Item 1. BUSINESS.
Business Overview
Actinium Pharmaceuticals, Inc.
is a clinical-stage, biopharmaceutical company applying its proprietary platform technology and deep understanding of radiobiology to
the development of novel targeted radiotherapies for patients with unmet needs. Our targeted radiotherapies combine the cell-killing ability
of radiation via a radioisotope payload with a targeting agent, such as a monoclonal antibody, to deliver radiation in a precise manner
inside the body to specific, targeted cells, to potentially achieve greater efficacy with lower toxicity than with external beam radiation.
They also enable a broader usage of radiation than external beam radiation as they can be used in the treatment of both solid tumors and
blood cancers, which generally cannot be treated with external radiation given their diffuse nature. Our clinical pipeline is focused
on targeting the antigens CD45 and CD33, both of which are expressed in multiple hematologic cancers, which are known to be highly sensitive
to radiation. Our clinical programs are focused on two primary areas: (1) targeted conditioning prior to a bone marrow transplant (“BMT”),
adoptive cell therapy (“ACT”) such as CAR-T or gene therapy with Iomab-B and (2) targeted radiotherapy combinations with Actimab-A
and other therapeutic agents. Our product development strategy is actively informed by clinical data with Iomab-B and Actimab-A in approximately
600 patients, including our ongoing Pivotal Phase 3 SIERRA trial, which completed its targeted enrollment of 150 patients in the third
quarter of 2021, with the last patient receiving their BMT in the fourth quarter of 2021. Our clinical pipeline has emanated from our
Antibody Warhead Enabling (“AWE”) technology platform, which is protected by over 170 issued and pending patents, trade secrets
and know-how that we are applying to the development of targeted radiotherapies for blood and solid tumor indications, independently and
with collaborators. Ongoing collaborations include a research partnership with Astellas Pharma, Inc. (“Astellas”) focused
on the development of theranostics, which enable the diagnosis and treatment, for solid tumor indications, a collaboration with EpicentRx,
Inc, focused on a novel CD47 immunotherapy targeted radiotherapy combination, leveraging EpicentRx’s RRx-01, that is being studied
in a Phase 3 trial in non-small cell lung cancer, with our clinical stage Actimab-A in AML models, and a collaboration with AVEO Oncology,
focused on developing a HER3 targeting ARC or Antibody Radiation Conjugate for solid tumors leveraging with their clinical stage antibody.
We are also utilizing our AWE technology platform to advance our research objectives focused on developing next-generation targeted radiotherapies
with our expanded research and development organization and research laboratories leveraging our drug development experience.
Targeted Conditioning
To the best of our knowledge, we are advancing the only multi-target, multi-indication, clinical-stage pipeline for targeted conditioning.
Our targeted conditioning agents are intended to potentially enable improved access and outcomes to cell-based therapies with curative
potential, including BMT, ACT, and gene therapy Conditioning in the context of BMT, ACT or gene therapy is the act of depleting certain
blood and immune-forming cells, including bone marrow stem cells and, in some cases, cancer cells prior to transplanting new cells into
a patient. Currently, conditioning is accomplished using a combination of cytotoxic chemotherapeutic agents and external radiation. These
non-targeted conditioning regimens are highly toxic and may prevent a patient from receiving a potentially curative therapy and hinder
outcomes. We believe our targeted conditioning agents have the potential to increase patient access and outcomes by way of their ability
to selectively deplete targeted cells while sparing normal healthy cells, resulting in potentially lower systemic and off-target toxicities.
We use our ARCs both at high isotope dose levels to achieve myeloablation, which fully depletes bone marrow stem cells and at lower isotope
dose levels to achieve lymphodepletion, which spares bone marrow stem cells from depletion. In addition, dosing may be titrated downward
from myeloablative doses to achieve partial myeloablation, which may be appropriate for certain gene therapy programs.
CD45 Targeted Conditioning Program
Iomab-B (I-131 apamistamab),
our lead candidate and targeted conditioning agent is comprised of the anti-CD45 monoclonal antibody known as apamistamab (formerly BC8)
and the radioisotope Iodine-131 (“I-131”). CD45 is an antigen expressed on leukemia, lymphoma and myeloma cancer cells, as
well as nucleated immune cells including bone marrow stem cells, but is not expressed outside of the hematopoietic, or blood forming,
system. This unique expression on blood cancer and immune cells enables simultaneous depletion of both cell types, making CD45 an optimal
antigen for targeted conditioning applications. CD45 is a cell surface antigen with an average expression of 200,000 copies per cell,
however, it only internalizes at a rate of 10-15%. We believe our ARC approach is the most effective method to target CD45 positive cells,
as the radioisotope payload linear energy transfer can readily ablate a targeted cell without requiring payload internalization like an
antibody drug conjugate or without relying on biological effector function processes like a naked antibody. Furthermore, since CD45 expression
level varies from low to high antigen density as the immune cells become more terminally differentiated, we can selectively condition
depending on the therapeutic application, from full myeloablation to transient lymphodepletion, by adjusting the dose or intensity of
the I-131 isotope payload. Full myeloablation can be achieved with high doses of I-131, as its energy pathlength and crossfire effect
can penetrate into bone marrow niches to target and deplete blood and immune system forming bone marrow stem cells. Myeloablation is applicable
to autologous or allogeneic BMT and to autologous gene-edited or modified therapies that can reconstitute a patient’s blood and
immune systems. Alternatively, low doses of I-131 can be transiently lymphodepleting and spare a patient’s bone marrow stem cells,
which we believe is ideal for ACT applications such as CAR-T. We intend to develop our CD45 targeted conditioning program for BMT, ACT
and gene therapy applications for malignant and non-malignant diseases and believe that multiple radioisotopes beyond I-131 may be utilized
including alpha and beta emitters.
Iomab-B uses high doses of
I-131 to achieve myeloablative conditioning prior to a BMT, is currently being studied in the pivotal Phase 3 Study of Iomab-B in Elderly
Relapsed or Refractory AML (“SIERRA”), clinical trial for targeted conditioning prior to an allogeneic BMT for patients with
active, relapsed or refractory (“r/r”) Acute Myeloid Leukemia, (“AML”), who are age 55 or older. Enrollment of
the planned 150 patients in the SIERRA trial was completed in the third quarter of 2021 with the last patient receiving their BMT in the
fourth quarter of 2021. Patients with active, r/r AML are not normally considered eligible for BMT and the SIERRA trial is the only randomized
Phase 3 trial to offer BMT as a treatment option for this patient population. The SIERRA trial compares outcomes of patients randomized
to receive Iomab-B and a BMT (the “study arm”) to those patients randomized to receive physician’s choice of salvage
therapy (the “control arm”). The control arm is also defined as conventional care, as no standard of care exists for this
patient population and includes over 20 agents that may be used as single agents or in combination including venetoclax, a targeted Bcl-2
inhibitor, Midostaurin and Sorafenib, targeted FLT3 inhibitors, hypomethylating agents and cytotoxic chemotherapies. Patients who fail
to achieve a Complete Remission (“CR”) on the control arm are ineligible to proceed to a BMT, but the trial design permits
these patients to “cross over” to receive the study arm treatment if they meet the eligibility criteria. The primary endpoint
of the SIERRA trial is durable Complete Remission (“dCR”) of 180 days and the secondary endpoint is Overall Survival (“OS”).
When the crossover patients receive Iomab-B and BMT, they have not achieved remission with their salvage therapy and are considered to
be failures for the primary endpoint of the study. The SIERRA trial recruited patients at 24 sites in the United States and Canada, which
includes many of the leading BMT sites based on volume. If approved, we expect our initial commercial launch would target the leading
50-100 BMT and medical centers that perform the vast majority of BMT’s in the United States. In the European Union (“EU”),
we received favorable feedback from the European Medicines Agency (“EMA”) via their scientific advice program that the trial
design, primary endpoint and planned statistical analysis from the SIERRA trial are acceptable as the basis for a Marketing Authorization
Application, or MAA. Additionally, the EMA commented that it does not anticipate the need for further standalone preclinical toxicology
or safety studies. Overall, transplant procedures in the EU are approximately fifty percent higher than in the United States with a similar
market dynamic, with a majority of BMT volume being conducted in a concentrated number of leading medical centers. Currently we intend
to secure a partner for Iomab-B in the EU.
Data from full patient enrollment in the SIERRA trial (151 patients), was presented at the American Society of Hematology (“ASH”)
Annual Meeting in December 2021. The data presented includes rates of BMT access and engraftment, 100-day non-relapse transplant-related
mortality (100-day TRM) and adverse events, which has been reported from interim analyses conducted at 25%, 50% 75% and 100% of patient
enrollment pursuant to the study protocol. The data presented at ASH highlighted that 100% of patients (59/59) on the study arm that received
a therapeutic dose of Iomab-B received a BMT, with a median time to BMT of 30 days, and all patients achieved neutrophil and platelet
engraftment in a median time of 18 days despite a high median blast count of 29%. On the control arm, only 17% of patients (13/76) achieved
remission after salvage therapy, and then received a BMT with a median time to BMT of 67 days and median blast count of 20%. Of the 83%
of patients failing to achieve a CR with conventional care (47/57), 30 patients were eligible to cross over to receive Iomab-B followed
by transplant. These patients are considered as having failed the primary endpoint of the study. All crossover patients who received the
therapeutic dose of Iomab-B (30/30) received a BMT, with a median time to BMT of 24 days and they achieved engraftment in a median time
of 19 days despite high median blast count of 22% at time of crossover. It was also reported that 100-day TRM of the study or Iomab-B
arm was 10% (6/59) of patients that received a BMT compared to 15% of patients (2/13) who received a BMT after salvage therapy on the
control arm. The universal engraftment rate and low 100-day TRM rate of the Iomab-B arm resulted in 53 patients potentially evaluable
for the primary endpoint compared to 11 patients in the control arm, an approximate five times difference. At each of the interim analyses
throughout the SIERRA trial, this approximate five times difference has been consistent in favor of the Iomab-B arm as a result of higher
rates of BMT engraftment and lower rates of 100-day TRM.
Data from the SIERRA trial has
also been accepted for presentation at the upcoming Transplantation & Cellular Therapy (“TCT”) Tandem Meetings of the
American Society for Transplantation and Cellular Therapy (“ASTCT”) and Center for International Bone & Marrow Transplant
Research (“CIBMTR”), which has been postponed from February to April 2022. At TCT, we expect to present additional data from
the SIERRA trial to include patients who have matured for BMT engraftment and 100-day TRM analysis, for which data was not available at
time of the submission cutoff for ASH in December of 2021. Top-line data for the primary endpoint of durable Complete Remission is expected
to be presented in the third quarter of 2022. We believe topline data from SIERRA will support the submission of a Biologics License Application
(“BLA”) with the U.S. Food and Drug Administration (“FDA”), which we expect to file in the first half of 2023.
Our Iomab-ACT program is intended
for targeted conditioning prior to ACT or gene therapy and uses the same I-131-apamistamab construct as Iomab-B at varying doses. At lower
doses of one-eighth to one-sixth of the myeloablative dose, it is applicable for lymphodepletion prior to CAR-T or certain gene therapy
applications where stem cell myeloablation is not necessary. At higher doses it is applicable for gene therapy applications where stem
cell myeloablation is necessary.
We believe our Iomab-ACT program
is highly differentiated when compared to Fludarabine and Cyclophosphamide (“Flu/Cy”) or other chemotherapy-based regimens
that are used as the standard of practice today for lymphodepletion prior to CAR-T. CD45 is an antigen expressed on certain immune cell
types that are relevant to the mechanism of CAR-T therapies including lymphocytes, regulatory T-cells and macrophages that have been associated
with clinical responses that may limit the safety, efficacy and durability of response of these CAR-T therapies including cytokine release
syndrome (“CRS”) and neurotoxicity. Some of these limitations may be attributable to the chemotherapy-based conditioning agents
that are being used prior to CAR-T therapies. Preclinical data supporting the rational for our Iomab-ACT program was presented at multiple
medical conferences in 2019. Unlike chemotherapy, Iomab-ACT is targeted in nature and, due to this CD45-directed targeting, we expect
we can improve CAR-T cell expansion, potentially resulting in responses that are more durable, but also resulting in reduced CAR-T related
toxicities. Importantly, we expect the Iomab-ACT program construct to enable lymphodepletion through a single-dose, outpatient administration
versus Flu/Cy or other chemotherapy-based lymphodepletion regimens that can require multiple infusion cycles over several days. Because
of this potentially superior profile, the Iomab-ACT construct could result in improved access to CAR-T therapy and better outcomes.
We are studying Iomab-ACT in a
clinical collaboration with Memorial Sloan Kettering Cancer Center (“MSKCC”) for targeted conditioning prior to administration
of MSKCC’s 19-28z CD19 targeting CAR-T in patients with relapsed or refractory B-cell acute lymphoblastic leukemia (“ALL”)
or diffuse large B-cell lymphoma (“DLBCL”). We received grant funding from the National Institute of Health (“NIH”)
to fund this trial with MSKCC being a co-recipient on this grant. This is a first of its kind study to use an ARC-based conditioning regimen
with CAR-T therapy. The hypothesized rationale for this study is that Iomab-ACT will exert an anti-tumor effect on the chemotherapy-refractory
B-ALL cells that are sensitive to radiation resulting in reduced disease burden and simultaneously deplete CD45 expressing immune cells
implicated in CAR-T related toxicities, resulting in an optimal homeostatic environment for the CAR-T cells. Results with MSKCC’s
19-28z CD-19 CAR-T in 53 patients with r/r B-ALL published in the New England Journal of Medicine reported complete remissions in 83%
(44/53) of patients, which compares favorably to standard chemotherapy regimens that have complete remission rates of 18% - 45% in this
patient population. Median event-free survival (EFS) was 6.1 months and median overall survival (OS) was 12.9 months at a median follow
up period of 29 months (range 1 – 65 months). There was a 26% (14/53) rate of Grade 3 or greater CRS and a 42% rate of Grade 3 or
4 neurotoxicity reported. The study will evaluate the feasibility of using an ARC-based conditioning regimen with CAR-T therapy and will
evaluate safety measures including incidence of CRS and neurotoxicity and efficacy measures including responses and survival outcomes.
In March 2021, we announced that patient enrollment was initiated, and the first patient was administered Iomab-ACT followed by their
19-28z CAR-T therapy. We expect proof of concept data from this study in the second half of 2022.
In addition, we are working
in collaboration with the University of California Davis to utilize Iomab-ACT conditioning with a novel anti-HIV autologous gene therapy.
We continue to identify additional gene therapies for which Iomab-ACT can be used for targeted conditioning with the goal of collaborating
with multiple academic or industry developers to establish Iomab-ACT as a non-chemotherapy universal targeted conditioning solution.
CD33 Program: Combinations and Therapeutics
Our CD33 program is evaluating
the clinical utility of Actimab-A, comprised of the anti-CD33 mAb lintuzumab linked to the potent alpha-emitting radioisotope Actinium-225
(“Ac-225”). CD33 is expressed in the majority of patients with AML and myelodysplastic syndrome (“MDS”) as well
as approximately one-third of patients with multiple myeloma. Ac-225 emits four alpha particles and can kill a cell with one alpha-particle
hit, making it one of the most powerful cell-killing agents with no know resistance mechanism to the double strand DNA breaks it can cause.
We source Ac-225 from the Department of Energy’s Oak Ridge National Laboratory.
Our CD33 development program
is driven by data obtained from nearly one hundred fifty treated patients, including results from a Phase 1/2 trial that studied Actimab-A
as a single agent at multiple dose levels in 58 patients with newly diagnosed AML, which was completed in 2018, as well as trials studying
Actimab-A in combination with other agents.
We believe that radiation delivered
internally via a targeting moiety can be synergistic when used in combination with chemotherapy, targeted agents and immunotherapy based
on mechanistic rationales supported by our own clinical data, preclinical research and scientific and clinical evidence in the literature.
We have prioritized our efforts and resources in favor of combination trials for our CD33 program development strategy rather than single
agent trials at this time as we believe Actimab-A can be a backbone therapy in AML when combined with other therapeutic modalities. Our
CD33 development program encompasses the following ongoing trials:
Actimab -A Combination Trials:
Actimab-A + CLAG-M
The combination of Actimab-A with CLAG-M has been
studied in a Phase 1 combination trial that was conducted in collaboration with the Medical College of Wisconsin (“MCW”) in
patients age 18 and above with r/r AML who are fit for intensive therapy. Patient enrollment was completed in November 2021. CLAG-M (cladribine,
cytarabine, filgrastim and mitoxantrone) is a salvage chemotherapy regimen that produced a 55% remission rate in patients with r/r AML
in a previous study conducted by MCW that compared outcomes of patients receiving either CLAG-M, MEC or CLAG salvage therapy regimens.
Data from the Phase 1 combination trial of Actimab-A + CLAG-M were presented at ASH in December 2021. After completion of dose-escalation
in the Phase 1 trial, the recommended Phase 2 dose was determined to be 0.75 µCi/kg of Actimab-A. 3 patients were enrolled in the
0.75 µCi/kg dose cohort, which had a 100% remission rate comprised of 1 complete remission (“CR”) and 2 complete remissions
with incomplete platelet recovery (“CRp”), there were no dose limiting toxicities (“DLTs”) or 30-day mortality
reported. Overall, a 67% (12/18) overall response rate (“ORR”) was reported across all dose cohorts (0.25 – 1.0 µCi/kg)
and remissions were achieved in every dose cohort including the 0.25 and 0.50 µCi/kg doses of Actimab-A, which have been shown to
be subtherapeutic as a single agent. In addition, there was a 72% minimal residual disease (“MRD”) negativity rate, which
compares favorably to the 39% MRD negativity rate reported by MCW with CLAG-M alone. This study enrolled patients who previously failed
Venetoclax, a targeted Bcl-2 inhibitor, and efficacy was similar in patients Venetoclax naïve and those that previously failed Venetoclax,
with a 60% response rate in previous Venetoclax failures. We are working to develop a regulatory and development pathway for the Actimab-A
CLAG-M combination and will be evaluating potential registration enabling strategies. In addition, we believe this Actimab-A + CLAG-M
combination study has provided proof of principle that the addition of Actimab-A to other AML therapies can lead to well-tolerated regimens
with improved responses, which supports our Actimab-A backbone therapy in AML strategy.
Actimab-A + Venetoclax
We are also conducting a Phase
1/2 Actimab-A combination trial with the Bcl-2 inhibitor Venetoclax in fit and unfit patients age 18 and above with relapsed or refractory
AML. This multi-center trial is being led by UCLA Medical Center. This combination is supported by mechanistic evidence in preclinical
studies using Venetoclax -resistant AML tumor cell lines. In these models, we have demonstrated that Actimab-A can deplete Mcl-1 and Bcl-XL,
two proteins implicated in mediating resistance to Venetoclax, in addition to causing potentially lethal double-stranded DNA breaks in
these CD33 expressing cells. Furthermore, in vivo studies in animal models of Venetoclax-resistant AML demonstrated robust tumor regression
and improved survival in cohorts receiving the Actimab-A Venetoclax combination compared to Venetoclax alone. The rationale for this clinical
study is that the addition of Actimab-A will; 1) have a direct anti-tumor effect via double-stranded DNA breaks and 2) deplete Mcl-1 and
Bcl-XL making the AML cells more susceptible to Venetoclax. Updated data from the Phase 1 dose escalation portion of this study was presented
at ASH in December 2021 from three dose cohorts of 0.50, 0.75 and 1.0 µCi/kg of Actimab-A in a total of 12 patients. 50% of patients
received Venetoclax therapy prior to enrollment on the Actimab-A combination trial. And 67% of patients had poor risk cytogenetics, of
which, 3 had a TP53 mutation, which is associate with poorer response rates and survival outcomes. Of the patients with a TP53 mutation,
67% achieved a remission including a patient that achieved a CR and at the time of data cutoff for ASH, the patient was in follow-up 230
days (~7.5 months). The combination of Actimab-A with Venetoclax was reported to be well-tolerated with no 30-day mortality. The data
to date support advancing to the Phase 2 portion of the trial and we expect to provide an update on the development strategy, including
consideration of patients with a TP53 mutation, after the Phase 1 dose finding portion of the trial is complete and the recommended Phase
2 dose is determined.
In addition to these ongoing
trials, we actively seek and evaluate additional modalities and agents that can be the basis for Actimab-A therapeutic combinations such
as the CD47 immunotherapy magrolimab combinations we announced at the Society for Immunotherapy of Cancer in November 2021 to leverage
our clinical experience, supply chain and AWE technology platform.
CD47 Based ARC Combinations in Solid Tumors
and Blood Cancers
CD47 is a macrophage checkpoint
that is upregulated in multiple cancers including blood cancers such as AML and MDS as well as solid tumors. CD47 acts as a “don’t
eat me” signal on cancer cells to suppress phagocytosis and evade detection and destruction by the immune system. It has become
an immunotherapy target of significant interest with multiple biopharmaceutical companies actively developing CD47 targeting agents across
a wide range of oncology and hematology indications. CD47 targeting agents have shown limited efficacy as single agent monotherapies in
AML/MDS or solid tumors, which has led to combinations such as with hypomethylating agents in AML/MDS. We hypothesized that targeted radiotherapy
via ARCs could synergize with CD47 targeting agents via the direct cytotoxic and immunogenic effect of ARCs without overlapping toxicities.
To explore this synergy and the potential to improve patient outcomes and we have initiated a program in AML with our Actimab-A ARC, consistent
with our strategy to establish Actimab-A a backbone AML therapy, and in solid tumors with a HER-2 targeting ARC, which emanated from our
AWE technology platform. To our knowledge, these are the first and only ARC-based targeted radiotherapy combinations with CD47 immunotherapy.
Data from these novel combinations were presented at the 36th Annual Meeting of the Society for Immunotherapy for Cancer.
The most advanced CD47 development
programs are being studied in patients with AML and MDS. Leveraging our clinical experience with Actimab-A in these indications we have
begun studying Actimab-A with the anti-CD47 antibody immunotherapy magrolimab, which is owned by Gilead Sciences, Inc., in preclinical
models of AML. In preclinical models, it was shown that in multiple AML cell lines, the combination of Actimab-A with magrolimab led to
increased phagocytosis of AML cells compared to magrolimab alone. Our studies also demonstrated that AML cell lines exposed to Actimab-A
had an upregulation of calreticulin, which is a pro-phagocytic or “eat me” signal, which we hypothesize makes Actimab-A potentially
synergistic with magrolimab and other anti-CD47 antibodies. The Actimab-A and magrolimab combination showed a significant increase in
survival compared to Actimab-A alone in a disseminated AML animal tumor model. We intend to continue to study preclinically this combination
with the goal of advancing to human clinical trials.
In January 2022, we announced
a research collaboration with EpicentRx that will evaluate Actimab-A in combination with EpicentRx’s RRx-001in AML. EpicentRx’s
RRx-001, currently under investigation in a Phase 3 trial for Small Cell Lung Cancer and in other oncology and non-oncology indications,
is a versatile next generation small molecule immunotherapeutic that targets the CD47-SIRPα axis and the NLRP3 inflammasome to
alter the tumor microenvironment and optimize immune response. This collaboration will explore the mechanistic synergy of RRx-001’s
CD47–SIRPα downregulation with Actinium’s targeted radiotherapy calreticulin upregulation to increase the immune detection
and destruction of cancer cells. Preclinical experiments have begun exploring this combination in AML models. We intend to leverage our
experience with CD47 targeting agents such as magrolimab in this collaboration. Based on Actimab-A and RRx-001 both being clinical-stage
assets, we believe there is a potentially faster pathway to clinical trials with this novel combination, particularly if the preclinical
safety and efficacy profile are in line with what was observed with Actimab-A and magrolimab.
Antibody Warhead Enabling Technology Platform
Our proprietary AWE technology
platform is supported by intellectual property, know-how and trade secrets that cover the generation, development, methods of use and
manufacture of targeted radiotherapies and certain of their components. Our AWE technology patent portfolio presently includes 39 patent
families comprised of 173 issued patents and pending patent applications, of which 8 are issued and 30 are pending in the United States,
and 135 are issued or pending internationally. The effective lives of the issued patents in our portfolio, or patents that may issue from
the pending applications in our portfolio, ranges from expirations between 2024 and 2042. Our technology enables the direct labeling,
or conjugation and labeling, of a biomolecular targeting agent to a radionuclide warhead and its development and use as a therapeutic
regimen for the treatment of diseases such as cancer. Our AWE intellectual property covers various methods of use in multiple diseases,
including indication, dose and scheduling, radionuclide warhead, and therapeutic combinations. We have particular expertise in utilizing
the alpha emitting isotope Ac-225 including clinical experience in treating approximately 150 patients with our alpha-emitter-based therapies,
“gold standard” linker technology and 5 issued patents in the United States and 49 patents internationally related to the
manufacturing or Ac-225 in a cyclotron, which we believe has the potential to produce higher quantities of Ac-225 than currently utilized
methods.
In 2021 we have enhanced our
research and development capabilities around AWE by securing and staffing research facilities. Our research laboratories are focused on
applying our AWE technology platform to the development of radiation conjugates and to execute on research collaborations. Our R&D
efforts employ a multidisciplinary approach leveraging our team’s knowledge and experience in cancer cell biology, radiochemistry,
radiation sciences, immunology and oncology drug development. We intend to focus on generating targeted radiotherapies using our existing
intellectual property, evaluating assets for in-licensing to complement our existing clinical pipeline and securing collaborations and
partnerships with biopharmaceutical companies. By adding research and development capabilities to our clinical development and clinical
supply chain capabilities, we seek to enable the rapid translation of radiotherapies.
Our AWE technology platform
is being utilized in our ongoing research collaboration with Astellas to arm select targeting agents owned by Astellas with the alpha-emitting
radioisotope Ac-225 for the development of theranostics for solid tumor indications, which combine the ability of radioisotopes to be
used for both diagnostic and therapeutic purposes.
We also utilized AWE to create aHER2-targeting radiotherapy using
the antibody Trastuzumab with either Ac-225 or Lu-177 radioisotopes to study in combination with magrolimab for solid tumors. Anti-CD47
monotherapies, such as magrolimab, have not shown meaningful responses in clinical studies in solid tumors. We hypothesized that radiation
directed at HER2 expressing cells would upregulate cell surface calreticulin, a pro-phagocytic “eat me” signal, that when
combined with an anti-CD47 blockade therapy would enhance antitumor activity. Data from this combination was presented at the Annual Meeting
of the Society for Immunotherapy for Cancer in November 2021. In vitro studies showed that immunogenicity, determined by binding to HER2
expressing cells, remained intact after radiolabeling Trastuzumab with Ac-225 or Lu-177. In multiple cells lines radiolabeled Trastuzumab
increased cell surface calreticulin and the combination with magrolimab increased phagocytosis. The combination of the Ac-225 or Lu-117
Trastuzumab with magrolimab slowed tumor growth in animal models of solid tumors compared to either the radiolabeled Trastuzumab or magrolimab
as single agents. We are continuing to evaluate this combination in additional tumor models, and we intend to continue to study this combination
with the goal of advancing to human clinical trials.
We are also collaborating
with AVEO Oncology (“AVEO”) to develop a targeted radiotherapy against ErbB3, also known as HER3, with the Ac-225 isotope
for solid tumor indications. HER3 is overexpressed in several solid tumor indications with high unmet needs, including colorectal, gastric,
head and neck, breast, ovarian, melanoma, prostate and bladder cancers with HER3 agents under development demonstrating activity in preclinical
and clinical studies. To our knowledge, this is the first HER3 targeting radiotherapy in development. AVEO is developing high affinity
antibodies including HER3 targeting AV-203, which has demonstrated preclinical activity across a number of solid tumor indications and
was studied in a Phase 1 open-label trial in patients with advanced solid tumors where it was found to be safe and generally well tolerated.
In March 2022, we announced that data from studies of Ac-225 radiolabeled HER3 antibody have been accepted for presentation at the American
Association for Cancer Research (“AACR”) Annual Meeting. Preliminary results contained in the AACR abstract showed potent
tumor cell cytotoxicity, complete anti-tumor response in a HER3 tumor xenograft models and significantly prolonged survival compared to
control groups (p<0.0001). Additional data from these studies will be presented at AACR in April 2022. We believe these preliminary
results support our collaboration with AVEO and given that AV-203 has clinical safety data, a potentially accelerated regulatory pathway
to clinical studies with an Ac-225 HER3 targeted radiotherapy.
Intellectual Property Portfolio and Regulatory Protections
Intellectual Property
We have developed or in-licensed
numerous patents and patent applications and possess substantial know-how and trade secrets related to the development and manufacture
of our products. As of March 2022, our patent portfolio includes 39 patent families comprised of 174 issued patents and pending patent
applications, of which 8 are issued and 30 are pending in the United States, and 135 are issued or pending internationally. Several non-provisional
patent applications are expected to be filed in 2022 based on provisional patent applications filed in 2021. More than 90% of our patents
are Actinium-owned and the remainder are in-licensed from third parties. These patents cover key areas of our business, including the
use of actinium-225 and other alpha- or beta-emitting isotopes attached to cancer targeting carriers like monoclonal antibodies in the
treatment of cancers and non-malignant medical disorders, methods for manufacturing key components of our product candidates including
actinium-225, an alpha particle emitting radioisotope and carrier antibodies, or Iodine-131, a beta particle emitting radioisotope, and
methods for manufacturing finished product candidates for use in cancer treatment.
We own two issued patents
in the United States and issued patents in Europe and Japan that relate to the composition of our Iomab-B product candidate. The basis
patent terms of these patents expire in 2036 and 2037. Four related patent applications are also currently pending in the U.S. and internationally.
In addition, we own both U.S. and international pending patent applications that relate to the use of Iomab-B or Iomab-ACT in the treatment
of cancers and non-malignant conditions. We also own five issued patents in the United States and 49 patents outside the United States
that relate to the manufacturing of actinium-225, the radionuclide used in our Actimab-A product candidate, in a cyclotron. These
patents will expire in the years 2024 through 2027. In addition, we also own U.S. and international patents and pending patent applications
that relate to the manufacturing of Actimab-A and its use in the treatment of cancers.
Regulatory Protections
The indications for which we
are developing our product candidates for are orphan drug designations, which are disease indications that affect fewer than 200,000 patients
in the United States and less than 5 in 10,000 patients in the EU. We have received orphan drug designation for Iomab-B and Actimab-A
for patients with AML in both the United States and the EU. As a result, if our products are to be approved, they may receive 7 years
and 10 years of market exclusivity in the United States and EU, respectively. In addition, our product candidates are biologics combined
with radioisotopes. We believe that the nature of radioisotopes having half-lives combined with the complexities of biologic drugs would
make it difficult for a manufacturer to demonstrate bioequivalence to our product candidates. The Hatch-Waxman Act requires that a manufacturer
of generic drugs, for which a biologic drug is called a biosimilar, demonstrate bioequivalence to the innovator. However, we are not aware
of any existing or pending regulations or legislation that pertains to generic radiopharmaceutical products such as our antibody radiation-conjugate
product candidates
Competition
The biopharmaceutical industry
in which we operate, specifically, the field of oncology drug development is rapidly evolving and highly competitive. Radiopharmaceuticals
for the treatment of cancer has received considerable interest from major and specialty pharmaceutical companies, biotechnology companies,
academic research institutions and other public and private entities, particularly in recent years.
For the targeted radiotherapies
we are developing, we face competition from biopharmaceuticals companies who are developing alpha particle-based therapies utilizing Actinium-225,
Radium-223 and Thorium-227. Companies developing targeted alpha therapies include Bayer AG, who owns Xofigo, the only approved alpha therapy,
that is used in the treatment of metastatic prostate cancer, Novartis AG, Telix Pharmaceuticals Limited, Point Biopharma, Inc., Fusion
Pharmaceuticals, Inc., RayzeBio, Inc., Aktis Oncology, Curie Therapeutics, RadioMedix, Inc. and Orano Med. Significant attention and resources
is being applied to Ac-225 based therapies given its high linear energy and short path length. Fusion Pharmaceuticals is studying FPI-1434,
targeting IFG-1R with Ac-225 in a Phase 1 trial in solid tumors and has recently initiated a Phase 1 study to test FGFR3 targeting agent
in development. Point Biopharma is studying PNT2002, a PSMA targeting agent for metastatic prostate cancer in a Phase 1 trial, PNT2004,
a preclinical agent targeting solid tumors expressing FAP, and PNT2001, a preclinical agent also targeting PSMA in prostate cancer, which
all utilize Ac-225. Novartis is also developing a PSMA targeting agent utilizing Ac-225 for prostate cancer. RayzeBio, Aktis Oncology
and Curie Therapeutics are all pursuing Ac-225 based therapies but have not yet disclosed cancer targets or indications.
To our knowledge, our Actimab-A
product candidate is the only clinical stage Ac-225 based therapy in active development for hematologic indications.
There are also several companies
developing beta particle-based therapies such as Bayer, Novartis, Lantheus Holdings, Inc. and Q BioMed, Inc., who all own approved products.
Beta particles used for oncology therapeutics includes Iodine-131, Lutetium-177, Strontium-89 and Yttrium-90. Companies developing beta
particle-based therapies includes Cellectar Biosciences, Inc., Clovis Oncology, Inc., Y-mAbs Therapeutics, Inc., Ipsen S.A., and Novartis.
In the field of conditioning,
pharmaceuticals currently used for myeloablation prior to a bone marrow transplant, lymphodepletion prior to CAR-T and other adoptive
cell therapies and conditioning for gene therapy are largely generic, non-targeted chemotherapeutic agents like fludarabine or busulfan
and/or total body irradiation.
In targeted conditioning,
we face competition from companies developing agents targeting CD117 (Jasper Therapeutics and Magenta Therapeutics), CD45 (Magenta Therapeutics)
and CD66 (Telix Pharmaceuticals). CD117 is expressed in normal CNS, GI, reproductive, kidney and skin tissue, which could result in on-target
toxicity to these organs. CD117 is not expressed on mature circulating immune cells and thus cannot be targeted for lymphodepletion for
adoptive cell therapy. Jasper Therapeutics, Inc, is developing JSP191, an anti-CD117 unconjugated monoclonal antibody that is being studied
in a Phase 1b trial in combination with fludarabine and total body irradiation in patients with MDS and AML. Magenta has initiated a Phase
1/2 trial for its MGTA-117 CD117 ADC and will conduct this first in human dose finding study in patients with r/r AML MDS with excess
blasts and is exploring MGTA-117 for gene therapy conditioning in preclinical studies. Magenta is also developing its CD45 ADC, which
is has not yet been studied in humans and is being evaluated in IND enabling studies.
Forty Seven, Inc.(acquired
by Gilead) announced a conditioning regimen comprised of its anti-CD47 monoclonal antibody Magrolimab with its preclinical stage FSI-174
anti-CD117 monoclonal antibody in a preclinical collaboration with bluebird bio, Inc. for conditioning prior to gene therapy.
Molecular Templates announced
a collaboration with Vertex focused on targeted conditioning using its Engineered Toxin Bodies (ETBs) with two targets that were not disclosed.
In October 2021, Vertex terminated the research collaboration with Molecular Templates. Molecular Templates has a preclinical stage CD45
ETB in development.
Telix Pharmaceuticals is developing
TLX66, a CD66 targeting antibody radio conjugated with Yttrium-90, for BMT conditioning in patients with Systemic Amyloid Light-Chain
Amyloidosis (SALA). TLX66 is also being studied in a Phase 2 investigator sponsored trial in the U.K in patients with childhood leukemia.
Allogene Therapeutics is developing
an anti-CD52 monoclonal antibody for use as a lymphodepletion agent in conjunction with CAR-T therapies. CD52 is not expressed on stem
cells and therefore cannot be used for myeloablation for a bone marrow transplant.
To our knowledge, we are the
only company with an anti-CD45 radio conjugate in clinical development and the only company with a targeted conditioning agent that has
completed enrollment of a pivotal Phase 3 trial.
Our Actimab-A product candidate
faces competition from several major pharmaceutical companies and biotechnology companies who are also developing multiple types of therapies
including chemotherapy, targeted agents, ADCs, monoclonal antibodies, bispecific antibodies, immunotherapies and cellular therapies for
patients with AML. The standard of care for patients with AML has long been “7+3”, which is 7 days of treatment with cytarabine
with an anthracycline on the first 3 days for patients who can tolerate intensive therapy and hypomethylating agents, azacitidine or decitabine,
for patients who are “unfit” and cannot tolerate intensive therapy. Since 2017, 9 agents have been approved for patients with
AML. These approved agents include Vyxeos (liposomal cytarabine and daunorubicin) owned by Jazz Pharmaceuticals, venetoclax, a Bcl-2 inhibitor
owned by Abbvie, FLT3 inhibitors midostaurin (owned by Novartis) and gilteritinib (owned by Astellas), Daurismo, a hedgehog pathway inhibitor
owned by Pfizer, IDH inhibitors Tibsovo (IDH1) and Idhifa (IDH2) owned by Servier, Onureg (oral azacitidine) owned by Bristol Myers Squibb
and Mylotarg, a CD33 targeting ADC owned by Pfizer.
These agents are approved in
various AML patient segments including secondary or treatment related AML (Vyxeos), patients over the age of 75 or patients unfit for
intensive therapy (venetoclax and Daurismo) and patients with a specific cytogenetic mutation such as FLT3 or IDH1/2. Despite these 9
approved agents, outcomes for patients with r/r AML remain dismal and it remains an area of high medical need that could accommodate many
new products with favorable safety and efficiency profiles.
We are pursuing CD33 because
it is expressed in virtually all patients with AML. AML is known to be highly sensitive to radiation, which lends itself to our targeted
radiotherapy approach. Also, AML has high cytogenetic and mutational heterogeneity, which targeted radiotherapy is agnostic to. Combination
therapies are commonly used in hematologic indications, but we believe we are the only clinical stage Ac-225 based product candidate that
is being explored in hematologic indications in combination with other modalities, including with the salvage chemotherapy regimen CLAG-M
in fit patients with relapsed or refractory AML as well as in combination with the Bcl-2 inhibitor venetoclax in fit and unfit patients
with relapsed or refractory AML.
In addition to developing
targeted radiotherapies, we also own patents related to the manufacturing of Ac-225 in a cyclotron. Medical grade Ac-225 is largely supplied
by the U.S. Department of Energy (“DOE”) derived from the natural decay of thorium-229 from so-called “thorium-cows”.
Additional routes of Ac-225 production are being pursued by the DOE including the generation of new thorium cows and production via a
cyclotron to increase supply. The DOE’s cyclotron production method for Ac-225 production leverages Actinium’s proprietary
technology and know-how and presents an additional path towards production of high-quality Ac-225. Previously, we utilized our cyclotron
production IP to create highly pure Ac-225. We are aware of at least six other government and non-government entities globally that have
or expect to have ability to supply Ac-225 using various methods including ITM, Niowave, Terrapower, NorthStar Medical Radioisotopes,
IONETIX Corporation, TRIUMF and Canadian Nuclear Laboratories that could be competitors should we elect to manufacture Ac-225 in the future.
We believe our cyclotron method has the potential to produce robust amounts of highly pure Ac-225, which could address potential future
Ac-225 supply constraints should multiple Ac-225 products gain regulatory approval.
Government Regulation
Governmental authorities in
the United States and other countries extensively regulate, among other things, the research, development, testing, manufacture, labeling,
promotion, advertising, distribution and marketing of radioimmunotherapy pharmaceutical products such as those being developed by us.
In the United States, the FDA regulates such products under the Federal Food, Drug and Cosmetic Act (“FDCA”) and implements
regulations. Failure to comply with applicable FDA requirements, both before and after approval, may subject us to administrative and
judicial sanctions, such as a delay in approving or refusal by the FDA to approve pending applications, warning letters, product recalls,
product seizures, total or partial suspension of production or distribution, injunctions and/or criminal prosecution.
U.S. Food and Drug Administration Regulation
Our research, development
and clinical programs, as well as our manufacturing and marketing operations, are subject to extensive regulation in the United States
and other countries. Most notably, products that may in the future be sold in the United States are subject to regulation by the FDA.
Certain of our product candidates in the United States will require FDA approval of a BLA prior to marketing. Foreign countries may require
similar or more onerous approvals to manufacture or market these products.
FDA Approval Process for Biologics License
Applications
Prior to testing a biological
product on humans, the product must clear the preclinical testing stage. The goal of preclinical testing is to perform laboratory evaluations
of the product’s chemistry and formulation as well as evaluate the product’s potential for adverse events by performing in
vitro and animal studies. This information is packaged together and submitted to the FDA as part of an investigational new drug (“IND”)
application, which must be approved by the FDA before administering the product to human subjects in clinical trials.
From there, the product moves
to the clinical stage, where it is administered to healthy volunteers or patients. The data gathered from the preclinical testing and
clinical trials is used to support the BLA submission. The FDA must approve the BLA prior to commercial marketing of a biological product.
The BLA must include information about product development, laboratory and animal studies, human trials, manufacturing information, the
composition of the product, and proposed labeling. The approval process requires significant time and financial resources and does not
guarantee that FDA will accept the BLA filing or ultimately approve the BLA.
The Prescription Drug User
Fee Act, as amended (“PDUFA”), requires each BLA to be accompanied by a substantial user fee. The amount of the user fee changes
on an annual basis. In addition to the BLA user fee, PDUFA also imposes an annual program fee for biological products. The FDA will waive
or reduce the fee under limited circumstances, such as for first applications filed by small businesses.
Within 60 days following submission
of the BLA, the FDA reviews the BLA submission for completion to determine if it will accept it for filing. The FDA may refuse to file
the BLA if it deems the submission incomplete or not properly reviewable at the time of submission. For the BLA review process to proceed,
the BLA must be resubmitted with the necessary additional information. After the BLA is accepted for filing, the FDA commences its substantive
review of the BLA. The FDA reviews the BLA to determine, among other things, whether the proposed product is safe, potent, and/or effective
for its intended use, has an acceptable purity profile, and whether the product’s manufacturing is consistent with current Good
Manufacturing Processes (“cGMPs”) to ensure that the product meets the appropriate standards for identity, safety, strength,
quality, potency and purity.
The FDA may involve an advisory
committee for novel biological products that present complex questions of safety or efficacy. The advisory committee typically consists
of a panel that includes clinicians and other subject matter experts that assist with the reviewing and evaluating the product. While
the advisory committee provides a recommendation for whether the product should be approved and under what conditions, the FDA is not
bound to follow the recommendations. However, the advisory committee’s recommendations are usually given significant consideration.
The FDA may also consider
requiring a risk evaluation and mitigation strategy (“REMS”) if it determines that one is necessary to ensure that the biological
product is used safely. If the FDA requires a REMS, the BLA sponsor must develop and submit a proposed REMS for the BLA review process
to move forward.
The manufacturer of the biological
product is also subject to FDA inspection prior to the approval of the BLA. The purpose of the inspection is to determine whether the
manufacturer adequately complies with the applicable cGMP requirements to ensure that the biological product is manufactured safely and
within the required specifications. Additionally, the FDA may choose to inspect one or more clinical sites to assess compliance with IND
trial requirements and good clinical practices (“GCPs”). Compliance with cGMP and GCP requirements involves significant expenditures
of time, money, and effort for BLA sponsors due to associated training, recordkeeping, production, and quality control needs.
If the FDA decides not to
approve the BLA in the form submitted, it will issue what is called a complete response letter that outlines the specific deficiencies
it would like to see addressed. The deficiencies identified can be minor (e.g., labeling changes) or major (e.g., the need for additional
clinical trials). The complete response letter may also include recommended actions the applicant may take to move closer towards securing
an approval. At this point, applicants may choose to resubmit the BLA to address FDA’s concerns or withdraw the application.
In addition, under the Pediatric
Research Equity Act, a BLA or supplement to a BLA must contain data to assess the safety and effectiveness of the product for the claimed
indications in all relevant pediatric subpopulations and to support dosing and administration for each pediatric subpopulation for which
the product is safe and effective. The FDA may grant deferrals for submission of data or full or partial waivers.
Post-Approval Requirements
If the BLA is approved, the
FDA may include additional conditions as part of its approval, such as limiting the approval by designating specific diseases for which
the product may be used. Additionally, conditions may include requiring the labeling to include specific contraindications, warnings,
or precautions, requiring post marketing clinical trials (sometimes referred to as Phase 4 clinical trials), and implementation of surveillance
program to monitor the approved product once commercialized.
Products approved by the FDA
under a BLA are subject to ongoing regulatory requirements, including, among other things, record-keeping requirements, adverse event
reporting requirements, responsibility for reporting updated safety and efficacy information to FDA, sampling and distribution requirements,
complying with advertising and promotion requirements, and complying with cGMPs.
Quality control and manufacturing
procedures must continue to comply with cGMP requirements even after the BLA is approved. The cGMP regulations include, but are not limited
to, requirements to ensure quality control, maintain appropriate manufacturing records and documentation, and the obligation to investigate
and address deviations from cGMPs, when identified. Manufacturers are also required to register their establishments with the FDA and
certain state agencies. The establishments are also subject to unannounced inspections by regulators.
The advertising and promotion
of drug and biologic products are also subject to specific laws and regulations. These authorities provide standards for direct-to-consumer
advertising, restrictions on promoting products for uses or to patient populations that are not described in the product’s approved
uses, known as “off-label” use, limitations on industry-sponsored scientific and educational activities, and requirements
for promotional activities involving the internet.
Regulatory Enforcement
Failure to comply with applicable
regulatory requirements can result in enforcement action by the FDA, the Nuclear Regulatory Commission or other regulatory authorities,
which may result in sanctions, including but not limited to, untitled letters, warning letters, fines, injunctions, consent decrees and
civil penalties; customer notifications or repair, replacement, refunds, recall, detention or seizure of our products; operating restrictions
or partial suspension or total shutdown of production; refusing or delaying our requests for BLA premarket approval of new products or
modified products; withdrawing BLA approvals that have already been granted; and refusal to grant export.
Additional Healthcare Laws
In addition to FDA regulations,
several other types of state and federal laws may restrict our business activities, including certain healthcare laws. These laws include,
without limitation, anti-kickback laws, false claims laws, data privacy and security laws, as well as transparency laws regarding payments
or other items of value provided to healthcare providers.
The federal Anti-Kickback
Statute prohibits, among other things, knowingly and willfully offering, paying, soliciting or receiving remuneration to induce or in
return for purchasing, leasing, ordering or arranging for the purchase, lease or order of any healthcare item, good, facility or service
reimbursable under Medicare, Medicaid or other federal healthcare programs. The term “remuneration” has been broadly interpreted
to include anything of value. This 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. Although there are a number of statutory exceptions and regulatory
safe harbors protecting certain common activities from prosecution or other regulatory sanctions, the exceptions and safe harbors are
drawn narrowly and arrangements must meet every element to qualify for an exception or safe harbor. Failure to meet all of the requirements
of a particular applicable statutory exception or regulatory safe harbor does not make the conduct per se illegal under the federal
Anti-Kickback Statute. Instead, the arrangement will be evaluated on a case-by-case basis based on the facts and circumstances involved.
Courts have interpreted the statute’s intent requirement to mean that if any one purpose of an arrangement involving remuneration
is to induce referrals of federal healthcare program business, the federal Anti-Kickback Statute has been violated. Additionally, the
intent standard under the federal Anti-Kickback Statute was amended by the Patient Protection and Affordable Care Act of 2010, as amended
by the Health Care and Education Reconciliation Act of 2010, collectively the “Affordable Care Act,” to a stricter standard
such that a person or entity no longer needs to have actual knowledge of the statute or specific intent to violate it in order to have
committed a violation. In addition, the Affordable Care Act codified case law that a violation of the federal Anti-Kickback Statute constitutes
a false or fraudulent claim for purposes of the federal False Claims Act.
Federal false claims laws,
including the federal False Claims Act, and civil monetary penalties laws, prohibit any person or entity from, among other things, knowingly
presenting, or causing to be presented, a false claim for payment to the federal government, or knowingly making, or causing to be made,
a false statement to have a false claim paid. Whistleblower or qui tam provisions under the False Claims Act permit whistleblowers to
sue in the name of the federal government for False Claims Act violations, and to share in the recovery from any award. Pharmaceutical
and other healthcare companies have been prosecuted under these laws for, among other things, allegedly inflating drug prices they report
to pricing services, which in turn were used by the government to set Medicare and Medicaid reimbursement rates, and for allegedly providing
free product to customers with the expectation that the customers would bill federal programs for the product. In addition, certain marketing
practices, including off-label promotion, may also violate false claims laws.
The federal Health Insurance
Portability and Accountability Act of 1996, or HIPAA, created additional federal civil and criminal statutes that prohibit among other
actions, knowingly and willfully executing, or attempting to execute, a scheme to defraud any healthcare benefit program, including private
third-party payors, knowingly and willfully embezzling or stealing from a healthcare benefit program, willfully obstructing a criminal
investigation of a healthcare offense, and knowingly and willfully falsifying, concealing or covering up a material fact or making any
materially false, fictitious or fraudulent statement in connection with the delivery of or payment for healthcare benefits, items or services.
Like the federal Anti-Kickback Statute, the Affordable Care Act amended the intent standard for certain healthcare fraud under HIPAA such
that a person or entity no longer needs to have actual knowledge of the statute or specific intent to violate it in order to have committed
a violation.
In addition, if we engage
in certain activities, we may be subject to data privacy and security regulation under HIPAA, as amended by the Health Information Technology
for Economic and Clinical Health Act, or HITECH. HIPAA imposes certain requirements on covered entities, which include certain healthcare
providers, health plans and healthcare clearinghouses, and their business associates and covered subcontractors that receive or obtain
protected health information in connection with providing a service on behalf of a covered entity that involves the use or disclosure
of individually identifiable health information.
Additionally, the federal
Physician Payments Sunshine Act, created under the Affordable Care Act, and its implementing regulations, require certain manufacturers
of drugs, devices, biologicals and medical supplies for which payment is available under Medicare, Medicaid or the Children’s Health
Insurance Program (with certain exceptions) to report annually information related to certain payments or other transfers of value provided
to physicians and any ownership and investment interests held by physicians or their immediate family members. Beginning in 2022, applicable
manufacturers also will be required to report such information regarding payments and other transfers of value to physician assistants,
nurse practitioners, clinical nurse specialists, anesthesiologist assistants, certified registered nurse anesthetists and certified nurse
midwives during the previous year.
The majority of states also
have statutes or regulations similar to the aforementioned federal healthcare laws, including fraud and abuse laws, some of which are
broader in scope and apply to items and services reimbursed under Medicaid and other state programs, or, in some states, apply regardless
of the payor. Many states also have some form of health information privacy or data security laws that could apply. Further, some state
laws require pharmaceutical companies to comply with the pharmaceutical industry’s voluntary compliance guidelines and the relevant
compliance guidance promulgated by the federal government in addition to requiring drug manufacturers to report information related to
payments or other transfers of value provided to physicians and other healthcare providers and entities, marketing expenditures, or drug
pricing. Certain state and local laws also require the registration of pharmaceutical sales representatives.
If our operations are found
to be in violation of any of the healthcare regulatory laws described above or any other laws that apply to us, we may be subject to potentially
significant criminal, civil and administrative penalties, damages, fines, disgorgement, imprisonment, additional reporting obligations
and oversight (if we become subject to a corporate integrity agreement or other agreement to resolve allegations of non-compliance with
these laws), exclusion from participation in government healthcare programs, as well as contractual damages, reputational harm, administrative
burdens, diminished profits and future earnings, and the curtailment or restructuring of our operations, any of which could adversely
affect our ability to operate our business and our results of operations.
Employees
As of March 25, 2022, we have
32 full-time employees including 20 with M.D., Ph.D. or other advanced degrees.
We believe that our future
success largely depends upon our continued ability to attract and retain highly skilled employees. We provide our employees with competitive
salaries and bonuses, opportunity for equity ownership, development programs that enable continued learning and growth, and an employment
package that promotes wellness across all aspects of their lives, including healthcare, retirement planning, and paid time off. None of
these employees are covered by a collective bargaining agreement, and we believe our relationship with our employees is good. We also
engage consultants on an as-needed basis to supplement existing staff.
Recent Developments
Impact of COVID–19 Pandemic
The global health crisis
caused by the novel coronavirus COVID-19 pandemic and its resurgences has and may continue to negatively impact global economic activity,
which, despite progress in vaccination efforts, remains uncertain and cannot be predicted with confidence. In addition, the Omicron variant
of COVID-19, which appears to be the most transmissible variant to date, has spread globally. The full impact of the Omicron variant,
or any subsequent variant, cannot be predicted at this time, and could depend on numerous factors, including vaccination rates among
the population, the effectiveness of COVID-19 vaccines against the Omicron variant and the response by governmental bodies and regulators.
Given the ongoing and dynamic nature of the circumstances, it is difficult to predict the impact of the COVID-19 pandemic on our business.
Many countries around the
world have continued to impose quarantines and restrictions on travel and mass gatherings to slow the spread of the virus. Accordingly,
our ability to continue to operate our business may also be limited. Such events may result in a period of business, supply and drug
product manufacturing disruption, and in reduced operations, any of which could materially affect our business, financial condition and
results of operations. In response to COVID-19, we implemented remote working and thus far have not experienced a significant disruption
or delay in our operations as it relates to the clinical development of our drug candidates. Such government-imposed precautionary measures
may have been relaxed in certain countries or states, but there is no assurance that more strict measures will be put in place again
due to a resurgence in COVID-19 cases, including those involving new variants of the coronavirus, which may be more contagious and deadly
than prior strains. Therefore, the COVID-19 pandemic may continue to affect our operation, may further divert the attention and efforts
of the medical community to coping with COVID-19 and disrupt the marketplace in which we operate and may have a material adverse effect
on our operations.
A continuation or worsening
of the levels of market disruption and volatility seen in the recent past could have an adverse effect on our ability to access capital,
which could in the future negatively affect our liquidity. In addition, a recession or market correction resulting from the spread of
COVID-19 could materially affect our business and the value of our common stock.
We believe our earlier stage
CD33 clinical trials will continue to recruit and enroll patients given the acute nature of relapsed or refractory AML. The continuation
of the pandemic could adversely affect our planned clinical trial operations, including our ability to conduct the trials on the expected
timelines and recruit and retain patients and principal investigators and site staff who, as healthcare providers, may have heightened
exposure to COVID-19 if their geography is impacted by the pandemic. Further, the continuation and/or resurgence of the COVID-19 pandemic
could result in delays in our clinical trials due to prioritization of hospital resources toward the pandemic, restrictions in travel,
potential unwillingness of patients to enroll in trials at this time, or the inability of patients to comply with clinical trial protocols
if quarantines or travel restrictions impede patient movement or interrupt healthcare services. In addition, we rely on independent clinical
investigators, contract research organizations and other third-party service providers to assist us in managing, monitoring and otherwise
carrying out our preclinical studies and clinical trials, and the pandemic may affect their ability to devote sufficient time and resources
to our programs or to travel to sites to perform work for us, which may result in delays or hinder our ability to collect data from our
clinical trials.
Additionally, COVID-19 may
result in delays in receiving approvals from local and foreign regulatory authorities, delays in necessary interactions with IRB’s
or Institutional Review Boards, local and foreign regulators, ethics committees and other important agencies and contractors due to limitations
in employee resources or forced furlough of government employees.
To date, COVID-19 has not
had a financial impact on our company. We continue to monitor the impacts of COVID-19 on the global economy and on our business operations.
Although we expect that vaccinations for COVID-19 will continue to improve conditions, the ultimate impact from COVID-19 on our business
operations and financial results during 2022 will depend on, among other things, the ultimate severity and scope of the pandemic, including
the new variants of the virus, the pace at which governmental and private travel restrictions and public concerns about public gatherings
will ease, the rate at which historically large increases in unemployment rates will decrease, if at all, and whether, and the speed with
which the economy recovers. We are not able to fully quantify the impact that these factors will have on our financial results during
2022 and beyond.
ITEM 1A. RISK FACTORS
In analyzing our company,
you should consider carefully the following risk factors, together with all of the other information included in this Annual Report on
Form 10-K. Factors that could cause or contribute to differences in our actual results include those discussed in the following subsection,
as well as those discussed above in “Management’s Discussion and Analysis of Financial Condition and Results of Operations”
and elsewhere throughout this Annual Report on Form 10-K. Each of the following risk factors, either alone or taken together, could
adversely affect our business, operating results and financial condition, as well as adversely affect the value of an investment in our
company. The risks and uncertainties described below are not the only ones we face. Additional risks not currently known to us or other
factors not perceived by us to present significant risks to our business at this time also may impair our business operations.
Summary of Risk Factors
We are providing the following
summary of the risk factors contained in this Annual Report on Form 10-K to enhance the readability and accessibility of our risk factor
disclosures. We encourage you to carefully review the full risk factors contained in this Annual Report on Form 10-K in their entirety
for additional information regarding the material factors that make an investment in our securities speculative or risky. These risks
and uncertainties include, but are not limited to, the following:
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We are a clinical-stage company and have generated no revenue from commercial sales to date; |
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We have incurred net losses in every year since our inception and anticipate that we will continue to incur net losses in the future; |
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If we fail to obtain additional financing, we will be unable to continue or complete our product development and you will likely lose your entire investment; |
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We are highly dependent on
the success of Iomab-B and the SIERRA trial and we may not be able to complete the necessary clinical development or our development
efforts may not result in the data necessary to receive regulatory approval; |
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Our business could be adversely affected by the effects of health epidemics, including the global COVID-19 pandemic; |
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We have not demonstrated that any of our products are safe and effective for any indication and will continue to expend substantial time and resources on clinical development before any of our current or future product candidates will be eligible for FDA approval, if ever; |
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Our clinical trials may fail to demonstrate adequately the efficacy and safety of our product candidates, which would prevent or delay regulatory approval and commercialization; |
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Preliminary, Interim, and “top-line” 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.; |
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Healthcare legislative reform measures intended
to increase pressure to reduce prices of pharmaceutical products paid for by Medicare or, otherwise, affect the federal regulation of
the U.S. healthcare system could have a material adverse effect our business, future revenue, if any, and results of operations;
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We rely on third parties to conduct our clinical trials. If these third parties do not successfully carry out their contractual duties or meet expected deadlines or comply with regulatory requirements, we may not be able to obtain regulatory approval for or commercialize our product candidates; |
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We currently depend on a single third-party manufacturer to produce our pre-clinical and clinical trial drug supplies. Any disruption in the operations of our current third-party manufacturer, or other third-party manufacturers we may engage in the future, could adversely affect our business and results of operations; |
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Our product candidates may cause undesirable side effects or have other properties that could halt their clinical development, prevent their regulatory approval, limit their commercial potential, or result in significant negative consequences; |
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Our patent position is highly uncertain and involves complex legal and factual questions. |
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The use of hazardous materials, including radioactive and biological materials, in our research and development efforts imposes certain compliance costs on us and may subject us to liability for claims arising from the use or misuse of these materials; |
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We are highly dependent on our key personnel, and the demand for talent
in the biotechnology industry is highly competitive; if we are not successful in attracting and retaining highly qualified personnel,
we may not be able to successfully implement or execute our business strategy; |
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Certain provisions of our Certificate of Incorporation and Bylaws and Delaware law make it more difficult for a third party to acquire us and make a takeover more difficult to complete, even if such a transaction were in our stockholders’ interest; and |
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Our ability to utilize our net operating loss carryforwards and certain other tax attributes may be limited. |
Risks Related to Our Business
We are a clinical-stage company and have
generated no revenue from commercial sales to date.
We are a clinical-stage biopharmaceutical
company with a limited operating history. We have no products approved for commercial sale and have not generated any revenue from product
sales to date. We will encounter risks and difficulties frequently experienced by early-stage companies in rapidly evolving fields. If
we do not address these risks successfully, our business will suffer.
We have incurred net losses in every year
since our inception and anticipate that we will continue to incur net losses in the future.
We are not profitable and
have incurred losses in each period since our inception. As of December 31, 2021 and December 31, 2020, we had an accumulated deficit
of $255.7 million and $231.0 million, respectively. We reported a net loss of $24.8 million and $22.2 million for the years ended December
31, 2021 and 2020, respectively. We expect to continue to operate at a net loss as we continue our research and development efforts, continue
to conduct clinical trials and develop manufacturing, sales, marketing and distribution capabilities. There can be no assurance that the
products under development by us will be approved for sale in the United States or elsewhere. Furthermore, there can be no assurance that
if such products are approved, they will be successfully commercialized, which would have an adverse effect on our business prospects,
financial condition and results of operation.
If we fail to obtain additional financing,
we will be unable to continue or complete our product development and you will likely lose your entire investment.
In August 2020, we entered
into the Capital on Demand™ Sales Agreement with JonesTrading, pursuant to which we may sell, from time to time, through or to JonesTrading,
up to an aggregate of $200 million of our common stock. Shares of common stock are offered pursuant to our shelf registration statement
filed with the SEC on August 7, 2020. For the year ended December 31, 2021, we sold 4.6 million shares of common stock, resulting in net
proceeds of $35.3 million. As of the date of filing this report, we expect that our existing resources will be more than sufficient to
fund our planned operations for more than 12 months following the date of this report.
Our business or operations
may change in a manner that would consume available funds more rapidly than anticipated and substantial additional funding may be required
to maintain operations, fund expansion, develop new or enhanced products, acquire complementary products, business or technologies or
otherwise respond to competitive pressures and opportunities, such as a change in the regulatory environment or a change in preferred
cancer treatment modalities. However, we may not be able to secure funding when we need it or on favorable terms or indeed on any terms.
In addition, from time to time, we may not be able to secure enough capital in a timely enough manner which may cause the generation of
a going-concern opinion from our auditors which can and may impair our stock market valuation and also our ability to finance on favorable
terms or indeed on any terms.
To raise additional capital,
we may in the future offer additional shares of our common stock or other securities convertible into or exchangeable for our common stock.
We cannot assure you that we will be able to sell shares or other securities in any other offering at a price per share that is equal
to or greater than the price per share paid by investors, and investors purchasing shares or other securities in the future could have
rights superior to existing stockholders.
If we cannot raise adequate
funds to satisfy our capital requirements, we will have to delay, scale back or eliminate our research and development activities, clinical
studies or future operations. We may also be required to obtain funds through arrangements with collaborators, which arrangements may
require us to relinquish rights to certain technologies or products that we otherwise would not consider relinquishing, including rights
to future product candidates or certain major geographic markets. We may further have to license our technology to others. This could
result in sharing revenues which we might otherwise have retained for ourselves. Any of these actions may harm our business, financial
condition and results of operations.
The amount of funding we will
need depends on many factors, including the progress, timing and scope of our product development programs; the progress, timing and scope
of our preclinical studies and clinical trials; the time and cost necessary to obtain regulatory approvals; the time and cost necessary
to further develop manufacturing processes and arrange for contract manufacturing; our ability to enter into and maintain collaborative,
licensing and other commercial relationships; and our partners’ commitment of time and resources to the development and commercialization
of our products.
We have limited access to the capital markets
and even if we can raise additional funding, we may be required to do so on terms that are dilutive to you.
We have limited access to
the capital markets to raise funds. The capital markets have been unpredictable in the recent past for radioisotope and other oncology
companies and unprofitable companies such as ours. In addition, it is generally difficult for development-stage companies to raise capital
under current market conditions. The amount of capital that a company such as ours is able to raise often depends on variables that are
beyond our control. As a result, we may not be able to secure financing on terms attractive to us, or at all. If we are able to consummate
a financing arrangement, the amount raised may not be sufficient to meet our future needs. If adequate funds are not available on acceptable
terms, or at all, our business, including our technology licenses, results of operations, financial condition and our continued viability
will be materially adversely affected.
We are highly dependent on the success of Iomab-B
and the SIERRA trial and we may not be able to complete the necessary clinical development or our development efforts may not result in
the data necessary to receive regulatory approval.
We have completed patient
enrollment in the pivotal Phase 3 SIERRA trial (Study of Iomab-B in Elderly Relapsed or Refractory AML), a 150-patient multi-center randomized
trial that will compare outcomes of patients who receive Iomab-B and a BMT to those patients receiving physician’s choice of salvage
chemotherapy, defined as conventional care, as no standard of care exists for this patient population. The SIERRA trial may be unsuccessful
and fail to demonstrate a safety and efficacy profile that is necessary to receive favorable regulatory approval. Even if Iomab-B receives
favorable regulatory approval, we may not be successful in securing adequate reimbursement or establishing successful commercial operations.
Any or all of these factors could have a material adverse impact on our business and ability to continue operations.
We may be unable to establish sales, marketing
and commercial supply capabilities.
We do not currently have,
nor have we ever had, commercial sales and marketing capabilities. If any of our product candidates become approved, we would have to
build and establish these capabilities in order to commercialize our approved product candidates. The process of establishing commercial
capabilities will be expensive and time consuming. Even if we are successful in building sales and marketing capabilities, we may not
be successful in commercializing any of our product candidates. Any delays in commercialization or failure to successfully commercialize
any product candidate may have material adverse impacts on our business and ability to continue operations.
Our business could be adversely affected
by the effects of health epidemics, including the global COVID-19 pandemic.
The global health crisis
caused by the novel coronavirus COVID-19 pandemic and its resurgences has and may continue to negatively impact global economic activity,
which, despite progress in vaccination efforts, remains uncertain and cannot be predicted with confidence. In addition, the Omicron variant
of COVID-19, which appears to be the most transmissible variant to date, has spread globally. The full impact of the Omicron variant,
or any subsequent variant, cannot be predicted at this time, and could depend on numerous factors, including vaccination rates among
the population, the effectiveness of COVID-19 vaccines against the Omicron variant and the response by governmental bodies and regulators.
Given the ongoing and dynamic nature of the circumstances, it is difficult to predict the impact of the COVID-19 pandemic on our business.
Many countries around the
world have continued to impose quarantines and restrictions on travel and mass gatherings to slow the spread of the virus. Accordingly,
our ability to continue to operate our business may also be limited. Such events may result in a period of business, supply and drug
product manufacturing disruption, and in reduced operations, any of which could materially affect our business, financial condition and
results of operations. In response to COVID-19, we implemented remote working and thus far have not experienced a significant disruption
or delay in our operations as it relates to the clinical development of our drug candidates. Such government-imposed precautionary measures
may have been relaxed in certain countries or states, but there is no assurance that more strict measures will be put in place again
due to a resurgence in COVID-19 cases, including those involving new variants of the coronavirus, which may be more contagious and deadly
than prior strains. Therefore, the COVID-19 pandemic may continue to affect our operation, may further divert the attention and efforts
of the medical community to coping with COVID-19 and disrupt the marketplace in which we operate and may have a material adverse effect
on our operations.
A continuation or worsening
of the levels of market disruption and volatility seen in the recent past could have an adverse effect on our ability to access capital,
which could in the future negatively affect our liquidity. In addition, a recession or market correction resulting from the spread of
COVID-19 could materially affect our business and the value of our common stock.
We believe our earlier stage
CD33 clinical trials will continue to recruit and enroll patients given the acute nature of relapsed or refractory AML. The continuation
of the pandemic could adversely affect our planned clinical trial operations, including our ability to conduct the trials on
the expected timelines and recruit and retain patients and principal investigators and site staff who, as healthcare providers, may have
heightened exposure to COVID-19 if their geography is impacted by the pandemic. Further, the continuation and/or resurgence of the COVID-19
pandemic could result in delays in our clinical trials due to prioritization of hospital resources toward the pandemic, restrictions in
travel, potential unwillingness of patients to enroll in trials at this time, or the inability of patients to comply with clinical trial
protocols if quarantines or travel restrictions impede patient movement or interrupt healthcare services. In addition, we rely on independent
clinical investigators, contract research organizations and other third-party service providers to assist us in managing, monitoring and
otherwise carrying out our preclinical studies and clinical trials, and the pandemic may affect their ability to devote sufficient time
and resources to our programs or to travel to sites to perform work for us, which may result in delays or hinder our ability to collect
data from our clinical trials.
Additionally, COVID-19 may
result in delays in receiving approvals from domestic and foreign regulatory authorities, delays in necessary interactions with Institutional
Review Boards (“IRBs”), domestic and foreign regulators, ethics committees and other important agencies and contractors due
to limitations in employee resources or forced furlough of government employees.
We continue to monitor the
impacts of COVID-19 on the global economy and on our business operations. However, the ultimate impact from COVID-19 on our business
operations and financial results during 2022 will depend on, among other things, the ultimate severity and scope of the pandemic, including
the new variants of the virus, the pace at which governmental and private travel restrictions and public concerns about public gatherings
will ease, the rate at which historically large increases in unemployment rates will decrease, if at all, and whether, and the speed
with which the economy recovers. We are not able to fully quantify the impact that these factors will have on our financial results during
2022 and beyond.
Our business is subject to cybersecurity
risks.
Our operations are increasingly
dependent on information technologies and services. Threats to information technology systems associated with cybersecurity risks and
cyber incidents or attacks continue to grow, and include, among other things, storms and natural disasters, terrorist attacks, utility
outages, theft, viruses, phishing, malware, design defects, human error, and complications encountered as existing systems are maintained,
repaired, replaced, or upgraded. Risks associated with these threats include, among other things:
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theft or misappropriation of funds; |
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loss, corruption, or misappropriation of intellectual property, or other proprietary, confidential or personally identifiable information (including supplier, clinical data or employee data); |
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disruption or impairment of our and our business operations and safety procedures; |
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damage to our reputation with our potential partners, patients and the market; |
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exposure to litigation; |
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increased costs to prevent, respond to or mitigate cybersecurity events. |
Although we utilize various
procedures and controls to mitigate our exposure to such risk, cybersecurity attacks and other cyber events are evolving and unpredictable.
Moreover, we have no control over the information technology systems of third parties conducting our clinical trials, our suppliers, and
others with which our systems may connect and communicate. As a result, the occurrence of a cyber incident could go unnoticed for a period
time.
We have cybersecurity insurance
coverage in the event we become subject to various cybersecurity attacks, however, we cannot ensure that it will be sufficient to cover
any particular losses we may experience as a result of such cyberattacks. Any cyber incident could have a material adverse effect on our
business, financial condition and results of operations.
Risks Related to Regulation
The FDA or comparable foreign regulatory
authorities may disagree with our regulatory plans and we may fail to obtain regulatory approval of our product candidates.
Our products are subject to
rigorous regulation by the FDA and numerous other federal, state and foreign governmental authorities. The process of seeking regulatory
approval to market an antibody radiation-conjugate product is expensive and time-consuming, and, notwithstanding the effort and expense
incurred, approval is never guaranteed. If we are not successful in obtaining timely approval of our products from the FDA, we may never
be able to generate significant revenue and may be forced to cease operations. In particular, the FDA permits commercial distribution
of a new antibody radiation-conjugate product only after a BLA for the product has received FDA approval. The BLA process is costly, lengthy
and inherently uncertain. Any BLA filed by us will have to be supported by extensive data, including, but not limited to, technical, preclinical,
clinical trial, chemistry, manufacturing and controls (“CMC”) and labeling data, to demonstrate to the FDA’s satisfaction
the safety and efficacy of the product for its intended use. The lengthy approval process as well as the unpredictability of future clinical
trial results may result in our failing to obtain regulatory approval to market our product candidates, which would significantly harm
our business, results of operations and prospects. In addition, even if we were to obtain approval, regulatory authorities may approve
any of our product candidates for fewer or more limited indications than we request, may not approve the price we intend to charge for
our products, may grant approval contingent on the performance of costly post-marketing clinical trials, or 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.
The approval process in the
United States and in other countries could result in unexpected and significant costs for us and consume management’s time and other
resources. The FDA and other foreign regulatory agencies could ask us to supplement our submissions, collect non-clinical data, conduct
additional clinical trials or engage in other time-consuming actions, or it could simply deny our applications. In addition, even if we
obtain approval to market our products in the United States or in other countries, the approval could be revoked, or other restrictions
imposed if post-market data demonstrates safety issues or lack of effectiveness. We cannot predict with certainty how, or when, the FDA
or other regulatory authorities will act. If we are unable to obtain the necessary regulatory approvals, our financial condition and cash
flow may be materially adversely affected, and our ability to grow domestically and internationally may be limited. Additionally, even
if we obtain approval, regulatory authorities may approve any of our product candidates for fewer or more limited indications that we
request. The Company’s products may not be approved for the specific indications that are most necessary or desirable for successful
commercialization or profitability.
We have not demonstrated that any of our
products are safe and effective for any indication and will continue to expend substantial time and resources on clinical development
before any of our current or future product candidates will be eligible for FDA approval, if ever.
We expect that a substantial portion of our efforts
and expenditures over the next few years will be devoted to development of our existing and contemplated biological product candidates.
Accordingly, our business currently depends heavily on the successful development, FDA approval, and commercialization of such candidates,
which may never receive FDA approval or be successfully commercialized even if FDA approval is received. The research, testing, manufacturing,
labeling, approval, sale, marketing, and distribution of our biological product candidates are, and will remain, subject to extensive
regulation by the FDA and other regulatory authorities in the United States and other countries, as applicable. We are currently not permitted
to market any of our current or future product candidates in the United States until we receive FDA approval (of each) via the BLA process.
To date, we have two product candidates in clinical development and have not-yet submitted a BLA for any of our candidates and, for many
such candidates, do not expect to be in a position to do so for the foreseeable future, as there are numerous developmental steps that
must be completed before we can prepare and submit a BLA.
In the United States, the
FDA regulates pharmaceutical and biological product candidates under the FDCA and the Public Health Service Act (“PHSA”),
as well as their respective implementing regulations. Such products and product candidates are also subject to other federal, state, and
local statutes and regulations. The process of obtaining regulatory approvals and the subsequent compliance with appropriate federal,
state, local, and foreign statutes and regulations requires the expenditure of substantial time and financial resources. The process required
by the FDA before a drug or biological product may be marketed in the United States generally involves the following:
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completion of preclinical laboratory tests and animal studies in accordance with FDA’s good laboratory practices (“GLPs”) and applicable requirements for the humane use of laboratory animals or other applicable regulations; |
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submission to the FDA of an Investigational New Drug (“IND”), which must become effective before human clinical trials in the United States may begin; |
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performance of adequate and well-controlled human clinical trials in accordance with FDA’s IND regulations, GCPs, and any additional requirements for the protection of human research subjects and their health information, to establish the safety and efficacy of the proposed biological product for its intended use; |
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submission to the FDA of a BLA for marketing approval that meets applicable requirements to ensure the continued safety, purity, and potency of the product that is the subject of the BLA based on results of preclinical testing and clinical trials; |
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satisfactory completion of an FDA inspection of the manufacturing facility or facilities where the biological product is produced, to assess compliance with cGMPs and assure that the facilities, methods and controls are adequate to preserve the biological product’s identity, strength, quality and purity; |
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potential FDA audit of the nonclinical study and clinical trial sites that generated the data in support of the BLA; and |
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FDA review and approval, or denial, of the BLA. |
Before testing any biological
product candidate in humans, the product candidate enters the preclinical testing stage. Preclinical tests include laboratory evaluations
of product chemistry, toxicity and formulation, as well as animal studies to assess the potential safety and activity of the product candidate.
The conduct of the preclinical tests must comply with federal regulations and requirements including GLPs. The clinical trial sponsor
must submit the results of the preclinical tests, together with manufacturing information, analytical data, any available clinical data
or literature and a proposed clinical protocol, to the FDA as part of the IND. Some preclinical testing may continue even after the IND
is submitted. The IND automatically becomes effective 30 days after receipt by the FDA, unless the FDA raises concerns or questions regarding
the proposed clinical trials and places the trial on a clinical hold within that 30-day time period. In such a case, the IND sponsor and
the FDA must resolve any outstanding concerns before the clinical trial can begin. The FDA may also impose clinical holds on a biological
product candidate at any time before or during clinical trials due to safety concerns or non-compliance. If the FDA imposes a clinical
hold, trials may not recommence without FDA authorization and then only under terms authorized by the FDA. Accordingly, we cannot be sure
that submission of an IND will result in the FDA allowing clinical trials to begin or that, for those that have already commenced under
an active IND, that issues will not arise that suspend or terminate such trials.
Clinical trials involve the
administration of the biological product candidate to healthy volunteers or patients under the supervision of qualified investigators,
generally physicians not employed by or under the trial sponsor’s control. Clinical trials are conducted under protocols detailing,
among other things, the objectives of the clinical trial, dosing procedures, subject selection and exclusion criteria, and the parameters
to be used to monitor subject safety, including stopping rules that assure a clinical trial will be stopped if certain adverse events
should occur. Each protocol and any amendments to the protocol must be submitted to the FDA as part of the IND. Clinical trials must be
conducted and monitored in accordance with the FDA’s regulations composing the GCP requirements, including the requirement that
all research subjects provide informed consent. Further, each clinical trial must be reviewed and approved by an independent institutional
review board, or IRB, at or servicing each institution at which the clinical trial will be conducted. An IRB is charged with protecting
the welfare and rights of trial participants and considers such items as whether the risks to individuals participating in the clinical
trials are minimized and are reasonable in relation to anticipated benefits. The IRB also approves the form and content of the informed
consent that must be signed by each clinical trial subject or his or her legal representative and must monitor the clinical trial until
completed. Human clinical trials are typically conducted in three sequential phases that may overlap or be combined:
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Phase 1. The biological product is initially introduced into healthy human subjects and tested for safety. In the case of some products for severe or life-threatening diseases, especially when the product may be too inherently toxic to ethically administer to healthy volunteers, the initial human testing is often conducted in subjects. |
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Phase 2. The biological product is evaluated in a limited patient population to identify possible adverse effects and safety risks, to preliminarily evaluate the efficacy of the product for specific targeted diseases and to determine dosage tolerance, optimal dosage and dosing schedule. |
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Phase 3. Clinical trials are undertaken to further evaluate dosage, clinical efficacy, potency, and safety in an expanded patient population at geographically dispersed clinical trial sites. These clinical trials are intended to establish the overall risk to benefit ratio of the product and provide an adequate basis for product labeling. |
Post-approval clinical trials,
sometimes referred to as Phase 4 clinical trials, may be conducted after initial marketing approval. These clinical trials are used to
gain additional experience from the treatment of patients in the intended therapeutic indication, particularly for long-term safety follow-up.
After the completion of clinical
trials of a biological product, FDA approval of a BLA must be obtained before commercial marketing of the biological product. The BLA
must include results of product development, laboratory and animal studies, human trials, information on the manufacture and composition
of the product, proposed labeling and other relevant information. The FDA may grant deferrals for submission of data, or full or partial
waivers. The testing and approval processes require substantial time and effort and there can be no assurance that the FDA will accept
the BLA for filing and, even if filed, that any approval will be granted on a timely basis, if at all. Before approving a BLA, the FDA
will inspect the facilities at which the product is manufactured. The FDA will not approve the product unless it determines that the manufacturing
processes and facilities are in compliance with cGMP requirements and adequate to assure consistent production of the product within required
specifications. Additionally, before approving a BLA, the FDA will typically inspect one or more clinical sites to assure that the clinical
trials were conducted in compliance with IND trial requirements and GCP requirements. To assure cGMP and GCP compliance, an applicant
must incur significant expenditure of time, money and effort in the areas of training, record keeping, production, and quality control.
Notwithstanding the submission
of relevant data and information, the FDA may ultimately decide that the BLA does not satisfy its regulatory criteria for approval and
deny approval. Data obtained from clinical trials are not always conclusive and the FDA may interpret data differently than we interpret
the same data. Our product candidates are in the earliest stages of clinical development and, therefore, a long way from BLA submission.
We cannot predict with any certainty if or when we might submit a BLA for regulatory approval for our product candidates or whether any
such BLA will be approved by the FDA. Human clinical trials are very expensive and difficult to design and implement, in part because
they are subject to rigorous regulatory requirements. For example, the FDA may not agree with our proposed endpoints for any clinical
trial we propose, which may delay the commencement of our clinical trials. The clinical trial process is also lengthy and requires substantial
time and effort.
In December 2015, the FDA
cleared our IND filing for Iomab-B and we have completed patient enrollment of a randomized, controlled, pivotal Phase 3 clinical trial
under such IND to study Iomab-B in patients 55 years of age or older with relapsed or refractory AML. Assuming the Phase 3 trial meets
its endpoints and there are no unexpected issues or delays, it is expected to form the basis for a BLA for Iomab-B for use in preparing
and conditioning AML patients for a BMT. Additionally, there are physician IND trials at the FHCRC that have been conducted or are currently
ongoing at FHCRC with Iomab-B (for other target indications) and the apamistamab antibody (formerly known as BC8) we licensed. And, we
have multiple Phase 1 and Phase 2 clinical trials ongoing and others that we have planned but not-yet commenced, for our other drug candidates
under our own sponsorship and multiple investigator-initiated trials ongoing. Except for Iomab-B (for patients with AML), we expect that
the clinical trials we need to conduct to be in a position to submit BLAs for our product candidates currently in-development will take,
at least, several years to complete. Moreover, failure can occur at any stage of the trials, and we could encounter problems that cause
us to abandon or repeat clinical trials. Also, the results of early preclinical and clinical testing may not be predictive of the results
of subsequent 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 studies. And, preclinical
and clinical data are often susceptible to multiple interpretations and analyses. Many companies that have believed their product candidates
performed satisfactorily in preclinical studies and clinical trials have, nonetheless, failed to obtain marketing approval of their products.
Success in preclinical testing and early clinical trials does not ensure that later clinical trials, which involve many more subjects,
and the results of later clinical trials may not replicate the results of prior clinical trials and preclinical testing. Any failure or
substantial delay in our product development plans may have a material adverse effect on our business.
We may encounter substantial delays in our
clinical trials or may not be able to conduct our trials on the timelines we expect.
We cannot predict whether
we will encounter problems with any of our ongoing or planned clinical trials that will cause us or regulatory authorities to delay, suspend,
or discontinue clinical trials or to delay the analysis of data from ongoing clinical trials. Any of the following could delay or disrupt
the clinical development of our product candidates and potentially cause our product candidates to fail to receive regulatory approval:
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conditions imposed on us by the FDA or comparable foreign authorities regarding the scope or design of our clinical trials; |
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delays in receiving, or the inability to obtain, required approvals from IRBs or other reviewing entities at clinical sites selected for participation in our clinical trials; |
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delays in enrolling patients into clinical trials; |
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a lower than anticipated retention rate of patients in clinical trials; |
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the need to repeat or discontinue clinical trials as a result of inconclusive or negative results or unforeseen complications in testing or because the results of later trials may not confirm positive results from earlier preclinical studies or clinical trials; |
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inadequate supply, delays in distribution, deficient quality of, or inability to purchase or manufacture drug product, comparator drugs or other materials necessary to conduct our clinical trials; |
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unfavorable FDA or other foreign regulatory inspection and review of a clinical trial site or records of any clinical or preclinical investigation; |
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serious and unexpected drug-related side effects experienced by participants in our clinical trials, which may occur even if they were not observed in earlier trials or only observed in a limited number of participants; |
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a finding that the trial participants are being exposed to unacceptable health risks; |
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the placement by the FDA or a foreign regulatory authority of a clinical hold on a trial; or |
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delays in obtaining regulatory agency authorization for the conduct of our clinical trials. |
We may suspend, or the FDA
or other applicable regulatory authorities may require us to suspend, clinical trials of a product candidate at any time if we or they
believe the patients participating in such clinical trials, or in independent third-party clinical trials for drugs based on similar technologies,
are being exposed to unacceptable health risks including but not limited to unacceptable or suboptimal factors related to toxicity, clinical
efficacy, imbalances in safety and efficacy profiles or for other reasons.
Further, individuals involved
with our clinical trials may serve as consultants to us from time to time and receive stock options or cash compensation in connection
with such services. If these relationships and any related compensation to the clinical investigator carrying out the study result in
perceived or actual conflicts of interest, or the FDA concludes that the financial relationship may have affected interpretation of the
study, the integrity of the data generated at the applicable clinical trial site may be questioned and the utility of the clinical trial
itself may be jeopardized. The delay, suspension or discontinuation of any of our clinical trials, or a delay in the analysis of clinical
data for our product candidates, for any of the foregoing reasons, could adversely affect our efforts 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.
Clinical trials may also be
delayed or terminated as a result of ambiguous or negative interim results. In addition, a clinical trial may be suspended or terminated
by us, the FDA, the IRBs at the sites where the IRBs are overseeing a trial, or a data safety monitoring board, or DSMB (Data Safety Monitoring
Board)/DMC (Data Monitoring Committee), overseeing the clinical trial at issue, or other regulatory authorities due to a number of factors,
including:
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failure to conduct the clinical trial in accordance with regulatory requirements or our clinical protocols; |
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inspection of the clinical trial operations or trial sites by the FDA or other regulatory authorities resulting in the imposition of a clinical hold; |
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varying interpretation of data by the FDA or similar foreign regulatory authorities; |
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failure to achieve primary or secondary endpoints or other failure to demonstrate efficacy; |
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unforeseen safety issues; or |
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lack of adequate funding to continue the clinical trial. |
Modifications to our product candidates
may require federal approvals.
The BLA application is the
vehicle through which the company may formally propose that the FDA approve a new pharmaceutical for sale and marketing in the United
States. Once a particular product candidate receives FDA approval, expanded uses or uses in new indications of our products may require
additional human clinical trials and new regulatory approvals, including additional IND and BLA submissions and premarket approvals before
we can begin clinical development, and/or prior to marketing and sales. If the FDA requires new approvals for a particular use or indication,
we may be required to conduct additional clinical studies, which would require additional expenditures and harm our operating results.
If the products are already being used for these new indications, we may also be subject to significant enforcement actions.
Conducting clinical trials
and obtaining approvals is a time-consuming process, and delays in obtaining required future approvals could adversely affect our ability
to introduce new or enhanced products in a timely manner, which in turn would have an adverse effect on our business prospects, financial
condition and results of operation.
The FDA or comparable foreign regulatory
authorities may disagree with our regulatory plans, and we may fail to obtain regulatory approval of our product candidates.
In June 2012, we acquired
rights to apamistamab, a clinical stage anti-CD45 monoclonal antibody with safety and efficacy data in more than 300 patients in need
of a BMT. Iomab-B is our product candidate that links I-131 to apamistamab that is being studied in the pivotal Phase 3 SIERRA trial.
Product candidates utilizing apamistamab would require BLA approval before they can be marketed in the United States. We are also evaluating
Iomab-ACT, which uses a lower dose I-131 for lymphodepletion prior to CAR-T or adoptive cell therapy. We are currently evaluating clinical
trials that would use our construct for lymphodepletion. Our lintuzumab-Ac-225 product candidate is also being studied in several Phase
1 trials under our sponsorship and investigator-initiated trials in patients with r/r AML. Product candidates utilizing the lintuzumab
antibody would require BLA approval before they can be marketed in the United States. We are in the early stages of evaluating other product
candidates consisting of conjugates of Ac-225 with human or humanized antibodies for pre-clinical and clinical development in other types
of cancer. The FDA may not approve these products for the indications that are necessary or desirable for successful commercialization.
The FDA may fail to approve any BLA we submit for new product candidates or for new intended uses or indications for approved products
or future product candidates. Failure to obtain FDA approval for our products in the proposed indications would have a material adverse
effect on our business prospects, financial condition and results of operations.
Clinical trials necessary to support approval
of our product candidates are time-consuming and expensive.
Initiating and completing
clinical trials necessary to support FDA approval of a BLA for Iomab-B, CD33 program candidates, and other product candidates, is a time-consuming
and expensive process, and the outcome is inherently uncertain. Moreover, the results of early clinical trials are not necessarily predictive
of future results, and any product candidate we advance into clinical trials may not have favorable results in later clinical trials.
We worked with the FDA to develop the SIERRA clinical trial to test the safety and efficacy of Iomab-B in patients with relapsed or refractory
AML who are age 55 and above prior to a BMT. This trial is designed to support a BLA filing for marketing approval by the FDA, pending
results from the trial. In addition to clinical data, a BLA filing encompasses preclinical, CMC, labeling and other information. Even
if the clinical data from the SIERRA trial is positive, there can be no assurances that the BLA filing we produce will meet all of the
FDA’s requirements or that they will not request additional information or studies, which may delay the FDA’s review or we
may not be able to produce. We have also worked with the FDA to develop a regulatory pathway for lintuzumab-Ac-225 in patients with high-risk
MDS that consists of a dose-confirming Phase 1 trial that can be followed by a randomized, controlled pivotal trial that could support
a BLA filing. To date, we have not initiated this clinical trial and we may never elect or be able to do so. There can be no assurance
that the data generated during the trial will meet our chosen safety and effectiveness endpoints or otherwise produce results that will
eventually support the filing or approval of a BLA. Even if the data from this trial are favorable, the data may not be predictive of
the results of any future clinical trials.
Preliminary, Interim, and “top-line”
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 publicly disclose preliminary, interim, and top-line data from our clinical trials, which is based on a preliminary analysis of then-available
data, and the results and related findings and conclusions are subject to change as more patient data become available or following a
more comprehensive review of the data related to the particular study or trial. For example, at the ASH annual meeting in December 2021,
we presented safety and feasibility data available at the time of data submission from 100% patient enrollment from the SIERRA trial.
We also make assumptions, estimations, calculations and conclusions as part of our analyses of data, and we may not have received or had
the opportunity to fully and carefully evaluate all data. Our clinical trials may be open label studies and certain of our clinical development
and or operations staff may review interim or preliminary safety or efficacy data during routine data collection, cleaning and analysis
from time to time. Interim or preliminary results that we report may differ from future results of the same studies, or different conclusions
or considerations may qualify such results once additional data have been received and fully evaluated. Preliminary, interim or top-line
data also remain subject to audit and verification procedures that may result in the final data being materially different from the top-line,
interim or preliminary data we previously published. As a result, top-line, interim and preliminary data should be viewed with caution
until the final data are available.
From time to time, we may
also disclose interim data from our preclinical studies and clinical trials. 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. Adverse differences between interim data and final data could significantly harm our business prospects. Further, disclosure
of interim data by us or by our competitors could result in volatility in the price of our common stock.
Further, others, including
regulatory agencies, may not accept or agree with our assumptions, estimates, calculations, conclusions or analyses or may interpret or
weigh the importance of data differently, which could impact the value of the particular program, the approvability or commercialization
of the particular product candidate or product and our company in general. In addition, the information we choose to publicly disclose
regarding a particular study or clinical trial is based on what is typically extensive information, and you or others may not agree with
what we determine is material or otherwise appropriate information to include in our disclosure.
If the interim, top-line or preliminary data that we report differ
from final results, or if others, including regulatory authorities, disagree with the conclusions reached, our ability to obtain approval
for, and commercialize, our product candidates may be harmed, which could harm our business, operating results, prospects or financial
condition.
Our clinical trials may fail to demonstrate
adequately the efficacy and safety of our product candidates, which would prevent or delay regulatory approval and commercialization.
Even if our clinical trials
are completed as planned, we cannot be certain that their results will support our product candidate claims or that the FDA or foreign
authorities will agree with our conclusions regarding them. Success in pre-clinical studies and early clinical trials does not ensure
that later clinical trials will be successful, and we cannot be sure that the later trials will replicate the results of prior trials
and pre-clinical studies. The clinical trial process may fail to demonstrate that our product candidates are safe and effective for the
proposed indicated uses. If FDA concludes that the clinical trials for Iomab-B, Actimab-A, or any other product candidate for which we
might seek approval, have failed to demonstrate safety and effectiveness, we would not receive FDA approval to market that product candidate
in the United States for the indications sought. In addition, such an outcome could cause us to abandon the product candidate and might
delay development of others. Any delay or termination of our clinical trials will delay or preclude the filing of any submissions with
the FDA and, ultimately, our ability to commercialize our product candidates and generate revenues. It is also possible that patients
enrolled in clinical trials will experience adverse side effects that are not currently part of a product candidate’s profile.
The intellectual property related to antibodies
we have licensed has expired or likely expired.
The key patents related to
the humanized antibody, lintuzumab, which we use in our CD33 program product candidates have expired. It is generally possible that others
may be eventually able to use an antibody with the same sequence, and we will then need to rely on additional patent protection covering
alpha particle drug products comprising Ac-225. Our final drug construct consists of the lintuzumab antibody labeled with the isotope
Ac-225. We have licensed issued patents that relate to the linker technology we use to conjugate the isotope to the antibody. Further,
we own issued and pending patents related to methods for drug conjugation and isotope labeling and for methods of isotope production.
In addition, we possess trade secrets and know how related to the manufacturing and use of isotopes. Any competing product based on the
lintuzumab antibody is likely to require several years of development before achieving our product candidate’s current status and
may be subject to significant regulatory hurdles but such development by others is nevertheless a possibility that could negatively impact
our business in the future. We own 2 issued U.S. patents, 1 issued European patent (validated as a national patent in several countries)
and 1 issued Japanese patent that relate to the composition of our Iomab-B product candidate. Several patent applications relating to
Iomab-B are also pending in the U.S. and internationally. We have and may continue to file patents related to Iomab-B that can provide
barriers to entry but there is no certainty that these patents will be granted or such granting thereof will adequately prevent others
from seeking to replicate and use the apamistamab antibody or the construct. We have pending patents related to radioimmunoconjugate composition,
formulation administration, and methods of use in solid or liquid cancers. This matter includes composition, administration, and methods
of treatment for our products Actimab-A and Iomab-B. Any competing product based on the antibody used in Iomab-B is likely to require
several years of development before achieving our product candidate’s current status and may be subject to significant regulatory
hurdles but such development by others is nevertheless a possibility that could negatively impact our business in the future.
Our CD33 program clinical trials are testing
the same drug construct.
Our CD33 program is comprised
of several clinical trials including investigator-initiated trials in AML that are studying the same drug construct consisting of lintuzumab-Ac-225.
Negative results from any of these trials could negatively impact our ability to enroll or complete our other trials studying lintzumab-Ac-225.
Additionally, negative outcomes including safety concerns, may result in the FDA discontinuing other trials utilizing lintuzumab-Ac-225.
We may be unable to obtain a sufficient
supply of isotopes to support clinical development or at commercial scale.
Iodine-131 is a key component
of our Iomab-B drug candidate. We currently source medical grade I-131 from three suppliers including two leading global manufacturers.
Currently, there is sufficient supply of I-131 to advance our ongoing SIERRA clinical trial, support additional trials we may undertake
utilizing I-131 and for commercialization of Iomab-B. We continually evaluate I-131 manufacturers and suppliers and intend to have multiple
qualified suppliers prior to the commercial launch of Iomab-B. While we consider I-131 to be commoditized and obtainable through several
suppliers, there can be no guarantee that we will be able to secure I-131 or obtain I-131 on terms that are acceptable to us.
Actinium-225 is a key component
of our CD33 ARC program, AWE platform and other drug candidates that we might consider for development with the Ac-225 payload. There
are adequate quantities of Ac-225 available today to meet our current needs via our present supplier, the Department of Energy (“DOE”).
The current Ac-225 currently supplied to Actinium’s clinical trials from the DOE is derived from the natural decay of thorium-229
from so-called ‘thorium-cows’ and is able to produce sufficient quantities that are several multiples of the amount of Ac-225
we require to supply our clinical programs through to early commercialization phase. The DOE is also producing Ac-225 from a recently
developed alternative route for Ac-225 production via a linear accelerator that is currently being evaluated by Actinium. Initial preclinical
and modelling results have indicated that the linear accelerator sourced Ac-225 does not impact labelling efficiency and expected distribution.
In accordance with representations made by the DOE, the capacity of Ac-225 from this route is expected to be sufficient to supply all
of Actinium’s pipeline and commercial Ac-225 needs and support new program expansion by not just Actinium but also other companies
that are developing Ac-225 based products. Additional routes of Ac-225 production are being pursued by the DOE including the generation
of new thorium cows and production via a cyclotron. The cyclotron production method for Ac-225 production leverages Actinium’s proprietary
technology and know-how and presents an additional path towards production of high-quality Ac-225 that would be able to satisfy commercial
needs. In addition, we are aware of at least six other government and non-government entities globally including the U.S., Canada, Russia,
Belgium, France and Japan that have, or expect to have ability to supply Ac-225 or equipment for its production within the timeframes
relevant to the potential first commercial approval of our Ac-225 ARC.
Our contract for supply of
this isotope from the DOE must be renewed yearly, we recently renewed our contract to extend through the end of 2022. While we expect
this contract will continue to be renewed at the end of its term as it has since 2009, there can be no assurance that the DOE will renew
the contract or that change its policies that allow for the sale of isotope to us. Failure to acquire sufficient quantities of medical
grade Ac-225 would make it impossible to effectively complete clinical trials and to commercialize any Ac-225 based drug candidates that
we may develop and would materially harm our business.
Our ability to conduct clinical
trials to advance our ARC drug candidates is dependent on our ability to obtain the radioisotopes I-131, Ac-225 and other isotopes we
may choose to utilize in the future. Currently, we are dependent on third party manufacturers and suppliers for our isotopes. These suppliers
may not perform their contracted services or may breach or terminate their agreements with us. Our suppliers are subject to regulations
and standards that are overseen by regulatory and government agencies and we have no control over our suppliers’ compliance to these
standards. Failure to comply with regulations and standards may result in their inability to supply isotope could result in delays in
our clinical trials, which could have a negative impact on our business. We have developed intellectual property, know-how and trade secrets
related to the manufacturing process of Ac-225. While we have manufactured medical grade Ac-225 of a purity compared to the cyclotron
sourced material in the past, this activity was terminated due to operating cost reasons and we currently do not have experience in manufacturing
medical grade Ac-225 and may not obtain the resources necessary to establish our own manufacturing capabilities in future. Our inability
to build out and establish our own manufacturing facilities would require us to continue to rely on third party suppliers as we currently
do. However, based on our current third-party suppliers and potential future suppliers of Ac-225 we expect to have adequate isotope supply
to support our current ongoing clinical trials, current AWE program activities and commercialization should our drug candidates receive
approval.
If we encounter difficulties enrolling patients
in our clinical trials, our clinical development activities could be delayed or otherwise adversely affected.
The timely completion of clinical
trials in accordance with their protocols depends on our ability to enroll a sufficient number of patients who remain in the trial until
its conclusion. We may experience difficulties in patient enrollment in our clinical trials for a variety of reasons, including:
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the size and nature of the patient population; |
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the patient eligibility criteria defined in the protocol; |
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the
size of the study population required for analysis of the trial’s primary endpoints; |
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the proximity of patients to trial sites; |
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the design of the trial; |
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our ability to recruit clinical trial investigators with the appropriate competencies and expertise; |
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competing clinical trials for similar or alternate therapeutic treatments; |
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clinician’s and patients’ perceptions as to the potential advantages and side effects of the product candidate being studied in relation to other available therapies; |
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our ability to obtain and maintain patient consents; and |
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the risk that patients enrolled in clinical trials will not complete a clinical trial. |
In addition, refractory patients,
which several of our trials are enrolling, participating in clinical trials are seriously and often terminally ill and therefore may not
complete the clinical trial due to reasons including comorbid conditions or occurrence of adverse medical events related or unrelated
to the investigational products, or death. Even if we are able to enroll a sufficient number of patients in our clinical trials, delays
in patient enrollment will result in increased costs or affect the timing of our planned trials, which could adversely affect our ability
to advance the development of our product candidates.
FDA may take actions that would prolong,
delay, suspend, or terminate clinical trials of our product candidates, which may delay or prevent us from commercializing our product
candidates on a timely basis.
There can be no assurance
that the data generated in our clinical trials will be acceptable to FDA or that if future modifications during the trial are necessary,
that any such modifications will be acceptable to FDA. Certain modifications to a clinical trial protocol made during the course of the
clinical trial have to be submitted to the FDA. This could result in the delay or halt of a clinical trial while the modification is evaluated.
In addition, depending on the quantity and nature of the changes made, FDA could take the position that some or all of the data generated
by the clinical trial is not usable because the same protocol was not used throughout the trial. This might require the enrollment of
additional subjects, which could result in the extension of the clinical trial and the FDA delaying approval of a product candidate. If
the FDA believes that its prior approval is required for a particular modification, it can delay or halt a clinical trial while it evaluates
additional information regarding the change.
Any delay or termination of
our current or future clinical trials as a result of the risks summarized above, including delays in obtaining or maintaining required
approvals from IRBs, delays in patient enrollment, the failure of patients to continue to participate in a clinical trial, and delays
or termination of clinical trials as a result of protocol modifications or adverse events during the trials, may cause an increase in
costs and delays in the filing of any submissions with the FDA, delay the approval and commercialization of our product candidates or
result in the failure of the clinical trial, which could adversely affect our business, operating results and prospects. Lengthy delays
in the completion of our Iomab-B clinical trials would adversely affect our business and prospects and could cause us to cease operations.
We have obtained orphan drug designation
from FDA for two of our current product candidates and intend to pursue such designation for other candidates and indications in the future,
but we may be unable to obtain such designations or to maintain the benefits associated with any orphan drug designations we have received
or may receive in the future.
We have received orphan drug
designation for Iomab-B and lintuzumab-CD33 ARC for treatment of AML in both the United States and the EU. Under the Orphan Drug Act,
the FDA may grant orphan designation to a drug or biologic intended to treat a rare disease or condition, which is a disease or condition
that affects fewer than 200,000 individuals in the United States, or if it affects more than 200,000 individuals in the United States,
there is no reasonable expectation that the cost of developing and making available a drug or biologic for this type of disease or condition
will be recovered from sales in the United States for that drug or biologic. Similarly, the EMA grants orphan drug designation to promote
the development of products that are intended for the diagnosis, prevention, or treatment of a life-threatening or chronically debilitating
condition affecting not more than five in 10,000 persons in the EU.
Orphan drug designation neither
shortens the development time or regulatory review time of a drug or biologic nor gives the drug or biologic any advantage in the regulatory
review or approval process. In the United States, orphan drug designation entitles a party to financial incentives, such as opportunities
for grant funding towards clinical trial costs, tax advantages, and application fee waivers. In addition, if a product candidate receives
the first FDA approval for the indication for which it has orphan designation, such product is entitled, upon approval, to seven years
of orphan-drug exclusivity, during which the FDA may not approve any other application to market the same drug for the same indication,
unless a subsequently approved product is clinically superior to orphan drug or where the manufacturer is unable to assure sufficient
product quantity in the applicable patient population. In the EU, orphan drug designation entitles a party to financial incentives such
as reduction of fees or fee waivers and ten years of market exclusivity following drug or biological product approval. This period may
be reduced to six years if the orphan drug designation criteria are no longer met, including where it is shown that the product is sufficiently
profitable not to justify maintenance of market exclusivity.
Even if we obtain (or have
obtained) orphan drug designation for certain product candidates, we may not be the first to obtain marketing approval for such candidates
for the applicable indications due to the uncertainties inherent in the development of novel biologic products. And, an orphan drug candidate
may not receive orphan-drug exclusivity upon approval if such candidate is approved for a use that is broader than the indication for
which it received orphan designation. In addition, exclusive marketing rights in the United States may be lost if the FDA later determines
that the request for designation was materially defective or if the manufacturer is unable to assure sufficient quantities of the product
to meet the needs of patients with the rare disease or condition.
Finally, even if we successfully
obtain orphan-drug exclusivity for an orphan drug candidate upon approval, such exclusivity may not effectively protect the product from
competition because (i) different drugs with different active moieties can be approved for the same condition; and (ii) the FDA or EMA
can also subsequently approve a subsequent product with the same active moiety and for the same indication as the orphan drug if the later-approved
drug if deemed clinically superior to the orphan drug.
Even if we receive regulatory approval of
our product candidates, we will be subject to ongoing regulatory obligations and continued regulatory review.
Any regulatory approvals that
we receive for our product candidates will require surveillance to monitor the safety and efficacy of the product candidate. The FDA may
also require a REMS in order to approve our product candidates, which could entail requirements for a medication guide, physician communication
plans or additional elements to ensure safe use, such as restricted distribution methods, patient registries and other risk minimization
tools. In addition, if the FDA or a comparable foreign regulatory authority approves our product candidates, the manufacturing processes,
labeling, packaging, distribution, adverse event reporting, storage, advertising, promotion, import, export and recordkeeping for our
product candidates will be subject to extensive and ongoing regulatory requirements. These requirements include submissions of safety
and other post-marketing information and reports, registration, as well as continued compliance with cGMPs and GCPs for any clinical trials
that we conduct post-approval. In addition, the FDA could require us to conduct another study to obtain additional safety or biomarker
information. Later discovery of previously unknown problems with our product candidates, including adverse events of unanticipated severity
or frequency, or with our third-party suppliers or manufacturing processes, or failure to comply with regulatory requirements, may result
in, among other things:
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restrictions on the marketing or manufacturing of our product candidates, withdrawal of the product from the market, or voluntary or mandatory product recalls; |
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fines, warning letters or holds on clinical trials; |
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refusal by the FDA to approve pending applications or supplements to approved applications filed by us or suspension or revocation of license approvals; |
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product seizure or detention, or refusal to permit the import or export of our product candidates; and |
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injunctions or the imposition of civil or criminal penalties. |
The FDA’s and other
regulatory authorities’ policies may change, and additional government regulations may be enacted that could prevent, limit or delay
regulatory approval of our product candidates. We cannot predict the likelihood, nature or extent of government regulation that may arise
from future legislation or administrative action, either in the United States or abroad. If we are slow or unable to adapt to changes
in existing requirements or the adoption of new requirements or policies, or if we are not able to maintain regulatory compliance, we
may lose any marketing approval that we may have obtained, and we may not achieve or sustain profitability.
Coverage and reimbursement may be limited
or unavailable in certain market segments for our product candidates which could limit our sales of our product candidates, if approved.
The commercial success of
our product candidates in both domestic and international markets will be substantially dependent on whether third-party coverage and
reimbursement is available for patients that use our products. However, the availability of insurance coverage and reimbursement for newly
approved cancer therapies is uncertain, and therefore, third-party coverage may be particularly difficult to obtain even if our products
are approved by the FDA as safe and efficacious. Patients using existing approved therapies are generally reimbursed all or part of the
product cost by Medicare or other third-party payors. Medicare, Medicaid, health maintenance organizations and other third-party payors
are increasingly attempting to contain healthcare costs by limiting both coverage and the level of reimbursement of new drugs, and, as
a result, they may not cover or provide adequate payment for these products. Submission of applications for reimbursement approval generally
does not occur prior to the filing of a BLA for that product and may not be granted until many months after BLA approval. In order to
obtain coverage and reimbursement for these products, we or our commercialization partners may have to agree to a net sales price lower
than the net sales price we might charge in other sales channels. The continuing efforts of government and third-party payors to contain
or reduce the costs of healthcare may limit our revenue. Initial dependence on the commercial success of our products may make our revenues
particularly susceptible to any cost containment or reduction efforts.
Healthcare legislative reform measures intended
to increase pressure to reduce prices of pharmaceutical products paid for by Medicare or, otherwise, affect the federal regulation of
the U.S. healthcare system could have a material adverse effect our business, future revenue, if any, and results of operations.
In the United States, there
have been a number of legislative and regulatory initiatives focused on containing the cost of healthcare. The Affordable Care Act, for
example, substantially changed the way healthcare is financed by both governmental and private insurers. The Affordable Care Act contains
a number of provisions that could impact our business and operations, primarily, once we obtain FDA approval to commercialize one of our
product candidates in the United States, if ever, and may also affect our operations in ways we cannot currently predict. Affordable Care
Act provisions that may affect our business include, among others, those governing enrollment in federal healthcare programs, reimbursement
changes, rules regarding prescription drug benefits under health insurance exchanges, expansion of the 340B program, expansion of state
Medicaid programs, fees and increased discount and rebate obligations, transparency and reporting requirements, and fraud and abuse enforcement.
Such changes may impact existing government healthcare programs, industry competition, formulary composition, and may result in the development
of new programs, including Medicare payment for performance initiatives, health technology assessments, and improvements to the physician
quality reporting system and feedback program.
There have been significant ongoing judicial, administrative, executive,
and legislative initiatives to modify, limit, replace, or repeal the Affordable Care Act. For example, former President Trump issued several
Executive Orders and other directives designed to delay the implementation of certain provisions of the Affordable Care Act or otherwise
circumvent some of the requirements for health insurance mandated by the Affordable Care Act. Concurrently, Congress considered legislation
that would repeal or replace all or part of the Affordable Care Act. While Congress has not passed comprehensive repeal legislation, several
bills affecting the implementation the Affordable Care Act have been passed. For example, the Tax Cuts and Jobs Act of 2017 eliminated
the Affordable Care Act provision requiring individuals to purchase and maintain health coverage, or the “individual mandate,”
by reducing the associated penalty to zero, beginning in 2019. In December 2018, a district court in Texas held that the individual mandate
is unconstitutional and that the rest of the Affordable Care Act is, therefore, invalid. On appeal, the Fifth Circuit Court of Appeals
affirmed the holding on the individual mandate but remanded the case back to the lower court to reassess whether and how such holding
affects the validity of the rest of the Affordable Care Act. The Fifth Circuit’s decision on the individual mandate was appealed
to the U.S. Supreme Court. On June 17, 2021, the Supreme Court held that the plaintiffs (comprised of the state of Texas, as well as numerous
other states and certain individuals) did not have standing to challenge the constitutionality of the Affordable Care Act’s individual
mandate and, accordingly, vacated the Fifth Circuit’s decision and instructed the district court to dismiss the case. As a result,
the Affordable Care Act will remain in-effect in its current form for the foreseeable future; however, we cannot predict what additional
challenges may arise in the future, the outcome thereof, or the impact any such actions may have on our business.
The adoption or implementation of new or amended legislation at the
federal or state level could affect our ability to obtain regulatory approval for any of our vaccine candidates and the commercial viability
of our future approved products, if any. We cannot predict the ultimate nature, timing, or effect of any changes to the Affordable Care
Act or other federal and state reform efforts, and there is no assurance that such efforts will not adversely affect our future business
and financial results.
In addition to the Affordable
Care Act, there have been several recent Congressional inquiries and proposed and enacted federal and state legislation designed to, among
other things, bring more transparency to drug pricing, review the relationship between pricing and manufacturer patient programs, and
reform government program reimbursement methodologies for drug products. Pharmaceutical product prices have been the focus of increased
scrutiny by the government, including certain state attorneys general, members of Congress and the United States Department of Justice.
State or federal healthcare reform measures or other social or political pressure to lower the cost of pharmaceutical products could have
a material adverse impact on our business, results of operations and financial condition.
The Biden administration also introduced various measures in 2021 focusing
on healthcare and drug pricing, in particular. For example, on January 28, 2021, President Biden issued an executive order that initiated
a special enrollment period for purposes of obtaining health insurance coverage through the Affordable Care Act marketplace, which began
on February 15, 2021, and remained open through August 15, 2021. The executive order also instructed certain governmental agencies to
review and reconsider their existing policies and rules that limit access to healthcare, including among others, reexamining Medicaid
demonstration projects and waiver programs that include work requirements and policies that create unnecessary barriers to obtaining access
to health insurance coverage through Medicaid or the Affordable Care Act. On the legislative front, the American Rescue Plan Act of 2021
was signed into law on March 11, 2021, which, in relevant part, eliminates the statutory Medicaid drug rebate cap, currently set at 100%
of a drug’s average manufacturer price, for single source drugs and innovator multiple source drugs, beginning January 1, 2024.
And, in July 2021, the Biden administration released an executive order entitled, “Promoting Competition in the American Economy,”
with multiple provisions aimed at prescription drugs. In response, on September 9, 2021, HHS released a “Comprehensive Plan for
Addressing High Drug Prices” that outlines principles for drug pricing reform and sets out a variety of potential legislative policies
that Congress could pursue as well as potential administrative actions HHS can take to advance these principles. And, in November 2021,
President Biden announced the “Prescription Drug Pricing Plan” as part of the Build Back Better Act (H.R. 5376) passed by
the House of Representatives on November 19, 2021, which aims to lower prescription drug pricing by, among other things, allowing Medicare
to negotiate prices for certain high-cost prescription drugs covered under Medicare Part D and Part B after the drugs have been on the
market for a certain number of years and imposing tax penalties on drug manufacturers that refuse to negotiate pricing with Medicare or
increase drug prices “faster than inflation.” If enacted, this bill could have a substantial impact on our business, particularly
once we have commercially available products on the U.S. market, if ever. In the coming years, additional legislative and regulatory changes
could be made to governmental health programs that could significantly impact pharmaceutical companies and the potential success of our
vaccine candidates.
Our relationships with customers, health
care professionals and third-party payors may be subject to applicable healthcare laws, which could expose us to penalties, including
administrative, civil or criminal penalties, damages, fines, imprisonment, exclusion from participation in federal healthcare programs
such as Medicare and Medicaid, reputational harm, the curtailment or restructuring of our operations and diminished future profits and
earnings.
Healthcare professionals and
third-party payors will play a primary role in the recommendation and prescription of any product candidates for which we obtain marketing
approval. Our current and future arrangements with customers, healthcare professionals and third-party payors may expose us to broadly
applicable fraud and abuse and other healthcare laws and regulations that may constrain the business or financial arrangements and relationships
through which we conduct research, market, sell and distribute any products for which we obtain marketing approval. Federal and state
healthcare laws and regulations that may affect our operations, directly or indirectly, include the following, among others:
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the federal Anti-Kickback Statute, which prohibits persons and entities from, among other things, knowingly and willfully soliciting, offering, receiving or providing remuneration, directly or indirectly, in cash or in kind, to induce or reward 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 under federal and state healthcare programs such as Medicare and Medicaid; |
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the federal false claims laws, including civil whistleblower or qui tam actions under the federal False Claims Act, which impose criminal and civil penalties against individuals or entities for, among other things, knowingly presenting, or causing to be presented, to the federal government, claims for payment that are false or fraudulent or making a false statement to avoid, decrease or conceal an obligation to pay money to the federal government; |
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the federal Health Insurance Portability and Accountability Act of 1996, or HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act of 2009, or HITECH, which imposes criminal and civil liability for, among other things, executing a scheme to defraud any healthcare benefit program or making false statements relating to healthcare matters and also imposes obligations, including mandatory contractual terms, on covered entities, including certain healthcare providers, health plans, and healthcare clearinghouses, and their respective business associates that create, receive, maintain or transmit individually identifiable health information for or on behalf of the covered entity as well as their covered subcontractors, with respect to safeguarding the privacy, security and transmission of individually identifiable health information; |
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the
federal Civil Monetary Penalties Law, which prohibits, among other things, the offering or transfer of remuneration to a Medicare or
state healthcare program beneficiary if the person knows or should know it is likely to influence the beneficiary’s selection of
a particular provider, practitioner, or supplier of services reimbursable by Medicare or a state healthcare program, unless an exception
applies; |
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the federal Physician Payments Sunshine Act, created under the Affordable Care Act, and its implementing regulations, which requires certain manufacturers of drugs, devices, biologicals and medical supplies for which payment is available under Medicare, Medicaid or the Children’s Health Insurance Program (with certain exceptions) to report annually information related to certain payments or other transfers of value provided to physicians and any ownership and investment interests held by physicians or their immediate family members. Beginning in 2022, applicable manufacturers also will be required to report such information regarding payments and other transfers of value to physician assistants, nurse practitioners, clinical nurse specialists, anesthesiologist assistants, certified registered nurse anesthetists and certified nurse midwives during the previous year; and |
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analogous state laws and regulations, including (among others) 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 United States 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 and that require tracking gifts and other remuneration and items of value provided to healthcare professionals and entities; state and local laws that require the registration of pharmaceutical sales representatives; 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 federal law, thus complicating compliance efforts. |
Efforts to comply with applicable
healthcare laws and regulations will involve substantial costs. Interpretations of standards of compliance under these laws and regulations
are rapidly changing and subject to varying interpretations and it is possible that governmental authorities will conclude that our business
practices may not comply with current or future statutes, regulations 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 these laws or any other laws that may apply to us, we may
be subject to significant civil, criminal and administrative penalties, damages, fines, exclusion from government funded healthcare programs,
such as Medicare and Medicaid, reputational harm, imprisonment, additional reporting obligations and oversight (if we become subject to
a corporate integrity agreement or other agreement to resolve allegations of non-compliance with these laws), and the curtailment or restructuring
of our operations, any of which could diminish our future profits or earnings. If any of the physicians or other providers or entities
with whom we expect to do business are found to be not in compliance with applicable laws, they may be subject to criminal, civil or administrative
sanctions, including exclusions from government funded healthcare programs.
Third-party payors may not adequately reimburse
customers for any of our products that we may commercialize or promote, and may impose coverage restrictions or limitations such as prior
authorizations and step edits that affect their use.
Our ability to commercialize
any product candidates successfully also will depend in part on the extent to which coverage and adequate reimbursement for these products
and related treatments will be available from government health programs, private health insurers, integrated delivery networks and other
third-party payors. Third-party payors decide which medications they will pay for and establish reimbursement levels. A significant trend
in the United States healthcare industry and elsewhere is cost containment. Government authorities and third-party payors have attempted
to control costs by limiting coverage and the amount of payment for particular medications. Increasingly, third-party payors are requiring
that drug companies provide predetermined discounts from list prices and are challenging the prices charged for medical products. Coverage
and reimbursement may not be available for any product that we commercialize and, if reimbursement is available, the level of reimbursement
may not be sufficient for commercial success. Coverage and reimbursement may impact the demand for, or the price of, any product candidate
for which we obtain marketing approval. If coverage and reimbursement is not available or is available only to limited levels, we may
not be able to successfully commercialize any product candidate for which we obtain marketing approval.
Obtaining reimbursement approval
for any product candidate for which we obtain marketing approval from any government or other third-party payor is a time-consuming and
costly process. There may be significant delays in obtaining coverage and adequate reimbursement for newly approved products. Moreover,
eligibility for coverage and reimbursement does not imply that any product will be paid for in all cases or at a rate that covers our
costs, including research, development, manufacture, sale and distribution. Even when a payor determines that a product that we may commercialize
or promote is eligible for reimbursement under its criteria, the payor may impose coverage limitations that preclude payment for some
uses that are approved by the FDA, or may impose restrictions, such as prior authorization requirements, or may simply deny coverage altogether.
Interim reimbursement levels for new drugs, if applicable, may also not be sufficient to cover our costs and may not be made permanent.
Coverage and reimbursement rates may vary according to the use of the drug and the medical circumstances under which it is used may be
based on reimbursement levels already set for lower cost products or procedures or may be incorporated into existing payments for other
services. Net prices for drugs may be reduced by mandatory discounts or rebates required by government healthcare programs or private
payors and by any future relaxation of laws that presently restrict imports of drugs from countries where they may be sold at lower prices
than in the United States. Furthermore, the Centers for Medicare and Medicaid Services frequently change product descriptors, coverage
policies, product and service codes, payment methodologies and reimbursement values. Commercial third-party payors often rely upon Medicare
coverage policies and payment limitations in setting their own reimbursement policies. Our inability to promptly obtain and maintain coverage
and profitable payment rates from both government-funded programs and private payors for any approved products that we develop could have
a material adverse effect on our operating results, our ability to raise capital needed to commercialize our approved products and our
overall financial condition.
Risks Related to Third Parties
We rely on third parties to conduct our
clinical trials. If these third parties do not successfully carry out their contractual duties or meet expected deadlines or comply with
regulatory requirements, we may not be able to obtain regulatory approval for or commercialize our product candidates.
We do not have the ability
to independently conduct our clinical trials for our product candidates and we must rely on third parties, such as contract research organizations,
medical institutions, clinical investigators and contract laboratories to conduct such trials. Our reliance on these third parties for
clinical development activities results in reduced control over these activities. Moreover, the FDA requires us to comply with regulations
and standards, commonly referred to as GCPs (good clinical practices), for conducting, recording and reporting the results of clinical
trials to assure that data and reported results are credible and accurate and that the trial participants are adequately protected. Our
reliance on third parties does not relieve us of these responsibilities and requirements. If we or any of our third-party contractors
fail to comply with applicable GCPs, the clinical data generated in our clinical trials may be deemed unreliable and the FDA or comparable
foreign regulatory authorities may require us to perform additional clinical trials before approving our marketing applications. We cannot
assure you that upon inspection by a given regulatory authority, such regulatory authority will determine that any of our clinical trials
complies with GCP regulations. In addition, our clinical trials must be conducted with product produced under current good manufacturing
practice, or cGMP, regulations. Our failure to comply with these regulations may require us to repeat clinical trials, which would delay
the regulatory approval process.
If our consultants,
contract research organizations and other similar entities with which we are working do not successfully carry out their contractual
duties, meet expected deadlines, or comply with applicable regulations, we may be required to replace them. Although we believe that
there are a number of other third-party contractors we could engage to continue these activities, we may not be able to enter into
arrangements with alternative third-party contractors or to do so on commercially reasonable terms, which may result in a delay of
our planned clinical trials and delayed development of our product candidates.
In addition, our third-party
contractors are not our employees, and except for remedies available to us under our agreements with such third-party contractors, we
cannot control whether or not they devote sufficient time and resources to our programs. If these third parties do not successfully carry
out their contractual duties or regulatory obligations or meet expected deadlines, or if the quality or accuracy of the data they obtain
is compromised due to the failure to adhere to our clinical protocols or regulatory requirements or for other reasons, our pre-clinical
development activities or clinical trials may be extended, delayed, suspended or terminated, and we may not be able to obtain regulatory
approval for, or successfully commercialize, our product candidates on a timely basis, if at all, and our business, operating results
and prospects would be adversely affected.
The antibodies we use in our antibody radiation-conjugate
product candidates may be subject to generic competition.
We are not aware of any existing
or pending regulations or legislation that pertains to generic radiopharmaceutical products such as our antibody radiation-conjugate product
candidates. Our product candidates are regulated by the FDA as biologic products and we intend to seek approval for these products pursuant
to the BLA pathway. The Biologics Price Competition and Innovation Act of 2009, or BPCIA, created an abbreviated pathway for the approval
of biosimilar and interchangeable biologic products. The abbreviated regulatory pathway establishes legal authority for the FDA to review
and approve biosimilar biologics, including the possible designation of a biosimilar as “interchangeable” based on its similarity
to an existing brand product. Under the BPCIA, an application for a biosimilar product cannot be approved by the FDA until 12 years after
the original branded product was approved under a BLA. The law is complex and is still being interpreted and implemented by the FDA. As
a result, its ultimate impact, implementation, and meaning are subject to uncertainty. Even if a biosimilar gets approved for one of the
antibodies that we use, the final constructs of our drug candidates consist of an antibody, radioisotope and in some cases a linker. Therefore,
we do not believe that the final drug product of our candidates can be subject to competition from a biosimilar as outlined in BPCIA.
Our product candidates may never achieve
market acceptance.
Iomab-B, CD33 ARC program
candidates and future product candidates that we may develop may never gain market acceptance among physicians, patients and the medical
community. The degree of market acceptance of any of our products will depend on a number of factors, including the actual and perceived
effectiveness and reliability of the product; the results of any long-term clinical trials relating to use of the product; the availability,
relative cost and perceived advantages and disadvantages of alternative technologies; the degree to which treatments using the product
are approved for reimbursement by public and private insurers; the strength of our marketing and distribution infrastructure; and the
level of education and awareness among physicians and hospitals concerning the product.
We believe that oncologists
and other physicians will not widely adopt a product candidate unless they determine, based on experience, clinical data, and published
peer-reviewed journal articles, that the use of that product candidate provides an effective alternative to other means of treating specific
cancers. Patient studies or clinical experience may indicate that treatment with our product candidates does not provide patients with
sufficient benefits in extension of life or quality of life. We believe that recommendations and support for the use of each product candidate
from influential physicians will be essential for widespread market acceptance. Our product candidates are still in the development stage
and it is premature to attempt to gain support from physicians at this time. We can provide no assurance that such support will ever be
obtained. If our product candidates do not receive such support from these physicians and from long-term data, physicians may not use
or continue to use, and hospitals may not purchase or continue to purchase, them.
Failure of Iomab-B, CD33 ARC
program candidates or any of our other product candidates to significantly penetrate current or new markets would negatively impact our
business financial condition and results of operations.
We may be subject to claims that our third-party
service providers, consultants or current or former employees have wrongfully used or disclosed confidential information of third parties.
We have received confidential
and proprietary information from third parties. In addition, we employ individuals who were previously employed at other biotechnology
or pharmaceutical companies. We may be subject to claims that we or our employees, consultants or independent contractors have inadvertently
or otherwise used or disclosed confidential information of these third parties or our employees’ former employers. Litigation may
be necessary to defend against these claims. Even if we are successful in defending against these claims, litigation could result in substantial
cost and be a distraction to our management and employees.
We currently depend on single third-party
manufacturers to produce our pre-clinical and clinical trial drug supplies. Any disruption in the operations of our current third-party
manufacturers, or other third-party manufacturers we may engage in the future, could adversely affect our business and results of operations.
We do not currently operate
manufacturing facilities for pre-clinical or clinical production of any of our product candidates. We rely on third-party manufacturers
to supply, store, and distribute pre-clinical and clinical supply of the components of our drug product candidates including monoclonal
antibodies, linkers and radioisotopes, as well as the final construct which comprises our drug product candidates. We expect to continue
to depend on third-party manufacturers for the foreseeable future. Any performance failure on the part of our existing or future manufacturers
could delay clinical development, cause us to suspend or terminate development or delay or prohibit regulatory approval of our product
candidates or commercialization of any approved products. Further avenues of disruption to our clinical or eventual commercial supply
may also occur due to the sale, acquisition, business reprioritization, bankruptcy or other unforeseen circumstances that might occur
at any of our suppliers or contract manufacturing partners including an inability to come to terms on renewal of existing contracts or
new contracts.
We currently rely on single
manufacturers to manufacture our pre-clinical and clinical trial drug supplies. With a view to maintaining business continuity we are
evaluating alternatives and second and even third sources of supply or manufacturing for our core suppliers and manufacturing partners,
however there can be no assurances that we will be able to identify such suppliers or partners and assuming we did, that we would be able
to enter into contracts that are on favorable terms or on terms that will enable sufficient supply to ensure business continuity and support
our growth plans.
Our product candidates require
precise, high-quality manufacturing. Failure by our current contract manufacturer or other third-party manufacturers we may engage in
the future to achieve and maintain high manufacturing standards could result in patient injury or death, product recalls or withdrawals,
delays or failures in testing or delivery, cost overruns, or other problems that could seriously hurt our business. Contract manufacturers
may encounter difficulties involving production yields, quality control, and quality assurance. These manufacturers are subject to ongoing
periodic and unannounced inspections by the FDA and corresponding state and foreign agencies to ensure strict compliance with cGMPs and
other applicable government regulations and corresponding foreign standards; we do not have control over third-party manufacturers’
compliance with these regulations and standards.
We may elect to build or purchase
a manufacturing facility or facilities in the future to operate for the purposes of manufacturing our own products. We have never built,
owned or operated a manufacturing facility. There can be no assurances that we will be able to successfully accomplish this and in doing
so we may experience delays, cost overruns, or other problems that could seriously hurt our business. Even if we successfully build or
purchase a manufacturing facility, we may not realize the expected benefits of these efforts.
We depend on vendors with
specialized operations, equipment and know-how to manufacture the respective components of our drug candidates. We have entered into manufacturing
and supply agreements with these third-parties, and in some instances, we have agreed that such vendor be the exclusive manufacturer and
supplier. If any of the third-parties we depend on encounter difficulties in their operations, fail to comply with required regulations
or breach their contractual obligations it may be difficult, or we may be unable to identify suitable alternative third-party manufacturers.
While we identify and evaluate third-party manufacturers from time to time, even if we do identify suitable alternative third-parties,
we may fail to reach agreement on contractual terms, it may be prohibitively expensive and there can be no assurance that we can successfully
complete technology transfer and development work necessary or complete the necessary work in a timely manner. Any of which could prevent
us from commencing manufacturing with third-parties which could cause delays or suspension of our clinical trials and pre-clinical work
that may have a negative impact on our business.
Furthermore, these third-party
contractors, whether foreign or domestic, may experience regulatory compliance difficulty, mechanical shut downs, employee strikes, or
any other unforeseeable acts that may delay or limit production. Our inability to adequately establish, supervise and conduct (either
ourselves or through third parties) all aspects of the formulation and manufacturing processes, and the inability of third-party manufacturers
to consistently supply quality product when required would have a material adverse effect on our ability to develop or commercialize our
products. We have faced delays and risks associated with reliance on key third party manufacturers in the past and may be faced with such
delays and risks in the future. Any future manufacturing interruptions or related supply issues could have an adverse effect on our company,
including delays in clinical trials.
If we are successful in obtaining marketing
approval from the FDA and/or other regulatory agencies for any of our product candidates, we anticipate continued reliance on third-party
manufacturers.
To date, our product candidates
have been manufactured in small quantities for preclinical and clinical testing by third-party manufacturers. If the FDA or other regulatory
agencies approve any of our product candidates for commercial sale, we expect that we would continue to rely, at least initially, on third-party
specialized manufacturers to produce commercial quantities of approved products. These manufacturers may not be able to successfully increase
the manufacturing capacity for any approved product in a timely or economic manner, or at all. Significant scale-up of manufacturing may
require additional validation studies, which the FDA must review and approve. Scale-up for commercial product may require financial commitment
or investment by us, which we may not have sufficient capital for or may elect not to undertake. If third party manufacturers are unable
to successfully increase the manufacturing capacity for a product candidate, or we are unable to establish our own manufacturing capabilities,
the commercial launch of any approved products may be delayed or there may be a shortage in supply, which in turn could have a material
adverse effect on our business.
In addition, the facilities
used by our contract manufacturers to manufacture our product candidates must be approved by the FDA pursuant to inspections that will
be conducted after we submit a BLA to the FDA. We do not control the manufacturing process of, and are completely dependent on, our contract
manufacturing partners for compliance with cGMPs. If our contract manufacturers cannot successfully manufacture material that conforms
to our specifications and the strict regulatory requirements of the FDA or other regulatory authorities, they will not be able to secure
and/or maintain regulatory approval for their manufacturing facilities. If the FDA or a comparable foreign regulatory authority does not
approve these facilities for the manufacture of our product candidates or if it withdraws any such approval in the future, we may need
to find alternative manufacturing facilities, which would significantly impact our ability to develop, obtain regulatory approval for
or market our product candidates, if approved.
We may have conflicts with our partners
that could delay or prevent the development or commercialization of our product candidates.
We may have conflicts with
our partners, such as conflicts concerning the interpretation of preclinical or clinical data, the achievement of milestones, the interpretation
of contractual obligations, payments for services, development obligations or the ownership of intellectual property developed during
our collaboration. If any conflicts arise with any of our partners, such partner may act in a manner that is averse to our best interests.
Any such disagreement could result in one or more of the following, each of which could delay or prevent the development or commercialization
of our product candidates, and in turn prevent us from generating revenues: unwillingness on the part of a partner to pay us milestone
payments or royalties we believe are due under a collaboration; uncertainty regarding ownership of intellectual property rights arising
from our collaborative activities, which could prevent us from entering into additional collaborations; unwillingness by the partner to
cooperate in the development or manufacture of the product, including providing us with product data or materials; unwillingness on the
part of a partner to keep us informed regarding the progress of its development and commercialization activities or to permit public disclosure
of the results of those activities; initiating litigation or alternative dispute resolution options by either party to resolve the dispute;
or attempts by either party to terminate the agreement.
We face significant competition from other
biotechnology and pharmaceutical companies.
Our product candidates face,
and will continue to face, intense competition from large pharmaceutical and biotechnology companies, as well as academic and research
institutions. We compete in an industry that is characterized by (i) rapid technological change, (ii) evolving industry standards, (iii)
emerging competition and (iv) new product introductions. Our competitors have existing products and technologies that will compete with
our product candidates and technologies and may develop and commercialize additional products and technologies that will compete with
our product candidates and technologies. Because several competing companies and institutions have greater financial resources than us,
they may be able to (i) provide broader services and product lines, (ii) make greater investments in research and development, or R&D,
and (iii) carry on broader R&D initiatives. Our competitors also have greater development capabilities than we do and have substantially
greater experience in undertaking preclinical and clinical testing of product candidates, obtaining regulatory approvals, and manufacturing
and marketing pharmaceutical products. They also have greater name recognition and better access to customers than us.
Our product candidates may cause undesirable
side effects or have other properties that could halt their clinical development, prevent their regulatory approval, limit their commercial
potential, or result in significant negative consequences.
Undesirable side effects caused
by our product candidates could cause us or regulatory authorities to interrupt, delay or halt clinical trials and could result in a more
restrictive label or the delay or denial of regulatory approval by the FDA or other comparable foreign authorities. The drug-related side
effects could affect patient recruitment or the ability of enrolled patients to complete the trial or result in potential product liability
claims. Any of these occurrences may harm our business, financial condition and prospects significantly. Even if any of our product candidates
receives marketing approval, as greater numbers of patients use a product following its approval, an increase in the incidence of side
effects or the incidence of other post-approval problems that were not seen or anticipated during pre-approval clinical trials could result
in a number of potentially significant negative consequences, including:
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we may elect, or we may be required, to recall or withdraw product from the market; |
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Any of these events could
substantially increase the costs and expenses of developing, commercializing and marketing any such product candidates or could harm or
prevent sales of any approved products.
Risks Related to Our Intellectual Property
We depend upon securing and protecting critical
intellectual property.
We are dependent on obtaining
and maintaining patents, trade secrets, copyright and trademark protection of our technologies in the United States and other jurisdictions,
as well as successfully enforcing this intellectual property and defending this intellectual property against third-party challenges.
The degree of future protection of our proprietary rights is uncertain for product candidates that are currently in the early stages of
development because we cannot predict which of these product candidates will ultimately reach the commercial market or whether the commercial
versions of these product candidates will incorporate proprietary technologies.
Our patent position is highly uncertain
and involves complex legal and factual questions.
Accordingly, we cannot predict
the breadth of claims that may be allowed or enforced under our patents or in third-party patents. For example, we or our licensors might
not have been the first to make the inventions covered by each of our pending patent applications and issued patents; we or our licensors
might not have been the first to file patent applications for these inventions; others may independently develop similar or alternative
technologies or duplicate any of our technologies; it is possible that none of our pending patent applications or the pending patent applications
of our licensors will result in issued patents; our issued patents and issued patents of our licensors may not provide a basis for commercially
viable technologies, or may not provide us with any competitive advantages, or may be challenged and invalidated by third parties; and,
we may not develop additional proprietary technologies that are patentable.
As a result, our owned
and licensed patents may not be valid, and we may not be able to obtain and enforce patents and to maintain trade secret protection for
the full commercial extent of our technology. The extent to which we are unable to do so could materially harm our business.
We or our licensors have applied
for and will continue to apply for patents for certain products. Such applications may not result in the issuance of any patents, and
any patents now held or that may be issued may not provide us with adequate protection from competition. Furthermore, it is possible that
patents issued or licensed to us may be challenged successfully. In that event, if we have a preferred competitive position because of
such patents, such preferred position would be lost. If we are unable to secure or to continue to maintain a preferred position, we could
become subject to competition from the sale of generic products. Failure to receive, inability to protect, or expiration of our patents
for medical use, manufacture, conjugation and labeling of Ac-225, the antibodies that we license from third parties, or subsequent related
filings, would adversely affect our business and operations.
Patents issued or licensed
to us may be infringed by the products or processes of others. The cost of enforcing our patent rights against infringers, if such enforcement
is required, could be significant, and we do not currently have the financial resources to fund such litigation. Further, such litigation
can go on for years and the time demands could interfere with our normal operations. There has been substantial litigation and other proceedings
regarding patent and other intellectual property rights in the pharmaceutical industry. We may become a party to patent litigation and
other proceedings. The cost to us of any patent litigation, even if resolved in our favor, could be substantial. Some of our competitors
may be able to sustain the costs of such litigation more effectively than we can because of their substantially greater financial resources.
Litigation may also absorb significant management time.
Unpatented trade secrets,
improvements, confidential know-how and continuing technological innovation are important to our scientific and commercial success. Although
we attempt to and will continue to attempt to protect our proprietary information through reliance on trade secret laws and the use of
confidentiality agreements with our partners, collaborators, employees and consultants and other appropriate means, these measures may
not effectively prevent disclosure of our proprietary information, and, in any event, others may develop independently, or obtain access
to, the same or similar information.
Certain of our patent rights
are licensed to us by third parties. If we fail to comply with the terms of these license agreements, our rights to those patents may
be terminated, and we will be unable to conduct our business.
If we are found to be infringing on patents
or trade secrets owned by others, we may be forced to cease or alter our product development efforts, obtain a license to continue the
development or sale of our products, and/or pay damages.
Our manufacturing processes
and potential products may violate proprietary rights of patents that have been or may be granted to competitors, universities or others,
or the trade secrets of those persons and entities. As the pharmaceutical industry expands and more patents are issued, the risk increases
that our processes and potential products may give rise to claims that they infringe the patents or trade secrets of others. These other
persons could bring legal actions against us claiming damages and seeking to enjoin clinical testing, manufacturing and marketing of the
affected product or process. If any of these actions are successful, in addition to any potential liability for damages, we could be required
to obtain a license in order to continue to conduct clinical tests, manufacture or market the affected product or use the affected process.
Required licenses may not be available on acceptable terms, if at all, and the results of litigation are uncertain. If we become involved
in litigation or other proceedings, it could consume a substantial portion of our financial resources and the efforts of our personnel.
In addition to infringement
or other intellectual property claims against us, we may become a party to other patent litigation or proceedings before regulatory agencies,
including post-grant review, inter parties review, interference or re-examination proceedings filed with the U.S. Patent and Trademark
Office (or similar proceedings before corresponding tribunals in other jurisdictions) that challenge our patent rights or the patent rights
of our licensors. The costs and efforts of defending our patents or enforcing our proprietary rights in post-issuance administrative proceedings
can be substantial and the outcome can be uncertain. An adverse determination in these proceedings could weaken or invalidate the patent
claims that cover our technology, which adverse determination could harm our business significantly and dissuade companies from collaborating
with us or permit third parties to directly compete with the same technology.
Our ability to protect and enforce our patents
does not guarantee that we will secure the right to commercialize our patents.
A patent is a limited monopoly
right conferred upon an inventor, and his successors in title, in return for the making and disclosing of a new and non-obvious invention.
This monopoly is of limited duration but, while in force, allows the patent holder to prevent others from making and/or using its invention.
While a patent gives the holder this right to exclude others, it is not a license to commercialize the invention where other permissions
may be required for commercialization to occur. For example, a drug cannot be marketed without the appropriate authorization from the
FDA, regardless of the existence of a patent covering the product. Further, the invention, even if patented itself, cannot be commercialized
if it infringes the valid patent rights of another party.
We rely on confidentiality agreements to
protect our trade secrets. If these agreements are breached by our employees or other parties, our trade secrets may become known to our
competitors.
We rely on trade secrets that
we seek to protect through confidentiality agreements with our employees and other parties. If these agreements are breached, our competitors
may obtain and use our trade secrets to gain a competitive advantage over us. We may not have any remedies against our competitors and
any remedies that may be available to us may not be adequate to protect our business or compensate us for the damaging disclosure. In
addition, we may have to expend resources to protect our interests from possible infringement by others.
Risks Related to Our Operations
The use of hazardous materials, including
radioactive and biological materials, in our research and development efforts imposes certain compliance costs on us and may subject us
to liability for claims arising from the use or misuse of these materials.
Our research, development
and manufacturing activities involve the controlled use of hazardous materials, including chemicals, radioactive and biological materials,
such as radioactive isotopes. We are subject to federal, state, local and foreign environmental laws and regulations governing, among
other matters, the handling, storage, use and disposal of these materials and some waste products. We cannot completely eliminate the
risk of contamination or injury from these materials and we could be held liable for any damages that result, which could exceed our financial
resources. We currently maintain insurance coverage for injuries resulting from the hazardous materials we use; however, future claims
may exceed the amount of our coverage. Also, we do not have insurance coverage for pollution cleanup and removal. Currently the costs
of complying with such federal, state, local and foreign environmental regulations are not significant, and consist primarily of waste
disposal expenses. However, they could become expensive, and current or future environmental laws or regulations may impair our research,
development, production and commercialization efforts.
We may undertake international operations,
which will subject us to risks inherent with operations outside of the United States.
Although we do not have any
international operations at this time, we intend to seek market clearances in foreign markets that we believe will generate significant
opportunities. However, even with the cooperation of a commercialization partner, conducting drug development in foreign countries involves
inherent risks, including, but not limited to difficulties in staffing, funding and managing foreign operations; unexpected changes in
regulatory requirements; export restrictions; tariffs and other trade barriers; difficulties in protecting, acquiring, enforcing and litigating
intellectual property rights; fluctuations in currency exchange rates; and potentially adverse tax consequences.
If we were to experience any
of the difficulties listed above, or any other difficulties, any international development activities and our overall financial condition
may suffer and cause us to reduce or discontinue our international development and registration efforts.
We are highly dependent on our key personnel,
and if we are not successful in attracting and retaining highly qualified personnel, we may not be able to successfully implement our
business strategy.
Our future operations and
successes depend in large part upon the continued service of key members of our senior management team whom we are highly dependent upon
to manage our business. If any member of our current senior management terminates his employment with us and we are unable to find a suitable
replacement quickly, the departure could have a material adverse effect on our business. An overall tightening and increasingly competitive
labor market has been observed in the U.S. employment market generally, especially in response to the COVID-19 pandemic. Specific to the
biotechnology industry in which we operate, there is significant demand and competition for highly specialized talent that we require.
We have experienced high turnover rates, with approximately one third of our employee base turning over or being replaced during 2021.
A sustained labor shortage or increased turnover rates within our employee base, caused by the COVID-19 pandemic, as a result of general
macroeconomic factors, or due to dynamics within our industry, could lead to increased costs, such as increased wage rates to attract
and retain employees, and could negatively affect our ability to efficiently conduct our clinical development, R&D, business development
and potential regulatory and commercial activities. If we are unable to hire and retain employees capable of performing at a high-level,
or if mitigation measures we may take to respond to a decrease in labor availability, have unintended negative effects, our business could
be adversely affected. An overall labor shortage, lack of skilled labor, increased turnover or labor inflation, caused by the COVID-19
pandemic, general macroeconomic factors or as a result of biotechnology industry dynamics could have a material adverse impact on our
operations, results of operations, liquidity or cash flows.
Our future success also depends
on our ability to identify, attract, hire or engage, retain and motivate other well-qualified managerial, technical, clinical and regulatory
personnel. This activity is likely to create additional demands on the time and attention of our senior management personnel as they identify,
hire, and train external and internal candidates to fill the sizable number of positions required to execute our business plans, including
submitting a BLA and building a commercial organization. The market for talent in our industry is very competitive. Many of the other
biopharmaceutical companies we compete against for qualified personnel have greater financial and other resources, more favorable risk
profiles and a longer operating history in the biopharmaceutical industry than we do. They also may provide more diverse opportunities
and better chances for career advancement. Some of these opportunities may be more appealing to high-quality candidates than what we have
to offer.
It is particularly difficult
to recruit and hire new employees during the COVID-19 pandemic as conducting interviews remotely makes it more difficult to ensure we
are recruiting and hiring high-quality employees, and the uncertainty created by the COVID-19 pandemic makes it less likely potential
candidates will be willing to leave a stable job to explore a new opportunity. There can be no assurance that such professionals will
be available in the market, or that we will be able to retain existing professionals or meet or continue to meet their compensation requirements.
Furthermore, the cost base in relation to such compensation, which may include equity compensation, may increase significantly, which
could have a material adverse effect on us. Failure to establish and maintain an effective management team and workforce could adversely
affect our ability to operate, grow and manage our business.
Managing our growth as we expand operations
may strain our resources.
We expect to need to grow
rapidly in order to support additional, larger, and potentially international, pivotal clinical trials of our product candidates as well
as potential commercial operations, which will place a significant strain on our financial, managerial and operational resources. In
order to achieve and manage growth effectively, we must continue to improve and expand our operational and financial management capabilities.
Moreover, we will need to increase staffing and to train, motivate and manage our employees. All of these activities will increase our
expenses and may require us to raise additional capital sooner than expected. Failure to manage growth effectively could materially harm
our business, financial condition or results of operations.
We may expand our business through the acquisition
of rights to new product candidates that could disrupt our business, harm our financial condition and may also dilute current stockholders’
ownership interests in our company.
Our business strategy includes
expanding our products and capabilities, and we may seek acquisitions of product candidates, antibodies or technologies to do so. Acquisitions
involve numerous risks, including substantial cash expenditures; potentially dilutive issuance of equity securities; incurrence of debt
and contingent liabilities, some of which may be difficult or impossible to identify at the time of acquisition; difficulties in assimilating
acquired technologies or the operations of the acquired companies; diverting our management’s attention away from other business
concerns; risks of entering markets in which we have limited or no direct experience; and the potential loss of our key employees or key
employees of the acquired companies.
We can make no assurances
that any acquisition will result in short-term or long-term benefits to us. We may incorrectly judge the value or worth of an acquired
product, company or business. In addition, our future success would depend in part on our ability to manage the rapid growth associated
with some of these acquisitions. We cannot assure that we will be able to make the combination of our business with that of acquired products,
businesses or companies work or be successful. Furthermore, the development or expansion of our business or any acquired products, business
or companies may require a substantial capital investment by us. We may not have these necessary funds, or they might not be available
to us on acceptable terms or at all. We may also seek to raise funds by selling shares of our preferred or common stock, which could dilute
each current stockholder’s ownership interest in the Company.
Risks Related to Ownership of Our Common
Stock
The sale of securities by us in any equity
or debt financing could result in dilution to our existing stockholders and have a material adverse effect on our earnings.
We have financed our operations
primarily through sales of stock and warrants. It is likely that during the next twelve months we will seek to raise additional capital
through the sales of stock and warrants in order to expand our level of operations to continue our research and development efforts.
Any sale of common stock by
us in a future offering could result in dilution to our existing stockholders as a direct result of our issuance of additional shares
of our capital stock. In addition, our business strategy may include expansion through internal growth or by establishing strategic relationships
with targeted customers and vendors. In order to do so, or to finance the cost of our other activities, we may issue additional equity
securities that could dilute our stockholders’ stock ownership. We may also assume additional debt and incur impairment losses related
to goodwill and other tangible assets if we acquire another company and this could negatively impact our earnings and results of operations.
Our common stock is subject to price volatility
which could lead to losses by stockholders and potential costly security litigation.
The trading volume of our
common stock has been and may continue to be extremely limited and sporadic. We expect the market price of our common stock to fluctuate
substantially due to a variety of factors, including market perception of our ability to achieve our planned growth, quarterly operating
results of other companies in the same industry, trading volume in our common stock, changes in general conditions in the economy and
the financial markets or other developments affecting our competitors or us. This volatility has had a significant effect on the market
price of securities issued by many companies for reasons unrelated to their operating performance and could have the same effect on our
common stock.
The trading price of our common
stock may be highly volatile and could fluctuate in response to factors such as:
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actual or anticipated variations in our operating results; |
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announcements of developments by us or our competitors; |
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the timing of IND and/or BLA approval, the completion and/or results of our clinical trials; |
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regulatory actions regarding our products; |
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announcements by us or our competitors of significant acquisitions, strategic partnerships, joint ventures or capital commitments; |
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adoption of new accounting standards affecting our industry; |
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additions or departures of key personnel; |
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introduction of new products by us or our competitors; |
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sales of our common stock or other securities in the open market; and |
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other events or factors, many of which are beyond our control. |
The stock market is subject
to significant price and volume fluctuations. Moreover, the COVID-19 pandemic has resulted in significant financial market volatility
and uncertainty in recent months. In the past, following periods of volatility in the market price of a company’s securities, securities
class action litigation has often been initiated against such a company. Litigation initiated against us, whether or not successful, could
result in substantial costs and diversion of our management’s attention and our resources, which could harm our business and financial
condition.
We do not intend to pay dividends on our
common stock, so any returns will be determined by the value of our common stock.
We have never declared or
paid any cash dividends on our common stock. For the foreseeable future, it is expected that earnings, if any, generated from our operations
will be used to finance the growth of our business, and that no dividends will be paid to holders of our common stock. As a result, the
success of an investment in our common stock will depend upon any future appreciation in its value. There is no guarantee that our common
stock will appreciate in value.
Certain provisions of our Certificate of
Incorporation and Bylaws and Delaware law make it more difficult for a third party to acquire us and make a takeover more difficult to
complete, even if such a transaction were in our stockholders’ interest.
Provisions of our certificate
of incorporation and bylaws may delay or discourage transactions involving an actual or potential change in our control or change in our
management, including transactions in which stockholders might otherwise receive a premium for their shares, or transactions that our
stockholders might otherwise deem to be in their best interests. Therefore, these provisions could adversely affect the price of our stock.
Among other things, the certificate of incorporation and bylaws:
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provide that the authorized number of directors may be changed by resolution of the board of directors; |
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provide that all vacancies, including newly-created directorships, may, except as otherwise required by law, be filled by the affirmative vote of a majority of directors then in office, even if less than a quorum; |
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divide the board of directors into three classes; |
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provide that stockholders seeking to present proposals before a meeting of stockholders or to nominate candidates for election as directors at a meeting of stockholders must provide notice in writing in a timely manner, and meet specific requirements as to the form and content of a stockholder’s notice; |
In addition, we are governed
by Section 203 of the Delaware General Corporation Law. In general, Section 203 prohibits a public Delaware corporation from engaging
in a “business combination” with an “interested stockholder” for a period of three years after the date of the
transaction in which the person became an interested stockholder, unless the business combination is approved in a prescribed manner.
A “business combination” includes mergers, asset sales or other transactions resulting in a financial benefit to the stockholder.
An “interested stockholder” is a person who, together with affiliates and associates, owns, or within three years, did own,
15% or more of the corporation’s outstanding voting stock. These provisions may have the effect of delaying, deferring or preventing
a change in our control.
Compliance with the reporting requirements
of federal securities laws can be expensive.
We are subject to the information
and reporting requirements of the Exchange Act and other federal securities laws, and the compliance obligations of the Sarbanes-Oxley
Act. The costs of preparing and filing annual and quarterly reports and other information with the Securities and Exchange Commission
and furnishing audited reports to stockholders are substantial. In addition, we will incur substantial expenses in connection with the
preparation of registration statements and related documents with respect any offerings of our common stock.
Our ability to utilize our net operating
loss carryforwards and certain other tax attributes may be limited.
Our ability to utilize our
federal net operating loss and tax credit carryforwards may be limited under Sections 382 and 383 of the Internal Revenue Code of 1986,
as amended, or the Code. The limitations apply if we experience an “ownership change”, generally defined as a greater
than 50 percentage point change in the ownership of our equity by certain stockholders over a rolling three-year period. Similar
provisions of state tax law may also apply. We have not assessed whether such an ownership change has previously occurred. If we
have experienced an ownership change at any time since our formation, we may already be subject to limitations on our ability to utilize
our existing net operating losses and other tax attributes to offset taxable income. In addition, future changes in our stock ownership,
which may be outside of our control, may trigger an ownership change and, consequently, the limitations under Sections 382 and 383 of
the Code. As a result, if or when we earn net taxable income, our ability to use our pre-change net operating loss carryforwards
and other tax attributes to offset such taxable income may be subject to limitations, which could adversely affect our future cash flows.
Failure to establish and maintain adequate
finance infrastructure and accounting systems and controls could impair our ability to comply with the financial reporting and internal
controls requirements for publicly traded companies.
As a public company, we operate
in an increasingly demanding regulatory environment, including with respect to more complex accounting rules. Company responsibilities
required by the Sarbanes-Oxley Act of 2002, as amended, or the Sarbanes-Oxley Act, include establishing and maintaining corporate oversight
and adequate internal control over financial reporting and disclosure controls and procedures. Effective internal controls are necessary
for us to produce reliable financial reports and are important to help prevent financial fraud.
Our compliance with Section
404 of the Sarbanes-Oxley Act requires that we incur substantial accounting expense and expend significant management efforts. We complied
with Section 404 at December 31, 2021 and 2020 and while our testing did not reveal any material weaknesses in our internal controls,
any material weaknesses in our internal controls in the future would be required us to remediate in a timely manner so as to be able to
comply with the requirements of Section 404 each year. If we are not able to comply with the requirements of Section 404 in a timely manner
each year, we could be subject to sanctions or investigations by the SEC, NYSE American or other regulatory authorities which would require
additional financial and management resources and could adversely affect the market price of our common stock. Furthermore, if we cannot
provide reliable financial reports or prevent fraud, our business and results of operations could be harmed, and investors could lose
confidence in our reported financial information.
If securities or industry analysts do not
publish research or publish inaccurate or unfavorable research about our business, the price of our common stock 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 publish about us or our business. Multiple
securities and industry analysts currently cover us. If one or more of the analysts downgrade our common stock or publish inaccurate or
unfavorable research about our business, the price of our common stock would likely decline. If one or more of these analysts cease coverage
of us or fail to publish reports on us regularly, demand for our common stock could decrease, which could cause the price of our common
stock and trading volume to decline.
Our amended and restated bylaws, as
amended, designate the U.S. federal district courts as the exclusive forum for the resolution of any complaint
asserting a cause of action arising under the Securities Act of 1933, as amended.
Our amended and restated bylaws,
as amended, provide that, unless we consent in writing to the selection of an alternative forum, the federal district courts of the
United States of America will be the exclusive forum for resolving any complaint asserting a cause of action arising under the Securities
Act of 1933, as amended. In addition, our amended and restated bylaws, as amended, state that any person purchasing or otherwise acquiring
any interest in our security shall be deemed to have notice of and to have consented to such provision. Such choice of forum provision
may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or our directors,
officers or other employees, which may discourage such lawsuits, if successful, might benefit our stockholders. Stockholders who do bring
a claim in the federal district courts of the United States of America could face additional litigation costs in pursuing any such claim.