize to be delivered or made available to you. We take no
responsibility for, and can provide no assurance as to the
reliability of, any other information that others may give you.
This prospectus may only be used where it is legal to offer and
sell our securities. The information in this prospectus is accurate
only as of the date of this prospectus, regardless of the time of
delivery of this prospectus or any sale of our securities. Our
business, financial condition, results of operations and prospects
may have changed since that date. We are not making an offer of
these securities in any jurisdiction where the offer is not
permitted.
PROSPECTUS
SUMMARY
This
summary highlights information contained elsewhere in this
prospectus and does not contain all of the information that you
should consider in making your investment decision. Before
investing in our Common Stock, you should carefully read this
entire prospectus, including our financial statements and the
related notes and the information set forth under the headings
“Risk Factors” and “Management’s Discussion and Analysis of
Financial Condition and Results of Operations” in each case
included elsewhere in this prospectus.
Unless
the context otherwise requires, references to “we,” “our,” “us,” in
this prospectus mean EOM Pharmaceutical Holdings, Inc., a Delaware
corporation, and its wholly owned subsidiary, EOM Pharmaceuticals,
Inc.
Our
Company
We
are a clinical-stage pharmaceutical company focused on the
development of novel therapeutics and delivery technologies for the
treatment of inflammatory conditions and ocular diseases. Our
development pipeline consists of multiple programs and clinical
indications at various stages of development. Our portfolio
currently consists of two product candidates: EOM613 and
EOM147.
EOM613
EOM613
is an investigational, dynamically dual-acting
immunomodulator. EOM613 is a peptide-nucleic acid solution
and, based on past clinical data published by third parties, that
we believe to have both an anti-inflammatory and pro-inflammatory
effect at the site of cytokine and chemokine overactivity, and a
pro-inflammatory effect when needed. EOM is designed to counteract
the most severe inflammatory effects of viruses, such as a cytokine
storm or hyperimmune response following infection with the novel
coronavirus that cause COVID-19, autoimmune attacks that cause
joint damage and pain associated with rheumatoid arthritis and
gastrointestinal disorders, and chemokine-related body-wasting
syndromes such as cachexia. In human cell culture studies, EOM613
demonstrated a “dynamic dual action” by suppressing or stimulating
monocytes and macrophages depending on the activation state and
environment of those key immune cells. We believe that this dynamic
dual action may overcome a limitation of many approved
immunomodulators that only reduce the inflammatory state, without
achieving total immune system balance. EOM613 has a development
program as supported by multiple exploratory previous clinical
stage data across multiple therapeutic applications associated with
hyperimmune responses, including cachexia associated with HIV/AIDS
or cancer and rheumatoid arthritis. The current open-label trial
for COVID-19 in Brazil for EOM613 meets the regulatory Phase 1/2a
clinical trial requirements of the Comissao Nacional de Etica em
Pesquisa and the Brazilian regulatory body ANVISA. However,
additional, larger Phase 2 placebo-controlled trials will be
required for the further clinical development of EOM613 in the
United States.
Our operating subsidiary, EOM Pharmaceuticals, Inc., commenced its
current operations in March 2020. Since that date, we have been
conducting a clinical trial in Brazil, as well as pre-clinical
animal studies. We have also been performing additional research
and development through contract research organizations for both
our product candidates EOM613 and EOM147. In addition, we have been
seeking sources of additional capital to further our research and
development efforts along with future clinical trials.
We
believe that EOM613 may be used as a therapy for the following
diseases:
Severe Effects of Infectious Disease, Including
COVID-19
COVID-19
is a highly infectious and potentially fatal disease. According to
WHO, as of June 17, 2022, it has caused over 6.3 million deaths and
over 500 million cases worldwide. Research shows that cytokine
storms are highly correlated with mortality in COVID-19. Aggressive
inflammatory responses such as cytokine storms can lead to acute
respiratory distress syndrome (ARDS), which is a cause of death in
70% of fatal COVID-9 cases.
Chemokine-Related Body Wasting Syndromes: Cancer
Cachexia
Cachexia
is a wasting syndrome that causes loss of weight, body fat, muscle
mass, and appetite due to a chronic disease, such as cancer. It
results in weakness, fatigue, malnourishment, and can be
life-threatening. It is caused principally by chemotherapy and
radiation treatments. Cancer cachexia affects approximately 50% of
all cancer patients. Cancer cachexia is caused by a combination of
decreased nutritional intake and altered metabolism and is defined
as ongoing loss of skeletal muscle mass that cannot be reversed by
conventional nutritional support. It is characterized by
progressive functional impairment and contributes to more than 20%
of cancer deaths. Since around 50% of patients with malignant
disease cannot be cured and more than 80% of advanced cancer
patients experience cachexia, the toll of this condition is severe
both for society and the individual patient. The pathogenesis of
cancer cachexia is highly dependent on the patient’s immune
response. Inflammatory cytokines and pro-cachectic factors induce
muscle degradation even in the face of adequate nutrition. The
prevalence of cachexia is as high as 87% in patients with
pancreatic and gastric cancer, 61% in patients with colon, lung,
and prostate cancer and non-Hodgkin lymphoma, and 40% in breast
cancer, sarcoma, leukemia, and Hodgkin lymphoma. There are no
approved cancer cachexia therapies.
Autoimmune Diseases: Rheumatoid Arthritis
Rheumatoid
arthritis (RA) is a debilitating chronic autoimmune disease that
affects the joints, connective tissues, muscle, tendons, and
fibrous tissue, and causes pain and deformity. The World Health
Organization estimates that more than 23 million people, mostly
women, live with RA.
EOM147
EOM
147 is an investigational, broad-spectrum aminosterol with a novel
intracellular mechanism for the treatment of retinal diseases.
Based on prior clinical data, we believe that EOM147 can affect
multiple angiogenic growth factors such as VEGF, PDGF, and bFGF.
This mechanism of action is differentiated from other retinal
therapies that are only anti-VEGF and administered as an
intraocular injection. The novel formulation, administered as an
eye drop, represents a potential breakthrough that does not require
intraocular injection. EOM147 is being developed as a proprietary,
newly reformulated eye drop, containing a steroid-polyamine
conjugate compound with broad-spectrum antimicrobial activity and
anti-angiogenic activity. We believe that EOM147 may be used as
therapy for retinal diseases, including retinal tear, retinal
detachment, diabetic retinopathy, epiretinal membrane, macular
hole, macular degeneration, and retinitis pigmentosa, all of which
affect the vital tissue of the eye and can lead to
blindness.
Age-Related Macular Degeneration (AMD)
Age-related
macular degeneration is an eye disease that can blur the sharp,
central vision needed for activities like reading and driving.
“Age-related” means that it often happens in older people.
“Macular” means it affects a part of the eye within the retina
called the macula. AMD is a common condition and a leading cause of
vision loss for people age 50 and older. Although AMD does not
necessarily cause complete blindness, it does impact central vision
that can make it harder to see faces, drive, or do close-up work
like cooking or fixing things around the house. The National Eye
Institute estimates that by 2050, the number of people with AMD in
the U.S. is expected to double from 2.07 million (2010) to 5.44
million. According to the Bright Focus Foundation, the number of
people living with some form of macular degeneration is expected to
reach 196 million worldwide by 2020 and increase to 288 million by
2050. There is no current therapeutic treatment for dry macular
degeneration, but certain vitamin and mineral supplements may delay
progression of the disease. Wet macular degeneration is often
treated by eye injections of anti-VEGF medicines, which inhibit the
abnormal growth of blood vessels. A type of laser treatment called
photodynamic therapy also can be used to help break down the extra
blood vessels in the back of the eye.
Diabetic Retinopathy (DR):
Diabetes
is the leading cause of new cases of blindness in adults. About 1
in 3 people with diabetes have Diabetic Retinopathy, affecting
almost one-third of adults over age 40 years with diabetes, and
more than one-third of African-Americans and Mexican Americans.
According to the Centers for Disease Control and Prevention,
diabetic retinopathy affects 7.7 million Americans, and that number
is projected to increase to more than 14.6 million people by 2030.
The most common diabetic eye disease and a leading cause of
blindness in American adults, diabetic retinopathy is caused by
changes in the blood vessels of the retina due to excess sugar in
the bloodstream. Currently, diabetic retinopathy is typically
treated by shrinking abnormal blood vessels in the eye with laser
therapy, by surgically evacuating and replacing fluid in the eye
(vitrectomy), or by injecting anti-VEGF medicines into the
eye.
Retinal Vein Occlusions (RVOs)
Retinal
vein occlusions are blockages of the small veins that carry blood
away from the retina. Such compromised blood flow can cause
reduction in blood flow, causing sudden blurred vision and blind
spots in the center of one’s visual field. The persistent build-up
of blood in the retina, particularly in the macular area can cause
substantial vision loss. Retinal vein occlusions are of two types-
central retinal vein occlusions (CRVOs), which are caused by the
blockage of the main retinal vein, and branch retinal vein
occlusions (BRVOs), which affect one or more of the smaller branch
veins from the main retinal vein. There is no current cure for
retinal vein occlusions; laser treatment or repeated treatments
with intravitreally injected anti-VEGF agents is most often used in
the treatment in order to reduce the levels of macular edema. An
estimated 20 million or more people currently suffer from RVOs
worldwide.
We have generated no revenues, have incurred operating losses since
inception, and expect to continue to incur significant operating
losses for the foreseeable future and may never become profitable.
For the nine-months ended September 30, 2022 and for the year ended
December 31, 2021, we incurred net losses from operations of
approximately $2,200,000 and $2,600,000, respectively. In addition,
for the nine-months ended September 30, 2022 and for the year ended
December 31, 2021, we incurred negative cash flows from operating
activities of approximately $1,900,000 and $2,300,000 respectively.
We expect to incur substantial losses for the foreseeable future,
which will continue to generate negative net cash flows from
operating activities, as we continue to pursue research and
development activities and the pre-clinical and clinical
development of our primary product candidates, EOM613 and EOM147.
As of September 30, 2022, we had cash of $551,176, a deficit in
working capital (defined as current assets less current
liabilities) of $20,254 and an accumulated shareholders’ deficit of
$8,784,373. The Company’s primary sources of cash have included the
issuance of a related party bridge note facility, and the issuance
of convertible promissory notes to related and unrelated
parties.
These
factors, among others including the lengthy and costly drug
development and regulatory approval process, raise substantial
doubt as to our ability to obtain additional debt or equity
financing and our ability to continue as a going concern as
described in the footnotes to our September 30, 2022 unaudited
interim condensed consolidated financial statements. Until such
time as we are able to establish a revenue stream from the sale of
our therapeutic products, we are dependent upon obtaining necessary
equity and/or debt financing to continue operations. We cannot make
any assurances that sales of our drug products will commence in the
near term or that additional financings will be available to us
and, if available, on acceptable terms or at all.
To date, we have been funded primarily by the family of Eli
Goldberger, our Chairman and Chief Operating Officer, through a
Bridge Note Facility in the amount of approximately $1.5 million
and the issuance of a Convertible Promissory Note in the amount of
up to $5 million. To date, Mr. Goldberger’s father has loaned us
$2,751,399 through these two instruments. Under the terms of the
Convertible Promissory Note, we have the right to prepay up to 25%
of the principal amount of the outstanding balance in the event we
receive gross proceeds of no less than $10 million from the sale of
our common stock. We intend to repay approximately $688,000 out of
the net proceeds of this offering. To date, we have also raised
$910,000 from an unrelated party through the issuance of two-year
Mandatory Convertible Notes. The Mandatory Convertible Notes
require interest to be paid semi-annually at a 5% rate and are
mandatorily convertible into our common stock at a 20% discount to
a underwritten public offering of our common stock resulting in
gross proceeds to the Company in an amount of no less than $10
million.
There
can be no assurance that the Goldberger family will continue to
fund our operations on favorable terms or at all or that we will be
successful in raising additional funds. Moreover, there can be no
assurance that we will be able to secure the necessary third-party
debt or equity financings to continue our drug development,
pre-clinical and clinical trial plans at all or on terms acceptable
to us. This could negatively impact our business and operations and
could also lead to the reduction of our business and drug
development operations.
We
intend to raise such additional capital through a combination of
private and public equity offerings, debt financings, government
funding arrangements, strategic alliances or other sources.
However, if such financing is not available at adequate levels and
on a timely basis, or such agreements are not available on
favorable terms, or at all, as and when needed, we will need to
reevaluate our operating plan and may be required to delay or
discontinue the development of one or more of our product
candidates or operational initiatives. We expect that our cash as
of September 30, 2022 will be insufficient to fund our projected
operations for the next twelve months and accordingly, we are in
the process of attempting to raise additional equity and/or debt
funds to continue our operations through the end of 2023 and
beyond.
Our
Competitive Strengths
We
believe that we possess a number of competitive strengths that
position us to become a leading biopharmaceutical company focused
on inflammatory and immune-related diseases as well as retinal
diseases, including:
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Our
technology
and drug development capabilities. EOM613 and predecessor
formulations have been explored in several human studies and have
shown potential in the treatment of diseases such as rheumatoid
arthritis. The present Phase 1/2a study in COVID-19 patients in
Brazil is generating important information on cytokines and the
effect of EOM613 treatment on the levels of these cytokines and the
relevance to clinical effects. This information will increase our
knowledge of EOM613’s Mechanism of Acton and the relevance to
various therapeutic areas. However, additional, larger Phase 2
placebo-controlled trials will be required for the further clinical
development of EOM613 in the United States.
EOM147
represents a different and potentially safer mode of application of
well accepted VEGF type treatments for Age Related Macular
Degeneration (AMD).
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Pipeline
addressing
large markets. By initially targeting large markets that have
significant medical needs, we believe that we can drive adoption of
new products and improve our competitive position. For example, we
believe that our immunomodulator lead asset, EOM613, a peptide
nucleic-acid solution with dual mechanism of action (both
anti-inflammatory and pro-inflammatory) will be a cost-effective
therapeutic approach to aid millions in not only managing the
symptoms of cancer cachexia and rheumatoid arthritis but in
COVID-19 and other viral diseases. Moreover, the ease of
administering EOM147 via an at-home eyedrop solution as opposed to
a monthly intraocular injection at a certified ophthalmologist,
will ease the burden of millions of people suffering from Aged
Related Macular degeneration, diabetic retinopathy and other
debilitating retinal diseases. These diseases can have significant
effects on patients’ quality of life and save employers from
significant workplace-related costs and limitations. |
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Experienced
leadership. Our leadership team possesses core capabilities in
infectious diseases, cancer cachexia, retinal diseases, drug
development, chemistry, manufacturing and controls, and finance. In
addition to our internal capabilities, we have also established a
network of key opinion leaders, contract research organizations,
contract manufacturing organizations and consultants. As a result,
we believe we are well positioned to efficiently develop novel
treatments for inflammatory and immune-related diseases.
Nevertheless, we only recently commenced operations, never received
approval for any IND, NDA or comparable foreign regulatory filing
and may never receive any such approval. Moreover, we may not be
successful in obtaining market approval for any of our drug
candidates. |
Our
Business Strategy
Our
business strategy is to develop and commercialize innovative drug
products that address medical needs for large markets with limited
competition.
Our
mission is to Rescue, Repair, and RestoreTM
health in patients suffering from debilitating and life threatening
diseases. EOM Pharmaceuticals was founded with a specific vision to
pursue innovative approaches to address some of today’s medical
needs. We believe our investigational products have mechanisms of
action that may transform the therapeutic paradigm of debilitating
diseases such as the hyperimmune effects in patients with severe
COVID-19, cancer cachexia, rheumatoid arthritis, and inflammatory
conditions of the retina characterized by a breakdown of the
blood-retinal barrier.
Key
elements of our strategy include:
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Advance
EOM613 clinical development in the U.S. for cancer
cachexia |
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Conduct
an exploratory study in the U.S. for EOM613 in rheumatoid
arthritis |
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Advance
EOM147 clinical development for diabetic retinopathy in initial
clinical trials ex-USA, and retinal vein occlusions in US clinical
trials |
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Build
out a commercialization organization and if approved, commercialize
EOM613 in the United States |
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Pursue
market opportunities for EOM613 outside the United
States |
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Develop
EOM613 as a cost-effective therapy for Cancer Cachexia and
Rheumatoid Arthritis. We are applying our expertise in immune
modulation and inflammation therapies, and clinical trial
management, to develop EOM613 as a potential cost-effective
treatment for Cancer Cachexia and Rheumatoid Arthritis. Based on
multiple prior clinical trials, such as exploratory trials in
cancer cachexia in the United States and Canada concluded in 2013,
and a trial in rheumatoid arthritis conducted in Argentina a decade
prior, we believe EOM613 presents a strong development program.
Based on these positive past clinical trial results and the results
of additional and ongoing animal studies conducted during the
latter half of 2022 we are evaluating opportunities to apply, as
applicable, for expedited regulatory review programs, which could
potentially lead to faster clinical development and
commercialization timelines. In general, any IND application is
subject to a lengthy regulatory review. Although under limited
circumstances, drug candidates may be approved for the FDA’s
fast-track approval program, we can provide no assurance that our
drug candidates will be approved for the fast-track approval
program, or that if approved, we will successfully complete the
review process of EOM613 on an accelerated basis, if at
all. |
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We
are in the process of initiating all the necessary IND-enabling
preclinical safety pharmacology studies and toxicology studies that
would enable us to proceed into new Phase II clinical trials in
cancer cachexia and/or rheumatoid arthritis. We are conducting
these studies with CROs. We are also conducting studies using
established animal models of cancer cachexia and rheumatoid
arthritis that simulate human disease, whose results are typically
evaluated by the FDA as well. We expect that these animal studies
will also enable us to elucidate the pharmacological mechanisms of
action of EOM613 and correlate them with previously established
laboratory cell culture studies. We expect these studies to be
concluded by the second quarter of 2023, at which time we expect to
have selected at least one of these disease states to conduct an
initial Phase I/II clinical trial, based on a thorough evaluation
of the animal data. At that point we intend to seek a pre-IND
meeting with the FDA in preparation of filing an IND application,
with the intent of commencing a trial in the chosen clinical
indication in the fourth quarter of 2023. |
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Establish
EOM147 as the leading treatment for chronic and debilitating
retinal diseases. Our goal is to obtain regulatory approval for
EOM147 and commercialize EOM147 for use in the treatment of chronic
retinal disease including Age Related Macular degeneration,
diabetic retinopathy among other angiogenic retinal disorders.
Based on previous early-stage clinical trial results in which
patients treated with EOM147 experienced meaningful improvements of
their symptoms with minimal side effects, we plan on conducting
additional research and development to improve our drug therapy and
initiate a confirmatory Phase 2b clinical study evaluating EOM147
in chronic retinal disease patients starting in the second quarter
of 2024. Because our drug delivery method is via non-invasive
eyedrops rather than an intraocular injection directly into the
eye, we believe our novel delivery application along with positive
past trials results will improve vision outcomes beyond that
achieved with current standard of care. We are developing a new
synthetic procedure for the manufacture of the Squalamine Lactate
active pharmaceutical ingredient of EOM147 eye drops and conducting
the development of novel formulations with potentially enhanced
retinal uptake, based on our proprietary technology. We plan on
establishing a commercial cGMP manufacturing process for the novel
formulations and evaluating the new eye drop formulations in rabbit
eye studies at a preclinical testing CRO site. We intend to conduct
the FDA-required rabbit eye toxicology studies as well as studies
measuring the drug uptake into the rabbit eyes’ retinas from the
front of the eye administration using specialized techniques of
measuring the drug uptake and concentration in the ocular tissues
These studies are expected to be completed by the second or third
quarter of 2023. We currently envision initial ex-US clinical
trials in diabetic retinopathy and in wet-AMD in India and Mexico
and confirmatory investigator-sponsored trials in the US for
treatment of retinal vein occlusions and macular edema secondary to
proliferative diabetic retinopathy. |
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Maximize
our current portfolio opportunity by expanding use across multiple
indications. We aim to expand our current drug portfolio to
treat multiple diseases. Our assets are designed to modulate
pathways that are implicated across a number of immune and
inflammatory conditions. We plan on developing future
proof-of-concept clinical studies of EOM613 as a potential
treatment for patients with a number of autoimmune gastrointestinal
disorders as well as disorders affecting the central nervous
system. |
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In-license
promising product candidates. We are applying our
cost-effective development approach to advance and expand our
pipeline. Although we currently rely on a limited number of
candidates, our long- term objective is to maintain a well-balanced
portfolio with product candidates across various stages of
development. In general, we seek to identify product candidates and
technology that represent a novel therapeutic approach, are
supported by compelling science, target a medical need, and provide
a meaningful commercial opportunity. We do not currently intend to
invest significant capital in basic research, which can be
expensive and time-consuming. |
| |
|
|
| |
● |
Maximize
our current portfolio opportunity by expanding use across multiple
indications. We aim to expand our current drug portfolio to
treat multiple diseases. While we believe our assets are designed
to modulate pathways that are implicated across a number of immune
and inflammatory conditions, we currently only have a limited
number of product candidates. We plan on developing future
proof-of-concept clinical studies of EOM613 as a potential
treatment for patients with a number of autoimmune gastrointestinal
disorders as well as disorders affecting the central nervous
system. |
Corporate
History
We
filed our original Certificate of Incorporation with the Secretary
of State of Delaware on March 20, 1987, under the name Redwing
Capital Corp. On June 16, 1989, we changed our name to Patco
Industries, Ltd. and conducted an unrelated business under that
name until 1994. On January 30, 2006, we amended our Certificate of
Incorporation to change our name to Optical Molecular Imaging, Inc.
On November 2, 2006, we amended our Certificate of Incorporation to
change our name to ImmunoCellular Therapeutics,
Ltd.
On
December 1, 2021, we completed the acquisition of EOM
Pharmaceuticals, Inc., a Delaware corporation. The transaction was
accounted for as a reverse merger, with EOM Pharmaceuticals, Inc.
deemed to be the accounting acquirer and ImmunoCellular
Therapeutics Ltd. deemed to be the legal acquirer. As such, the
consolidated financial statements herein reflect the historical
activity of EOM Pharmaceuticals, Inc. since its inception on March
27, 2020.
On
November 7, 2022, we amended our Certificate of Incorporation to
change our name to EOM Pharmaceutical Holdings, Inc. to reflect the
acquisition of EOM Pharmaceuticals, Inc. and the new direction of
our business.
Our
Corporate Information
Our
principal executive offices are located at 136 Summit Avenue, Suite
100 Montvale, NJ 07645, and our telephone number at that address is
(201) 351-0605.
Our
Team
We
have assembled an experienced management team and board of
directors (the “Board of Directors”) to pursue innovative
approaches to solving the problems of urgent and medical needs. EOM
is led by an accomplished team with a deep legacy in multiple
therapeutic areas and drug development.
Our
Founder, Chairman and Chief Operating Officer, Eli Goldberger, is a
successful entrepreneur, focusing on advancing innovations in
pharmaceuticals, women’s health and energy. Our Chief Executive
Officer, Irach Taraporewala, PhD., is a highly seasoned
pharmaceutical company executive with specific experience in
leadership of start-up pharmaceutical companies and over 25 years
of experience in drug development and regulatory strategy. Our
Chief Scientific Officer and Medical Director, Shalom Hirschman,
M.D., has had a long and illustrious career as an academic
physician, research scientist, educator, biotechnology entrepreneur
and consultant. A graduate of the Albert Einstein College of
Medicine, Dr. Hirschman served as intern and resident in medicine
at The Massachusetts General Hospital of the Harvard Medical School
followed by years of conducting research in molecular biology at
the National Institutes of Health in Bethesda, MD. He joined the
faculty of The Mount Sinai School of Medicine where he was Director
of the Division of Infectious Diseases and Professor of Medicine.
Our Chief Financial Officer, Wayne Danson, a former partner in
multiple Big 4 public accounting firms and accomplished C level
executive, has over 35 years of experience in international and
corporate taxation, financial advisory services including
investment banking, and mergers and acquisitions, business
strategy, and entrepreneurship.
Nevertheless,
the Company has never submitted an IND, NDA or comparable foreign
regulatory filing and may not be successful in obtaining market
approval for any product candidate.
Summary
of Risks Associated with Our Business
Our
business and an investment in our company is subject to numerous
risks and uncertainties, including those highlighted in the section
titled “Risk Factors” immediately following this prospectus
summary. Some of these risks include:
|
|
● |
We
are a pre-revenue company with a limited operating history. Since
inception, we have incurred significant operating losses. At
September 30 2022, we had an accumulated deficit of approximately
$8.8 million; |
| |
|
|
| |
● |
We
will need substantial additional funding to finance our operations
through regulatory approval of one or more of our product
candidates. If we are unable to raise capital when needed, we could
be forced to delay, reduce or eliminate our product development
programs or commercialization efforts; |
| |
|
|
| |
● |
To
date, we have been primarily funded by the Goldberger family. Eli
Goldberger is our co-founder, Chairman, Chief Operating Officer and
largest stockholder. There can be no assurance that the Goldberger
family will continue to fund our operations on favorable terms, if
at all. We currently expect to use $688,000 of the net proceeds
from this offering to repay approximately 25% of the principal on
the outstanding promissory note issued to a member of the
Goldberger family. |
| |
|
|
| |
● |
We
are entirely dependent on the success of our drug product
candidates. If we are unable to obtain regulatory approval or
commercialize one or more of these experimental treatments, or
experience significant delays in doing so, our business will be
materially harmed; |
| |
|
|
| |
● |
The
FDA might not allow us to pursue the Section 505(b)(2) pathway for
EOM613 and EOM147 and, if so, we may be unable to meet our
anticipated development and commercialization timelines and may be
unable to generate the additional required data at a reasonable
cost; |
| |
|
|
| |
● |
We
may not be able to successfully develop or commercialize our
existing drug product candidates or develop new drug product
candidates on a timely or cost-effective basis; |
| |
|
|
| |
● |
Our
business may be negatively affected by the ongoing COVID-19
pandemic; |
|
|
● |
We
depend on a limited number of drug product candidates and our
business could be materially adversely affected if one or more of
our key drug product candidates do not perform as well as expected
and do not receive regulatory approval; |
| |
|
|
| |
● |
We
may be in the future, a party to legal proceedings that could
result in adverse outcomes; |
|
|
● |
Our
competitors and other third parties may allege that we are
infringing their intellectual property, forcing us to expend
substantial resources in resulting litigation, and any unfavorable
outcome of such litigation could have a material adverse effect on
our business; |
| |
|
|
| |
● |
We
may experience failures of or delays in clinical trials which could
jeopardize or delay our ability to obtain regulatory approval and
commence product commercialization;
|
| |
● |
We
face intense competition from both brand and generic companies who
have significant financial resources which could limit our growth
and adversely affect our financial results;
|
| |
● |
Our
employees, principal investigators, consultants and commercial
partners may engage in misconduct or other improper activities,
including noncompliance with regulatory standards and requirements
and insider trading, which could cause significant liability for us
and harm our reputation. |
| |
|
|
| |
● |
We
will be competing against large existing well-funded pharmaceutical
companies with existing and proposed competing
products. |
| |
|
|
| |
● |
We
are subject to extensive governmental regulation and we face
significant uncertainties and potentially significant costs
associated with our efforts to comply with applicable
regulations; |
| |
|
|
| |
● |
We
may not be able to develop or maintain our sales capabilities or
effectively market or sell our products; |
| |
|
|
| |
● |
Manufacturing
or quality control problems may damage our reputation, require
costly remedial activities or otherwise negatively impact our
business; |
| |
|
|
| |
● |
Our
profitability may depend on coverage and reimbursement by
third-party payors including government agencies, and healthcare
reform and other future legislation may lead to reductions in
coverage or reimbursement levels; |
| |
|
|
| |
● |
We
face risks related to health epidemics and outbreaks, including the
COVID-19 pandemic, which could significantly disrupt our
preclinical studies and clinical trials, research activities and
therefore our receipt of necessary regulatory approvals could be
delayed or prevented; |
| |
|
|
| |
● |
We
do not currently own any patents and our technology
is largely based on expired patents. If we are unable to obtain and
maintain patent protection for our product candidates we may
develop, or if the scope of the patent protection obtained is not
sufficiently broad, our competitors could develop and commercialize
products and technology similar or identical to ours, and our
ability to successfully commercialize our products we may develop
may be adversely affected; |
| |
|
|
| |
● |
We
currently, and may in the future need to, license certain
intellectual property from third parties, and such licenses may not
be available or may not be available on commercially reasonable
terms; |
| |
|
|
| |
● |
We
may not identify relevant third-party patents or may incorrectly
interpret the relevance, scope or expiration of a third-party
patent, which might adversely affect our ability to develop,
manufacture and market our products and product
candidates; |
| |
|
|
| |
● |
If we
fail to comply with our obligations under any of our third-party
agreements, we could lose license rights that are necessary to
develop our product candidates;
|
| |
|
|
| |
● |
Our
future success depends on our ability to retain key executives and
to attract, retain and motivate qualified personnel;
and |
| |
|
|
| |
● |
After
this offering, our directors, executive officers and certain
stockholders (one of which is an affiliate of our Founder and Chief
Operating Officer) will continue to own a majority of our common
stock and, if they choose to act together, will be able to exert
absolute control over matters subject to stockholder
approval. |
Summary
of the Offering
|
Shares being Offered: |
|
|
| |
|
|
|
Common Stock Outstanding
Before this Offering
|
|
113,270,751 |
| |
|
|
|
Common Stock Outstanding
After this Offering
|
|
|
| |
|
|
|
Use of Proceeds |
|
We
expect to receive net proceeds, after deducting underwriting
discounts and commissions and estimated expenses payable by us, of
approximately $_____ million (or approximately $______ million if
the underwriters exercise their option to purchase additional
shares in full).
We
intend to use substantially all of the net proceeds from this
offering to continue to fund research and development of our EOM613
and EOM147 drug candidates, conduct clinical trials, repay a
portion of our outstanding Convertible Promissory Note issued to a
principal stockholder, and for working capital and other general
corporate purposes. See “Use of Proceeds”
|
|
Underwriters’ over-allotment option |
|
We
have granted the underwriters a 45-day option from the date of this
prospectus to purchase up to an additional _________ shares (15% of
the total number of shares to be offered by us in the
offering). |
| |
|
|
|
Trading Market for our Common
Stock
|
|
Our
Common Stock is currently traded on the Pink Sheets of the OTC
Market under the symbol “IMUC”. We have applied to have our Common
Stock listed for trading on the Nasdaq Capital Market. There can be
no assurance that our Common Stock will be approved for trading on
the Nasdaq. |
|
|
|
|
|
Risk Factors |
|
See
“Risk Factors” beginning on page 11 of this prospectus and the
other information included in this prospectus for a discussion of
factors you should carefully consider before investing in our
securities. |
The
number of shares of our common stock to be outstanding after this
offering is based on 113,270,751 shares of our common stock
outstanding as of the date hereof, and does not include:
●
4,418,998 shares of common stock issuable upon exercise of
outstanding warrants; and
●
4,585,665 shares of common stock issuable upon the conversion, at
the option of the Holder of our Convertible Promissory Note, at an
exercise price of $0.60 per share.
Except
as otherwise indicated herein, all information in this prospectus
assumes:
● no
exercise by the underwriters of their option to purchase an
additional _____ shares of common stock, to cover over-allotments,
if any; and
● a
1-for- reverse stock split of our common stock that was implemented
on ______________, 2023, pursuant to which (i) every shares of
outstanding common stock were decreased to one share of common
stock, (ii) the number of shares of common stock for which each
outstanding warrant or option to purchase common stock is
exercisable was proportionally decreased on 1-for- basis, and (iii)
the exercise price of each outstanding warrant or option to
purchase common stock was proportionately increased on a 1-for-
basis, (the “Reverse Stock Split”).
SUMMARY
FINANCIAL DATA
You
should read the following summary financial data together with our
financial statements and the related notes appearing at the end of
this prospectus and the “Management’s Discussion and Analysis of
Financial Condition and Results of Operations” section of this
prospectus. We have derived the statement of operations data from
our audited consolidated financial statements for the year ended
December 31, 2021, and for the period from March 27, 2020
(Inception) through December 31, 2020, and from our unaudited
interim condensed consolidated financial statements for the periods
ended September 30, 2022, and 2021. We have derived the balance
sheet data from our unaudited interim condensed consolidated
financial statements for the period ended September 30, 2022. Our
historical results are not necessarily indicative of results that
should be expected in any future period.
On
December 1, 2021, we completed the acquisition of EOM
Pharmaceuticals, Inc. The transaction was accounted for as a
reverse merger, with EOM Pharmaceuticals, Inc. deemed to be the
accounting acquirer and EOM Pharmaceutical Holdings, Inc (formerly
ImmunoCellular Therapeutics Ltd.) deemed to be the legal acquirer.
Accordingly, these summary financial data reflect the historical
activity of EOM Pharmaceuticals, Inc.
| |
|
|
|
|
From March 27,
2020 |
|
|
Nine
Months Ended |
|
| |
|
|
|
|
(Inception)
to |
|
|
September 30, |
|
| |
|
December 31, 2021 |
|
|
December 31, 2020
|
|
|
2022 |
|
|
2021 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Statement of
Operations Data: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Research and
Development |
|
$ |
1,301,437 |
|
|
$ |
696,718 |
|
|
$ |
900,426 |
|
|
$ |
1,224,400 |
|
| Marketing and Advertising |
|
|
554,025 |
|
|
|
474,000 |
|
|
|
44,101 |
|
|
|
535,756 |
|
| General and
administrative |
|
|
758,000 |
|
|
|
282,274 |
|
|
|
1,206,279 |
|
|
|
435,178 |
|
| Total Operating
Expenses |
|
|
2,613,462 |
|
|
|
1,452,992 |
|
|
|
2,150,806 |
|
|
|
2,195,334 |
|
| Loss from Operations |
|
|
(2,613,462 |
) |
|
|
(1,452,992 |
) |
|
|
(2,150,806 |
) |
|
|
(2,195,334 |
) |
| Other income (expense) |
|
|
- |
|
|
|
|
|
|
|
- |
|
|
|
- |
|
| Interest income (expense) (net) |
|
|
(8,462
|
) |
|
|
- |
|
|
|
8,427
|
|
|
|
(8,389
|
) |
| Derivative expense |
|
|
|
|
|
|
|
|
|
|
(70,000
|
) |
|
|
- |
|
| Other income |
|
|
|
|
|
|
|
|
|
|
30,000
|
|
|
|
- |
|
| Loss on debt
extinguishment |
|
|
(2,527,078
|
) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
| Total Other
income (expense) |
|
|
(2,535,540 |
) |
|
|
- |
|
|
|
(31,573
|
) |
|
|
(8,389
|
) |
| Net loss |
|
$ |
(5,149,002 |
) |
|
$ |
(1,452,992 |
) |
|
$ |
(2,182,379 |
) |
|
$ |
(2,203,723 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (Loss) per share - basic and
diluted: |
|
|
(0.11 |
) |
|
|
(0.03 |
) |
|
|
(0.02 |
) |
|
|
(0.05 |
) |
| Weighted Average common shares outstanding-basic and
diluted(1): |
|
|
47,535,953 |
|
|
|
45,075,538 |
|
|
|
113,270,751 |
|
|
|
45,075,538 |
|
|
(1) |
See
Note 1 to our audited consolidated financial statements as of
December 31, 2021 and our unaudited interim condensed consolidated
financial statement for the nine-month periods ended September 30,
2022 and 2021, appearing at the end of this prospectus for further
details on the calculation of basic and diluted net loss per common
share. |
|
|
|
September
30, 2022 |
|
|
|
|
Actual |
|
|
As
Adjusted(1) |
|
| Balance
Sheet Data: |
|
|
|
|
|
|
|
|
|
Cash |
|
$ |
551,176 |
|
|
$ |
|
|
| Working
capital |
|
$ |
(20,254 |
) |
|
$ |
|
|
| Total
assets |
|
$ |
714,365 |
|
|
$ |
|
|
| Accounts
payable and accrued expenses |
|
$ |
734,619 |
|
|
$ |
|
|
| Accumulated
deficit |
|
$ |
(8,784,373 |
) |
|
$ |
|
|
| Stockholders’
equity (deficit) |
|
$ |
(3,727,371 |
) |
|
$ |
|
|
|
|
(1) |
As
adjusted giving effect to our issuance and sale of ___________
shares of our common stock in this offering at the assumed offering
price of $__________per share, after deducting estimated
underwriting discounts and commissions and estimated offering
expenses payable by us. |
RISK
FACTORS
Any
investment in our Common Stock involves a high degree of risk.
Investors should carefully consider the risks described below and
all of the information contained in this prospectus before deciding
whether to purchase our Common Stock. Our business, financial
condition and results of operations could be materially adversely
affected by these risks if any of them actually occur. This
prospectus also contains forward-looking statements that involve
risks and uncertainties. Our actual results could differ materially
from those anticipated in these forward-looking statements as a
result of certain factors, including the risks we face as described
below and elsewhere in this prospectus.
Risks
Related to Our Financial Position and Need for Additional
Capital
We are an early-clinical stage pharmaceutical company with a
limited operating history.
We
were established and began operations in 2020. Our operations to
date have been limited to financing and staffing our company, and
conducting clinical trials outside the United States of our EOM613
formulation for complications resulting from COVID-19. We have not
yet demonstrated the ability to successfully complete a
large-scale, pivotal clinical trial, obtain marketing approval,
manufacture a commercial scale product, arrange for a third party
to do so on our behalf, or conduct sales and marketing activities
necessary for successful product commercialization. Consequently,
predictions about our future success or viability may not be as
accurate as they could be if we had a history of successfully
developing and commercializing pharmaceutical products.
Accordingly,
you should consider our prospects in light of the costs,
uncertainties, delays and difficulties frequently encountered by
companies in the early stages of development, especially early
clinical stage pharmaceutical companies such as ours. Potential
investors should carefully consider the risks and uncertainties
that a company with a limited operating history will face. In
particular, potential investors should consider that we cannot
assure you that we will be able to, among other things:
|
|
● |
successfully
implement or execute our current business plan, and we cannot
assure you that our business plan is sound; |
| |
|
|
| |
● |
successfully
manufacture our clinical product candidates and establish a
commercial supply; |
| |
|
|
| |
● |
successfully
complete the clinical trials necessary to obtain regulatory
approval for the marketing of our product candidates; |
| |
|
|
| |
● |
secure
market exclusivity and/or adequate intellectual property protection
for our product candidates; |
| |
|
|
| |
● |
attract
and retain an experienced management and advisory team; |
| |
|
|
| |
● |
secure
acceptance of our product candidates in the medical community and
with third-party payors and consumers; |
| |
|
|
| |
● |
raise
sufficient funds in the capital markets or otherwise to effectuate
our business plan; and |
| |
|
|
| |
● |
utilize
the funds that we do have and/or raise in this offering or in the
future to efficiently execute our business strategy. |
If we
cannot successfully execute any one of the foregoing, our business
may fail and your investment will be adversely affected.
We have incurred losses since inception and anticipate that we will
continue to incur losses for the foreseeable future. We are not
currently profitable, and we may never achieve or sustain
profitability.
We are an early clinical stage biopharmaceutical company with a
limited operating history and have incurred losses since our
formation. We incurred a net loss of approximately $2,200,000 for
the nine-months ended September 30, 2022 and $5.1 million for the
year ended December 31, 2021. As of September 30, 2022, we had an
accumulated loss of approximately $8.8 million. We have not
commercialized any product candidates and have never generated
revenue from the commercialization of any product. To date, we have
devoted most of our financial resources to research and
development, including our clinical work, and to intellectual
property.
We
expect to incur significant additional operating losses for the
next several years, at least, as we advance EOM613 and EOM147
through clinical development, complete clinical trials, seek
regulatory approval and commercialize our formulas, if approved.
The costs of advancing product candidates into each clinical phase
tend to increase substantially over the duration of the clinical
development process. Therefore, the total costs to advance any of
our product candidates to marketing approval in even a single
jurisdiction will be substantial. Because of the numerous risks and
uncertainties associated with pharmaceutical product development,
we are unable to accurately predict the timing or amount of
increased expenses or when, or if, we will be able to begin
generating revenue from the commercialization of any products or
achieve or maintain profitability. Our expenses will also increase
substantially if and as we:
|
|
● |
are
required by the FDA, to complete the various animal toxicity and
dosing studies |
| |
● |
are
required by the FDA, to complete the various phases in human
trials; |
| |
● |
establish
a sales, marketing and distribution infrastructure to commercialize
our drugs, if approved, and for any other product candidates for
which we may obtain marketing approval; |
| |
● |
maintain,
expand and protect our intellectual property portfolio; |
| |
● |
hire
additional clinical, scientific and commercial
personnel; |
| |
● |
add
operational, financial and management information systems and
personnel, including personnel to support our product development
and planned future commercialization efforts, as well as to support
our transition to a public reporting company; and |
| |
● |
acquire
or in-license or invent other product candidates or
technologies. |
Furthermore,
our ability to successfully develop, commercialize and license any
product candidates and generate product revenue is subject to
substantial additional risks and uncertainties, as described under
“Risks Related to Development, Clinical Testing, Manufacturing and
Regulatory Approval” and “Risks Related to Commercialization.” As a
result, we expect to continue to incur net losses and negative cash
flows for the foreseeable future. These net losses and negative
cash flows have had, and will continue to have, an adverse effect
on our stockholders’ equity and working capital. The amount of our
future net losses will depend, in part, on the rate of future
growth of our expenses and our ability to generate revenues. If we
are unable to develop and commercialize one or more product
candidates, either alone or through collaborations, or if revenues
from any product that receives marketing approval are insufficient,
we will not achieve profitability. Even if we do achieve
profitability, we may not be able to sustain profitability or meet
outside expectations for our profitability. If we are unable to
achieve or sustain profitability or to meet outside expectations
for our profitability, the value of our common stock will be
materially and adversely affected.
Even if this offering is successful, we will require additional
capital to fund our operations, and if we fail to obtain necessary
financing, we may not be able to complete the development and
commercialization of our drugs.
Our
operations have consumed substantial amounts of cash since
inception. We expect to continue to spend substantial amounts to
advance the clinical development of and launch and commercialize
our product candidates if we receive regulatory approval. Following
this offering, we will require additional capital for further
research and development and commencement of clinical trials of
EOM613 and EOM147 and may also need to raise additional funds
sooner to pursue a more accelerated development of our formulas. If
we are unable to raise capital when needed or on attractive terms,
we could be forced to delay, reduce or eliminate our research and
development programs, clinical trials or any future
commercialization efforts.
We
believe that the net proceeds from this offering will enable us to
fund our operating expense requirements through December 2023
following the closing of this offering. We have based this estimate
on assumptions that may prove to be wrong, and we could deploy our
available capital resources sooner than we currently expect. Our
future funding requirements, both near and long-term, will depend
on many factors, including, but not limited to the:
|
|
● |
initiation,
progress, timing, costs and results of preclinical studies and
clinical trials, including patient enrollment in such trials, for
EOM613 and EOM147 or any other future product
candidates; |
| |
|
|
| |
● |
various
clinical development plans we establish for EOM613 and EOM147 and
any other future product candidates; |
| |
|
|
| |
● |
number
and characteristics of product candidates that we discover or
in-license and develop; |
| |
|
|
| |
● |
outcome,
timing and cost of regulatory review by the FDA and comparable
foreign regulatory authorities, including the potential for the FDA
or comparable foreign regulatory authorities to require that we
perform more studies than those that we planned for; |
| |
|
|
| |
● |
costs
of filing, prosecuting, defending and enforcing any patent claims
and maintaining and enforcing other intellectual property
rights; |
| |
|
|
| |
● |
effects
of competing technological and market developments; |
| |
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costs
and timing of the implementation of commercial-scale manufacturing
activities; |
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costs
and timing of establishing sales, marketing and distribution
capabilities for any product candidates for which we may receive
regulatory approval; and |
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cost
associated with being a public company. |
If we
are unable to expand our operations or otherwise capitalize on our
business opportunities due to a lack of capital, our ability to
become profitable will be compromised.
Raising additional capital may cause dilution to our stockholders,
including purchasers of common stock in this offering, restrict our
operations or require us to relinquish rights to our technologies
or product candidates.
Until
such time, if ever, as we can generate substantial revenue, we may
finance our cash needs through a combination of equity offerings,
debt financings, marketing and distribution arrangements and other
collaborations, strategic alliances and licensing arrangements or
other sources. We do not currently have any committed external
source of funds. In addition, we may seek additional capital due to
favorable market conditions or strategic considerations, even if we
believe that we have sufficient funds for our current or future
operating plans.
To
the extent that we raise additional capital through the sale of
equity or convertible debt securities, your ownership interest will
be diluted, and the terms of these securities may include
liquidation or other preferences that adversely affect your rights
as a common stockholder. Debt financing and preferred equity
financing, if available, may involve agreements that include
covenants limiting or restricting our ability to take specific
actions, such as incurring additional debt, making capital
expenditures or declaring dividends. If we raise additional funds
through collaborations, strategic alliances or marketing,
distribution or licensing arrangements with third parties, we may
be required to relinquish valuable rights to our technologies,
intellectual property, future revenue streams or product candidates
or grant licenses on terms that may not be, in hindsight, favorable
to us. If we are unable to raise additional funds through equity or
debt financings when needed, we may be required to delay, limit,
reduce or terminate product candidate development or future
commercialization efforts.
There is substantial doubt about our ability to continue as a going
concern.
Our
independent public accounting firm in its report included herein
included an explanatory paragraph expressing substantial doubt in
our ability to continue as a going concern without additional
capital becoming available. Going concern contemplates the
realization of assets and the satisfaction of liabilities in the
normal course of business over a reasonable length of time. Our
ability to continue as a going concern ultimately is dependent on
our ability to generate a profit which is dependent upon our
ability to obtain additional equity or debt financing, attain
further operating efficiencies and, ultimately, to achieve
profitable operations. As a result, our financial statements do not
reflect any adjustment which would result from our failure to
continue to operate as a going concern. Any such adjustment, if
necessary, would materially affect the value of our
assets.
Risks
Related to Development, Clinical Testing, Manufacturing and
Regulatory Approval
Clinical trials are expensive, time-consuming and difficult to
design and implement, and involve an uncertain
outcome.
Clinical
testing is expensive and can take many years to complete, and its
outcome is inherently uncertain. Failure can occur at any time
during the clinical trial process. Because the results of early
clinical trials are not necessarily predictive of future results,
EOM613 and EOM147 may not have favorable results in future
preclinical and clinical studies or receive regulatory approval. We
may experience delays in initiating and completing any clinical
trials that we intend to conduct, and we do not know whether
planned clinical trials will begin on time, need to be redesigned,
enroll patients on time or be completed on schedule, or at all.
Clinical trials can be delayed for a variety of reasons, including
delays related to:
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the
FDA or comparable foreign regulatory authorities disagreeing as to
the design or implementation of our clinical studies; |
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obtaining
regulatory approval to commence a trial; |
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reaching
an agreement on acceptable terms with prospective contract research
organizations (“CROs”), and clinical trial sites, the terms of
which can be subject to extensive negotiation and may vary
significantly among different CROs and trial sites; |
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obtaining
Institutional Review Board (“IRB”), approval at each site, or
Independent Ethics Committee (“IEC”), approval at sites outside the
United States; |
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recruiting
suitable patients to participate in a trial in a timely manner and
in sufficient numbers; |
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having
patients complete a trial or return for post-treatment
follow-up; |
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imposition
of a clinical hold by regulatory authorities, including as a result
of unforeseen safety issues or side effects or failure of trial
sites to adhere to regulatory requirements or follow trial
protocols; |
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clinical
sites deviating from trial protocol or dropping out of a
trial; |
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addressing
patient safety concerns that arise during the course of a
trial; |
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adding
a sufficient number of clinical trial sites; or |
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manufacturing
sufficient quantities of product candidate for use in clinical
trials. |
We
could also encounter delays if a clinical trial is suspended or
terminated by us, the IRBs or IECs of the institutions in which
such trials are being conducted, the Data Safety Monitoring Board
(“DSMB”) for such trial or the FDA or other regulatory authorities.
Such authorities may impose such a suspension or termination due to
a number of factors, including failure to conduct the clinical
trial in accordance with regulatory requirements or our clinical
protocols, inspection of the clinical trial operations or trial
site by the FDA or other regulatory authorities resulting in the
imposition of a clinical hold, unforeseen safety issues or adverse
side effects, failure to demonstrate a benefit from using a drug,
changes in governmental regulations or administrative actions or
lack of adequate funding to continue the clinical trial.
Furthermore, we rely on CROs and clinical trial sites to ensure the
proper and timely conduct of our clinical trials, including
clinical trial data collection, and, while we have agreements
governing their committed activities, we have limited influence
over their actual performance, as described in “Risks Related to
Our Dependence on Third Parties”.
The regulatory approval processes of the FDA and comparable foreign
authorities are lengthy, time consuming and inherently
unpredictable, and if we are ultimately unable to obtain regulatory
approval for EOM613 and/or EOM147 or any other product candidates,
our business will be substantially harmed.
The
time required to obtain approval by the FDA and comparable foreign
authorities is unpredictable but typically takes many years
following the commencement of clinical trials and depends upon
numerous factors, including the substantial discretion of the
regulatory authorities. In addition, approval policies, regulations
or the type and amount of clinical data necessary to gain
regulatory approval may change during the course of a product
candidate’s clinical development and may vary among jurisdictions.
We have not obtained regulatory approval for any product candidate
and it is possible that we will never obtain regulatory approval
for EOM613 and EOM147 or any other product candidate. We are not
permitted to market any of our product candidates in the United
States until we receive regulatory approval of an New Drug
Application (“NDA”) from the FDA. Our product candidates could fail
to receive regulatory approval for many reasons, including the
following:
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we
may be unable to demonstrate to the satisfaction of the FDA or
comparable foreign regulatory authorities that a product candidate
is safe and effective for its proposed indication; |
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serious
and unexpected drug-related side effects experienced by
participants in our clinical trials or by individuals using drugs
similar to our product candidates, or other products containing the
active ingredient in our product candidates; |
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negative
or ambiguous results from our clinical trials or results that may
not meet the level of statistical significance required by the FDA
or comparable foreign regulatory authorities for
approval; |
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we
may be unable to demonstrate that a product candidate’s clinical
and other benefits outweigh its safety risks; |
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the
FDA or comparable foreign regulatory authorities may disagree with
our interpretation of data from preclinical studies or clinical
trials; |
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the
data collected from clinical trials of our product candidates may
not be acceptable or sufficient to support the submission of an NDA
or other submission or to obtain regulatory approval in the United
States or elsewhere, and we may be required to conduct additional
clinical trials; |
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the
FDA or comparable foreign authorities may disagree regarding the
formulation, labeling and/or the specifications of our product
candidates; |
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the
FDA or comparable foreign regulatory authorities may fail to
approve or find deficiencies with the manufacturing processes or
facilities of third-party manufacturers with which we contract for
clinical and commercial supplies; and |
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the
approval policies or regulations of the FDA or comparable foreign
regulatory authorities may significantly change in a manner
rendering our clinical data insufficient for approval. |
Prior
to obtaining approval to commercialize a product candidate in the
United States or abroad, we must demonstrate with substantial
evidence from well-controlled clinical trials, and to the
satisfaction of the FDA or foreign regulatory agencies, that such
product candidates are safe and effective for their intended uses.
Results from preclinical studies and clinical trials can be
interpreted in different ways. Even if we believe the preclinical
or clinical data for our product candidates are promising, such
data may not be sufficient to support approval by the FDA and other
regulatory authorities.
The
FDA or any foreign regulatory bodies can delay, limit or deny
approval of our product candidates or require us to conduct
additional preclinical or clinical testing or abandon a program for
many reasons, including:
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the
FDA or comparable foreign regulatory authorities may disagree with
the design or implementation of our clinical trials; |
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the
FDA or comparable foreign regulatory authorities may disagree with
our safety interpretation of our product candidate; |
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the
FDA or comparable foreign regulatory authorities may disagree with
our efficacy interpretation of our product candidate;
and |
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the
FDA or comparable foreign regulatory authorities may regard our CMC
package as inadequate. |
Of
the large number of drugs in development, only a small percentage
successfully complete the regulatory approval processes and are
commercialized. This lengthy approval process, as well as the
unpredictability of future clinical trial results, may result in
our failing to obtain regulatory approval to market EOM613 and/or
EOM147, or another product candidate, which would significantly
harm our business, results of operations and prospects.
In
addition, the FDA or the applicable foreign regulatory agency also
may approve a product candidate for a more limited indication or
patient population than we originally requested, and the FDA or
applicable foreign regulatory agency may approve a product
candidate with a label that does not include the labeling claims
necessary or desirable for the successful commercialization of that
product candidate. Any of the foregoing scenarios could materially
harm the commercial prospects for our product
candidates.
If we are unable to file for approval of EOM613 and EOM147 under
Section 505(b)(2) of the FDCA or if we are required to generate
additional data related to safety and efficacy in order to obtain
approval under Section 505(b)(2), we may be unable to meet our
anticipated development and commercialization
timelines.
Our
current plans for filing NDAs for EOM613 and EOM147 include efforts
to minimize the data we will be required to generate in order to
obtain marketing approval and therefore reduce the development
time. We intend to file Section 505(b)(2) NDAs for EOM613 and
EOM147 that might, if accepted by the FDA, save time and expense in
the development and testing of these indications.
The
timeline for filing and review of our NDAs for EOM613 and EOM147 is
based on our plan to submit the NDAs under Section 505(b)(2) of the
FDA, which would enable us to rely in part on data in the public
domain or elsewhere. Previous trials in cancer cachexia were
carried out by OHR Pharmaceuticals on EOM613 (known previously as
OHR/AVR118), the data for which will form the basis of our
505(b)(2) filings, together with new preclinical data we are
planning on generating to augment the forthcoming FDA submissions
to be compliant with current FDA guidance and requirements for
NDAs. For our NDA submission for drug candidate EOM147 we will be
relying in part on the clinical data of the drug product OHR-102
0.2% squalamine lactate ophthalmic formulation in previously
conducted clinical trials in wet-AMD, retinal vein occlusions and
proliferative diabetic retinopathy that were acquired by the
previous sponsor, OHR Pharmaceutical, Inc. Our eye drop product
EOM147 represents a novel, different, enhanced formulation of the
OHR-102 ophthalmic solution formulation. We have not yet filed an
NDA under Section 505(b)(2) for any of our product candidates.
Depending on the data that may be required by the FDA for approval,
some of the data may be related to products already approved by the
FDA. Neither of our pipeline products EOM613 or EOM147 are
currently approved drug products in any jurisdiction. If the data
relied upon is related to products already approved by the FDA and
covered by third-party patents, we would be required to certify
that we do not infringe the listed patents or that such patents are
invalid or unenforceable. As a result of the certification, the
third-party would have 45 days from notification of our
certification to initiate an action against us. In the event that
an action is brought in response to such a certification, the
approval of our NDA could be subject to a stay of up to 30 months
or more while we defend against such a suit. Approval of our
product candidates under Section 505(b)(2) may therefore be delayed
until patent exclusivity expires or until we successfully challenge
the applicability of those patents to our product candidates.
Alternatively, we may elect to generate sufficient additional
clinical data so that we no longer rely on data which triggers a
potential stay of the approval of our product candidates. Even if
no exclusivity periods apply to our applications under Section
505(b)(2), the FDA has broad discretion to require us to generate
additional data on the safety and efficacy of our product
candidates to supplement third-party data on which we may be
permitted to rely. In either event, we could be required, before
obtaining marketing approval for any of our product candidates, to
conduct substantial new research and development activities beyond
those we currently plan to engage in order to obtain approval of
our product candidates. Such additional new research and
development activities would be costly and time consuming.
We
intend to pursue the FDA’s 505(b)(2) pathway for both of our
pipeline products, EOM613 and EOM147. While both the statutory
505(b)(1) and 505 (b) (2) pathways require a full accounting of
safety and efficacy of candidate drug products to seek FDA
approval, the latter pathway provides added flexibility for how
this requirement is met. The FDA allows this flexibility to avoid
unnecessary additional testing by relying on prior available data,
where the application contains some information coming from studies
not conducted directly by and for the applicant, and for which the
applicant has not obtained a right of reference. Given the prior
preclinical and clinical information available for EOM613 and a
progenitor formulation of the EOM147 drug product in prior ex-U.S.
clinical studies, as to their safety and effectiveness, we believe
the 505(b)(2) pathway is appropriate for both drug products in our
pipeline. We have not had a pre-IND meeting as yet with the FDA
regarding our ability to use this pathway for either or both of our
products. We do intend to use and include prior clinical data,
including data derived for our clinical drug candidates in clinical
trials carried out in the USA and abroad by previous sponsors, in
support of our NDA, in addition to our own planned new clinical
trials.
We
may not be able to realize a shortened development timeline for
EOM613 and EOM147, and the FDA may not approve either of our NDAs
based on their review of the submitted data. Moreover, if products
containing the reference drug are withdrawn from the market by the
FDA for any safety reason, we may not be able to reference such
products to support a 505(b)(2) NDA for our product candidates, and
we may need to fulfill the more extensive requirements of Section
505(b)(1). If we are required to generate additional data to
support approval, we may be unable to meet our anticipated
development and commercialization timelines, may be unable to
generate the additional data at a reasonable cost, or at all, and
may be unable to obtain marketing approval of our lead product
candidate.
Enrollment and retention of patients in clinical trials is an
expensive and time-consuming process and could be made more
difficult or rendered impossible by multiple factors outside our
control.
The
timely completion of clinical trials in accordance with their
protocols depends, among other things, on our ability to enroll a
sufficient number of patients who remain in the study until its
conclusion. We may encounter delays in enrolling, or be unable to
enroll, a sufficient number of patients to complete any of our
clinical trials, and even once enrolled, we may be unable to retain
a sufficient number of patients to complete any of our trials.
Patient enrollment and retention in clinical trials depends on many
factors, including:
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the
patient eligibility criteria defined in the protocol; |
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the
size of the patient population required for analysis of the trial’s
primary endpoints; |
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the
nature of the trial protocol; |
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the
existing body of safety and efficacy data with respect to the
product candidate; |
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the
proximity of patients to clinical sites; |
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our
ability to recruit clinical trial investigators with the
appropriate competencies and experience; |
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clinicians’
and patients’ perceptions as to the potential advantages of the
product candidate being studied 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
clinical trials being conducted by other companies or
institutions; |
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our
ability to maintain patient consents; and |
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the
risk that patients enrolled in clinical trials will drop out of the
trials before completion. |
We face risks related to health epidemics and outbreaks, including
the COVID-19 pandemic, which could significantly disrupt our
preclinical studies and clinical trials, and therefore our receipt
of necessary regulatory approvals could be delayed or
prevented.
We
face risks related to health epidemics or outbreaks of communicable
diseases. For example, the recent outbreak around the world,
including in the United States, the European Union (the “EU”)
members, China and many other countries, of the highly
transmissible and pathogenic COVID-19 and its Omicron variant. The
outbreak of such communicable diseases could result in a widespread
health crisis that could adversely affect general commercial
activity and the economies and financial markets of many countries,
which in the case of COVID-19 has occurred. In addition, the
COVID-19 pandemic is having a severe effect on the clinical trials
of many drug candidates. Some trials have been merely delayed,
while others have been cancelled. The extent to which the COVID-19
pandemic may impact our preclinical and clinical trial operations
will depend on future developments, which are highly uncertain and
cannot be predicted with confidence, such as the duration and
geographic reach of the outbreak, the severity of COVID-19, and the
effectiveness of actions to contain and treat COVID-19. The
continued spread of COVID-19 globally could adversely impact our
clinical trial operations, including our ability to recruit and
retain patients and principal investigators and site staff who, as
healthcare providers, may have heightened exposure to COVID-19 if
an outbreak occurs in their geography. Disruptions or restrictions
on our ability to travel to monitor data from our clinical trials,
or to conduct clinical trials, or the ability of patients enrolled
in our studies to travel, or the ability of staff at study sites to
travel, as well as temporary closures of our facilities or the
facilities of our clinical trial partners and their contract
manufacturers, would negatively impact our clinical trial
activities. In addition, we rely on independent clinical
investigators, CROs and other third-party service providers to
assist us in managing, monitoring and otherwise carrying out our
preclinical studies and clinical trials, including the collection
of data from our clinical trials, and the outbreak may affect their
ability to devote sufficient time and resources to our programs or
to travel to sites to perform work for us. Similarly, our
preclinical trials could be delayed and/or disrupted by the
COVID-19 pandemic. As a result, the expected timeline for data
readouts of our preclinical studies and clinical trials and certain
regulatory filings may be negatively impacted, which would
adversely affect our ability to obtain regulatory approval for and
to commercialize our product candidates, increase our operating
expenses and have a material adverse effect on our financial
results.
Results of preclinical studies, early clinical trials or analyses
may not be indicative of results obtained in later
trials.
The
results of preclinical studies, early clinical trials or analyses
of our 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
traits despite having progressed through preclinical studies and
initial clinical trials. A number of companies in the
biopharmaceutical industry have suffered significant setbacks in
advanced clinical trials due to lack of efficacy or adverse safety
profiles, notwithstanding promising results in earlier trials. In
addition, conclusions based on promising data from analyses of
clinical results may be shown to be incorrect when implemented in
prospective clinical trials. Even if our clinical trials for EOM613
and/or EOM147 are completed as planned, we cannot be certain that
their results will support the safety and efficacy sufficient to
obtain regulatory approval.
Interim “top-line” and preliminary data from our clinical trials
that we announce or publish from time to time may change as more
patient data become available and are subject to audit and
verification procedures that could result in material changes in
the final data.
From
time to time, we may publish interim “top-line” or preliminary data
from our clinical studies. Interim data from clinical trials that
we may complete are subject to the risk that one or more of the
clinical outcomes may materially change as patient enrollment
continues and more patient data become available. Preliminary or
“top-line” data also remain subject to audit and verification
procedures that may result in the final data being materially
different from the preliminary data we previously published. As a
result, interim and preliminary data should be viewed with caution
until the final data are available. Adverse differences between
preliminary or interim data and final data could significantly harm
our business prospects.
Our product candidates may cause serious adverse events or
undesirable side effects, which may delay or prevent marketing
approval, or, if approved, require them to be taken off the market,
require them to include safety warnings or otherwise limit their
sales.
Serious
adverse events or undesirable side effects caused by our products
could cause us or regulatory authorities to interrupt, delay or
halt clinical trials and could result in a more restrictive label
or the delay or denial of regulatory approval by the FDA or other
comparable foreign authorities. Results of any clinical trial we
conduct could reveal a high and unacceptable severity and
prevalence of side effects or unexpected characteristics. Any
clinical trials for our drug product candidates to date may fail to
demonstrate acceptable levels of safety and efficacy which could
prevent or significantly delay their regulatory approval or result
in a more restrictive label by the FDA or other comparable foreign
authorities.
If
unacceptable side effects arise in the development of our product
candidates, we, the FDA or the IRBs at the institutions in which
our studies are conducted, or the DSMB, if constituted for our
clinical trials, could recommend a suspension or termination of our
clinical trials, or the FDA or comparable foreign regulatory
authorities could order us to cease further development of or deny
approval of a product candidate for any or all targeted
indications. In addition, drug-related side effects could affect
patient recruitment or the ability of enrolled patients to complete
a trial or result in potential product liability claims. In
addition, these side effects may not be appropriately recognized or
managed by the treating medical staff. We expect to have to train
medical personnel using our product candidates to understand the
side effect profiles for our clinical trials and upon any
commercialization of any of our product candidates. Inadequate
training in recognizing or managing the potential side effects of
our product candidates could result in patient injury or death. Any
of these occurrences may harm our business, financial condition and
prospects significantly.
Additionally,
if one or more of our product candidates receives marketing
approval, and we or others later identify undesirable side effects
caused by such products, a number of potentially significant
negative consequences could result, including:
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regulatory
authorities may withdraw approvals of such product; |
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regulatory
authorities may require additional warnings on the label, such as a
“black box” warning or contraindication; |
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additional
restrictions may be imposed on the marketing of the particular
product or the manufacturing processes for the product or any
component thereof; |
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we
may be required to implement a Risk Evaluation and Mitigation
Strategy (“REMS”) or create a medication guide outlining the risks
of such side effects for distribution to patients; |
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we
could be sued and held liable for harm caused to
patients; |
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the
product may become less competitive; and |
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our
reputation may suffer. |
Any
of these events could prevent us from achieving or maintaining
market acceptance of a product candidate, if approved, and could
significantly harm our business, results of operations and
prospects.
The market opportunities for our products, if approved, may be
smaller than we anticipate.
We
expect to initially seek approval for EOM613 and EOM147. Our
estimates of market potential for these formulas have been derived
from a variety of sources, including scientific literature, patient
foundations, and market research, and may prove to be incorrect.
Even if we obtain significant market share for any product
candidate, if approved, if the potential target populations are
smaller than we anticipate, we may never achieve profitability
without obtaining marketing approval for additional
indications.
We have never obtained marketing approval for our product
candidates and we may be unable to obtain, or may be delayed in
obtaining, marketing approval for any of our product
candidates.
We
have never obtained marketing approval for a product candidate. It
is possible that the FDA may refuse to accept for substantive
review any NDAs that we submit for our product candidates or may
conclude after review of our data that our application is
insufficient to obtain marketing approval of our product
candidates. In addition, as some of our trials may take place
overseas, the FDA may require us to conduct additional studies or
trials if it does not accept data from ex-U.S. studies or believes
that additional data is necessary to supplement our trial data. If
the FDA does not accept or approve our NDAs for our product
candidates, it may require that we conduct additional clinical,
preclinical, or manufacturing validation studies and submit that
data before it will reconsider our applications. Depending on the
extent of these or any other FDA-required studies, approval of any
NDA that we submit may be delayed or may require us to expend more
resources than we have available. It is also possible that
additional studies, if performed and completed, may not be
considered sufficient by the FDA to approve our NDAs.
Any
delay in obtaining, or an inability to obtain, marketing approvals
would prevent us from commercializing our product candidates,
generating revenues, and achieving and sustaining profitability. If
any of these outcomes occur, we may be forced to abandon our
development efforts for our product candidates, which could
significantly harm our business.
Even if we obtain FDA approval for our product candidate in the
United States, we may never obtain approval for or commercialize
our product candidate in any other jurisdiction, which would limit
our ability to realize their full market
potential.
To
market any products in any particular jurisdiction, we must
establish and comply with numerous and varying regulatory
requirements on a country-by-country basis regarding safety and
efficacy. Approval by the FDA in the United States does not ensure
approval by regulatory authorities in other countries or
jurisdictions. However, the failure to obtain approval in one
jurisdiction may negatively impact our ability to obtain approval
elsewhere. In addition, clinical trials conducted in one country
may not be accepted by regulatory authorities in other countries,
and regulatory approval in one country does not guarantee
regulatory approval in any other country.
Approval
processes vary among countries and can involve additional product
testing and validation and additional administrative review
periods. Seeking foreign regulatory approval could result in
difficulties and increased costs for us and require additional
preclinical studies or clinical trials which could be costly and
time consuming. Regulatory requirements can vary widely from
country to country and could delay or prevent the introduction of
our products in those countries. We do not have any product
candidates approved for sale in any jurisdiction, including in
international markets, and we do not have experience in obtaining
regulatory approval in international markets. If we fail to comply
with regulatory requirements in international markets or to obtain
and maintain required approvals, or if regulatory approvals in
international markets are delayed, our target market will be
reduced and our ability to realize the full market potential of any
product we develop will be unrealized.
Even if we obtain regulatory approval for our product candidates,
we will still face extensive and ongoing regulatory requirements
and obligations and any product candidates, if approved, may face
future development and regulatory difficulties.
Any
product candidate for which we obtain marketing approval, along
with the manufacturing processes, post-approval clinical data,
labeling, packaging, distribution, adverse event reporting,
storage, recordkeeping, export, import, advertising and promotional
activities for such product, among other things, will be subject to
extensive and ongoing requirements of and review by the FDA and
other regulatory authorities. These requirements include
submissions of safety and other post-marketing information and
reports, establishment registration and drug listing requirements,
continued compliance with current Good Manufacturing Practice
(“cGMP”) requirements relating to manufacturing, quality control,
quality assurance and corresponding maintenance of records and
documents, requirements regarding the distribution of samples to
physicians and recordkeeping and Good Clinical Practice (“GCP”)
requirements for any clinical trials that we conduct
post-approval.
Even
if marketing approval of a product candidate is granted, the
approval may be subject to limitations on the indicated uses for
which the product candidate may be marketed or to the conditions of
approval, including a requirement to implement a REMS. If any of
our product candidates receive marketing approval, the accompanying
label may limit the approved indicated use of the product
candidate, which could limit sales of the product candidate. The
FDA may also impose requirements for costly post-marketing studies
or clinical trials and surveillance to monitor the safety or
efficacy of a product. The FDA closely regulates the post-approval
marketing and promotion of drugs to ensure drugs are marketed only
for the approved indications and in accordance with the provisions
of the approved labeling. The FDA imposes stringent restrictions on
manufacturers’ communications regarding off-label use, and if we
market our products for uses beyond their approved indications, we
may be subject to enforcement action for off-label marketing.
Violations of the FDCA relating to the promotion of prescription
drugs may lead to FDA enforcement actions and investigations
alleging violations of federal and state healthcare fraud and abuse
laws, as well as state consumer protection laws.
In
addition, later discovery of previously unknown adverse events or
other problems with our products, manufacturers or manufacturing
processes or failure to comply with regulatory requirements, may
yield various results, including:
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restrictions
on manufacturing such products; |
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restrictions
on the labeling or marketing of products; |
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restrictions
on product distribution or use; |
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requirements
to conduct post-marketing studies or clinical trials; |
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warning
letters or untitled letters; |
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withdrawal
of the products from the market; |
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refusal
to approve pending applications or supplements to approved
applications that we submit; |
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recall
of products; |
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fines,
restitution or disgorgement of profits or revenues; |
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suspension
or withdrawal of marketing approvals; |
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refusal
to permit the import or export of our products; |
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product
seizure; or |
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injunctions
or the imposition of civil or criminal penalties. |
Further,
the FDA’s policies may change, and additional government
regulations may be enacted that could prevent, limit or delay
regulatory approval of our product candidates. If we are slow or
unable to adapt to changes in existing requirements or the adoption
of new requirements or policies, or if we are not able to maintain
regulatory compliance, we may lose any marketing approval that we
may have obtained, which would adversely affect our business,
prospects and ability to achieve or sustain
profitability.
Potential product liability lawsuits against us could cause us to
incur substantial liabilities and limit commercialization of any
products that we may develop.
The
use of EOM613 or EOM147 or any other product candidates we may
develop in clinical trials and the sale of any products for which
we obtain marketing approval exposes us to the risk of product
liability claims. Product liability claims might be brought against
us by patients, healthcare providers, pharmaceutical companies or
others selling or otherwise coming into contact with our products.
On occasion, large judgments have been awarded in class action
lawsuits based on drugs that had unanticipated adverse effects. If
we cannot successfully defend against product liability claims, we
could incur substantial liability and costs. In addition,
regardless of merit or eventual outcome, product liability claims
may result in:
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impairment
of our business reputation and significant negative media
attention; |
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withdrawal
of participants from our clinical trials; |
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significant
costs to defend the litigation; |
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distraction
of management’s attention from our primary business; |
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substantial
monetary awards to patients or other claimants; |
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inability
to commercialize EOM613, EOM147 or any other product
candidate; |
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product
recalls, withdrawals, or labeling, marketing, or promotional
restrictions; |
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decreased
market demand for any product; and |
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loss
of revenue. |
Risks
Related to Commercialization
We face significant competition from other biotechnology and
pharmaceutical companies and our operating results will suffer if
we fail to compete effectively.
The
biopharmaceutical and pharmaceutical industries are highly
competitive and subject to significant and rapid technological
change. Our success is highly dependent on our ability to acquire,
develop, and obtain marketing approval for new products on a
cost-effective basis and to market them successfully. We face
intense competition from a variety of businesses, including large,
fully integrated pharmaceutical companies, specialty pharmaceutical
companies and biopharmaceutical companies in the United States and
other jurisdictions. These organizations may have significantly
greater resources than we do and may conduct similar research; seek
patent protection; and establish collaborative arrangements for
research, development, manufacturing and marketing of products that
may compete with us.
Our
competitors may, among other things:
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have
significantly greater name recognition, financial, manufacturing,
marketing, drug development, technical, and human resources than we
do, and future mergers and acquisitions in the biotechnology and
pharmaceutical industries may result in even more resources being
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develop
and commercialize products that are safer, more effective, less
expensive, more convenient, or easier to administer, or have fewer
or less severe effects; |
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obtain
quicker regulatory approval; |
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implement
more effective approaches to sales and marketing; or |
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form
more advantageous strategic alliances. |
Smaller
and other early-stage companies may also prove to be significant
competitors, particularly through collaborative arrangements with
large and established companies. These third parties compete with
us in recruiting and retaining qualified scientific and management
personnel; establishing clinical trial sites and patient
registration; and in acquiring technologies complementary to, or
necessary for, our programs. Our commercial opportunity could be
reduced or eliminated if our competitors develop and commercialize
products that are more effective, have fewer or less severe side
effects, or are more convenient or are less expensive than EOM613
and EOM147. Our competitors may also obtain FDA or other regulatory
approval for their product candidates more rapidly than we may
obtain approval for EOM613 and EOM147, which could result in our
competitors establishing or strengthening their market position
before we are able to enter the market.
The successful commercialization of EOM613 or EOM147 and any other
product candidate we develop will depend in part on the extent to
which governmental authorities and health insurers establish
adequate coverage, reimbursement levels, and pricing policies.
Failure to obtain or maintain coverage and adequate reimbursement
for our product candidates, if approved, could limit our ability to
market those products and decrease our ability to generate
revenue.
The
availability and adequacy of coverage and reimbursement by
governmental healthcare programs such as Medicare and Medicaid,
private health insurers and other third-party payors are essential
for most patients to be able to afford prescription medications
such as EOM613 and EOM147, if approved. Our ability to achieve
acceptable levels of coverage and reimbursement for products by
governmental authorities, private health insurers and other
organizations will have an effect on our ability to successfully
commercialize our drug and any other product candidates we develop.
Assuming we obtain coverage for our product candidates by a
third-party payor, the resulting reimbursement payment rates may
not be adequate or may require co-payments that patients find
unacceptably high. We cannot be sure that coverage and
reimbursement in the United States or elsewhere will be available
for our product candidates or any product that we may develop, and
any reimbursement that may become available may be decreased or
eliminated in the future.
Third-party
payors increasingly are challenging prices charged for
pharmaceutical products and services, and many third-party payors
may refuse to provide coverage and reimbursement for particular
drugs or biologics when an equivalent generic drug, biosimilar, or
a less expensive therapy is available. It is possible that a
third-party payor may consider our product candidates as
substitutable and offer to reimburse patients only for the less
expensive product. Even if we show improved efficacy or improved
convenience of administration with our product candidates, pricing
of existing drugs may limit the amount we will be able to charge
for our product candidates. These payors may deny or revoke the
reimbursement status of a given product or establish prices for new
or existing marketed products at levels that are too low to enable
us to realize an appropriate return on our investment in our
product candidates. If reimbursement is not available or is
available only at limited levels, we may not be able to
successfully commercialize our product candidates and may not be
able to obtain a satisfactory financial return on our product
candidates.
There
is significant uncertainty related to the insurance coverage and
reimbursement of newly approved products. In the United States,
third-party payors, including private and governmental payors, such
as the Medicare and Medicaid programs, play an important role in
determining the extent to which new drugs and biologics will be
covered. The Medicare and Medicaid programs increasingly are used
as models in the United States for how private payors and other
governmental payors develop their coverage and reimbursement
policies for drugs and biologics. Some third-party payors may
require pre-approval of coverage for new or innovative devices or
drug therapies before they will reimburse healthcare providers who
use such therapies. It is difficult to predict at this time what
third-party payors will decide with respect to the coverage and
reimbursement for our product candidates.
No
uniform policy for coverage and reimbursement for products exists
among third-party payors in the United States. Therefore, coverage
and reimbursement for products can differ significantly from payor
to payor. As a result, the coverage determination process is often
a time-consuming and costly process that will require us to provide
scientific and clinical support for the use of our product
candidates to each payor separately, with no assurance that
coverage and adequate reimbursement will be applied consistently or
obtained in the first instance. Furthermore, rules and regulations
regarding reimbursement change frequently, in some cases at short
notice, and we believe that changes in these rules and regulations
are likely.
We
may also be subject to extensive governmental price controls and
other market regulations outside of the United States, and we
believe the increasing emphasis on cost-containment initiatives in
other countries have and will continue to put pressure on the
pricing and usage of medical products. In many countries, the
prices of medical products are subject to varying price control
mechanisms as part of national health systems. Other countries
allow companies to fix their own prices for medical products but
monitor and control company profits.
Additional
foreign price controls or other changes in pricing regulation could
restrict the amount that we are able to charge for our product
candidates. Accordingly, in markets outside the United States, the
reimbursement for our product candidates may be reduced compared
with the United States and may be insufficient to generate
commercially reasonable revenue and profits.
Moreover,
increasing efforts by governmental and third-party payors in the
United States to cap or reduce healthcare costs may cause such
organizations to limit both coverage and the level of reimbursement
for newly approved products and, as a result, they may not cover or
provide adequate payment for our product candidates. We expect to
experience pricing pressures in connection with the sale of our
product candidates due to the trend toward managed health care, the
increasing influence of health maintenance organizations and
additional legislative changes. The downward pressure on healthcare
costs in general, particularly prescription drugs and biologics and
surgical procedures and other treatments, has become intense. As a
result, increasingly high barriers are being erected to the entry
of new products.
Even if EOM613 and/or EOM147 or any product candidate we develop
receives marketing approval, it may fail to achieve market
acceptance by physicians, patients, third-party payors or others in
the medical community necessary for commercial
success.
If
EOM613 and/or EOM147 or any product candidate we develop receives
marketing approval, it may nonetheless fail to gain sufficient
market acceptance by physicians, patients, third-party payors, and
others in the medical community. If it does not achieve an adequate
level of acceptance, we may not generate significant product
revenues or become profitable. The degree of market acceptance of
our product candidates, if approved, will depend on a number of
factors, including but not limited to:
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the
efficacy and potential advantages compared to alternative
treatments; |
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effectiveness
of sales and marketing efforts; |
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the
cost of treatment in relation to alternative treatments, including
any similar generic treatments; |
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our
ability to offer our products for sale at competitive
prices; |
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the
convenience and ease of administration compared to alternative
treatments; |
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the
willingness of the target patient population to try new therapies
and of physicians to prescribe these therapies; |
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the
strength of marketing and distribution support; |
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the
availability of third-party coverage and adequate
reimbursement; |
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the
prevalence and severity of any side effects; and |
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any
restrictions on the use of our product together with other
medications. |
Because
we expect sales of our product candidates, if approved, to generate
substantially all of our revenues for the foreseeable future, the
failure of our product candidates to find market acceptance would
harm our business and could require us to seek additional
financing.
If we are unable to establish sales, marketing, and distribution
capabilities either on our own or in collaboration with third
parties, we may not be successful in commercializing EOM613 and/or
EOM147, if approved.
We do
not have any infrastructure for the sales, marketing, or
distribution of EOM613 or EOM147, and the cost of establishing and
maintaining such an organization may exceed the cost-effectiveness
of doing so. In order to market and successfully commercialize our
drug or any product candidate we develop, if approved, we must
build our sales, distribution, marketing, managerial and other
non-technical capabilities or make arrangements with third parties
to perform these services. We expect to build a focused sales,
distribution and marketing infrastructure to market EOM613 and/or
EOM147, if approved, in the United States and Europe. There are
significant expenses and risks involved with establishing our own
sales, marketing and distribution capabilities, including our
ability to hire, retain and appropriately incentivize qualified
individuals, generate sufficient sales leads, provide adequate
training to sales and marketing personnel and effectively manage a
geographically dispersed sales and marketing team. Any failure or
delay in the development of our internal sales, marketing and
distribution capabilities could delay any product launch, which
would adversely impact the commercialization of that product. For
example, if the commercial launch of EOM613 and/or EOM147 for which
we recruit a sales force and establish marketing capabilities is
delayed or does not occur for any reason, we would have prematurely
or unnecessarily incurred these commercialization expenses. This
may be costly, and our investment would be lost if we cannot retain
or reposition our sales and marketing personnel.
Factors
that may inhibit our efforts to commercialize our product
candidates on our own include:
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our
inability to recruit, train and retain adequate numbers of
effective sales and marketing personnel; |
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the
inability of sales personnel to obtain access to physicians or
attain adequate numbers of physicians to prescribe our products;
and |
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unforeseen
costs and expenses associated with creating an independent sales
and marketing organization. |
We do
not anticipate having the resources in the foreseeable future to
allocate to the sales and marketing of our product candidates, if
approved, in certain markets overseas. Therefore, our future
success will depend, in part, on our ability to enter into and
maintain collaborative relationships for such capabilities, the
collaborator’s strategic interest in a product and such
collaborator’s ability to successfully market and sell the product.
We intend to pursue collaborative arrangements regarding the sale
and marketing of EOM613 and/or EOM147, if approved, for certain
markets overseas; however, we cannot assure you that we will be
able to establish or maintain such collaborative arrangements, or
if able to do so, that they will have effective sales forces. To
the extent that we depend on third parties for marketing and
distribution, any revenues we receive will depend upon the efforts
of such third parties, and there can be no assurance that such
efforts will be successful.
If we
are unable to build our own sales force or negotiate a
collaborative relationship for the commercialization of EOM613
and/or EOM147, we may be forced to delay the potential
commercialization of the drug or reduce the scope of our sales or
marketing activities. If we need to increase our expenditures to
fund commercialization activities for EOM613 and/or EOM147 we will
need to obtain additional capital, which may not be available to us
on acceptable terms, or at all. We may also have to enter into
collaborative arrangements for EOM613 and/or EOM147 at an earlier
stage than otherwise would be ideal and we may be required to
relinquish rights to it or otherwise agree to terms unfavorable to
us. Any of these occurrences may have an adverse effect on our
business, operating results, and prospects.
If we
are unable to establish adequate sales, marketing, and distribution
capabilities, either on our own or in collaboration with third
parties, we will not be successful in commercializing our product
candidates and may never become profitable. We will be competing
with many companies that currently have extensive and well-funded
marketing and sales operations. Without an internal team or the
support of a third party to perform marketing and sales functions,
we may be unable to compete successfully against these more
established companies.
A variety of risks associated with operating internationally could
materially adversely affect our business.
We
currently have no international operations, but our business
strategy includes potentially expanding internationally if any of
our product candidates receive regulatory approval. Doing business
internationally involves a number of risks, including but not
limited to:
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multiple,
conflicting and changing laws and regulations, such as privacy
regulations, tax laws, export and import restrictions, employment
laws, regulatory requirements and other governmental approvals,
permits and licenses; |
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failure
by us to obtain and maintain regulatory approvals for the use of
our products in various countries; |
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additional
potentially relevant third-party patent rights; |
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complexities
and difficulties in obtaining protection and enforcing our
intellectual property; |
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difficulties
in staffing and managing foreign operations; |
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complexities
associated with managing multiple payor reimbursement regimes,
government payors or patient self-pay systems; |
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limits
in our ability to penetrate international markets; |
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financial
risks, such as longer payment cycles, difficulty collecting
accounts receivable, the impact of local and regional financial
crises on demand and payment for our products and exposure to
foreign currency exchange rate fluctuations; |
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natural
disasters, political and economic instability, including wars,
terrorism and political unrest, outbreak of disease, boycotts,
curtailment of trade and other business restrictions; |
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certain
expenses including, among others, expenses for travel, translation
and insurance; and |
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regulatory
and compliance risks that relate to maintaining accurate
information and control over sales and activities that may fall
within the purview of the U.S. Foreign Corrupt Practices Act, its
books and records provisions, or its anti-bribery
provisions. |
Any
of these factors could significantly harm any future international
expansion and operations and, consequently, our results of
operations.
Risks
Related to Our Dependence on Third Parties
Our employees and independent contractors, including principal
investigators, CROs, consultants, vendors, and any third parties we
may engage in connection with development and commercialization,
may engage in misconduct or other improper activities, including
noncompliance with regulatory standards and requirements, which
could have a material adverse effect on our
business.
Our
employees and independent contractors, including principal
investigators, CROs, consultants, vendors and any third parties we
may engage in connection with development and commercialization of
our product candidates, could engage in misconduct, including
intentional, reckless or negligent conduct or unauthorized
activities that violate: the laws and regulations of the FDA or
other similar regulatory requirements of other authorities,
including those laws that require the reporting of true, complete
and accurate information to such authorities; manufacturing
standards; data privacy, security, fraud and abuse and other
healthcare laws and regulations; or laws that require the reporting
of true, complete and accurate financial information and data.
Specifically, sales, marketing and business arrangements in the
healthcare industry are subject to extensive laws and regulations
intended to prevent fraud, misconduct, kickbacks, self-dealing and
other abusive practices. These laws and regulations may restrict or
prohibit a wide range of pricing, discounting, marketing and
promotion, sales commission, customer incentive programs and other
business arrangements. Activities subject to these laws could also
involve the improper use or misrepresentation of information
obtained in the course of clinical trials, creation of fraudulent
data in preclinical studies or clinical trials or illegal
misappropriation of drug product, which could result in regulatory
sanctions and cause serious harm to our reputation. It is not
always possible to identify and deter misconduct by employees and
other third parties, and the precautions we take to detect and
prevent this activity may not be effective in controlling unknown
or unmanaged risks or losses or in protecting us from governmental
investigations or other actions or lawsuits stemming from a failure
to comply with such laws or regulations. Additionally, we are
subject to the risk that a person or government could allege such
fraud or other misconduct, even if none occurred. If any such
actions are instituted against us and we are not successful in
defending ourselves or asserting our rights, those actions could
have a significant impact on our business and results of
operations, including the imposition of significant civil, criminal
and administrative penalties, damages, monetary fines,
disgorgements, possible exclusion from participation in Medicare,
Medicaid, other U.S. federal healthcare programs or healthcare
programs in other jurisdictions, individual imprisonment, other
sanctions, contractual damages, reputational harm, diminished
profits and future earnings, and curtailment of our
operations.
We currently rely on third-party contract manufacturing
organizations (“CMOs”) for the production of clinical supply of
EOM613 and EOM147 and intend to rely on CMOs for the production of
commercial supply of EOM613 and EOM147, if approved. Our dependence
on CMOs may impair or delay the development and commercialization
of the drug, which would adversely impact our business and
financial position.
We
have limited personnel with experience in manufacturing, and we do
not own facilities for manufacturing. Instead, we rely on and
expect to continue to rely on CMOs for the supply of cGMP grade
clinical trial materials and commercial quantities of EOM613 and
EOM147 and any product candidates we develop, if approved. Reliance
on CMOs may expose us to more risk than if we were to manufacture
our product candidates ourselves. We intend to have manufactured a
sufficient clinical supply of EOM613 and EOM147 drug substance to
enable us to complete our clinical trials, and we have engaged or
intend to engage a CMO to provide clinical and commercial supplies
of the drug products.
The
facilities used to manufacture our product candidates must be
inspected by the FDA and comparable foreign authorities. While we
provide oversight of manufacturing activities, we do not and will
not control the execution of manufacturing activities by, and are
or will be essentially dependent on, our CMOs for compliance with
cGMP requirements for the manufacture of our product candidates. As
a result, we are subject to the risk that our product candidates
may have manufacturing defects that we have limited ability to
prevent. If a CMO cannot successfully manufacture material that
conforms to our specifications and the regulatory requirements, we
will not be able to secure or maintain regulatory approval for the
use of our product candidates in clinical trials, or for commercial
distribution of our product candidates, if approved. In addition,
we have limited control over the ability of our CMOs to maintain
adequate quality control, quality assurance and qualified
personnel. If the FDA or comparable foreign regulatory authority
finds deficiencies with or does not approve these facilities for
the manufacture of our product candidates or if it withdraws any
such approval or finds deficiencies in the future, we may need to
find alternative manufacturing facilities, which would delay our
development program and significantly impact our ability to
develop, obtain regulatory approval for or commercialize our
product candidates, if approved. In addition, any failure to
achieve and maintain compliance with these laws, regulations and
standards could subject us to the risk that we may have to suspend
the manufacture of our product candidates or that obtained
approvals could be revoked. Furthermore, CMOs may breach existing
agreements they have with us because of factors beyond our control.
They may also terminate or refuse to renew their agreement at a
time that is costly or otherwise inconvenient for us. If we were
unable to find an adequate CMO or another acceptable solution in
time, our clinical trials could be delayed, or our commercial
activities could be harmed.
We
rely on and will continue to rely on CMOs to purchase from
third-party suppliers the raw materials necessary to produce our
product candidates. We do not and will not have control over the
process or timing of the acquisition of these raw materials by our
CMOs. Supplies of raw material could be interrupted from time to
time and we cannot be certain that alternative supplies could be
obtained within a reasonable timeframe, at an acceptable cost, or
at all. In addition, a disruption in the supply of raw materials
could delay the commercial launch of our product candidates, if
approved, or result in a shortage in supply, which would impair our
ability to generate revenues from the sale of our product
candidates. Growth in the costs and expenses of raw materials may
also impair our ability to cost effectively manufacture our product
candidates. There are a limited number of suppliers for the raw
materials that we may use to manufacture our product candidates and
we may need to assess alternative suppliers to prevent a possible
disruption of the manufacture of our product candidates.
Finding
new CMOs or third-party suppliers involves additional cost and
requires our management’s time and focus. In addition, there is
typically a transition period when a new CMO commences work.
Although we generally have not, and do not intend to, begin a
clinical trial unless we believe we have on hand, or will be able
to obtain, a sufficient supply of our product candidates to
complete the clinical trial, any significant delay in the supply of
our product candidates or the raw materials needed to produce our
product candidates, could considerably delay conducting our
clinical trials and potential regulatory approval of our product
candidates.
As
part of their manufacture of our product candidates, our CMOs and
third-party suppliers are expected to comply with and respect the
proprietary rights of others. If a CMO or third-party supplier
fails to acquire the proper licenses or otherwise infringes the
proprietary rights of others in the course of providing services to
us, we may have to find alternative CMOs or third-party suppliers
or defend against claims of infringement, either of which would
significantly impact our ability to develop, obtain regulatory
approval for or commercialize our product candidates, if
approved.
We intend to rely on third parties to conduct, supervise and
monitor our clinical trials. If those third parties do not
successfully carry out their contractual duties, or if they perform
in an unsatisfactory manner, it may harm our
business.
We
rely, and will continue to rely, on CROs, CRO-contracted vendors
and clinical trial sites to ensure the proper and timely conduct of
our clinical trials. Our reliance on CROs for clinical development
activities limits our control over these activities, but we remain
responsible for ensuring that each of our trials is conducted in
accordance with the applicable protocol and legal, regulatory and
scientific standards.
We
and our CROs will be required to comply with the Good Laboratory
Practice (“GLP”) requirements for our preclinical studies and GCP
requirements for our clinical trials, which are regulations and
guidelines enforced by the FDA and are also required by comparable
foreign regulatory authorities. Regulatory authorities enforce GCP
requirements through periodic inspections of trial sponsors,
principal investigators and clinical trial sites. If we or our CROs
fail to comply with GCP requirements, the clinical data generated
in our clinical trials may be deemed unreliable and the FDA or
comparable foreign regulatory authorities may require us to perform
additional clinical trials before approving our marketing
applications. We cannot assure you that upon inspection by a given
regulatory authority, such regulatory authority will determine that
any of our clinical trials comply with GCP requirements. In
addition, our clinical trials must be conducted with product
produced under cGMP requirements. Accordingly, if our CROs fail to
comply with these requirements, we may be required to repeat
clinical trials, which would delay the regulatory approval
process.
Our
CROs are not our employees, and we do not control whether or not
they devote sufficient time and resources to our clinical trials.
Our CROs may also have relationships with other commercial
entities, including our competitors, for whom they may also be
conducting clinical trials, or other drug development activities,
which could harm our competitive position. We face the risk of
potential unauthorized disclosure or misappropriation of our
intellectual property by CROs, which may reduce our trade secret
protection and allow our potential competitors to access and
exploit our proprietary technology. If our CROs do not successfully
carry out their contractual duties or obligations, fail to meet
expected deadlines, or if the quality or accuracy of the clinical
data they obtain is compromised due to the failure to adhere to our
clinical protocols or regulatory requirements or for any other
reason, our clinical trials may be extended, delayed or terminated,
and we may not be able to obtain regulatory approval for, or
successfully commercialize any product candidate that we develop.
As a result, our financial results and the commercial prospects for
any product candidate that we develop would be harmed, our costs
could increase, and our ability to generate revenue could be
delayed.
If
our relationship with any CROs terminate, we may not be able to
enter into arrangements with alternative CROs or do so on
commercially reasonable terms. Switching or adding additional CROs
involves substantial cost and requires management’s time and focus.
In addition, there is a natural transition period when a new CRO
commences work. As a result, delays occur, which can materially
impact our ability to meet our desired clinical development
timelines. Though we intend to carefully manage our relationships
with our CROs, there can be no assurance that we will not encounter
challenges or delays in the future or that these delays or
challenges will not have an adverse impact on our business,
financial condition and prospects.
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the
number and type of our collaborations could adversely affect our
attractiveness to future collaborators or acquirers;
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the
loss of, or a disruption in our relationship with, any one or more
collaborators could harm our business. |
If
any collaborations do not result in the successful development and
commercialization of products or if one of our collaborators
terminates its agreement with us, we may not receive any future
research and development funding or milestone or royalty payments
under such collaborations. If we do not receive the funding we
expect under these agreements, our continued development of our
product candidates could be delayed, and we may need additional
resources to develop additional product candidates. All of the
risks relating to product development, regulatory approval and
commercialization described in this prospectus also apply to the
activities of any collaborators and there can be no assurance that
our collaborations will produce positive results or successful
products on a timely basis or at all.
In
addition, subject to its contractual obligations to us, if one of
our collaborators is involved in a business combination or
otherwise changes its business priorities, the collaborator might
deemphasize or terminate the development or commercialization of
our product candidates. If a collaborator terminates its agreement
with us, we may find it more difficult to attract new collaborators
and the perception of our business and our stock price could be
adversely affected.
We
may in the future collaborate with additional pharmaceutical and
biotechnology companies for development and potential
commercialization of therapeutic products. We face significant
competition in seeking appropriate collaborators. Our ability to
reach a definitive agreement for a collaboration will depend, among
other things, upon our assessment of the collaborator’s resources
and expertise, the terms and conditions of the proposed
collaboration and the proposed collaborator’s evaluation of a
number of factors. If we are unable to reach agreements with
suitable collaborators on a timely basis, on acceptable terms, or
at all, we may have to curtail the development of a product
candidate, reduce or delay its development program or one or more
of our other development programs, delay its potential
commercialization or reduce the scope of any sales or marketing
activities, or increase our expenditures and undertake development
or commercialization activities at our own expense. If we elect to
fund and undertake development or commercialization activities on
our own, we may need to obtain additional expertise and additional
capital, which may not be available to us on acceptable terms or at
all. If we fail to enter into collaborations and do not have
sufficient funds or expertise to undertake the necessary
development and commercialization activities, we may not be able to
further develop our product candidates or bring them to market or
continue to develop our programs, and our business may be
materially and adversely affected.
Risks
Related to Healthcare Laws and Other Legal Compliance
Matters
Current and future healthcare legislation may increase the
difficulty and cost for us to obtain marketing approval of and
commercialize our product candidates, if approved, and may affect
the prices we may set.
In
the United States and other jurisdictions, there have been, and we
expect there will continue to be, a number of legislative and
regulatory changes and proposed changes to the healthcare system
that could affect our future results of operations. In particular,
there have been and continue to be a number of initiatives at the
U.S. federal and state levels that seek to reduce healthcare costs
and improve the quality of healthcare. For example, in March 2010,
the Patient Protection and Affordable Care Act, as amended by the
Health Care and Education Reconciliation Act (collectively the
“ACA”) was enacted, which substantially changed the way healthcare
is financed by both governmental and private insurers. Among the
provisions of the ACA, those of greatest importance to the
pharmaceutical and biotechnology industries include the
following:
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an
annual, non-deductible fee payable by any entity that manufactures
or imports certain branded prescription drugs and biologic agents
(other than those designated as orphan drugs), which is apportioned
among these entities according to their market share in certain
government healthcare programs; |
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a new
Medicare Part D coverage gap discount program, in which
manufacturers must agree to offer point-of-sale discounts off
negotiated prices of applicable brand drugs to eligible
beneficiaries during their coverage gap period, as a condition for
the manufacturer’s outpatient drugs to be covered under Medicare
Part D; |
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new
requirements to report certain financial arrangements with
physicians and teaching hospitals, including reporting “transfers
of value” made or distributed to prescribers and other healthcare
providers and reporting investment interests held by physicians and
their immediate family members; |
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an
increase in the statutory minimum rebates a manufacturer must pay
under the Medicaid Drug Rebate Program; |
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a new
methodology by which rebates owed by manufacturers under the
Medicaid Drug Rebate Program are calculated for drugs and biologics
that are inhaled, infused, instilled, implanted, or
injected; |
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extension
of a manufacturer’s Medicaid rebate liability to covered drugs
dispensed to individuals who are enrolled in Medicaid managed care
organizations; |
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expansion
of eligibility criteria for Medicaid programs thereby potentially
increasing a manufacturer’s Medicaid rebate liability; |
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a new
Patient-Centered Outcomes Research Institute to oversee, identify
priorities in, and conduct comparative clinical effectiveness
research, along with funding for such research; |
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establishment
of a Center for Medicare Innovation at the Centers for Medicare
& Medicaid Services, or CMS, to test innovative payment and
service delivery models to lower Medicare and Medicaid spending,
potentially including prescription drug spending; |
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expansion
of the entities eligible for discounts under the Public Health
Service program; and |
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licensure framework for follow on biologic products. |
Other
legislative changes have been proposed and adopted in the United
States since the ACA was enacted. For example, the Budget Control
Act of 2011, resulted in aggregate reductions of Medicare payments
to providers of 2% per fiscal year. These reductions went into
effect in April 2013 and, due to subsequent legislative amendments
to the statute, will remain in effect through 2027 unless
additional action is taken by Congress. In January 2013, the
American Taxpayer Relief Act of 2012 was signed into law, which,
among other things, further reduced Medicare payments to several
types of providers, including hospitals, imaging centers and cancer
treatment centers, and increased the statute of limitations period
for the government to recover overpayments to providers from three
to five years. Additionally, the orphan drug tax credit was reduced
as part of a broader tax reform. These new laws or any other
similar laws introduced in the future may result in additional
reductions in Medicare and other health care funding, which could
negatively affect our customers and accordingly, our financial
operations.
In
addition, there has been increasing legislative and enforcement
interest in the United States with respect to specialty drug
pricing practices. Specifically, there have been Congressional
inquiries and proposed federal and state legislation designed to
bring more transparency to drug pricing, reduce the cost of
prescription drugs under Medicare, review the relationship between
pricing and manufacturer patient programs and reform government
program reimbursement methodologies for drugs. Moreover, payment
methodologies may be subject to changes in healthcare legislation
and regulatory initiatives. We expect that additional U.S. federal
healthcare reform measures will be adopted in the future, any of
which could limit the amounts that the U.S. federal government will
pay for healthcare products and services, which could result in
reduced demand for our product candidates or additional pricing
pressures.
Individual
states in the United States have also become increasingly
aggressive in passing legislation and implementing regulations
designed to control pharmaceutical and biological product pricing,
including price or patient reimbursement constraints, discounts,
restrictions on certain product access and marketing cost
disclosure and transparency measures, and, in some cases, designed
to encourage importation from other countries and bulk purchasing.
Legally mandated price controls on payment amounts by third-party
payors or other restrictions could harm our business, results of
operations, financial condition and prospects. In addition,
regional healthcare authorities and individual hospitals are
increasingly using bidding procedures to determine what
pharmaceutical products and which suppliers will be included in
their prescription drug and other healthcare programs. This could
reduce the ultimate demand for our product candidates or put
pressure on our product pricing.
In
markets outside of the United States, reimbursement and healthcare
payment systems vary significantly by country, and many countries
have instituted price ceilings on specific products and therapies.
We cannot predict the likelihood, nature, or extent of government
regulation that may arise from future legislation or administrative
action in the United States or any other jurisdiction. If we or any
third parties we may engage are slow or unable to adapt to changes
in existing requirements or the adoption of new requirements or
policies, or if we or such third parties are not able to maintain
regulatory compliance, our product candidates may lose any
regulatory approval that may have been obtained and we may not
achieve or sustain profitability.
Our business operations and current and future relationships with
investigators, healthcare professionals, consultants, third-party
payors, patient organizations, and customers will be subject to
applicable healthcare regulatory laws, which could expose us to
penalties.
Our
business operations and current and future arrangements with
investigators, healthcare professionals, consultants, third-party
payors, patient organizations, and customers, may expose us to
broadly applicable fraud and abuse and other healthcare laws and
regulations. These laws may constrain the business or financial
arrangements and relationships through which we conduct our
operations, including how we research, market, sell and distribute
our product candidates, if approved. Such laws include:
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the
U.S. federal Anti-Kickback Statute, which prohibits, among other
things, persons or entities from knowingly and willfully
soliciting, offering, receiving, or providing any remuneration
(including any kickback, bribe, or certain rebate), directly or
indirectly, overtly or covertly, in cash or in kind, to induce or
reward, or in return for, either the referral of an individual for,
or the purchase, lease, order, or recommendation of, any good,
facility, item, or service, for which payment may be made, in whole
or in part, under U.S. federal and state healthcare programs such
as Medicare and Medicaid. A person or entity does not need to have
actual knowledge of the statute or specific intent to violate it in
order to have committed a violation. The U.S. federal Anti-Kickback
Statute has been interpreted to apply to arrangements between
pharmaceutical manufacturers on the one hand and prescribers,
purchasers and formulary managers on the other hand; |
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the
U.S. federal false claims and civil monetary penalties laws,
including the civil False Claims Act (the “FCA”) which, among other
things, impose criminal and civil penalties, including through
civil whistleblower or qui tam actions, against individuals or
entities for knowingly presenting, or causing to be presented, to
the U.S. federal government, claims for payment or approval that
are false or fraudulent, knowingly making, using or causing to be
made or used, a false record or statement material to a false or
fraudulent claim, or from knowingly making a false statement to
avoid, decrease or conceal an obligation to pay money to the U.S.
federal government. In addition, the government may assert that a
claim including items and services resulting from a violation of
the U.S. federal Anti-Kickback Statute constitutes a false or
fraudulent claim for purposes of the FCA. A claim includes “any
request or demand” for money or property presented to the federal
government. In addition, manufacturers can be held liable under the
FCA even when they do not submit claims directly to government
payors if they are deemed to “cause” the submission of false or
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the
U.S. federal Health Insurance Portability and Accountability Act of
1996 (“HIPAA”), which imposes criminal and civil liability for,
among other things, knowingly and willfully executing, or
attempting to execute, a scheme to defraud any healthcare benefit
program or obtain, by means of false or fraudulent pretenses,
representations, or promises, any of the money or property owned
by, or under the custody or control of, any healthcare benefit
program, regardless of the payor (e.g., public or private) and
knowingly and willfully falsifying, concealing or covering up a
material fact or making any materially false statement, in
connection with the delivery of, or payment for, healthcare
benefits, items or services. Similar to the U.S. federal
Anti-Kickback Statute, a person or entity does not need to have
actual knowledge of the statute or specific intent to violate it in
order to have committed a violation; |
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HIPAA,
as amended by the Health Information Technology for Economic and
Clinical Health Act of 2009 (“HITECH”), and their respective
implementing regulations, which impose, among other things,
specified requirements relating to the privacy, security and
transmission of individually identifiable health information
without appropriate authorization by covered entities subject to
the rule, such as health plans, healthcare clearinghouses and
healthcare providers as well as their business associates that
perform certain services involving the use or disclosure of
individually identifiable health information. HITECH also created
new tiers of civil monetary penalties, amended HIPAA to make civil
and criminal penalties directly applicable to business associates
and gave state attorneys general new authority to file civil
actions for damages or injunctions in federal courts to enforce the
federal HIPAA laws and seek attorneys’ fees and costs associated
with pursuing federal civil actions; |
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the
FDCA, which prohibits, among other things, the adulteration or
misbranding of drugs, biologics and medical devices; |
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the
U.S. federal legislation commonly referred to as the Physician
Payments Sunshine Act, enacted as part of the ACA, and its
implementing regulations, which requires certain manufacturers of
drugs, devices, biologics, and medical supplies that are
reimbursable under Medicare, Medicaid, or the Children’s Health
Insurance Program to report annually to the government information
related to certain payments and other transfers of value to
physicians and teaching hospitals, as well as ownership and
investment interests held by the physicians described above and
their immediate family members; and |
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analogous
U.S. state laws and regulations, including: state anti-kickback and
false claims laws, which may apply to our business practices,
including but not limited to, research, distribution, sales, and
marketing arrangements and claims involving healthcare items or
services reimbursed by any third-party payor, including private
insurers; state laws that require pharmaceutical companies to
comply with the pharmaceutical industry’s voluntary compliance
guidelines and the relevant compliance guidance promulgated by the
U.S. federal government, or otherwise restrict payments that may be
made to healthcare providers and other potential referral sources;
state laws and regulations that require drug manufacturers to file
reports relating to pricing and marketing information, which
requires tracking gifts and other remuneration and items of value
provided to healthcare professionals and entities; 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 often are not preempted by HIPAA, thus complicating
compliance efforts. |
Because
of the breadth of these laws and the narrowness of the statutory
exceptions and regulatory safe harbors available under such laws,
it is possible that some of our business activities, including our
consulting agreements and other relationships with physicians and
other healthcare providers, some of whom receive stock or stock
options as compensation for their services, could be subject to
challenge under one or more of such laws. Ensuring that our current
and future internal operations and business arrangements with third
parties comply with applicable healthcare laws and regulations will
involve substantial costs. It is possible that governmental
authorities will conclude that our business practices do not comply
with current or future statutes, regulations, agency guidance or
case law involving applicable fraud and abuse or other healthcare
laws and regulations.
If
our operations are found to be in violation of any of the laws
described above or any other governmental laws and regulations that
may apply to us, we may be subject to the imposition of civil,
criminal and administrative penalties, damages, disgorgement,
monetary fines, possible exclusion from participation in Medicare,
Medicaid and other federal healthcare programs, individual
imprisonment, contractual damages, reputational harm, diminished
profits and future earnings, additional reporting requirements or
oversight if we become subject to a corporate integrity agreement
or similar agreement to resolve allegations of non-compliance with
these laws, and curtailment or restructuring of our operations, any
of which could adversely affect our ability to operate our business
and our results of operations. If any of the physicians or other
providers or entities with whom we expect to do business are found
to not be in compliance with applicable laws, they may be subject
to criminal, civil or administrative sanctions, including
exclusions from government funded healthcare programs and
imprisonment, which could affect our ability to operate our
business. Further, defending against any such actions can be
costly, time-consuming and may require significant personnel
resources. Therefore, even if we are successful in defending
against any such actions that may be brought against us, our
business may be impaired.
Any clinical trial programs we conduct or research collaborations
we enter into in the European Economic Area may subject us to the
General Data Protection Regulation.
If we
conduct clinical trial programs or enter into research
collaborations in the European Economic Area, we may be subject to
the General Data Protection regulation (“GDPR”). The GDPR applies
extraterritorially and implements stringent operational
requirements for processors and controllers of personal data,
including, for example, high standards for obtaining consent from
individuals to process their personal data, robust disclosures to
individuals, a comprehensive individual data rights regime, data
export restrictions governing transfers of data from the European
Union (the “EU”) to other jurisdictions, short timelines for data
breach notifications, limitations on retention of information,
increased requirements pertaining to health data, other special
categories of personal data and coded data and additional
obligations if we contract third-party processors in connection
with the processing of personal data. The GDPR provides that EU
member states may establish their own laws and regulations limiting
the processing of personal data, including genetic, biometric or
health data, which could limit our ability to use and share
personal data or could cause our costs to increase. If our or our
partners’ or service providers’ privacy or data security measures
fail to comply with the GDPR requirements, we may be subject to
litigation, regulatory investigations, enforcement notices
requiring us to change the way we use personal data and/or fines of
up to 20 million Euros or up to 4% of the total worldwide annual
turnover of the preceding financial year, whichever is higher, as
well as compensation claims by affected individuals, negative
publicity, reputational harm and a potential loss of business and
goodwill.
We are subject to environmental, health and safety laws and
regulations, and we may become exposed to liability and substantial
expenses in connection with environmental compliance or remediation
activities.
Our
operations, including our development, testing and manufacturing
activities, are subject to numerous environmental, health and
safety laws and regulations. These laws and regulations govern,
among other things, the controlled use, handling, release and
disposal of and the maintenance of a registry for, hazardous
materials and biological materials, such as chemical solvents,
human cells, carcinogenic compounds, mutagenic compounds and
compounds that have a toxic effect on reproduction, laboratory
procedures and exposure to blood-borne pathogens. If we fail to
comply with such laws and regulations, we could be subject to fines
or other sanctions.
As
with other companies engaged in activities similar to ours, we face
a risk of environmental liability inherent in our current and
historical activities, including liability relating to releases of
or exposure to hazardous or biological materials. Environmental,
health and safety laws and regulations are becoming more stringent.
We may be required to incur substantial expenses in connection with
future environmental compliance or remediation activities, in which
case, the production efforts of our third-party manufacturers or
our development efforts may be interrupted or delayed.
Risks
Related to Our Intellectual Property
If we are unable to obtain and maintain patent protection for our
technology, products, and product candidates or if the scope of the
patent protection obtained is not sufficiently broad, we may not be
able to compete effectively in our markets.
We do not currently own any patents and our technology is largely
based on expired patents. If we are unable to obtain and maintain
patent protection for our product candidates we may develop, or if
the scope of the patent protection obtained is not sufficiently
broad, our competitors could develop and commercialize products and
technology similar or identical to ours, and our ability to
successfully commercialize our products we may develop may be
adversely affected.
We
intend to rely
upon a combination of patents, trade secret protection and
confidentiality agreements to protect the intellectual property
related to our drug development programs and product candidates.
Our success depends in large part on our ability to obtain and
maintain patent protection in the United States and other countries
with respect to EOM613 and EOM147 and any future products and
product candidates. We seek to protect our proprietary position by
filing patent applications in the United States and abroad related
to our development programs and product candidates. The patent
prosecution process is expensive and time-consuming, and we may not
be able to file and prosecute all necessary or desirable patent
applications at a reasonable cost or in a timely manner.
If
the patent applications we own or license with respect to our
development programs and product candidates fail to issue, if their
breadth or strength of protection is threatened, or if they fail to
provide meaningful exclusivity for EOM613 and EOM147 or any future
product candidates, it could dissuade companies from collaborating
with us to develop product candidates, and threaten our ability to
commercialize future product candidates. Any such outcome could
have a materially adverse effect on our business.
The
patent position of biotechnology and pharmaceutical companies
generally is highly uncertain, involves complex legal and factual
questions and has in recent years been the subject of much
litigation. In addition, the laws of foreign countries may not
protect our patent rights to the same extent as the laws of the
United States. For example, European patent law restricts the
patentability of methods of treatment of the human body more than
U.S. law does. However, in certain instances, the laws of the
United States are more restrictive than those of foreign countries.
For example, a recent series of Supreme Court Cases has narrowed
the types of subject matter considered eligible for
patenting.
Accordingly,
certain diagnostic methods are considered ineligible for patenting
in the U.S. because they are directed to a “law of nature”.
Further, publications of discoveries in scientific literature often
lag behind the actual discoveries, and patent applications in the
United States and other jurisdictions are typically not published
until 18 months after filing, or in some cases not at all.
Therefore, we cannot know with certainty whether we were the first
to make the inventions claimed in our owned or licensed patents or
pending patent applications, or that we were the first to file for
patent protection of such inventions. As a result, the issuance,
scope, validity, enforceability and commercial value of our patent
rights are highly uncertain. Our pending and future patent
applications may not result in patents being issued which protect
our technology, products, or product candidates, in whole or in
part, or patents being issued which effectively prevent others from
commercializing competitive technologies and products. Changes in
either the patent laws or interpretation of the patent laws in the
United States and other countries may diminish the value of our
patents or narrow the scope of our patent protection.
The
issuance of a patent is not conclusive as to its inventorship,
scope, validity or enforceability, and our owned and licensed
patents may be challenged in the courts or patent offices in the
United States and abroad. Such challenges may result in patent
claims being narrowed, invalidated, held unenforceable, in whole or
in part, or reduced patent term. Such a result could limit our
ability to stop others from using or commercializing similar or
identical technologies and products to ours. Moreover, patents have
a limited lifespan. In the United States, the natural expiration of
a patent is generally 20 years after it is filed. While various
extensions may be available, the life of a patent is limited.
Without patent protection for our current or future products, we
may be open to competition from generic versions of such products.
Given the amount of time required for the development, testing and
regulatory review of new products, patents protecting such
candidates might expire before or shortly after such candidates are
commercialized. As a result, our owned and licensed patent
portfolio may not provide us with sufficient rights to exclude
others from using or commercializing technologies or products
similar or identical to ours.
We may become subject to third parties’ claims alleging
infringement of their patents and proprietary rights, or we may
need to become involved in lawsuits to protect or enforce our
patents, which could be costly, time consuming, delay or prevent
the development and commercialization of our products and product
candidates or put our patents and other proprietary rights at
risk.
Our
commercial success depends, in part, upon our ability to develop,
manufacture, market and sell our products and product candidates
without alleged or actual infringement, misappropriation or other
violation of the patents and proprietary rights of third parties.
Litigation relating to infringement or misappropriation of patent
and other intellectual property rights in the pharmaceutical and
biotechnology industries is common, including patent infringement
lawsuits, interferences, oppositions, reexamination, derivation and
post-grant proceedings before the U.S. Patent and Trademark Office
(“USPTO”), and corresponding foreign patent offices. The various
markets in which we plan to operate are subject to frequent and
extensive litigation regarding patents and other intellectual
property rights. In addition, many companies in intellectual
property-dependent industries, including the biotechnology and
pharmaceutical industries, have employed intellectual property
litigation as a means to gain an advantage over their competitors.
Numerous U.S., European and other foreign issued patents and
pending patent applications, which are owned by third parties,
exist in the fields in which we are developing products and product
candidates. Some claimants may have substantially greater resources
than we do and may be able to sustain the costs of complex
intellectual property litigation to a greater degree and for longer
periods of time than we could. In addition, patent holding
companies that focus solely on extracting royalties and settlements
by enforcing patent rights may target us. As the biotechnology and
pharmaceutical industries expand and more patents are issued, the
risk increases that our products and product candidates may be
subject to claims of infringement of the intellectual property
rights of third parties.
We
may be subject to third-party claims including infringement,
interference or derivation proceedings, post-grant review and inter
parties review before the USPTO or similar adversarial proceedings
or litigation in other jurisdictions. Even if we believe such
claims are without merit, a court of competent jurisdiction could
hold that these third-party patents are valid, enforceable and
infringed, and the holders of any such patents may be able to block
our ability to commercialize the applicable product candidate
unless we obtained a license under the applicable patents, or until
such patents expire or are finally determined to be invalid or
unenforceable. These proceedings may also result in our patent
claims being invalidated, held unenforceable or narrowed in scope.
Similarly, if our patents or patent applications are challenged
during interference or derivation proceedings, a court may hold
that a third-party is entitled to certain patent ownership rights
instead of us. Further, if any third-party patents were held by a
court of competent jurisdiction to cover aspects of our
compositions, formulations, methods of manufacture, or methods of
treatment, prevention or use, the holders of any such patents may
be able to block our ability to develop and commercialize the
applicable products and product candidates unless we obtained a
license or until such patents expire or are finally determined to
be invalid or unenforceable. In addition, defending such claims
would cause us to incur substantial expenses and, if successful,
could cause us to pay substantial damages, if we are found to be
infringing a third party’s patent rights. If we are found to have
infringed such rights willfully, the damages may be enhanced and
may include attorneys’ fees. Further, if a patent infringement suit
is brought against us or our third-party service providers, our
development, manufacturing or sales activities relating to the
product or product candidate that is the subject of the suit may be
delayed or terminated. As a result of patent infringement claims,
or in order to avoid potential infringement claims, we may choose
to seek, or be required to seek, a license from the third party,
which may require us to pay license fees or royalties or both.
These licenses may not be available on acceptable terms, or at all.
Even if a license can be obtained on acceptable terms, the rights
may be nonexclusive, which could give our competitors access to the
same intellectual property rights. If we are unable to enter into a
license on acceptable terms, we could be prevented from
commercializing one or more of our products and product candidates,
forced to modify such products and product candidates, or to cease
some aspect of our business operations, which could harm our
business significantly. Modifying our products and product
candidates to design around third-party intellectual property
rights may result in significant cost or delay to us and could
prove to be technically infeasible. Any of these events, even if we
were ultimately to prevail, could require us to divert substantial
financial and management resources that we would otherwise be able
to devote to our business. In addition, if the breadth or strength
of protection provided the patents and patent applications we own,
or will own in the future, or in-license is threatened, it could
dissuade companies from collaborating with us to license, develop
or commercialize current or future products and product
candidates.
If we
were to initiate legal proceedings against a third party to enforce
a patent covering one of our products and product candidates, the
defendant could counterclaim that our patent is invalid or
unenforceable. In patent litigation in the United States and in
Europe, defendant counterclaims alleging invalidity or
unenforceability are commonplace. Grounds for a validity challenge
could be an alleged failure to meet any of several statutory
requirements, for example, lack of eligibility, lack of written
description, lack of novelty, obviousness or non-enablement. Third
parties might allege unenforceability of our patents because
someone connected with prosecution of the patent withheld relevant
information, or made a misleading statement, during patent
prosecution. The outcome of proceedings involving assertions of
invalidity and unenforceability during patent litigation is
unpredictable. With respect to the validity of patents, for
example, we cannot be certain that there is no invalidating prior
art of which we and the patent examiner were unaware during
prosecution. If a defendant were to prevail on a legal assertion of
invalidity or unenforceability, we would lose at least part, and
perhaps all, of the patent protection on our products and product
candidates. Furthermore, our patents and other intellectual
property rights also will not protect our technology if competitors
design around our protected technology without infringing our
patents or other intellectual property rights.
Furthermore,
because of the substantial amount of discovery required in
connection with intellectual property litigation, there is a risk
that some of our confidential information could be compromised by
disclosure during this type of litigation. There could also be
public announcements of the results of hearings, motions or other
interim proceedings or developments. If securities analysts or
investors view these announcements in a negative light, the price
of common stock could be adversely affected.
Finally,
even if resolved in our favor, litigation or other legal
proceedings relating to intellectual property claims may cause us
to incur significant expenses and could distract our technical and
management personnel from their normal responsibilities. In
addition, there could be public announcements of the results of
hearings, motions or other interim proceedings or developments and
if securities analysts or investors view these announcements in a
negative light, the price of our common stock could be adversely
affected. Such litigation or proceedings could substantially
increase our operating losses and reduce our resources available
for development activities. We may not have sufficient financial or
other resources to adequately conduct such litigation or
proceedings. Some of our competitors may be able to sustain the
costs of such litigation or proceedings more effectively than we
can because of their substantially greater financial resources.
Uncertainties resulting from the initiation and continuation of
patent litigation or other proceedings could have an adverse effect
on our ability to compete in the marketplace.
We may not identify relevant third-party patents or may incorrectly
interpret the relevance, scope or expiration of a third-party
patent, which might adversely affect our ability to develop,
manufacture and market our products and product
candidates.
We
cannot guarantee that any of our or our licensors’ patent searches
or analyses, including but not limited to the identification of
relevant patents, the scope of patent claims or the expiration of
relevant patents, are complete or thorough, nor can we be certain
that we have identified each and every third-party patent and
pending application in the United States, Europe and elsewhere that
is relevant to or necessary for the commercialization of our
products and product candidates in any jurisdiction. For example,
in the United States, applications filed before November 29, 2000
and certain applications filed after that date that will not be
filed outside the United States remain confidential until patents
issue. Patent applications in the United States, Europe and
elsewhere are published approximately 18 months after the earliest
filing for which priority is claimed, with such earliest filing
date being commonly referred to as the priority date. Therefore,
patent applications covering our future products and product
candidates, or their manufacture or use may currently be
unpublished. Additionally, pending patent applications that have
been published can, subject to certain limitations, be later
amended in a manner that could cover our products and product
candidates or the use thereof. The scope of a patent claim is
determined by an interpretation of the law, the written disclosure
in a patent and the patent’s prosecution history. Our
interpretation of the relevance or the scope of a patent or a
pending application may be incorrect, which may negatively impact
our ability to market our products and product candidates. We may
incorrectly determine that our products and product candidates are
not covered by a third-party patent or may incorrectly predict
whether a third party’s pending application will issue with claims
of relevant scope. Our determination of the expiration date of any
patent in the United States, Europe or elsewhere that we consider
relevant may be incorrect, which may negatively impact our ability
to develop and market our products and product candidates. Our
failure to identify and correctly interpret relevant patents may
negatively impact our ability to develop and market our products
and product candidates.
From
time to time we may identify patents or applications in the same
general area as our products and product candidates. We may
determine these third-party patents are irrelevant to our business
based on various factors including our interpretation of the scope
of the patent claims and our interpretation of when those patents
expire. If the patents are asserted against us, however, a court
may disagree with our determinations. Further, while we may
determine that the scope of claims that will issue from a patent
application does not present a risk, it is difficult to accurately
predict the scope of claims that will issue from a patent
application, our determination may be incorrect, and the issuing
patent may be asserted against us. We cannot guarantee that we will
be able to successfully settle or otherwise resolve such
infringement claims. If we fail in any such dispute, in addition to
being forced to pay monetary damages, we may be temporarily or
permanently prohibited from commercializing our products and
product candidates. We might, if possible, also be forced to
redesign our products and product candidates so that we no longer
infringe the third-party intellectual property rights. Any of these
events, even if we were ultimately to prevail, could require us to
divert substantial financial and management resources that we would
otherwise be able to devote to our business.
Changes in patent laws or patent jurisprudence could diminish the
value of patents in general, thereby impairing our ability to
protect our products and product candidates.
As is
the case with other biopharmaceutical and pharmaceutical companies,
our success is entirely dependent on intellectual property,
particularly patents. Obtaining and enforcing patents in the
biopharmaceutical and pharmaceutical industries involve both
technological complexity and legal complexity. Therefore, obtaining
and enforcing biopharmaceutical and pharmaceutical patents is
costly, time-consuming and inherently uncertain. In addition, the
America Invents Act, or the AIA, which was passed in September
2011, resulted in significant changes to the U.S. patent
system.
An
important change introduced by the AIA is that, as of March 16,
2013, the United States transitioned to a “first-to-file” system
for deciding which party should be granted a patent when two or
more patent applications are filed by different parties claiming
the same invention. A third party that files a patent application
in the USPTO after that date but before us could therefore be
awarded a patent covering an invention of ours even if we made the
invention before it was made by the third party. This will require
us to be cognizant going forward of the time from invention to
filing of a patent application, but circumstances could prevent us
from promptly filing patent applications on our
inventions.
Among
some of the other changes introduced by the AIA are changes that
limit where a patentee may file a patent infringement suit and
providing opportunities for third parties to challenge any issued
patent before the USPTO. This applies to all of our U.S. patents,
even those effectively filed before March 16, 2013. Because of a
lower evidentiary standard in USPTO proceedings compared to the
evidentiary standard in U.S. federal courts necessary to invalidate
a patent claim, a third party could potentially provide evidence in
a USPTO proceeding sufficient for the USPTO to hold a claim invalid
even though the same evidence would be insufficient to invalidate
the claim if first presented in a district court action.
Accordingly,
a third party may attempt to use the USPTO procedures to invalidate
our patent claims that would not have been invalidated if first
challenged by the third party as a defendant in a district court
action. It is not clear what, if any, impact the AIA will have on
the operation of our business. However, the AIA and its
implementation could increase the uncertainties and costs
surrounding the prosecution of our owned and in-licensed patent
applications and the enforcement or defense of our owned and
in-licensed patents.
Additionally,
the U.S. Supreme Court has ruled on several patent cases in recent
years either narrowing the scope of patent protection available in
certain circumstances or weakening the rights of patent owners in
certain situations. In addition to increasing uncertainty with
regard to our ability to obtain patents in the future, this
combination of events has created uncertainty with respect to the
value of patents, once obtained. Depending on decisions by
Congress, the federal courts and the USPTO, the laws and
regulations governing patents could change in unpredictable ways
that could weaken our ability to obtain new patents or to enforce
our existing patents and patents that we might obtain in the
future. Similarly, the complexity and uncertainty of European
patent laws has also increased in recent years. In addition, the
European patent system is relatively stringent in the type of
amendments that are allowed during prosecution. Complying with
these laws and regulations could limit our ability to obtain new
patents in the future that may be important for our
business.
Obtaining and maintaining protection of patents that we may obtain
in the future depends on compliance with various procedural,
document submission, fee payment and other requirements imposed by
governmental patent agencies, and our patent protection could be
reduced or eliminated for non-compliance with these
requirements.
Periodic
maintenance and annuity fees on any issued patent are due to be
paid to the USPTO, European Patent Office (“EPO”) and other foreign
patent offices over the lifetime of a patent. In addition, the
USPTO, EPO and other foreign patent office’s require compliance
with a number of procedural, documentary, fee payment and other
similar provisions during the patent application process. While an
inadvertent failure to make payment of such fees or to comply with
such provisions can in many cases be cured by payment of a late fee
or by other means in accordance with the applicable rules, there
are situations in which such noncompliance will result in the
abandonment or lapse of the patent or patent application, and the
partial or complete loss of patent rights in the relevant
jurisdiction. Non-compliance events that could result in
abandonment or lapse of a patent or patent application include
failure to respond to official actions within prescribed time
limits, non-payment of fees and failure to properly legalize and
submit formal documents within prescribed time limits. If we or our
licensors fail to maintain the patents and patent applications
covering our products and product candidates or if we or our
licensors otherwise allow our owned or licensed patents or patent
applications to be abandoned or lapse, our competitors might be
able to enter the market, which would hurt our competitive position
and could impair our ability to successfully commercialize our
products and product candidates in any indication for which they
are approved.
We enjoy only limited geographical protection with respect to
certain patents that we may obtain in the future and we may not be
able to protect our intellectual property rights throughout the
world.
Filing,
prosecuting and defending patents covering our products and product
candidates in all countries throughout the world would be
prohibitively expensive. Competitors may use our owned and
in-licensed technologies in jurisdictions where we have not
obtained patent protection to develop their own products and,
further, may export otherwise infringing products to territories
where we and our licensors have patent protection, but enforcement
is not as strong as that in the United States or the Europe. These
products may compete with our products and product candidates, and
patents that we may obtain in the future or in-licensed patents or
other intellectual property rights may not be effective or
sufficient to prevent them from competing.
In
addition, we may decide to abandon national and regional patent
applications before grant. The grant proceeding of each national or
regional patent is an independent proceeding which may lead to
situations in which applications might in some jurisdictions be
refused by the relevant patent offices, while granted by others.
For example, unlike other countries, China has a heightened
requirement for patentability, and specifically requires a detailed
description of medical uses of a claimed drug. Furthermore, generic
drug manufacturers or other competitors may challenge the scope,
validity or enforceability of our future owned and in-licensed
patents, requiring us or our licensors to engage in complex,
lengthy and costly litigation or other proceedings. Generic drug
manufacturers may develop, seek approval for and launch generic
versions of our products. It is also quite common that depending on
the country, the scope of patent protection may vary for the same
product candidate or technology.
The
laws of some jurisdictions do not protect intellectual property
rights to the same extent as the laws or rules and regulations in
the United States and Europe, and many companies have encountered
significant difficulties in protecting and defending such rights in
such jurisdictions. The legal systems of certain countries,
particularly certain developing countries, do not favor the
enforcement of patents, trade secrets and other intellectual
property protection, which could make it difficult for us to stop
the infringement of our patents or marketing of competing products
in violation of our proprietary rights generally. Proceedings to
enforce our patent rights in other jurisdictions, whether or not
successful, could result in substantial costs and divert our
efforts and attention from other aspects of our business, could put
our patents at risk of being invalidated or interpreted narrowly
and our patent applications at risk of not issuing, and could
provoke third parties to assert claims against us. We may not
prevail in any lawsuits that we initiate, and the damages or other
remedies awarded, if any, may not be commercially meaningful.
Accordingly, our efforts to enforce our intellectual property
rights around the world may be inadequate to obtain a significant
commercial advantage from the intellectual property that we develop
or license. Furthermore, while we intend to protect our
intellectual property rights in our expected significant markets,
we cannot ensure that we will be able to initiate or maintain
similar efforts in all jurisdictions in which we may wish to market
our product candidates. Accordingly, our efforts to protect our
intellectual property rights in such countries may be inadequate,
which may have an adverse effect on our ability to successfully
commercialize our product candidates in all of our expected
significant foreign markets. If we or our licensors encounter
difficulties in protecting, or are otherwise precluded from
effectively protecting, the intellectual property rights important
for our business in such jurisdictions, the value of these rights
may be diminished, and we may face additional competition from
others in those jurisdictions.
Some
countries also have compulsory licensing laws under which a patent
owner may be compelled to grant licenses to third parties. In
addition, some countries limit the enforceability of patents
against government agencies or government contractors. In these
countries, the patent owner may have limited remedies, which could
materially diminish the value of such patent. If we or any of our
licensors is forced to grant a license to third parties with
respect to any patents relevant to our business, our competitive
position may be impaired.
If we do not obtain patent term extension in the United States
under the Hatch-Waxman Act and in foreign countries under similar
legislation, thereby potentially extending the term of marketing
exclusivity for our products, our business may be materially
harmed.
Patents
have a limited lifespan. In the United States, if all maintenance
fees are timely paid, the natural expiration of a patent is
generally 20 years from its earliest U.S. non-provisional filing
date. Various extensions may be available, but the life of a
patent, and the protection it affords, is limited. Even if patents
covering our products are obtained, once the patent life has
expired for a product, we may be open to competition from
competitive medications, including generic medications. Given the
amount of time required for the development, testing and regulatory
review of new products, patents protecting such candidates might
expire before or shortly after such candidates are commercialized.
As a result, our owned and licensed patent portfolio may not
provide us with sufficient rights to exclude others from using or
commercializing technologies or products similar or identical to
ours.
Depending
upon the timing, duration and conditions of FDA marketing approval
of our product candidates, we may be able to extend the term of a
patent covering each product candidate under the Drug Price
Competition and Patent Term Restoration Act of 1984, referred to as
the Hatch-Waxman Amendments and similar legislation in the EU. The
Hatch-Waxman Amendments permit a patent term extension of up to
five years for a patent covering an approved product as
compensation for effective patent term lost during product
development and the FDA regulatory review process. Patent term
extension cannot extend the remaining term of a patent beyond a
total of 14 years from the date of product approval, and only one
patent that is applicable to and covers an approved drug may be
extended. Similar provisions are available in Europe, such as
supplementary protection certificates, and in certain other
non-United States jurisdictions to extend the term of a patent that
covers an approved drug. However, we may not receive an extension
if we fail to apply within applicable deadlines, fail to apply
prior to expiration of relevant patents or otherwise fail to
satisfy applicable requirements. Moreover, the length of a patent
term extension could be less than we request. If we are unable to
obtain patent term extension or the term of any such extension is
less than we request, the period during which we can enforce our
patent rights for that product will be shortened and our
competitors may obtain approval to market competing products
sooner. As a result, our revenue from applicable products could be
reduced, possibly materially.
Further,
under certain circumstances, the term of a patent covering our
products may be extended for time spent during the pendency of the
corresponding patent application in the USPTO (referred to as
Patent Term Adjustment, or PTA). The laws and regulations
underlying how the USPTO calculates the PTA is subject to change
and any such PTA granted by the USPTO could be challenged by a
third-party. If we do not prevail under such a challenge, the PTA
may be reduced or eliminated, resulting in a shorter patent term,
which may negatively impact our ability to exclude
competitors.
Because
PTA added to the term of patents covering pharmaceutical products
has particular value, our business may be adversely affected if the
PTA is successfully challenged by a third party and our ability to
exclude competitors is reduced or eliminated.
Intellectual property rights do not 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 EOM613 and EOM147
or our future products or product candidates but that are not
covered by the claims of the patents that we own or license from
others; |
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● |
others
may independently develop similar or alternative technologies or
otherwise circumvent any of our technologies without infringing our
intellectual property rights; |
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we or
any of our collaborators might not have been the first to conceive
and reduce to practice the inventions covered by the patents or
patent applications that we own, license or will own or
license; |
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● |
we or
any of our collaborators might not have been the first to file
patent applications covering certain technologies we or they own or
have obtained a license, or will own or obtain a
license; |
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● |
issued
patents that we own may not provide us with any competitive
advantage, 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, or in countries where
research and development safe harbor laws exist, and then use the
information learned from such activities to develop competitive
products for sale in our major commercial markets; |
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● |
ownership
and inventorship of our patents or patent applications may be
challenged by third parties; and |
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patents
of third parties, or pending or future applications of third
parties, if issued, may have an adverse effect on our
business. |
Our reliance on third parties requires us to share our trade
secrets, which increases the possibility that our trade secrets
will be misappropriated or disclosed, and confidentiality
agreements with employees and third parties may not adequately
prevent disclosure of trade secrets and protect other proprietary
information.
We
consider proprietary trade secrets or confidential know-how and
unpatented know-how to be important to our business. We may rely on
trade secrets or confidential know-how to protect our technology,
especially where patent protection is believed by us to be of
limited value. Because we expect to rely on third parties to
manufacture EOM 613 and EOM147 and any future products and product
candidates, and we expect to collaborate with third parties on the
development of EOM613 and EOM147 and any future products and
product candidates, we must, at times, share trade secrets with
them. We also conduct joint research and development programs that
may require us to share trade secrets under the terms of our
research and development partnerships or similar agreements.
However, trade secrets or confidential know-how can be difficult to
maintain as confidential.
To
protect this type of information against disclosure or
appropriation by competitors, our policy is to require our
employees, consultants, collaborators, contractors and advisors to
enter into confidentiality agreements and, if applicable, material
transfer agreements, consulting agreements or other similar
agreements with us prior to beginning research or disclosing
proprietary information. These agreements typically limit the
rights of the third parties to use or disclose our confidential
information, including our trade secrets. However, current or
former employees, consultants, collaborators, contractors and
advisors may unintentionally or willfully disclose our confidential
information to competitors, and confidentiality agreements may not
provide an adequate remedy in the event of unauthorized disclosure
of confidential information. The need to share trade secrets and
other confidential information increases the risk that such trade
secrets become known by our competitors, are inadvertently
incorporated into the technology of others, or are disclosed or
used in violation of these agreements. Given that our proprietary
position is based, in part, on our know-how and trade secrets, a
competitor’s discovery of our trade secrets or other unauthorized
use or disclosure would impair our competitive position and may
have an adverse effect on our business and results of operations.
Enforcing a claim that a third party obtained illegally and is
using trade secrets or confidential know-how is expensive, time
consuming and unpredictable. The enforceability of confidentiality
agreements may vary from jurisdiction to jurisdiction.
In
addition, these agreements typically restrict the ability of our
employees, consultants, collaborators, contractors and advisors to
publish data potentially relating to our trade secrets, although
our agreements may contain certain limited publication rights.
Despite our efforts to protect our trade secrets, our competitors
may discover our trade secrets, either through breach of our
agreements with third parties, independent development or
publication of information by any of our third-party collaborators.
A competitor’s discovery of our trade secrets would impair our
competitive position and have an adverse impact on our
business.
If our trademarks and trade names are not adequately protected,
then we may not be able to build name recognition in our markets of
interest and our business may be adversely
affected.
Our
unregistered trademarks or trade names may be challenged,
infringed, circumvented or declared generic or determined to be
infringing on other marks. We may not be able to protect our rights
to these trademarks and trade names, which we need to build name
recognition among potential collaborators or customers in our
markets of interest. At times, competitors may adopt trade names or
trademarks similar to ours, thereby impeding our ability to build
brand identity and possibly leading to market confusion. In
addition, there could be potential trade name or trademark
infringement claims brought by owners of other registered
trademarks or trademarks that incorporate variations of our
unregistered trademarks or trade names. Over the long term, if we
are unable to successfully register our trademarks and trade names
and establish name recognition based on our trademarks and trade
names, then we may not be able to compete effectively, and our
business may be adversely affected. Our efforts to enforce or
protect our proprietary rights related to trademarks, trade
secrets, domain names, copyrights or other intellectual property
may be ineffective and could result in substantial costs and
diversion of resources and could adversely impact our financial
condition or results of operations.
We may need to license certain intellectual property from third
parties, and such licenses may not be available or may not be
available on commercially reasonable terms.
A
third party may hold intellectual property, including patent rights
that are important or necessary for the development or
commercialization of EOM613 and EOM147 or our future products or
product candidates. It may be necessary for us to use the patented
or proprietary technology of third parties to commercialize EOM613
and EOM147 or our products or product candidates, in which case we
would be required to obtain a license from these third parties.
Such a license may not be available on commercially reasonable
terms, or at all, which could materially harm our business. At this
time, we are unaware of any intellectual property that interferes
with ours or is complementary and needed to commercialize EOM613
and EOM147.
We may be subject to claims that our employees, consultants,
collaborators contractors or advisors have wrongfully used or
disclosed confidential information of their former employers or
other third parties.
We
employ individuals who were previously employed at other
biotechnology or pharmaceutical companies. Although we seek to
protect our ownership of intellectual property rights by ensuring
that our agreements with our employees, consultants, collaborators,
contractors, advisors and other third parties with whom we do
business include provisions requiring such parties to assign rights
in inventions to us, we may be subject to claims that we or our
employees, consultants, collaborators, contractors and advisors
have inadvertently or otherwise used or disclosed confidential
information of their former employers or other third parties. We
may also be subject to claims that the former employers or other
third parties have an ownership interest in our patents. Litigation
may be necessary to defend against these claims. There is no
guarantee of success in defending these claims, and if we fail in
defending any such claims, in addition to paying monetary damages,
we may lose valuable intellectual property rights, such as
exclusive ownership of, or right to use, valuable intellectual
property. Even if we are successful, litigation could result in
substantial cost and be a distraction to our management and other
employees.
Our proprietary information may be lost, or we may suffer security
breaches.
In
the ordinary course of our business, we collect and store sensitive
data, including intellectual property, clinical trial data,
proprietary business information, personal data and personally
identifiable information of our clinical trial subjects and
employees, in our data centers and on our networks. The secure
processing, maintenance and transmission of this information is
critical to our operations. 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. Although, to our knowledge, we have not
experienced any such material security breach to date, 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 could result
in legal claims or proceedings, liability under laws that protect
the privacy of personal information, significant regulatory
penalties, disrupt our operations, damage our reputation and cause
a loss of confidence in us and our ability to conduct clinical
trials, which could adversely affect our reputation and delay our
clinical development of our product candidates.
Risks
Related to Our Employees, Managing Our Growth and Our
Operations
Our future success depends on our ability to retain our key
personnel and to attract, retain and motivate qualified
personnel.
We
are highly dependent on the development, regulatory,
commercialization and business development expertise of our senior
management team, as well as the other principal members of our
scientific and clinical teams. Although we have employment
agreements, offer letters or consulting agreements with our
executive officers, these agreements do not prevent them from
terminating their services at any time.
If we
lose one or more of our executive officers or key employees, our
ability to implement our business strategy successfully could be
seriously harmed. Furthermore, replacing executive officers and key
employees may be difficult and may take an extended period of time
because of the limited number of individuals in our industry with
the breadth of skills and experience required to successfully
develop product candidates, gain regulatory approval, and
commercialize new products. Competition to hire from this limited
pool is intense, and we may be unable to hire, train, retain or
motivate these additional key personnel on acceptable terms given
the competition among numerous pharmaceutical and biotechnology
companies for similar personnel. We also experience competition for
the hiring of scientific and clinical personnel from universities
and research institutions. In addition, we rely on consultants and
advisors, including scientific and clinical advisors, to assist us
in formulating our research and development and commercialization
strategy. Our consultants and advisors may be engaged by entities
other than us and may have commitments under consulting or advisory
contracts with other entities that may limit their availability to
us. If we are unable to continue to attract and retain highly
qualified personnel, our ability to develop and commercialize
product candidates will be limited.
We expect to expand our development, regulatory, and sales and
marketing capabilities, and as a result, we may encounter
difficulties in managing our growth, which could disrupt our
operations.
We
expect to experience significant growth in the number of our
employees and the scope of our operations, particularly in the
areas of drug development, regulatory affairs, sales and marketing
and financial and systems operations. To manage our anticipated
future growth, we must continue to implement and improve our
managerial, operational and financial systems, expand our
facilities or acquire new facilities and continue to recruit and
train additional qualified personnel. Due to our limited financial
resources, we may not be able to effectively manage the expansion
of our operations or recruit and train additional qualified
personnel. The expansion of our operations may lead to significant
costs and may divert our management and business development
resources. Any inability to manage growth could delay the execution
of our business plans or disrupt our operations.
We may engage in acquisitions that could disrupt our business,
cause dilution to our stockholders or reduce our financial
resources.
In
the future, we may enter into transactions to acquire other
businesses, products or technologies. If we do identify suitable
candidates, we may not be able to make such acquisitions on
favorable terms, or at all. Any acquisitions we make may not
strengthen our competitive position, and these transactions may be
viewed negatively by customers or investors. We may decide to incur
debt in connection with an acquisition or issue our common stock or
other equity securities to the stockholders of the acquired
company, which would reduce the percentage ownership of our
existing stockholders. We could incur losses resulting from
undiscovered liabilities of the acquired business that are not
covered by the indemnification we may obtain from the seller. In
addition, we may not be able to successfully integrate the acquired
personnel, technologies and operations into our existing business
in an effective, timely and nondisruptive manner. Acquisitions may
also divert management attention from day-to-day responsibilities,
increase our expenses and reduce our cash available for operations
and other uses. We cannot predict the number, timing or size of
future acquisitions or the effect that any such transactions might
have on our operating results.
Our business and operations would suffer in the event of system
failures.
Our
computer systems, as well as those of our CROs and other
contractors and consultants, are vulnerable to damage from computer
viruses, unauthorized access including ransomware attacks, natural
disasters (including hurricanes), terrorism, war and
telecommunication and electrical failures. If such an event were to
occur and cause interruptions in our operations, it could result in
a material disruption of our development programs. For example, the
loss of preclinical or clinical trial data from completed, ongoing
or planned trials could result in delays in our regulatory approval
efforts and significantly increase our costs to recover or
reproduce the data. To the extent that any disruption or security
breach were to result in a loss of or damage to our data or
applications, or inappropriate disclosure of personal, confidential
or proprietary information, we could incur liability and the
further development of EOM613 and/or EOM147 or any other product
candidate could be delayed.
We are increasingly dependent on information technology, and our
systems and infrastructure face certain risks, including
cybersecurity and data leakage risks.
Significant
disruptions to our information technology systems or breaches of
information security could adversely affect our business. In the
ordinary course of business, we collect, store and transmit large
amounts of confidential information, and it is critical that we do
so in a secure manner to maintain the confidentiality and integrity
of such confidential information. The size and complexity of our
information technology systems, and those of our third-party
vendors with whom we contract, make such systems potentially
vulnerable to service interruptions and security breaches from
inadvertent or intentional actions by our employees, partners or
vendors, from attacks by malicious third parties, or from
intentional or accidental physical damage to our systems
infrastructure maintained by us or by third parties. Maintaining
the secrecy of this confidential, proprietary, or trade secret
information is important to our competitive business position.
While we will take steps to protect such information and invested
in information technology, there can be no assurance that our
efforts will prevent service interruptions or security breaches in
our systems or the unauthorized or inadvertent wrongful use or
disclosure of confidential information that could adversely affect
our business operations or result in the loss, dissemination, or
misuse of critical or sensitive information. A breach of our
security measures or the accidental loss, inadvertent disclosure,
unapproved dissemination, misappropriation or misuse of trade
secrets, proprietary information, or other confidential
information, whether as a result of theft, hacking, fraud, trickery
or other forms of deception, or for any other reason, could enable
others to produce competing products, use our proprietary
technology or information, or adversely affect our business or
financial condition. Further, any such interruption, security
breach, loss or disclosure of confidential information, could
result in financial, legal, business, and reputational harm to us
and could have a material adverse effect on our business, financial
position, results of operations or cash flow.
Risks
Related to this Offering and Our Common Stock
Following this offering, our directors, executive officers and
certain stockholders (a number of which are affiliates of our
Founder and Chief Operating Officer) will continue to own a
significant percentage of our common stock and, if they choose to
act together, will be able to exert significant control over
matters subject to stockholder approval.
Upon
the closing of this offering, our Chairman and Chief Operating
Officer, the Goldberger family and entities affiliated with them
will beneficially own approximately _______% of the voting power of
our outstanding common stock, or approximately ______% if the
underwriters exercise their over-allotment option from us in full.
As a result, they will have absolute control over the election of
our directors and the outcome of corporate actions requiring
stockholder approval, such as: (i) a merger or a sale of our
company, (ii) a sale of all or substantially all of our assets, and
(iii) amendments to our certificate of incorporation and bylaws.
This concentration of voting power and control could have a
significant effect in delaying, deferring or preventing an action
that might otherwise be beneficial to our other stockholders and be
disadvantageous to our stockholders with interests different from
those entities and individuals. These individuals also have
significant control over our business, policies and affairs as
officers and directors of our company. Therefore, you should not
invest in reliance on your ability to have any control over our
company.
Because we are a startup and a smaller reporting company, the
market price of our common stock will likely be volatile and
fluctuate substantially, which could result in substantial losses
for purchasers of our common stock in this
offering.
Because
we a startup with a limited track record, the market price of our
common stock will likely be highly volatile. The market price of
our common stock may be subject to wide fluctuations in response to
a variety of factors, including the following:
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any
delay in the commencement, enrollment and ultimate completion of
our clinical trials; |
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● |
any
delay in submitting an NDA and any adverse development or perceived
adverse development with respect to the FDA’s review of that
NDA; |
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● |
failure
to successfully develop and commercialize EOM613 and EOM147 or any
future product candidate; |
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● |
inability
to obtain additional funding; |
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● |
regulatory
or legal developments in the United States and other countries
applicable to EOM613 and EOM147 or any other product
candidate; |
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● |
adverse
regulatory decisions; |
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● |
changes
in the structure of healthcare payment systems; |
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● |
introduction
of new products, services or technologies by our
competitors; |
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● |
failure
to meet or exceed financial projections we provide to the
public; |
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● |
failure
to meet or exceed the estimates and projections of the investment
community; |
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● |
changes
in the market valuations of companies similar to ours; |
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market
conditions in the pharmaceutical and biotechnology sectors, and the
issuance of new or changed securities analysts’ reports or
recommendations; |
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● |
announcements
of significant acquisitions, strategic collaborations, joint
ventures or capital commitments by us or our
competitors; |
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● |
significant
lawsuits, including patent or stockholder litigation, and disputes
or other developments relating to our proprietary rights, including
patents, litigation matters and our ability to obtain patent
protection for our technologies; |
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● |
additions
or departures of key scientific or management
personnel; |
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sales
of our common stock by us or our stockholders in the
future; |
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● |
trading
volume of our common stock; |
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● |
general
economic, industry and market conditions; |
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health
epidemics and outbreaks, including the COVID-19 pandemic, which
could significantly disrupt our preclinical studies and clinical
trials, and therefore our receipt of necessary regulatory approvals
could be delayed or prevented; and |
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the
other factors described in this “Risk Factors” section. |
In
addition, the stock markets have experienced extreme price and
volume fluctuations that have affected and continue to affect the
market prices of equity securities of many companies. These price
fluctuations have often been unrelated or disproportionate to the
operating performance of those companies. Broad market and industry
factors, as well as general economic, political, regulatory and
market conditions, may negatively affect the market price of our
common stock, regardless of our actual operating performance. The
market price of our common stock may decline below the public
offering price, and you may lose some or all of your investment. In
particular, stock markets have experienced extreme volatility in
2020 and 2021 due to the ongoing COVID-19 pandemic, among other
factors, and investor concerns and uncertainty related to the
impact of the pandemic on the economies of countries
worldwide.
Our management has broad discretion in using the net proceeds from
this offering.
We
have stated, in only a general manner, how we intend to use the net
proceeds from this offering. See “Use of Proceeds.” We cannot, with
any assurance, be more specific at this time. We will have broad
discretion in the timing of the expenditures and application of
proceeds received in this offering. If we fail to apply the net
proceeds effectively, we may not be successful in bringing our
proposed products to market. You will not have the opportunity to
evaluate all of the economic, financial or other information upon
which we may base our decisions to use the net proceeds from this
offering.
We could be subject to securities class action
litigation.
In
the past, securities class action litigation has often been brought
against companies following a decline in the market price of their
securities. This risk is especially relevant for us because
biotechnology companies have experienced significant share price
volatility in recent years. 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.
If securities or industry analysts do not publish research or
reports about our business, or if they issue an adverse or
misleading opinion regarding our common stock, our stock price and
trading volume could decline.
The
trading market for our common stock will depend, in part, on the
research and reports that securities or industry analysts may
publish about us or our business. We do not have any control over
these analysts. If our financial performance fails, or our drug
development program and clinical trial results do not meet analyst
expectations or one or more of the analysts who cover us downgrade
our common stock or change their opinion of our common stock, our
share price would likely decline. If one or more of these analysts
cease coverage of us or fail to regularly publish reports on us, we
could lose visibility in the financial markets, which could cause
our share price or trading volume to decline.
Because we do not anticipate paying any cash dividends on our
common stock in the foreseeable future, capital appreciation, if
any, will be your sole source of gain.
We
have never declared or paid any cash dividends on our common stock.
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. As a result, capital appreciation, if any, of
our common stock would be your sole source of gain on an investment
in our common stock for the foreseeable future. See “Dividend
Policy” for additional information.
If you purchase shares of our common stock in this offering, you
will incur immediate dilution in the book value of your
shares.
The
public offering price of our common stock will be substantially
higher than the as adjusted net tangible book value per share of
our common stock. Therefore, if you purchase our common stock in
this offering, you will pay a price per share of our common stock
that substantially exceeds the book value of our net tangible
assets after subtracting our liabilities. Based on the assumed
public offering price of $____________ per share, you will
experience immediate dilution of $__________ per share,
representing the difference between our net tangible book value per
share, after giving effect to this offering, and the public
offering price. Further, the future exercise of any outstanding
options and/or warrants to purchase shares of our common stock will
cause you to experience additional dilution. See
“Dilution.”
We will incur increased costs as a result of operating as a public
company, and our management will be required to devote substantial
time to new compliance initiatives and corporate governance
practices.
As a
newly public company, we will incur significant legal, accounting
and other expenses that we did not incur previously. The
Sarbanes-Oxley Act of 2002 (“SOX”), the Dodd-Frank Wall Street
Reform and Consumer Protection Act, the listing requirements of
Nasdaq, and other applicable securities rules and regulations
impose various requirements on U.S. reporting public companies,
including the establishment and maintenance of effective disclosure
and financial controls and corporate governance practices. Our
management and other personnel will need to devote a substantial
amount of time to these compliance initiatives. Moreover, these
rules and regulations will increase our legal and financial
compliance costs and will make some activities more time-consuming
and costly. For example, we expect that these rules and regulations
may make it more expensive for us to obtain director and officer
liability insurance, which in turn could make it more difficult for
us to attract and retain qualified senior management personnel or
members for our Board of Directors. In addition, these rules and
regulations are often subject to varying interpretations, and, as a
result, their application in practice may evolve over time as new
guidance is provided by regulatory and governing bodies. This could
result in continuing uncertainty regarding compliance matters and
higher costs necessitated by ongoing revisions to disclosure and
governance practices. Pursuant to Section 404 of SOX (“Section
404”), we will be required to furnish a report by our senior
management on our internal control over financial reporting in our
next annual filing.
While
we remain a smaller reporting company, we will not be required to
include an attestation report on internal control over financial
reporting issued by our independent registered public accounting
firm. During our 2021 and 2020 audit examinations, our independent
auditors identified material weaknesses in our internal controls
principally due to the lack of segregation of duties for cash
management. To mitigate this, we have hired an additional financial
manager and engaged in various safeguards with our banks to insure
cash management checks and balances. To prepare for eventual
compliance with Section 404, we will be engaged in a process to
document and evaluate our internal control over financial
reporting, which is both costly and challenging. In this regard, we
will need to continue to dedicate internal resources, engage
outside consultants and adopt a detailed work plan to assess and
document the adequacy of internal control over financial reporting,
continue steps to improve control processes as appropriate,
validate through testing that controls are functioning as
documented and implement a continuous reporting and improvement
process for internal control over financial reporting. Despite our
efforts, there is a risk that we will not be able to conclude,
within the prescribed timeframe or at all, that our internal
control over financial reporting is effective as required by
Section 404. If we identify one or more material weaknesses, it
could result in an adverse reaction in the financial markets due to
a loss of confidence in the reliability of our financial
statements.
Anti-takeover provisions contained in our certificate of
incorporation and bylaws, as well as provisions of Delaware law,
could impair a takeover attempt.
Our
certificate of incorporation, bylaws and Delaware law contain
provisions which could have the effect of rendering more difficult,
delaying or preventing an acquisition deemed undesirable by our
Board of Directors. Our corporate governance documents include
provisions:
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● |
authorizing
“blank check” preferred stock, which could be issued by our Board
of Directors without stockholder approval and may contain voting,
liquidation, dividend, and other rights superior to our common
stock; |
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| |
● |
limiting
the liability of, and providing indemnification to, our directors
and officers; |
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| |
● |
controlling
the procedures for the conduct and scheduling of Board of Directors
and stockholder meetings; and |
| |
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|
| |
● |
providing
our Board of Directors with the express power to postpone
previously scheduled annual meetings and to cancel previously
scheduled special meetings. |
These
provisions, alone or together, could delay or prevent hostile
takeovers and changes in control or changes in our
management.
As a
Delaware corporation, we are also subject to provisions of Delaware
law, including Section 203 of the Delaware General Corporation law,
which generally prevents stockholders holding more than 15% of our
outstanding common stock from engaging in certain business
combinations without approval of the holders of substantially all
of our outstanding common stock.
Any
provision of our certificate of incorporation, bylaws or Delaware
law that has the effect of delaying or deterring a change in
control could limit the opportunity for our stockholders to receive
a premium for their shares of our common stock and could also
affect the price that some investors are willing to pay for our
common stock.
CAUTIONARY
NOTE REGARDING FORWARD LOOKING STATEMENTS
This
prospectus, including the sections entitled “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. The words
“believe,” “may,” “will,” “potentially,” “estimate,” “continue,”
“anticipate,” “intend,” “could,” “would,” “project,” “plan,”
“expect” and similar expressions that convey uncertainty of future
events or outcomes are intended to identify forward-looking
statements. These forward-looking statements include, but are not
limited to, statements concerning the following:
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|
● |
our
lack of operating history; |
| |
|
|
| |
● |
fluctuations
in the trading price of our common stock; |
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|
|
| |
● |
the
expectation that we will incur significant operating losses for the
foreseeable future and will need significant additional capital
following this offering; |
| |
|
|
| |
● |
our
current and future capital requirements to support our development
and commercialization efforts for our product candidates and our
ability to satisfy our capital needs; |
| |
|
|
| |
● |
our
dependence on our product candidates, which are still in
preclinical or early stages of clinical development; |
| |
|
|
| |
● |
our,
or that of our third-party manufacturers, ability to manufacture
cGMP quantities of our product candidates as required for
pre-clinical and clinical trials and, subsequently, our ability to
manufacture commercial quantities of our product
candidates; |
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|
|
| |
● |
our
ability to complete required clinical trials for our product
candidates and obtain approval from the FDA or other regulatory
agencies in different jurisdictions; |
| |
|
|
| |
● |
our
lack of a sales and marketing organization and our ability to
commercialize our product candidates if we obtain regulatory
approval; |
| |
|
|
| |
● |
our
dependence on third-parties to manufacture our product
candidates; |
| |
|
|
| |
● |
our
reliance on third-party CROs to conduct our clinical
trials; |
| |
|
|
| |
● |
our
ability to maintain or protect the validity of our intellectual
property; |
| |
|
|
| |
● |
our
ability to internally develop new inventions and intellectual
property; |
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|
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● |
interpretations
of current laws and the passages of future laws; |
| |
|
|
| |
● |
acceptance
of our business model by investors; |
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|
| |
● |
the
accuracy of our estimates regarding expenses and capital
requirements; |
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|
|
| |
● |
our
ability to adequately support organizational and business growth;
and |
| |
|
|
| |
● |
the
continued spread of COVID-19 and the resulting global pandemic and
its impact on our preclinical studies and clinical
studies. |
These
forward-looking statements are subject to a number of risks,
uncertainties and assumptions, including those described in “Risk
Factors” and elsewhere in this prospectus. Moreover, we operate in
a very competitive and rapidly changing environment, and new risks
emerge from time to time. It is not possible for us to predict all
risks, nor can we assess the impact of all factors on our business
or the extent to which any factor, or combination of factors, may
cause actual results to differ materially from those contained in
any forward-looking statements we may make. In light of these
risks, uncertainties and assumptions, the forward-looking events
and circumstances discussed in this prospectus may not occur and
actual results could differ materially and adversely from those
anticipated or implied in our forward-looking
statements.
You
should not rely upon forward-looking statements as predictions of
future events. Although we believe that the expectations reflected
in our forward-looking statements are reasonable, we cannot
guarantee that the future results, levels of activity, performance
or events and circumstances described in the forward-looking
statements will be achieved or occur. Moreover, neither we nor any
other person assumes responsibility for the accuracy and
completeness of the forward-looking statements. We undertake no
obligation to update publicly any forward-looking statements for
any reason after the date of this prospectus to conform these
statements to actual results or to changes in our expectations,
except as required by law.
You
should read this prospectus and the documents that we reference in
this prospectus and have filed with the Securities and Exchange
Commission as exhibits to the registration statement of which this
prospectus is a part with the understanding that our actual future
results, levels of activity, performance and events and
circumstances may be materially different from what we
expect.
USE
OF PROCEEDS
We
estimate that the net proceeds we will receive from the sale of our
common stock in this offering, after deducting underwriting
discounts and commissions and estimated expenses payable by us,
will be approximately $________ million (or $______ million if the
underwriters exercise their option to purchase additional shares in
full), based on an assumed public offering price of $________ per
share.
We
currently expect to use the net proceeds from this offering for
product development activities, including pre-clinical and
regulatory research and development for our product candidates and
future proposed clinical trials, and to repay approximately
$688,000 (25%) of the principal on the outstanding convertible
promissory note issued to one of our stockholders in the aggregate
amount of approximately $2,751,000 which we have used for R&D
drug development, our Brazilian clinical trial and general working
capital. The convertible promissory note bears interest at a rate
of 5% per annum and matures on November 24, 2023. We anticipate
that the combined cost of preclinical animal studies and clinical
trials for both drug candidates in the U.S. and ex-U.S. will be
approximately $8-$12 million including regulatory and manufacturing
costs. We anticipate using approximately $1 million to complete
pre-clinical animal studies for EOM147. No proceeds are anticipated
to be used for EOM613 pre-clinical animal studies. We also
anticipate using approximately $8.5 million and $3.5 million
respectively, to conduct U.S. clinical trials for EOM613 and
EOM147. In addition, we anticipate conducting additional ex-U.S.
clinical trials for EOM147 which we estimate will cost $4.5
million. No proceeds from this offering will be used for ex U.S.
clinical trials for EOM613.
However,
there can be no assurance that these costs will not increase due to
macro-economic forces and trial delays outside of our
control.The
remainder of the net proceeds will be used for working capital and
other general corporate purposes, including the associated costs of
operating as a public company.
Based
on our current projections, we believe the net proceeds of this
offering will fund our operations for at least 12 months from the
date of this prospectus.
We
may also use a portion of the net proceeds of this offering for the
acquisition or licensing, as the case may be, of additional
technologies, other assets or businesses, or for other strategic
investments or opportunities, although we currently have no
understandings, agreements or commitments to do so.
Although
we currently anticipate that we will use the net proceeds from this
offering as described above, there may be circumstances where a
reallocation of funds is necessary. The amounts and timing of our
actual expenditures will depend upon numerous factors, including
the results of our pre-clinical studies and planned clinical
trials, our sales and marketing and commercialization efforts,
demand for our products, our operating costs and the other factors
described under “Risk Factors” in this prospectus. Accordingly, our
management will have flexibility in applying the net proceeds from
this offering. An investor will not have the opportunity to
evaluate the economic, financial or other information on which we
base our decisions on how to use the proceeds.
The
net proceeds from this offering, together with our cash and
marketable securities, will not be sufficient for us to fund any of
our product candidates through regulatory approval, and we will
need to raise additional capital to complete the development and
commercialization of our product candidates. We estimate that we
will need no less than $25 million of additional funding to obtain
regulatory approval and achieve commercialization for our current
product candidates. We can provide no assurance that we will be
able to raise such funds on terms that are commercially acceptable
to us, if at all.
Pending
our use of the net proceeds from this offering, we intend to invest
the net proceeds in a variety of capital preservation investments,
including short-term, investment-grade, interest-bearing
instruments and U.S. government securities.
DIVIDEND
POLICY
We
have never declared or paid any cash dividends on our common stock.
We intend to retain future earnings, if any, to finance the
operation and expansion of our business and do not anticipate
paying any cash dividends in the foreseeable future. Investors
should not purchase our common stock with the expectation of
receiving cash dividends. Any future determination related to our
dividend policy will be made at the discretion of our Board of
Directors after considering our financial condition, results of
operations, capital requirements, business prospects and other
factors our Board of Directors deems relevant, and subject to the
restrictions contained in any future financing
instruments.
CAPITALIZATION
The
following table sets forth our cash and our capitalization as of
September 30, 2022:
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on an
actual basis; and |
|
|
● |
on an
as adjusted basis, giving effect to our issuance and sale of shares
of our common stock in this offering based on an assumed public
offering price of $.00 per share, after deducting estimated
underwriting discounts and commissions and estimated offering
expenses payable by us. |
We
derived this table from, and it should be read in conjunction with
and is qualified in its entirety by reference to, our historical
financial statements and the accompanying notes included elsewhere
in this prospectus. You should read the following table together
with our financial statements and the related notes appearing at
the end of this prospectus and the “Management’s Discussion and
Analysis of Financial Condition and Results of Operations” section
of this prospectus. On December 1, 2021, we completed the
acquisition of EOM Pharmaceuticals, Inc. The transaction was
accounted for as a reverse merger, with EOM Pharmaceuticals, Inc.
deemed to be the accounting acquirer and EOM Pharmaceutical
Holdings, Inc (formerly ImmunoCellular Therapeutics Ltd.) deemed to
be the legal acquirer. Accordingly, this table reflects the
historical financial data of EOM Pharmaceuticals, Inc.
| |
|
As
of September, 30 |
|
|
|
|
2022 |
|
|
|
|
Actual |
|
|
As
Adjusted |
|
|
Cash |
|
$ |
551,176 |
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
| Non-Current
Liabilities |
|
|
3,707,117
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
| Shareholders’
Equity (Deficit) |
|
|
|
|
|
|
|
|
| Preferred
stock, $0.0001 par value, 5,000,000 shares authorized, no shares
issued and outstanding actual; no shares issued and outstanding as
adjusted as of September 30, 2022 |
|
|
- |
|
|
|
- |
|
| Common
stock, $0.0001 par value, 500,000,000 authorized, 113,270,751
issued and outstanding actual; shares issued and outstanding as
adjusted as of September 30, 2022 |
|
|
11,327 |
|
|
|
|
|
| Additional
paid-in capital |
|
|
5,045,675 |
|
|
|
|
|
| Accumulated
deficit |
|
|
(8,784,373 |
) |
|
|
|
|
| Total
Shareholders’ Equity (Deficit) |
|
|
(3,727,371 |
) |
|
|
|
|
| Total
Capitalization |
|
$ |
(20,254 |
) |
|
$ |
|
|
Except
as otherwise indicated herein, all information in this prospectus
assumes:
|
|
● |
a
1-for- reverse stock split of our common stock; and |
| |
|
|
| |
● |
no
exercise of the outstanding options or warrants described
above. |
DILUTION
If
you invest in our common stock in this offering, your ownership
interest will be diluted immediately to the extent of the
difference between the public offering price per share of our
common stock and the as adjusted net tangible book value per share
of our common stock immediately after this offering.
Dilution
results from the fact that the public offering price per share is
substantially in excess of the book value per share attributable to
the existing stockholders for the presently outstanding shares of
common stock. We calculate net tangible book value per share by
dividing the net tangible book value (total tangible assets less
total liabilities) by the number of outstanding shares of common
stock.
Our
historical net tangible book value as of September 30, 2022 was
($3,521,653), or ($0.03) per share of our common stock. Our
historical net tangible book value is the amount of our total
tangible assets less our total liabilities. Historical net tangible
book value per share represents our historical net tangible book
value deficit divided by the 113,270,751 shares of our common stock
outstanding as of September 30, 2022.
After
giving effect to the receipt of the estimated net proceeds from our
sale of shares of common stock in this offering, based on an
assumed public offering price of $.00 per share, after deducting
estimated underwriting discounts and commissions and estimated
offering expenses payable by us, our as adjusted net tangible book
value at September 30, 2022 would have been approximately
$________, or $_____ per share. This represents an immediate
increase in net tangible book value per share of $_______ to
existing stockholders and an immediate decrease in net tangible
book value per share of $______ to you. The following table
illustrates this dilution on a per share basis to new
investors:
|
Assumed
public offering price per share |
|
|
|
|
|
Historical
net tangible book value deficit per share as of September 30,
2022 |
|
|
|
|
|
Increase
in net tangible book value per share attributable to this
offering |
|
|
|
|
| As
adjusted net tangible book value per share after this
offering |
|
|
|
|
| Dilution
per share to new investors purchasing common stock in this
offering |
|
|
|
|
If
the underwriters’ over-allotment option is exercised in full, our
as adjusted net tangible book value per share after this offering
would be $_______ and dilution per share to new investors
purchasing common stock in this offering would be
$_______.
The
table above is based on 113,270,751 shares of our common stock
outstanding as of September 30, 2022 and does not include as of
such date:
●
4,418,998 shares of common stock issuable upon exercise of
warrants, at exercise prices of $0.60, $0.42 and $0.53 per share;
and
●
4,585,665 shares of common stock issuable upon the conversion, at
the option of the Holder of our Convertible Promissory Note, at an
exercise price of $0.60 per share.
|
|
● |
a
1-for- reverse stock split of our common stock; and |
| |
|
|
| |
● |
no
exercise of the outstanding options or warrants described
above. |
MANAGEMENT’S
DISCUSSION AND ANALYSIS OF
FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The
following discussion summarizes the significant factors affecting
the operating results, financial condition, liquidity and cash
flows of our company as of and for the periods presented below. The
following discussion and analysis should be read in conjunction
with “Prospectus Summary—Summary Financial Information,” “Selected
Financial Information” and the financial statements and the related
notes thereto included elsewhere in this prospectus. The statements
in this discussion regarding industry outlook, our expectations
regarding our future performance, liquidity and capital resources
and all other non-historical statements in this discussion are
forward-looking statements and are based on the beliefs of our
management, as well as assumptions made by, and information
currently available to, our management. Actual results could differ
materially from those discussed in or implied by forward-looking
statements as a result of various factors, including those
discussed below and elsewhere in this prospectus, particularly in
the section entitled “Risk Factors.” This discussion and analysis
are based upon the historical financial statements of EOM
Pharmaceuticals, Inc, included in this prospectus. All references
to years, unless otherwise noted, refer to our fiscal years, which
end on December 31. On December 1, 2021, we completed the
acquisition of EOM Pharmaceuticals, Inc. The transaction was
accounted for as a reverse merger, with EOM Pharmaceuticals, Inc.
deemed to be the accounting acquirer and EOM Pharmaceutical
Holdings, Inc. (formerly ImmunoCellular Therapeutics Ltd.) deemed
to be the legal acquirer. All references to share and per share
amounts of our common stock listed in this prospectus have been
adjusted to give effect to the Reverse Stock Split.
Overview
We
are a clinical stage pharmaceutical company that is focused on
developing drugs with the potential to transform therapeutic
paradigms and improve quality of life in patients suffering from
debilitating and sometimes deadly diseases. We were founded with a
specific vision to pursue innovative approaches to solving the
problems of some of today’s urgent and medical needs. Our
development efforts are focused on therapeutics with novel
mechanisms of action that have shown promise in diseases with high
need such as the hyperimmune response in severe COVID-19 patients,
cancer cachexia for which no products have been approved in the
U.S., rheumatoid arthritis, and inflammatory conditions of the
retina characterized by a breakdown of the blood-retinal barrier.
Our pipeline includes our lead compound EOM613, an investigational
“dynamically dual-acting” immunomodulator. EOM613 is a peptide
nucleic-acid solution with both anti-inflammatory and
pro-inflammatory broad spectrum cytokine effects. Human cell
culture studies demonstrate that EOM613 can suppress or stimulate
monocytes and macrophages depending on the activation state and
environment of those key immune cells resulting in either further
activation or suppression.
Our
lead clinical asset EOM613, is a broad spectrum immunomodulator
investigational product, that we believe to have both
anti-inflammatory and pro-inflammatory effects on cytokines and
chemokines. In cell culture studies, EOM613 modulates a number of
clinically important cytokines and chemokines, including IL-2,
IL-6, IL-10, IL-12 MCP-1, TNF-alpha and interferon-gamma. This drug
product is currently being evaluated in a multicenter, open-label
Phase 1/2a clinical trial in Brazil to treat hospitalized COVID-19
patients who have the deleterious “cytokine storm”- related
hyperimmune response to viral infection. Our Brazilian clinical
trial is currently generating important information on cytokines
and the effect of EOM613 treatment on the levels of these cytokines
and the relevance to clinical effects. This information will
increase the present information on EOM613’s mechanism of action
and the relevance to various therapeutic areas. Additional studies
are being planned to assess the drug product’s potential to improve
the quality of life for persons with debilitating and potentially
fatal diseases such as rheumatoid arthritis, and cachexia
associated with advanced AIDS and cancers. These are all clinical
conditions with enormous market potential. An immunomodulator drug
candidate such as EOM613 also has potential in the treatment of a
number of autoimmune disorders, where the immune system of certain
individuals is dysregulated and aberrant.
Our
second clinical stage asset, EOM147, is a new formulation of
topical Squalamine Lactate solution eye drops. It is a novel
therapeutic product which could provide a non-invasive therapy to
improve vision outcomes beyond that achieved with current standard
of care, or without requiring multiple intraocular injections
directly into the eye for a variety of retinal
disorders.
We
intend to conduct trials with a newly formulated and enhanced
formulation of Squalamine Lactate eye drops for the treatment of
wet-AMD as well for diabetic retinopathies and retinal vein
occlusions. EOM147 is an improved, enhanced formulation designed to
provide greater Squalamine concentrations as well as enhanced
ocular retention and retinal retention uptake from front-of-the eye
application as an eye drop for a potentially safer application. The
new formulation utilizes FDA-approved additives to enhance
absorption, through the use of our proprietary in-house technology.
The new eye drop formulations will be subjected to preclinical
evaluations for ocular uptake and safety and toxicology studies in
order to corroborate their tolerability displayed by the prior
formulations of squalamine lactate, based on the data from a prior
Phase 2 clinical trial in wet-AMD which demonstrated a positive and
clinically meaningful treatment effect of a 0.2% w/v Squalamine
solution combination therapy in classic containing choroidal
neovascularization (classic CNV) as well as those with occult
neovascularization (occult CNV) less than 10mm2.
Additional proof-of concept investigator-initiated trials were also
previously completed with the 0.2% w/v Squalamine drug product for
other serious retinal disorders that lead to blindness, such as in
proliferative diabetic retinopathy and in retinal vein occlusions
with visual acuity benefits seen consistent with inhibition of
retinal neovascularization. Once the safety of the novel
formulations has been established in these preclinical animal
studies, we expect to be able to proceed with our ophthalmological
clinical trials.
On
December 14, 2021, we entered into a Squalamine Lactate Route
Selection, Development and Demonstration Agreement with Eurofins
CDMO Alphora, Inc., a Canadian based Contract Research Organization
to evaluate various synthetic routes to access Squalamine Lactate
for purposes of further research and development of the Company’s
EOM147 drug compound. The agreement is structured under a Phase 1
and Phase 2 work plan spanning over a ten-month period. The
estimated aggregate cost under the agreement is approximately $1.3
million. In addition, on April 18, 2022, we entered into an
agreement with Charles River Laboratories Montreal, LLC to conduct
a comprehensive multi-animal toxicity study to assess the impact of
our new squalamine formulation on intraocular eyedrop
administration. The study is not expected to commence until the
first quarter of 2023. The total cost of the study approximates
$1.3 million. Our financial obligation will not commence until the
study begins.
Merger with EOM Pharmaceutical Holdings, Inc.
On
December 1, 2021, we consummated the business combination
(“Merger”) among us, EOM Pharmaceuticals, Inc. (“EOM”), and
ImmunoCellular MergerSub Inc., a Delaware corporation and our
wholly-owned subsidiary (“Merger Sub”), pursuant to which Merger
Sub was merged with and into EOM, with EOM surviving the Merger. As
a result of the Merger, EOM became our wholly-owned subsidiary .
Pursuant to the merger agreement, EOM shareholders exchanged all of
their EOM common stock for our newly issued shares of common and
Series C convertible preferred stock. Post-merger, our then current
equity holders own approximately 3.5% and the former EOM equity
holders own approximately 96.5% percent of our common stock,
calculated on a fully diluted basis. In connection with the Merger,
on November 7, 2022, we changed our name to EOM Pharmaceutical
Holdings, inc.
COVID-19 Outbreak
On
January 30, 2020, the World Health Organization announced a global
health emergency because of a new strain of coronavirus originating
in Wuhan, China (the “COVID-19 Outbreak”) and the risks to the
international community as the virus spreads globally beyond its
point of origin. In March 2020, the WHO classified the COVID-19
Outbreak as a pandemic, based on the rapid increase in exposure
globally. The global COVID-19 pandemic has had, and may continue to
have, a material impact on our business. Towards the end of the
fourth quarter 2021 and continuing into the second quarter 2022, we
experienced and continued to experience, an impact to our business
in connection with our ongoing EOM613 clinical trial in Brazil. Due
to ongoing numerous clinical studies in Brazil for various
therapeutic treatments as well as the lack of available patients
eligible for screening in accordance with the terms of our agreed
upon trial protocol, we experienced a delay in enrollment in our
clinical trial. Consequently, during the third quarter 2022 we
decided to terminate the clinical trial after we achieved an
approximately 50% enrollment rate. Although the incidence and
severity of the COVID-19 Outbreak has significantly subsided there
is no assurance that additional infectious COVID-19 strains will
emerge which may have a material adverse effect on the Company’s
financial condition, liquidity, and future results of operations
including our ability to conduct future clinical U.S and foreign
drug trials for our drug candidates. Management is actively
monitoring the impact of the global pandemic on its financial
condition, liquidity, operations, industry, and
workforce.
Results
of Operations
Comparison
of the three and nine months ended September 30, 2022 and
2021
Our
results of operations for the three and nine months ended September
30, 2022 and 2021 are summarized as follows:
| |
|
Three
Months Ended
September
30,
|
|
|
Change |
|
| |
|
2022 |
|
|
2021 |
|
|
Dollars |
|
|
Percentage |
|
| |
|
|
|
|
|
|
|
|
|
| Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Research and
development |
|
$ |
332,503 |
|
|
$ |
315,435 |
|
|
$ |
17,068 |
|
|
|
5.4 |
% |
| Marketing & Advertising |
|
|
1,600 |
|
|
|
23,208 |
|
|
|
21,608 |
|
|
|
-93.1 |
% |
| Salaries and benefits |
|
|
124,655 |
|
|
|
109,674 |
|
|
|
14,981 |
|
|
|
13.7 |
% |
| General and
administrative |
|
|
223,117 |
|
|
|
48,117 |
|
|
|
175,000 |
|
|
|
363.7 |
% |
| Total operating
expenses |
|
|
681,875 |
|
|
|
496,434 |
|
|
|
185,441 |
|
|
|
37.4 |
% |
| Loss from
operations |
|
|
(681,875 |
) |
|
|
(496,434 |
) |
|
|
(185,441 |
) |
|
|
37.4 |
% |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Other (income) expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Other income |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
% |
| Derivative expense |
|
|
(70,000 |
) |
|
|
- |
|
|
|
(70,000 |
) |
|
|
|
% |
| Interest income
(expense), net |
|
|
(11,115 |
) |
|
|
(5,486 |
) |
|
|
5,629 |
|
|
|
102.6 |
% |
| Total other
(expense) |
|
|
(81,115 |
) |
|
|
(5,486 |
) |
|
|
75,629 |
|
|
|
1378.6 |
% |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net loss |
|
$ |
(762,990 |
) |
|
$ |
(501,920 |
) |
|
$ |
(261,070 |
) |
|
|
52.0 |
% |
| |
|
Nine
Months Ended
September
30,
|
|
|
Change |
|
| |
|
2022 |
|
|
2021 |
|
|
Dollars |
|
|
Percentage |
|
| |
|
|
|
|
|
|
|
|
|
| Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Research and
development |
|
$ |
900,426 |
|
|
$ |
1,224,400 |
|
|
$ |
(323,974 |
) |
|
|
-26.5 |
% |
| Marketing & Advertising |
|
|
44,101 |
|
|
|
535,756 |
|
|
|
(491,655 |
) |
|
|
-91.8 |
% |
| Salaries and benefits |
|
|
383,953 |
|
|
|
341,340 |
|
|
|
42,613 |
|
|
|
12.5 |
% |
| General and
administrative |
|
|
822,326 |
|
|
|
93,838 |
|
|
|
728,488 |
|
|
|
776.3 |
% |
| Total operating
expenses |
|
|
2,150,806 |
|
|
|
2,195,334 |
|
|
|
(44,528 |
) |
|
|
-2.0 |
% |
| Loss from
operations |
|
|
(2,150,806 |
) |
|
|
(2,195,334 |
) |
|
|
(44,528 |
) |
|
|
-2.0 |
% |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Other (income) expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Other income |
|
|
30,000 |
|
|
|
- |
|
|
|
30,000 |
|
|
|
- |
% |
| Derivative expense |
|
|
(70,000 |
) |
|
|
- |
|
|
|
(70,000 |
) |
|
|
- |
% |
| Interest income
(expense), net |
|
|
8,427 |
|
|
|
(8,389 |
) |
|
|
(16,816 |
) |
|
|
200.5 |
% |
| Total other
(expense) |
|
|
(31,573 |
) |
|
|
(8,389 |
) |
|
|
(23,184 |
) |
|
|
276.5 |
% |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net loss |
|
$ |
(2,182,379 |
) |
|
$ |
(2,203,723 |
) |
|
$ |
(21,344 |
) |
|
|
-1.0 |
% |
Operating expenses
Research
and development expenses
Research
and development costs are expensed as incurred. Our research and
development expenses consisted primarily of direct costs associated
with our COVID-19 Brazilian EOM613 clinical trial incurred by third
party clinical research organizations, other medical institutions
involved in ongoing trial activity, third party contract research
organizations involved in further research and drug development as
well as manufacturing efforts. It also includes costs associated
with EOM613’s ongoing animal studies. The table below details our
research and development costs for the three and nine-month periods
ended September 30, 2022 and 2021 attributable to each facet of our
drug development process for our two drug candidates.
| |
|
Three
Months Ended
September
30,
|
|
|
Nine
Months Ended
September
30,
|
|
| |
|
2022 |
|
|
2021 |
|
|
Change |
|
|
2022 |
|
|
2021 |
|
|
Change |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and Development: |
|
$ |
332,503 |
|
|
$ |
315,435 |
|
|
$ |
17,068 |
|
|
$ |
900,426 |
|
|
$ |
1,224,400 |
|
|
$ |
(323,974 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| EOM613 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Animal studies |
|
|
84,966 |
|
|
|
- |
|
|
|
84,966 |
|
|
|
183,437 |
|
|
|
- |
|
|
|
183,437 |
|
| Clinical trials |
|
|
- |
|
|
|
268,531 |
|
|
|
(268,531 |
) |
|
|
278,872 |
|
|
|
860,691 |
|
|
|
(581,819 |
) |
| Drug
development |
|
|
16,890 |
|
|
|
46,904 |
|
|
|
(30,014 |
) |
|
|
58,770 |
|
|
|
363,709 |
|
|
|
(304,939 |
) |
| |
|
|
101,856 |
|
|
|
315,435 |
|
|
|
(213,579 |
) |
|
|
521,079 |
|
|
|
1,224,400 |
|
|
|
(703,321 |
) |
| EOM147 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Animal studies |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
| Drug
development |
|
|
230,647 |
|
|
|
- |
|
|
|
230,647 |
|
|
|
379,347 |
|
|
|
- |
|
|
|
379,347 |
|
| |
|
|
230,647 |
|
|
|
- |
|
|
|
230,647 |
|
|
|
379,347 |
|
|
|
- |
|
|
|
379,347 |
|
| |
|
$ |
332,503 |
|
|
$ |
315,435 |
|
|
$ |
17,068 |
|
|
$ |
900,426 |
|
|
$ |
1,224,400 |
|
|
$ |
(323,974 |
) |
General
and administrative expenses
General
and administrative expense consists primarily of professional fees
for legal and accounting services as well as other operating
expenses including insurance costs.
Marketing
and Advertising
Marketing
and advertising costs are expensed as incurred and relate primarily
to costs associated with developing our corporate website, investor
relations and presentations, traditional and social media,
corporate branding and messaging, and strategic communications and
business development plans.
Components
of Results of Operations for the Three-Months Ended September 30,
2022 and September 30, 2021
Operating expenses
Research
and development expenses
For
the three months ended September 30, 2022, we recorded $332,503 of
research and development expenses compared to $315,435 for the
comparative three-month period ended September 30, 2021. The slight
increase of $17,068 during the three-month period ended September
30, 2022 related principally to a decrease of $268,531 in drug
development and clinical trial costs associated with EOM613’s
clinical trial in Brazil that was offset by an increase of $84,966
in costs associated with multiple animal toxicology and dosing
studies as compared to the three-month period ended September 30,
2021. This was further offset by an increase of $230,647 associated
with continued research and development costs attributable to our
retinal drug EOM147 incurred during the three-month period ended
September 30, 2022.
General
and administrative expenses
For
the three-month period ended September 30, 2022, we incurred
$223,117 of general and administrative expenses compared to $48,117
for the three-month period ended September 30, 2021 for an increase
of $175,000 over the comparative three-month period. The increase
in general and administrative expense for the three-month period
ended September 30, 2022 compared to the three-month period ended
September 30, 2021 is principally attributable to an increase in
professional fees including legal, accounting and investment
banking costs associated with the Company’s public company status
and regulatory filings in the amount of $52,551 as well as an
increase in overall insurance costs of $75,749, and $46,700 of
other general and administrative costs.
Salaries
and Benefits
For
the three-month periods ended September 30, 2022, and 2021 we
incurred $124,655 and $109,674, respectively, of salary and
benefits costs or an increase of $14,981 period over period. The
slight increase during the three-month period ended September 30,
2022 was primarily attributable to an increase in salary and
benefits for management personnel starting in February
2022.
Marketing
and Advertising
Marketing
and advertising costs for the three-month periods ended September
30, 2022, and 2021 amounted to $1,600 and $23,208, respectively, or
a decrease of $21,608. The decrease during the three-month period
ended September 30, 2022 as compared to the three-month period
ended September 30, 2021 was entirely attributable to a reduction
in advertising and marketing costs associated with our drug
products including a reduction in corporate messaging and
presentation materials.
Other income (expenses)
Interest
income (expense), net
For
the three-month period ended September 30, 2022, we recorded
$11,115 of net interest expense compared to $5,486 of net interest
expense for the comparative three-month period ended September 30,
2021. The increase of $5,629 in net interest expense is comprised
of $41,715 of interest income attributable to the amortization of
debt premium on our Convertible Promissory Note and $178 of other
interest income, offset by accrued interest of $33,771 and debt
discount of $7,856 on our Convertible Promissory Note, accrued
interest of $2,399 and debt discount of $7,561 on our unrelated
Mandatory Convertible Notes and other interest expense of $1,421
compared to $5,486 of interest expense during the three-months
ended September 30, 2021 attributable entirely to our Bridge Loan
facility. During the three-month period ended September 30, 2022,
we recognized $70,000 of derivative expense on our Mandatory
Convertible Notes compared to $-0-for the three-month period ended
September 30, 2021.
Components
of Results of Operations for the Nine-Months Ended September 30,
2022 and September 30, 2021
Operating expenses
Research
and development expenses
For
the nine months ended September 30, 2022, we recorded $900,426 of
research and development expenses compared to $1,224,400 for the
comparative nine-month period ended September 30, 2021. The
decrease of $323,974 during the nine-month period ended September
30, 2022 related principally to decreases of $304,939 and $581,819
respectively in drug development and clinical trial costs
associated with EOM613’s clinical trial in Brazil which commenced
in the second quarter, 2021, offset by increases of $183,437 for
EOM613’s animal studies and $379,347 of research and development
costs incurred during the nine-month period ended September 30,
2022 attributable to our retinal drug EOM147 as compared to $-0-
for the nine-month period ended September 30, 2021.
General
and administrative expenses
For
the nine-month period ended September 30, 2022, we incurred
$822,326 of general and administrative expenses compared to $93,838
for the nine-month period ended September 30, 2021 for an increase
of $728,488 over the comparative nine-month period. The increase in
general and administrative expense for the nine-month period ended
September 30, 2022 compared to the nine-month period ended
September 30, 2021 is principally attributable to an increase in
professional fees including legal, accounting and investment
banking costs in the amount of $431,625 attributable to our public
company status including regulatory costs, and increases in
insurance and other general and administrative costs of $205,186
and $91,677 respectively.
Salaries
and Benefits
For
the nine-month periods ended September 30, 2022 and 2021 we
incurred $383,953 and $341,340, respectively, of salary and
benefits costs or an increase of $42,613 period over period. The
increase during the nine-month period ended September 30, 2022 was
primarily attributable to an increase in salary and benefits for
management personnel starting in February 2022 versus eight months
of reduced salary and benefit costs during the nine-month period
ended September 30, 2021.
Marketing
and Advertising
Marketing
and advertising costs for the nine-month periods ended September
30, 2022 and 2021 amounted to $44,101 and $535,756, respectively,
or a decrease of $491,655. The decrease during the nine-month
period ended September 30, 2022 as compared to the nine-month
period ended September 30, 2021 was entirely attributable to a
significant reduction in advertising and marketing costs associated
with our drug products including a reduction in corporate messaging
and presentation materials.
Other income (expenses)
Interest
income (expense), net
For
the nine-month period ended September 30, 2022, we recorded $8,427
of net interest income compared to $8,389 of net interest expense
for the comparative nine-month period ended September 30, 2021 for
an increase of $16,816 in net interest income. The increase in net
interest income is comprised of $124,243 of interest income
attributable to the amortization of debt premium on our Convertible
Promissory Note and $1,338 of other interest income, offset by
accrued interest of $95,792 and debt discount of $7,856 on our
Convertible Promissory Note, accrued interest of $2,399 and debt
discount of $7,561 on our unrelated Mandatory Convertible Notes and
other interest expense of $3,546 compared to $8,389 of net interest
expense during the nine months ended September 30, 2021
attributable entirely to our Bridge Note Facility. During the
nine-month period ended September 30, 2022, we recognized $30,000
in other income and $70,000 in derivative expense compared to $-0-
and $-0- for the nine-month period ended September 30,
2021.
Cash
Flow Summary for the Nine-Month Periods Ended September 30, 2022
and September 30 2021
The
following table shows a summary of our cash flows for each of the
periods shown below:
|
|
|
Nine Months Ended |
|
|
|
|
September
30,
2022
|
|
|
September
30,
2021
|
|
| |
|
|
|
|
|
|
|
Net cash used in operating activities |
|
$ |
(1,935,390 |
) |
|
$ |
(1,455,832 |
) |
|
Net cash provided by financing activities |
|
|
1,000,000
|
|
|
|
1,205,124 |
|
|
Net increase (decrease) in cash |
|
$ |
(935,390 |
) |
|
$ |
(250,708 |
) |
Operating
activities
During
the nine-month period ended September 30, 2022, operating
activities used $1,935,390 of cash, primarily resulting from a net
loss of $2,182,379 decreased by an increase in prepaid expenses in
the amount of $16,541, an increase of $269,275 in accounts payable
and accrued expenses offset by $108,827 in amortization of net debt
premium on our Convertible Promissory Note and an increase of
$70,000 in derivative expense.
During
the nine-month period ended September 30, 2021, operating
activities used $1,455,832 of cash, primarily resulting from a net
loss of $2,203,723 decreased by an increase of $750,322 in accounts
payable and accrued expenses reduced by a decrease in prepaid
expenses of $2,431.
Investing
activities
During
the nine-month periods ended September 30, 2022 and September 30,
2021, there were no investing activities.
Financing
activities
During
the nine-month period ended September 30, 2022, $1,000,000 of funds
were provided by financing activities in connection with $750,000
of proceeds received from our issuance of Mandatory Convertible
Notes and $250,000 of additional funds borrowed under our related
party Convertible Promissory Note. During the nine-month period
ended September 30, 2021, $1,201,399 of funds were provided in
connection with the related party Bridge Note facility and $3,725
of funds were provided by a stock subscription
receivable.
Commitments
and Contingencies
See
Note 8, Commitments and Contingencies, of the notes to our
unaudited interim condensed consolidated financial statements for
the nine-month periods ended September 30, 2022 and 2021 and Note 9
to our audited consolidated financial statements as of and for the
year ended December 31, 2021, and for the period from March 27,
2020 (Inception) through December 31, 2020 included elsewhere for
further discussion of our contractual obligations.
Results
of operations for the year ended December 31, 2021 and the period
from March 27, 2020 (Inception) through December 31,
2020
The
following table sets forth our statements of operations data for
the following periods:
|
|
|
|
|
|
Change |
|
|
|
|
Year
Ended
December
31,
2021
|
|
|
Period
from
March
27, 2020 (Inception) To
December
31,
2020
|
|
|
Dollars |
|
|
Percentage |
|
| |
|
|
|
|
|
|
|
|
|
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and development |
|
$ |
1,301,437 |
|
|
$ |
696,718 |
|
|
$ |
604,719 |
|
|
|
87 |
% |
|
General and administrative |
|
|
308,433 |
|
|
|
107,968 |
|
|
|
200,465 |
|
|
|
186 |
% |
|
Salaries and benefits |
|
|
449,567 |
|
|
|
174,306 |
|
|
|
275,261 |
|
|
|
158 |
% |
|
Marketing & Advertising |
|
|
554,025 |
|
|
|
474,000 |
|
|
|
80,025 |
|
|
|
17 |
% |
|
Total operating expenses |
|
|
2,613,462 |
|
|
|
1,452,992 |
|
|
|
1,160,470 |
|
|
|
80 |
% |
|
Loss from operations |
|
|
(2,613,462 |
) |
|
|
(1,452,992 |
) |
|
|
1,160,470 |
|
|
|
80 |
% |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Other
(income) expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense, net |
|
|
8,462 |
|
|
|
- |
|
|
|
(8,462 |
) |
|
|
- |
% |
|
Loss on debt extinguishment |
|
|
2,527,078 |
|
|
|
- |
|
|
|
(2,527,078 |
) |
|
|
- |
% |
|
Total other (expense) |
|
|
(2,535,540 |
) |
|
|
- |
|
|
|
(2,535,540 |
) |
|
|
- |
% |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(5,149,002 |
) |
|
$ |
(1,452,992 |
) |
|
$ |
3,696,010 |
|
|
|
254 |
% |
Operating expenses
Research
and development expenses
For
the year ended December 31, 2021, we recorded $1,301,437 of
research and development expenses compared to $696,718 for the
period from March 27, 2020 (Inception) through December 31, 2020.
The increase of $604,719 related entirely to an increase in
clinical trial and drug development expenses in connection with our
EOM613 Phase 1/2a open-label clinical trial in Brazil including
$465,685 of CRO costs associated with the commencement of the above
clinical trial. No material drug development costs for EOM147 were
incurred either during the year ended December 31, 2021, or for the
period from March 27, 2020 (Inception) through December 31,
2020.
General
and administrative expenses
For
the year ended December 31, 2021, we incurred $308,433 of general
and administrative expenses compared to $107,968 for the period
from March 27, 2020 (Inception) through December 31, 2020. The
increase of $200,465 related to an increase in professional fees
including legal, accounting and investment banking costs in the
amount of $204,663, reduced by a decrease in other general and
administrative costs of $14,542 increased by $10,344 in general and
trial insurance expense.
Salaries
and Benefits
For
the year ended December 31, 2021, we incurred $449,567 of salaries
and benefit expense compared to $174,306 for the period from March
27, 2020 (Inception) through December 31, 2020. The increase of
$275,261 was entirely attributable to additional management
personnel commencing in January 1, 2021 combined with a full year
versus eight months of costs.
Marketing
and Advertising
Marketing
and advertising costs for the year ended December 31, 2021, and the
period from March 27, 2020 (Inception) through December 21, 2020
were $554,025 and $474,000 respectively. The increase of $80,025
for the year ended December 31, 2021, as compared to the period
from March 27, 2020 (Inception) through December 31, 2020 was
attributable to additional marketing and corporate messaging
services in advance of and during our COVID-19 Brazilian clinical
trial.
Other (income) expenses
Interest
expense, net
For
the year ended December 31, 2021, we recorded $8,462 of net
interest expense compared to $-0- for the period from March 27,
2020 (Inception) through December 31, 2020. The increase of $8,462,
is net of $17,224 of interest income attributable to the
amortization of debt premium on our November 24, 2021 Convertible
Promissory Note and $13 of other interest income offset by an
increase in accrued interest of $12,815 on our April 7, 2021,
Bridge Note facility, and $12,884 of accrued interest on our
Convertible Promissory Note.
Loss
on Debt Extinguishment
For
the year ended December 31, 2021 we recorded a loss of $2,527,078
on the extinguishment of our related party Bridge Note Facility
compared to $-0- for the period from March 27, 2020 (Inception)
through December 31, 2020.
Liquidity
and Capital Resources
We
have generated no revenues, have incurred operating losses since
inception, and expect to continue to incur significant operating
losses for the foreseeable future and may never become profitable.
We have an accumulated deficit of $8,784,373 as of September 30,
2022, and future losses are anticipated. These factors, among
others, raise substantial doubt as to our ability to obtain
additional debt or equity financing and our ability to continue as
a going concern. Until such time as we are able to establish a
revenue stream from the sale of our therapeutic products, we are
dependent upon obtaining necessary equity and/or debt financing to
continue operations. We cannot make any assurances that sales of
our drug products will commence in the near term or that additional
financings will be available to us and, if available, on acceptable
terms or at all. To date, we have been funded primarily by the
majority shareholder’s family and debt issued to an unrelated
party. There can be no assurance that the majority shareholder’s
family will continue to fund our operations on favorable terms or
at all or that we will be successful in borrowing additional funds
on other favorable terms or at all. Moreover, there can be no
assurance that we will be able to secure the necessary debt or
equity financings to continue our drug development and clinical
trial plans at all or on terms acceptable to us. This could
negatively impact our business and operations and could also lead
to the reduction of our business and drug development operations.
Consequently, the accompanying financial statements have been
prepared on a going concern basis, which contemplates the
realization of assets and the satisfaction of liabilities in the
normal course of business. Accordingly, there are material risks
and uncertainties that raise substantial doubt about our ability to
continue as a going concern within one year from the date these
financial statements are available to be issued. These financial
statements do not include any adjustments relating to the recovery
of recorded assets or the classification of the liabilities that
might be necessary should we be unable to continue as a going
concern.
On
November 24, 2021, we issued a Convertible Promissory Note (the
“Note”) in the amount of up to $5.0 million to a related party
principal stockholder. Under the terms of Note, the related party
stockholder advanced $1 million to the Company immediately prior to
closing and committed to provide additional funding up to an
additional $2.5 million over the two-year term of the Note. The
Note has an interest rate of 5% and is payable semi-annually
without prepayment penalty. Under the terms of the Note, the
related party agreed to transfer the amount due under the Bridge
Note Facility of $1,501,399 to the principal of the Note with the
Bridge Note Facility becoming null and void. At Merger closing, the
then-principal amount due under the Note amounted to $2,501,399
which included the unpaid principal amount of the Bridge Note
Facility of $1,501,399 and the $1,000,000 advanced under the Note.
The Note is convertible into common stock of the Company at any
time at the option of the holder thereof at an initial price of
$1.30 per share, the agreed upon pre-merger value of EOM. As a
result of the merger, the conversion price was subsequently
adjusted to $0.60, which equals the pre-close price of our common
stock as traded on the Pink Sheets of the OTC Markets. The number
of shares the Convertible Promissory Note is exchangeable into was
also adjusted to the pre-closing price of $0.60 per share for a
total of 4,168,998 shares of common stock. The conversion price
will be adjusted further in the event of stock splits, stock
dividends and other similar transactions.
The
Note also provides us the right, but not the obligation, to prepay
up to 25% of the principal amount of the outstanding balance in the
event we receive gross proceeds of no less than $10 million from
the sale of common stock.
To
date, the Company issued 5% Mandatory Convertible Promissory Notes
(the “Notes”) to an unrelated party for an aggregate principal
amount of $910,000. The Notes have a two-year term and mature on
various dates between August thru November 2024. The Notes require
interest to be paid semi-annually at a 5% rate and are mandatorily
convertible in the Company’s common stock at a 20% discount to a
Qualified Financing. As defined under the Notes, a Qualified
Financing means the underwritten public offering of the Company’s
common stock resulting in an amount no less than $10 million in
gross proceeds to the Company. The Notes are not prepayable without
the holder’s consent.
Cash
Flow Summary for the year ended December 31, 2021 and from March
27, 2020 (Inception) to December 31, 2020
The
following table shows a summary of our cash flows for each of the
periods shown below:
|
|
|
Year
Ending
December
31,
2021
|
|
|
Period
from
March
27, 2020
(Inception)
to
December
31,
2020
|
|
| |
|
|
|
|
Net cash used in operating activities |
|
$ |
(2,306,385 |
) |
|
$ |
(1,237,021 |
) |
|
Net cash provided by financing activities |
|
|
3,529,972 |
|
|
|
1,500,000 |
|
|
Net increase (decrease) in cash |
|
$ |
1,223,587 |
|
|
$ |
262,979 |
|
Operating
activities
During
the year ended December 31, 2021, operating activities used
$2,306,385 of cash, primarily resulting from a net loss of
$5,149,002 decreased by an increase in prepaid expenses in the
amount of $13,372, an increase in loss on debt extinguishment of
$2,527,078, an increase of $319,391 in accounts payable and accrued
expenses offset by an increase in amortization of debt premium of
$17,224 on our Convertible Promissory Note.
During
the period from March 27, 2020 (Inception) to December 31, 2020,
operating activities used $1,237,021 of cash, primarily resulting
from a net loss of $1,452,992, decreased by a non-cash charge of
$78,843 from the issuance of Founders stock in exchange for
intellectual property, and an increase of $137,128 in accounts
payable and accrued expenses.
Investing
activities
During
the year ended December 31, 2021, and for the period from March 27,
2020 (Inception) to December 31, 2020 there were no investing
activities.
Financing
activities
During
the year ended December 31, 2021, financing activities provided
$3,529,972 of cash, principally from $1,501,399 of funds borrowed
under the April 7, 2021 Bridge Note facility, $1,000,000 of funds
borrowed under the November 24, 2021 related party Convertible
Promissory Note, 1,024,848 of cash, net of transaction costs in
connection with our Merger with EOM Pharmaceuticals Inc. on
December 1, 2021, and $3,725 from the payment of previously issued
Founders shares.
During
the period from March 27, 2020 (Inception) through December 31,
2020, financing activities provided $1,500,000 of cash solely from
the issuance of Founder’s shares.
Critical
Accounting Policies and Significant Judgments and
Estimates
Our
management’s discussion and analysis of its financial condition and
results of operations is based on its financial statements, which
have been prepared in accordance with GAAP. The preparation of our
consolidated financial statements requires us to make estimates,
judgments and assumptions that affect the reported amounts of
assets and liabilities, disclosure of contingent assets and
liabilities as of the date of the balance sheet and the reported
amounts of expenses during the reporting period. In accordance with
GAAP, we the evaluate our estimates and judgments on an ongoing
basis. The most significant estimates relate to the valuation
allowance of deferred tax assets resulting from net operating
losses as well as the determination of the fair value and debt
premium on our Convertible Promissory Note. We base our estimates
and assumptions on current facts, historical experiences, and
various other factors that the Company believes are reasonable
under the circumstances, the results of which form the basis for
making judgments about the carrying value of assets and liabilities
that are not readily apparent from other sources. Actual results
may differ from these estimates under different assumptions or
conditions.
We
define our critical accounting policies as those accounting
principles that require it to make subjective estimates and
judgments about matters that are uncertain and are likely to have a
material impact on its financial condition and results of
operations, as well as the specific manner in which we apply those
principles. While our significant accounting policies are more
fully described in Note 1 to our audited consolidated financial
statements, we believe the following are the critical accounting
policies used in the preparation of our financial statements that
require significant estimates and judgments.
Research and Development Expenses
Research
and development costs include costs incurred for external research
and development activities to develop drug candidates and are
expensed as incurred in the accompanying statement of operations.
Research and development costs consist of, when applicable,
external laboratory supplies and facility costs, as well as fees
paid to third party entities that conduct certain research and
development activities on our behalf.
We
record accrued liabilities for incurred cost of research and
development activities conducted by service providers, which
include activities under agreements with various Contract Research
Organizations for preclinical and clinical studies and contract
manufacturing activities. We record the costs of research and
development activities based upon the number of services provided
and includes these costs in accrued and other current liabilities
in the accompanying balance sheet and within research and
development expense in the accompanying interim condensed statement
of operations.
Derivative Accounting
The
Company analyzes the conversion feature of its Mandatory
Convertible Notes for derivative accounting consideration under ASC
815-15 “Derivatives and Hedging.” ASC 815-15 requires that the
conversion features are bifurcated and separately accounted for as
an embedded derivative contained in the Company’s convertible debt.
The embedded derivative is carried on the balance sheet at fair
value. Any unrealized change in fair value, as determined at each
measurement period, is recorded as a component of the statement of
operations and the associated carrying amount on the balance sheet
is adjusted by the change.
Net
Loss per Share of Common Stock
Basic
net loss per common share is calculated by dividing the net loss
attributable to common stockholders by the weighted-average number
of common shares outstanding during the period, without
consideration for potentially dilutive securities. Diluted net loss
per share is computed by dividing the net loss attributable to
common stockholders by the weighted-average number of common shares
and potentially dilutive securities outstanding for the period. For
purposes of the diluted net loss per share calculation, stock
options and restricted stock units are considered to be potentially
dilutive securities. Because we have reported a net loss for the
three and nine month periods ended September 30, 2022 and September
30, 2021 as well as for the year ended December 31, 2021, and for
the period from March 27, 2020 (Inception) through December 31,
2020, diluted net loss per common share is the same as basic net
loss per common share for these periods.
Warrants
The
Company assesses its warrants as either equity or a liability based
upon the characteristics and provisions of each instrument.
Warrants classified as equity are recorded at fair value as of the
date of issuance on the Company’s balance sheet and no further
adjustments to their valuation are made. Warrants classified as
derivative liabilities and other derivative financial instruments
that require separate accounting as liabilities are recorded on the
Company’s balance sheet at their fair value on the date of issuance
and are re-measured on each subsequent balance sheet date until
such instruments are exercised or expire, with any changes in the
fair value between reporting periods recorded as other income or
expense. Management estimates the fair value of these liabilities
using option pricing models and assumptions that are based on the
individual characteristics of the warrants or other instruments on
the valuation date, as well as assumptions for future financings,
expected volatility, expected life, yield and risk-free interest
rate. As of September 30, 2022 and September 30, 2021, all
outstanding warrants issued by the Company were classified as
equity.
Recently Issued Accounting Pronouncements
From
time to time, new accounting pronouncements are issued by the
Financial Accounting Standards Board, or FASB, or other standard
setting bodies and adopted by us as of the specified effective
date. Unless otherwise discussed, the impact of recently issued
standards that are not yet effective is not expected to have a
material impact on our financial position or results of operations
upon adoption.
In
February 2016, the Financial Accounting Standards Board (FASB)
issued ASU 2016-02, Leases (Topic 842), with guidance
regarding the accounting for and disclosure of leases. The update
requires lessees to recognize the liabilities related all leases,
including operating leases, with a term greater than 12 months on
the balance sheet. This update also requires lessees and lessors to
disclose key information about their leasing transactions. This
guidance will be effective for public companies for annual and
interim periods beginning after December 15, 2018. For all other
entities, this standard is effective for annual reporting periods
beginning after December 15, 2021, early adoption is permitted. We
adopted Topic 842 effective January 1, 2022. As we had no lease
obligations as of December 31, 2021 there was no impact on our
consolidated financial statements or financial statement
disclosures.
In
December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic
740): Simplifying the Accounting for Income Taxes. This guidance is
intended to improve consistent application and simplify the
accounting for income taxes. This ASU removes certain exceptions to
the general principles in Topic 740 and clarifies and amends
existing guidance. This standard is effective for annual reporting
periods beginning after December 15, 2020, including interim
reporting periods within those annual reporting periods, with early
adoption permitted. We have adopted ASU No. 2019-12 for the
calendar year ended December 31, 2021, with such adoption having no
material impact on our consolidated financial
statements.
In
August 2020, the FASB issued ASU No. 2020-06, Debt with
Conversion and Other Options (Subtopic 470-20) and Derivatives and
Hedging-Contracts in Entity’s Own Equity (Subtopic
815-40)-Accounting For Convertible Instruments and Contracts in an
Entity’s Own Equity. The ASU simplifies accounting for
convertible instruments by removing major separation models
required under current GAAP. Consequently, more convertible debt
instruments will be reported as a single liability instrument with
no separate accounting for embedded conversion features. The ASU
removes certain settlement conditions that are required for equity
contracts to qualify for the derivative scope exception, which will
permit more equity contracts to qualify for it. The ASU also
simplifies the diluted net income per share calculation in certain
areas. The new guidance is effective for annual and interim periods
beginning after December 15, 2021, and early adoption is permitted
for fiscal years beginning after December 15, 2020, and interim
periods within those fiscal years. We adopted ASU 2020-06 effective
January 1, 2021. The adoption of ASU 2020-06 did not have a
material impact on our consolidated financial
statements.
BUSINESS
Summary
We
are a clinical-stage pharmaceutical company focused on the
development of therapeutics and delivery technologies for the
treatment of inflammatory conditions and ocular disease. Our
development pipeline consists of multiple programs and clinical
indications at various stages of development.
Our
lead clinical asset is EOM613 solution, a broad spectrum
immunomodulator investigational product, and, based on past
clinical data, that we believe to have both anti-inflammatory and
pro-inflammatory effects on cytokines and chemokines. In cell
culture studies, EOM613 modulates a number of clinically important
cytokines and chemokines, including IL-2, IL-6, IL-10, IL-12 MCP-1,
TNF-alpha and interferon-gamma. This drug product is currently
being evaluated in a multicenter, open-label Phase 1/2a clinical
trial in Brazil to treat hospitalized COVID-19 patients who have
the deleterious “cytokine storm”- related hyperimmune response to
viral infection. Additional subsequent studies are being planned to
assess the drug product’s potential to improve the quality of life
for persons with debilitating and potentially fatal diseases such
as rheumatoid arthritis, and cachexia associated with advanced AIDS
and cancers. We believe that these are clinical conditions with
enormous market potential. An immunomodulator drug candidate such
as EOM613 also has potential in the treatment of a number of
autoimmune disorders, where the immune system of certain
individuals is dysregulated and aberrant.
Our
second clinical stage asset, EOM147, a new formulation of topical
Squalamine Lactate solution eye drops. It is a novel therapeutic
product which could provide a non-invasive therapy to improve
vision outcomes beyond that achieved with current standard of care,
or without requiring multiple intraocular injections directly into
the eye for a variety of retinal disorders.
We
intend to conduct trials in 2023 with newly enhanced formulation of
Squalamine Lactate eye drops for the treatment of wet-AMD as well
for diabetic retinopathies and retinal vein occlusions. EOM147 is
an improved, enhanced formulation; designed to provide greater
squalamine concentrations as well as enhanced ocular retention and
retinal retention uptake from front-of-the eye application as an
eye drop. The new formulation utilizes FDA-approved additives to
enhance absorption, through the use of our proprietary in-house
technology. The new eye drop formulations will be subjected to
preclinical evaluations for ocular uptake and safety and toxicology
studies in order to corroborate their
tolerability displayed by the prior formulations of
squalamine lactate based on the data from a Phase 2 clinical trial
in wet-AMD which demonstrated a positive and clinically meaningful
treatment effect of a 0.2% w/v Squalamine solution combination
therapy in classic containing choroidal neovascularization (classic
CNV) as well as those with occult neovascularization (occult CNV)
less than 10mm2. Additional proof-of concept
investigator-initiated trials were also previously completed with
the 0.2% w/v squalamine drug product for other serious retinal
disorders that lead to blindness, such as in proliferative diabetic
retinopathy and in retinal vein occlusions with visual acuity
benefits seen consistent with inhibition of retinal
neovascularization. Once the safety of the novel formulations has
been established in these preclinical animal studies, we expect to
be able to proceed with our ophthalmological clinical
trials.
We
envision conducting future Phase II trials with a new formulation
of EOM147 in wet AMD in India, and in macular edema secondary to
diabetic retinopathies in India and Mexico, together with trials in
retinal vein occlusions and in proliferative diabetic retinopathy
in the US. We further intend to conduct future Phase II trials with
a new formulation of EOM147 in wet AMD in India, and in macular
edema secondary to diabetic retinopathies in India and Mexico,
together with trials in retinal vein occlusions and in
proliferative diabetic retinopathy in the US.
Product
Pipeline
EOM613 Solution for Injection
We
acquired
EOM613 from Neubase Therapeutics, the successor company to OHR
Pharmaceutical, Inc., which had previously developed the drug
product (under the name OHR/AVR118 solution) for the treatment of
AIDS and cancer cachexia. The rights to the EOM613 INDs 62994 and
69518 and related data related to the drug product were transferred
by Neubase Pharmaceuticals to Dr. Shalom Hirschman, one of our
co-founders, on May 22, 2020. He transferred the rights over to us
in exchange for Founder’s stock having a value of $78,843. No
monetary exchanges occurred for these transactions. No unexpired
patents or other intellectual property were transferred.
Cachexia
is the wasting syndrome in advanced cancer and AIDS patients that
leads to severe muscle wasting and debilitation. It is largely
driven by release of deleterious pro-inflammatory biochemical
molecules called cytokines and chemokines that are released within
the body as a result of these clinical conditions.
EOM613
is a peptide nucleic acid solution that we believe to have both
pro- and anti-inflammatory effects on cytokines and chemokines. In
human cell line culture studies, EOM613 has demonstrated a unique
“dynamic dual action” by suppressing or stimulating monocytes or
macrophages, based upon the specific activation state and specific
bodily environment of those immune cells. We believe that this
dynamic dual action may overcome a limitation of many approved
immunomodulators that only reduce the inflammatory state, without
restoring a state of immune balance. Therefore, other classes of
drugs such as corticosteroids suppress the immune system to such a
degree that they can open the body up to secondary infections while
suppressing inflammation. (S.Z. Hirchman, Advances in Bioscience
and Biotechnology 5 (2014) 161-168).
EOM613
(previously known as Reticulose, Product R, OHR118 and AVR118), is
an investigational, dynamically dual-acting immunomodulator. EOM613
is a peptide-nucleic acid (PNA) mixture containing two peptides and
13 nucleotides/nucleosides – a synthetic analog comprised of
nucleobases arrayed along a pseudopeptide backbone. It combines the
power of nucleic acids to encode information with the versatility
of amino acids to encode structure and function. Specifically,
peptide A has 31 amino acids, and peptide B has 21 amino acids with
diadenine dinucleotide attached.
While
the exact mechanism of action of EOM613 is not yet fully
understood, it appears to have both pro- and anti-inflammatory
effects depending on the activation state of immune cells,
consistent with the meaning of dynamic dual action. As noted above,
nucleic acid-based molecules are known to simultaneously mimic both
a peptide and a nucleic acid. Further, studies have shown that
modulation of the pathogenic T-cell response with antigen-specific
peptide immunotherapy offers the potential to restore the immune
homeostasis and prevent further tissue destruction. Studies of the
effect of EOM613 on the immune response are consistent with these
findings. The studies are reported from two separately published
reports of a series of in vitro human cell culture studies by
Lazzarino et al. and Hirschman. One of the studies by Lazzarino et
al. (D.A. Lazzrino, et al., Cytokine, 2001, 14:234-239)
showed that EOM613 enhanced the cytokines IL-8 and MCP-1 secretion
by unstimulated adherent PBMCs, but in lipopolysaccharide (“LPS”)
stimulated peripheral blood monocyte cells (PBMCs), it only
slightly increased the cytokine MCP-1 production. Therefore, the
action of EOM613 on cells of the immune system appears to be linked
to both the cell type and its specific state of
activation.
In
another study by Hirschman, (SZ Hirschman, Adv. Biosc. Biotechnol.,
5: 161-168) EOM613 stimulated a pro-inflammatory response of
increased IL-6 secretion by U937 cells (a cell line of myeloid
monocyte lineage) moderately activated with phorbol myristate
acetate (PMA). However, after those cells were further activated by
LPS, EOM613 produced an anti-inflammatory response by reducing IL-6
secretion.
In
activated U937 cell lines of a monocyte lineage, EOM613 induced an
anti-inflammatory phenotype, as indicated by reduced phagocytosis
and increased IL-10 chemokines including secretion. Other studies
showed the ability of EOM613 to upregulate or downregulate various
other cytokines and IL-6, Il-12, TNF-alpha and interferon gamma
based on the immune cell type and/or its activation
state.
This
dual immunomodulatory action exhibited by EOM613 based on the
specific activation status of the cells in the immune system may
offer us distinct advantages over conventional immunomodulator
drugs. Corticosteroid drugs, that are the usual mainstay today in
the physician’s arsenal to suppress hyperimmune reactions in the
body, suppress the immune system across the board in the entire
body. They therefore produce serious side-effects and may open the
patient to contracting serious secondary bacterial or fungal
infections upon prolonged therapy. By virtue of its novel dual
immune modulatory actions on both pro- and anti-inflammatory
cytokines and chemokines, EOM613 does not have this propensity, and
has been used clinically in the past, being well tolerated by
patients.
We
believe it has become increasingly clear that, while attenuating
the inflammatory response is necessary in treating many disorders –
and critical in patients suffering from cytokine storms associated
with COVID-19 – maintaining a balance of pro- and anti-inflammatory
action is also fundamentally important. Dynamically dual-acting
immunomodulators such as EOM613 can have an anti-inflammatory
effect specifically at the site of excessively overactive
pro-inflammatory cytokines and chemokines, and a pro-inflammatory
effect when needed to restore physiological balance or fight an
infection. Given the involvement of hyperinflammatory states in
many diseases and disorders (e.g., severe COVID-19, cancer- and
AIDS-associated cachexia, rheumatoid arthritis and other autoimmune
disorders, sepsis, and others), the potential use of dynamically
dual-acting immunomodulators such as EOM613 could be broad
indeed.
Past Clinical Trials of EOM613
EOM613
has a development program supported by previous early clinical
stage safety and efficacy data garnered in over 100 patients across
multiple therapeutic indications associated with hyperimmune
responses, including clinical trials in AIDS cachexia, cancer
cachexia and rheumatoid arthritis. The table below provides an
overview of previously concluded clinical trials with EOM613. In
past clinical trials, the drug product has been well-tolerated by
patients as a subcutaneous injection dosing. In the cancer cachexia
trials, dosing extended to 52 consecutive daily doses of
treatment.
|
DISEASE
SOURCE |
|
STUDY
TYPE AND DESIGN |
|
#
OF PATIENTS |
|
EFFICACY
FINDINGS |
|
SAFETY/TOLERABILITY
FINDINGS
|
|
HIV/AIDS1 |
|
● |
Phase
1/2, randomized, double-blind, placebo-controlled trial |
|
● |
43
(21 EOM613, 22 placebo) |
|
● |
CD4
lymphocyte counts increased vs baseline more in EOM613 group vs
placebo group (p=0.013) |
|
● |
EOM613
injections generally well tolerated
|
| |
|
● |
Conducted
in Barbados |
|
|
|
|
● |
4
EOM613 patients (but no placebo patients) had significant viral
load declines |
|
● |
Some
patients reported transient mild pain at injection site
|
| |
|
|
|
|
|
|
|
● |
Body
weight increased vs baseline in EOM613 group (p=0.003) whereas
placebo group had a mean weight loss (p=0.003 for group
difference) |
|
● |
No
toxic effects of EOM613 reported by patients or observed by
physicians |
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Rheumatoid
Arthritis (RA)2 |
|
● |
Phase
2, open-label trial |
|
● |
27
patients who met American College of Rheumatology criteria for mild
to moderately severe RA |
|
After
the 3 months of EOM613 therapy, all patients:
|
|
● |
No
major side effects observed or reported |
| |
|
● |
Patients
given EOM613 I mL twice daily for 15 days, then once daily for 75
days |
|
|
|
|
● |
Responded
with amelioration of symptoms
|
|
● |
All
patients considered tolerability as excellent |
| |
|
● |
Conducted
in Argentina |
|
|
|
|
● |
Had a
significant decreases in joint pain |
|
|
|
| |
|
|
|
|
|
|
|
● |
Had
increased mobility of the joints |
|
|
|
| |
|
|
|
|
|
|
|
● |
Showed
objective signs of decreased inflammation of affected
joints |
|
|
|
| |
|
|
|
|
|
|
|
● |
Considered
efficacy as excellent |
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Cancer
Cachexia3 |
|
● |
Phase
2, open-label trial |
|
● |
29
enrolled patients with advanced cancer and cachexia |
|
● |
Stabilization
of weight, lean body mass and body fat |
|
● |
EOM613
was well tolerated with minimal side effects |
| |
|
● |
Conducted
in Canada |
|
|
|
|
● |
Appetite
increased (p=0.00) and total PG-SGA scores improved significantly
(p=0.025) |
|
|
|
| |
|
|
|
|
|
|
|
● |
Enhanced
quality of life and Karnofsky Performance Status |
|
|
|
* In
these and other past reports, EOM613 has had other names, including
Product R, OHR118, AVR118, and OHR/AVR118.
HIV-1 (AIDS) Trial in Barbados
This
randomized, placebo-controlled trial was conducted by the company
that originally developed the drug product, Advanced Viral Research
Corporation at the University of West Indies School of Clinical
Medicine and Research, Queen Elizabeth Hospital, Bridgetown,
Barbados, between 2001-2002, with Dr. Paul N. Levett as the
Principal Investigator. HIV-1 positive patients naïve to any prior
retroviral treatments were randomized to receive EOM613 (then
referred to as Product R). A total of 43 patients were enrolled; 21
received Product R and 22 received placebo solution subcutaneously
injected. The dosage was two 1 mL solution injections daily on days
1-14, followed by 1 mL daily on days 22-28, days 36-42 and 50-56.
The follow-up period lasted until Day 120. The results of the study
indicated that mean CD4 lymphocyte counts increased in the drug
product-treated group was significant higher (p= 0.013) than in the
placebo-control group by the end of follow-up. Four of the
drug-treated patients experienced declines in viral load of >0.5
log., while none of the placebo-treated patients did. At the end of
the follow-up period, the Product R-treated patients experienced a
mean weight gain (p= 003) while the placebo group experienced a
mean weight loss. The number of deaths and opportunistic infections
were lower in the drug-treated group as compared to placebo group
(p=0.076). No drug-related toxic effects were reported, and the
drug product was generally well-tolerated with some patients
experiencing mild pain at the injection site. The study results
were published in the medical literature – P.N. Levett et
al., HIV Clin Trials, 2002, 3:272-278. The trial results were
sufficient to advance the product candidate to a subsequent
clinical trial for the indication being evaluated.
Rheumatoid Arthritis Exploratory Trial in
Argentina
An
open label pilot study in rheumatoid arthritis (RA) patients was
conducted at a rheumatology clinic in Buenos Aires, Argentina,
under the sponsorship of Advanced Viral Research Corporation in
1999-2000. A total of 27 patients, ranging in age from 29 to 50
years old, were recruited into the study, who had confirmed
diagnosis of mild to moderate RA of less than two years’ duration
and met the American College of Rheumatology criteria for that
stage of the disease. Most patients had impaired mobility of joints
in hands; three also had impaired joints in their feet. Patients
were treated with a 90-day treatment protocol, being given a
subcutaneous injection of Product R, 1 mL twice a day for the first
15 days, then 1 mL once a day for the subsequent 75 days. Patient
self-assessment for spontaneous pain at baseline were 7 reporting
no pain, 8 reporting mild pain and 12 reporting moderate pain. By
day 30 the scoring was 11 reporting no pain, 12 reporting mild pain
and 5 reporting moderate pain. On day 60, the scoring was 17
reporting no joint pain, 10 reporting mild pain and none reporting
moderate pain. At study’s end on Day 90, the scoring was 23
patients reporting no pain, and 4 with mild pain, with none
reporting moderate pain.
When
pain caused by applied pressure on the affected joints was
evaluated; likewise, there were improvements in pain scores as the
treatment progressed. At baseline none reported mild pain, 15
reported moderate pain and 12 reported severe pain. At Day 30, 11
reported mild pain, 15 reported moderate pain and one severe pain.
At day 60, the scoring was 15 reporting mild pan, 12 moderate pain
and none severe pain. At the study end on day 90, the score was 25
patients exhibiting mild pain and 2 moderate pain, with none
exhibiting severe pain. All patients also showed objective signs of
decreased inflammation of the affected joints as manifested by
joint tumefaction. Increased joint mobility was also evident upon
treatment.
The
drug product was well-tolerated, with only one patient reporting
pain at the site of injection on day 90, which lasted two days and
resolved by itself. The trial results were sufficient to advance
the product candidate to a subsequent clinical trial for the
indication being evaluated.
Phase II Cancer Cachexia Study
A
Phase II open label study of EOM613 (then known as AVR/OHR118) in
cancer-related anorexia-cachexia was conducted by Ohr
Pharmaceuticals, Inc. under a Health Canada IND at the McGill
University Cancer Center and the University of Ottawa Cancer
Center, under the stewardship of Dr. Martin Chasen, who served as
Principal Investigator. A total of 29 patients were enrolled in
this trial (NCT01206335), of which 18 completed the trial. The
trial’s purpose was to determine the safety and effects of
OHR/AVR118 on appetite and symptoms of anorexia-cachexia I patients
with advanced cancers. Primary outcome measures included Functional
Status/Quality of Life as measured by the Simmonds Functional
assessment, appetite and satiation as measured by patient-generated
subjective global assessment (PG-SGA) scoring, the Edmonton Symptom
assessment scale (ESAS), Dyspepsia symptom severity index (DSSI),
weight gain or stabilization and increase in lean body mass.
Inclusion criteria incorporated patients aged 18 through 85, with a
histologically confirmed solid tumor, lymphoma, leukemia or
multiple myeloma, with symptoms of recurrent or metastatic cancer
with anorexia and/or cachexia, a Karnofsky performance score of
>40%, a palliative prognostic score of <6, and a patient
expected to be able to remain on the protocol for at least 2
calendar months. Patients received a total of 4.0 mL of the drug
product in two daily subcutaneous doses of 2 mL each. Patients
received bimonthly evaluations during the initial 28-day treatment
period (Phase A). Patients who benefited from and chose to could
extend the treatment period to a second 28-day period (Phase B),
for a total of a 56-day drug treatment. Of the 29 enrolled
patients, 18 completed the protocol; 15 with Stage IV cancers and
three with Stage III cancers. Of the completed patients, there were
15 male and 3 female patients, 11 >65 years old and 7 in the age
group of 18-64. Of the 18 patients who completed the Phase 1
treatment period, 11 chose to extend treatment beyond the initial
28 days into the second 28-day treatment period. Eight of these 11
completed the Phase B treatment. A total of 7 patients remained on
active chemotherapy during the trial and one patient continue
radiation treatments.
At
Day 28, for the 18 patients completing the protocol, on the symptom
severity assessment ESAS scale, appetite scores decreased from a
mean of 7.2 at the baseline to a value of 5.8 (p<0.005). The
cumulative PGSGA score decreased from a mean value of 10.9 at the
baseline to a value of 7.7 (p = 0.025), indicating statistically
significant symptom improvement Overall DSSI scores improved from a
baseline value of 1.45 to 0.75 after 4 weeks. Mean total body
weights remained stable over the treatment period, going from 68.7
kg to 67.1 (p =0.83), without a marked cachectic weight loss being
seen; body fat likewise remained stable (29.8% at baseline versus
29.4 at Day 28, p=0.60). The BMI also remained stable, at 23.0 at
baseline versus 23.4 at Day 28, p=0.12). These results suggest that
weight stabilization and body composition stability is seen in the
anorexic-cachectic cancer patients with drug treatment at 28 days.
The Karnofsky performance status of the patients also remained
stable, being 68.3 at baseline and 67.2 at Day 28
(p=0.75).
In
the subgroup of patients who chose to continue the trial for the
extension period of additional 28 days, the mean body weight was
75.21 kg at baseline, 73.90 kg at Day 28 (p relative to baseline =
0.816), and 73.75 kg at study end (p relative to baseline=0.79),
once again suggesting weight stabilization in these cachectic
cancer patients. In the subgroup of patients who completed the full
56 days of treatment in Phase A and B, the Mean PGSA score improved
from a value of 10.5 at baseline to a score of 6.1 at Day 56
(p=0.05).
The
study investigators concluded that the drug treatment in Stage
III/Stage IV cachectic cancer patients resulted in stabilization of
body weight, BMI, body fat and Karnofsky scores. No rapid decline
over time was observed even in patients who continued to Phase B
and completed the extended 56 days of treatment. Such stabilization
was seen despite 8 of 18 patients still receiving chemotherapy or
radiation treatment. Statistically significant improvement was seen
in ESAS appetite and PG-SGA scores and stability was seen in the
Simmonds Functional Assessment scores.
The
drug product was well-tolerated by patients, with only mild
transient pain or discomfort at the injection site being
reported.
The
results of this study have been reported in the medical literature:
(M Chasen, et al., J. Am. Med. Dir. Assoc., 2011, 12:62-67.) and M.
Chasen, et al., J. Cachexia Sarcopenia Muscle, 2013, 4:335. The
trial results were sufficient to advance the product candidate to a
subsequent clinical trial for the indication being
evaluated.
Current Clinical Trial in Brazil in Hospitalized COVID-19
Patients
We
have contracted with a contracting manufacturing company, Pace
Laboratories, to manufacture EOM613 for clinical trial use. An
entirely scalable manufacturing process has been developed. The
drug product’s manufacture is fully compliant with the FDA’s
currently mandated good manufacturing practices (cGMP) regulations
and meets all current and stringent specifications for a sterile
injectable drug product. This product has now been advanced for use
in our Phase 1/2a Brazilian clinical trial in COVID-19 patients.
The current open-label trial for COVID-19 in Brazil for EOM613
meets the regulatory Phase 1/2a clinical trial requirements of the
Comissao Nacional de Etica em Pesquisa and the Brazilian regulatory
body ANVISA. However, additional, larger Phase 2 placebo-controlled
trials will be required for the further clinical development of
EOM613 in the United States.
We
believe EOM613 is an appropriate therapeutic for the treatment of
hospitalized COVID-19 patients. The major cause of mortality in
COVID-19 patients is linked to the runaway and prolonged
hyperimmune reaction that occurs in certain COVID-19 patients,
caused by an indiscriminate release of damaging cytokines and
chemokines within the body, leading to the irreversible damage and
destruction of lung tissue. An immunomodulator drug product that
can dampen this aberrant immune response, while not concomitantly
opening up the patients to secondary bacterial or fungal infections
by over-suppression of the body’s overall immune responses, would
be valuable in this clinical indication.
In
August 2021, we enrolled our first patient in a 40-patient Phase
1/2a clinical trial for seriously ill COVID-19 patients in Brazil.
The clinical trial is currently in progress at five clinical sites
across Brazil, and is approved by the Comissao Nacional de Etica em
Pesquisa national body in Brazil that reviews and approves clinical
trials. Due to ongoing numerous clinical studies in Brazil during
the 2021/2022 period for various therapeutic treatments coupled
with accelerated vaccine rates, we experienced a lack of available
patients eligible for screening in accordance with the terms of our
agreed upon trial protocol. Consequently, during the third quarter
2022 we decided to terminate the clinical trial after we achieved
an approximately 50% enrollment rate. Clinical data on the study
results will be released when available
There
are two cohorts being studied in the clinical trial; COVID-19
confirmed patients who are admitted into an ICU setting with the
need of mechanical assisted ventilation and less gravely ill
patients who are in need of hospitalization and supplemental
oxygen, but are being treated outside the ICU setting. The drug
product safety and efficacy are being evaluated over a 28-day study
period in these patients. Additional details of this Brazilian
clinical trial may be found on the ClinicalTrials.gov site:
https://clinicaltrials.gov/ct2/show/NCT05212532?term=EOM+Pharmaceuticals&cond=COVID-19&draw=2&rank=1
Initial
results obtained on blood samples of the COVID-19 patients enrolled
in the study and drawn at specific time-points after study
initiation appear to validate the postulated mechanism of action of
the drug as being able to modulate the action of various clinically
relevant cytokines and chemokines in the patients, concomitant with
their symptom resolution.
Upon