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What changed in Azitra, Inc.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Azitra, Inc.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+295 added−312 removedSource: 10-K (2025-02-24) vs 10-K (2024-03-15)

Top changes in Azitra, Inc.'s 2024 10-K

295 paragraphs added · 312 removed · 242 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

127 edited+14 added−14 removed319 unchanged
Biggest changeThe steps usually required to be taken before a new biologic may be marketed in the U.S. generally include: ● completion of preclinical laboratory tests and animal studies performed in accordance with the FDA’s current Good Laboratory Practices regulation; 21 ● submission to the FDA of an IND, which must become effective before clinical trials may begin and must be updated annually or when significant changes are made; ● approval by an independent Institutional Review Board, or IRB, or ethics committee at each treatment site before the trial is commenced; ● performance of adequate and well controlled human clinical trials to establish the safety, purity and potency of the proposed biologic product candidate for its proposed indication for use; ● submission of data supporting safety and efficacy as well as detailed information on the manufacture and composition of the product in clinical development and proposed labeling; ● preparation of and submission to the FDA of a BLA after completion of all pivotal clinical trials; ● satisfactory completion of an FDA Advisory Committee review, if applicable; ● a determination by the FDA within 60 days of its receipt of a BLA to file the application for review; ● satisfactory completion of an FDA pre-approval inspection of the manufacturing facility or facilities at which the proposed product is produced to assess compliance with cGMP standards and to assure that the facilities, methods and controls are adequate to preserve the biological product’s continued safety, purity and potency, and of selected clinical investigation sites to assess compliance with Good Clinical Practices, or GCP; ● satisfactory completion of any FDA audits of the non-clinical and clinical trial sites to assure compliance with CGP requirements and the integrity of clinical data in support of the BLA; ● payment of user fees and securing FDA approval of the BLA for the proposed indication for use; ● FDA review and approval of the BLA to permit commercial marketing of the product for particular indications for use in the United States; and ● compliance with any post-approval requirements, including REMS and any post-approval studies required by the FDA.
Biggest changeThe steps usually required to be taken before a new biologic may be marketed in the U.S. generally include: • completion of preclinical laboratory tests and animal studies performed in accordance with the FDA’s current Good Laboratory Practices regulation; • submission to the FDA of an IND, which must become effective before clinical trials may begin and must be updated annually or when significant changes are made; • approval by an independent Institutional Review Board, or IRB, or ethics committee at each treatment site before the trial is commenced; • approval of an Institutional Biologics Committee or similar committee at each treatment site, where applicable, before the trial is commenced; • performance of adequate and well controlled human clinical trials to establish the safety, purity and potency of the proposed biologic product candidate for its proposed indication for use; • submission of data supporting safety and efficacy as well as detailed information on the manufacture and composition of the product in clinical development and proposed labeling; • preparation of and submission to the FDA of a BLA after completion of all pivotal clinical trials; • satisfactory completion of an FDA Advisory Committee review, if applicable; • a determination by the FDA within 60 days of its receipt of a BLA to file the application for review; • satisfactory completion of an FDA pre-approval inspection of the manufacturing facility or facilities at which the proposed product is produced to assess compliance with cGMP standards and to assure that the facilities, methods and controls are adequate to preserve the biological product’s continued safety, purity and potency, and of selected clinical investigation sites to assess compliance with Good Clinical Practices, or GCP; • satisfactory completion of any FDA audits of the non-clinical and clinical trial sites to assure compliance with CGP requirements and the integrity of clinical data in support of the BLA; • payment of user fees and securing FDA approval of the BLA for the proposed indication for use; • FDA review and approval of the BLA to permit commercial marketing of the product for particular indications for use in the United States; and • compliance with any post-approval requirements, including REMS and any post-approval studies required by the FDA. 23 Preclinical Studies and Investigational New Drug Application Preclinical tests include laboratory evaluations of product chemistry, formulation and stability, as well as animal studies to evaluate the potential for efficacy and toxicity in animals.
Furthermore, a clinical trial may only be started after a competent ethics committee has issued a favorable opinion on the clinical trial application in that country. On January 31, 2022, the Clinical Trials Regulation (EU) No. 536/2014 replaced the current Clinical Trials Directive 2001/20/EC.
Furthermore, a clinical trial may only be started after a competent ethics committee has issued a favorable opinion on the clinical trial application in that country. 31 On January 31, 2022, the Clinical Trials Regulation (EU) No. 536/2014 replaced the current Clinical Trials Directive 2001/20/EC.
Any authorization that is not followed by the actual placing of the drug on the EU market (in case of centralized procedure) or on the market of the authorizing member state within three years after authorization will cease to be valid, the so-called “sunset clause.” Orphan Drug Designation and Exclusivity The European Commission can grant orphan medicinal product designation to products for which the sponsor can establish that it is intended for the diagnosis, prevention, or treatment of (1) a life-threatening or chronically debilitating condition affecting not more than five in 10,000 people in the EU, or (2) a life threatening, seriously debilitating or serious and chronic condition in the EU and that without incentives it is unlikely that sales of the drug in the EU would generate a sufficient return to justify the necessary investment.
Any authorization that is not followed by the actual placing of the drug on the EU market (in case of centralized procedure) or on the market of the authorizing member state within three years after authorization will cease to be valid, the so-called “sunset clause." Orphan Drug Designation and Exclusivity The European Commission can grant orphan medicinal product designation to products for which the sponsor can establish that it is intended for the diagnosis, prevention, or treatment of (1) a life-threatening or chronically debilitating condition affecting not more than five in 10,000 people in the EU, or (2) a life threatening, seriously debilitating or serious and chronic condition in the EU and that without incentives it is unlikely that sales of the drug in the EU would generate a sufficient return to justify the necessary investment.
This statute also prohibits knowingly and willfully falsifying, concealing or covering up a material fact or making any materially false statement in connection with the delivery of or payment for healthcare benefits, items, or services; 34 ● The federal false statements statute prohibits knowingly and willfully falsifying, concealing or covering up a material fact or making any materially false statement in connection with the delivery of or payment for health care benefits, items or services; ● The Physician Payments Sunshine Act, created under the ACA, and its implementing regulations, which requires specified manufacturers of drugs, devices, biologics and medical supplies for which payment is available under Medicare, Medicaid or the Children’s Health Insurance Program, with specific exceptions, to report annually to the Centers for Medicare & Medicaid Services, or CMS, information related to payments or other “transfers of value” made to physicians.
This statute also prohibits knowingly and willfully falsifying, concealing or covering up a material fact or making any materially false statement in connection with the delivery of or payment for healthcare benefits, items, or services; • The federal false statements statute prohibits knowingly and willfully falsifying, concealing or covering up a material fact or making any materially false statement in connection with the delivery of or payment for health care benefits, items or services; • The Physician Payments Sunshine Act, created under the ACA, and its implementing regulations, which requires specified manufacturers of drugs, devices, biologics and medical supplies for which payment is available under Medicare, Medicaid or the Children’s Health Insurance Program, with specific exceptions, to report annually to the Centers for Medicare & Medicaid Services, or CMS, information related to payments or other “transfers of value” made to physicians.
A well-controlled, statistically robust Phase 3 trial may be designed to deliver the data that regulatory authorities will use to decide whether or not to approve, and, if approved, how to appropriately label a drug: such Phase 3 studies are referred to as “pivotal.” 23 The FDA may order the temporary or permanent discontinuation of a clinical study at any time or impose other sanctions if it believes that the clinical study is not being conducted in accordance with FDA requirements or that the participants are being exposed to an unacceptable health risk.
A well-controlled, statistically robust Phase 3 trial may be designed to deliver the data that regulatory authorities will use to decide whether or not to approve, and, if approved, how to appropriately label a drug: such Phase 3 studies are referred to as “pivotal.” The FDA may order the temporary or permanent discontinuation of a clinical study at any time or impose other sanctions if it believes that the clinical study is not being conducted in accordance with FDA requirements or that the participants are being exposed to an unacceptable health risk.
It is currently unclear how the IRA will be implemented but is likely to have a significant impact on the pharmaceutical industry In addition, in response to the Biden administration’s October 2022 executive order, on February 14, 2023, HHS released a report outlining three new models for testing by the Center for Medicare and Medicaid Innovation which will be evaluated on their ability to lower the cost of drugs, promote accessibility, and improve quality of care.
It is currently unclear how the IRA will be implemented but is likely to have a significant impact on the pharmaceutical industry In addition, in response to the Biden administration’s October 2022 executive order, on February 14, 2023, HHS released a report outlining three new models for testing by the Center for Medicare and Medicaid Innovation which will be evaluated on their 38 ability to lower the cost of drugs, promote accessibility, and improve quality of care.
Other potential consequences include, among other things: ● restrictions on the marketing or manufacturing of the product, complete withdrawal of the product from the market or product recalls; ● fines, warning letters or holds on post-approval clinical trials; ● refusal of the FDA to approve pending BLAs or supplements to approved BLAs, or suspension or revocation of product license approvals; ● product seizure or detention, or refusal to permit the import or export of products; or ● injunctions or the imposition of civil or criminal penalties.
Other potential consequences include, among other things: 28 • restrictions on the marketing or manufacturing of the product, complete withdrawal of the product from the market or product recalls; • fines, warning letters or holds on post-approval clinical trials; • refusal of the FDA to approve pending BLAs or supplements to approved BLAs, or suspension or revocation of product license approvals; • product seizure or detention, or refusal to permit the import or export of products; or • injunctions or the imposition of civil or criminal penalties.
The pathogenesis of IV has long been identified as a decrease in the size or number, or even a complete absence of, epidermal keratohyaline granules. In addition, patients with IV are at increased risk for atopic dermatitis, asthma and allergies. 14 Ichthyosis vulgaris is an autosomal semidominant disease caused by loss-of-function mutations in the gene encoding filaggrin.
The pathogenesis of IV has long been identified as a decrease in the size or number, or even a complete absence of, epidermal keratohyaline granules. In addition, patients with IV are at increased risk for atopic dermatitis, asthma and allergies. Ichthyosis vulgaris is an autosomal semidominant disease caused by loss-of-function mutations in the gene encoding filaggrin.
Additional regulatory protection may also be afforded through data exclusivity, market exclusivity and patent-term extensions where available. 18 As of the date of this report, we own or exclusively license three issued U.S. patents, 12 pending U.S. patent applications, three pending PCT application and 57 other foreign patents and patent applications that are important to the development of our business.
Additional regulatory protection may also be afforded through data exclusivity, market exclusivity and patent-term extensions where available. As of the date of this report, we own or exclusively license three issued U.S. patents, 12 pending U.S. patent applications, three pending PCT application and 57 other foreign patents and patent applications that are important to the development of our business.
Those that survive face a lifetime of skin disease challenges including red, scaly skin, hair defects and an ongoing higher than normal risk for infection and allergy. 6 Netherton syndrome is caused by mutations in the SPINK5 gene, which codes for the serine protease inhibitor Lympho-epithelial Kazal-type related inhibitor, or LEKTI.
Those that survive face a lifetime of skin disease challenges including red, scaly skin, hair defects and an ongoing higher than normal risk for infection and allergy. Netherton syndrome is caused by mutations in the SPINK5 gene, which codes for the serine protease inhibitor Lympho-epithelial Kazal-type related inhibitor, or LEKTI.
In December 2022, we filed an IND for a first-in-human trial of ATR-12 in Netherton syndrome patients. Our IND proposes a Phase 1b multi-center, randomized, double-blind, single dose level, placebo-controlled clinical study of ATR-12 in patients with Netherton syndrome. The primary endpoint is safety and secondary endpoints will include signals of efficacy and pharmacokinetics.
In December 2022, we filed an IND for a first-in-human trial of ATR-12 in Netherton syndrome patients. Our IND proposes a Phase 1b multi-center, randomized, double-blind, single dose level, placebo-controlled clinical study of ATR-12 in patients with Netherton syndrome. The primary endpoint is safety, and secondary endpoints include signals of efficacy and pharmacokinetics.
Full length human LETKI, a 15-domain protein (145 kDa), is too large for reliable bacterial expression and secretion. Given evidence that fragments of the full-length protein are sufficient to counter the dysregulated skin serine protease activity observed in Netherton syndrome patients, we selected D6 for recombinant expression in S. epidermidis .
Full length human LETKI, a 15-domain protein (145 kDa), is too large for reliable bacterial expression and secretion. Given evidence 8 that fragments of the full-length protein are sufficient to counter the dysregulated skin serine protease activity observed in Netherton syndrome patients, we selected D6 for recombinant expression in S. epidermidis .
We seek to protect our proprietary technology and processes, in part, by confidentiality agreements and invention assignment agreements with our employees, consultants, scientific advisors, contractors and others who may have access to proprietary information, under which they are bound to assign to us inventions made during the term of their employment or term of service.
We seek to protect our proprietary technology and processes, in part, by confidentiality agreements and invention assignment agreements with our employees, consultants, scientific 21 advisors, contractors and others who may have access to proprietary information, under which they are bound to assign to us inventions made during the term of their employment or term of service.
We believe our collaboration with the Carnegie Mellon based team provides us with a scalable and modification tolerant way to accelerate therapeutic discoveries within our microbial library. The Delivery of our Microbially Produced Drugs The delivery of genetically engineered proteins to the subcutaneous target sites is hindered by the natural barrier and the defenses of the stratum corneum.
We believe our collaboration with the Carnegie Mellon based team provides us with a scalable and modification tolerant way to accelerate therapeutic discoveries within our microbial library. 5 The Delivery of our Microbially Produced Drugs The delivery of genetically engineered proteins to the subcutaneous target sites is hindered by the natural barrier and the defenses of the stratum corneum.
We believe that among the important advantages of this approach is the potential to deliver rhLEKTI-D6 over time into the lower layers of the stratum corneum and epidermis, the primary sites of dysregulation in patients with Netherton syndrome. 7 The S. epidermidis strain selected to deliver rhLEKTI-D6 to the skin, SE351, was selected from our proprietary strain collection.
We believe that among the important advantages of this approach is the potential to deliver rhLEKTI-D6 over time into the lower layers of the stratum corneum and epidermis, the primary sites of dysregulation in patients with Netherton syndrome. The S. epidermidis strain selected to deliver rhLEKTI-D6 to the skin, SE351, was selected from our proprietary strain collection.
EGFRi-Associated Rash To date, no drug has been specifically approved by the FDA for the treatment of EGFRi-associated rash. The majority of patients (estimated to be up to 90%) treated continuously with anti-EGFR therapies suffer from dermatological adverse events, especially papulopustular rash, pruritus (itching), xerosis (dryness), and paronychia (nail infections).
EGFRi-Associated Rash To date, no drug has been specifically approved by the FDA for the treatment of EGFRi-associated rash. The majority of patients (estimated to be up to 90%) treated continuously with anti-EGFR therapies suffer from dermatological adverse events, especially papulopustular rash, pruritus (itching), xerosis (dryness), and paronychia 19 (nail infections).
We, our manufacturers and clinical research organizations may also be subject to regulations under other foreign, federal, state and local laws, including, but not limited to, the U.S. Occupational Safety and Health Act, the Resource Conservation and Recovery Act, the Clean Air Act and import, export and customs regulations as well as the laws and regulations of other countries.
We, our manufacturers and clinical research organizations may also be subject to regulations under other foreign, federal, state and local laws, including, but not limited to, the U.S. 22 Occupational Safety and Health Act, the Resource Conservation and Recovery Act, the Clean Air Act and import, export and customs regulations as well as the laws and regulations of other countries.
The CHMP is composed of experts nominated by each member state’s national authority for medicinal products, with one of them appointed to act as Rapporteur for the co-ordination of the evaluation with the possible assistance of a further member of the Committee acting as a Co-Rapporteur. After approval, the Rapporteur(s) continue to monitor the product throughout its life cycle.
The CHMP is composed of experts nominated by each member state’s national authority for medicinal products, with one of them appointed to act as Rapporteur for the co-ordination of the 32 evaluation with the possible assistance of a further member of the Committee acting as a Co-Rapporteur. After approval, the Rapporteur(s) continue to monitor the product throughout its life cycle.
In December 2022, we submitted an investigational new drug application, or IND, for a Phase 1b clinical trial of ATR-12 in Netherton syndrome patients, and on January 27, 2023 we received notification from the FDA that the “study may proceed” with respect to the proposed Phase 1b clinical trial.
In December 2022, we submitted an investigational new drug application, or IND, for a Phase 1b clinical trial of ATR-12 in adult Netherton syndrome patients, and on January 27, 2023 we received notification from the FDA that the “study may proceed” with respect to the proposed Phase 1b clinical trial.
We have also collected other species in our library that includes roughly 60 different skin commensal species that can also be screened for therapeutic purposes. 4 Figure 1. Representative Species in Azitra Microbial Library Predictive Analysis of Our Microbial Library The biopharmaceutical industry has seen success in identifying and isolating thousands of bacterial species.
We have also collected other species in our library that includes roughly 60 different skin commensal species that can also be screened for therapeutic purposes. Figure 1. Representative Species in Azitra Microbial Library Predictive Analysis of Our Microbial Library The biopharmaceutical industry has seen success in identifying and isolating thousands of bacterial species.
The appearance of the papulopustular rash is a dose-dependent skin drug reaction, which usually develops in the first one to two weeks and peaks at three to four weeks on therapy. The intensity of the rash may start to decrease after two weeks but can persists over the entire course of EGFRi treatment.
The appearance of the papulopustular rash is a dose-dependent skin drug reaction, which usually develops in the first one to two weeks and peaks at three to four weeks on therapy. The intensity of the rash may start to decrease after two 11 weeks but can persists over the entire course of EGFRi treatment.
Clinical trials are usually conducted in three sequential phases, but the phases may overlap or be combined. Annual progress detailing the results of the clinical trial phases must be submitted to the FDA. ● Phase 1 clinical trials are normally conducted in small groups of healthy volunteers to assess safety and tolerability of various dosing regimens and pharmacokinetics.
Clinical trials are usually conducted in three sequential phases, but the phases may overlap or be combined. Annual progress detailing the results of the clinical trial phases must be submitted to the FDA. 24 • Phase 1 clinical trials are normally conducted in small groups of healthy volunteers to assess safety and tolerability of various dosing regimens and pharmacokinetics.
If we seek to make certain changes to an approved product, such as certain manufacturing changes, we may need FDA review and approval before the change can be implemented. While physicians may use products for indications that have not been approved by the FDA, we may not label or promote the product for an indication that has not been approved.
If we seek to make certain changes to an approved product, such as certain manufacturing changes, we may need FDA review and approval before the change can be implemented. 26 While physicians may use products for indications that have not been approved by the FDA, we may not label or promote the product for an indication that has not been approved.
S. epidermidis is a gram-positive bacterium that is ubiquitous in the human skin and mucosal flora. As one of the earliest colonizers of the skin, S. epidermidis plays an important role in cutaneous immunity and maintaining microbial community homeostasis. S. epidermidis is known to have a beneficial relationship with its host as a skin commensal.
S. epidermidis is a gram-positive bacterium that is ubiquitous in the human skin and mucosal flora. As one of 4 the earliest colonizers of the skin, S. epidermidis plays an important role in cutaneous immunity and maintaining microbial community homeostasis. S. epidermidis is known to have a beneficial relationship with its host as a skin commensal.
Amounts of LEKTI activity in layers extracted were from tape strip samples from ex vivo human skin treated with placebo and ATR-12. The collection proceeded right after skin application (T = 0 hours, white bars) or after 8 hours incubation at 30°C (T = 8 hours, black bars).
Amounts of LEKTI activity in layers extracted were from 9 tape strip samples from ex vivo human skin treated with placebo and ATR-12. The collection proceeded right after skin application (T = 0 hours, white bars) or after 8 hours incubation at 30°C (T = 8 hours, black bars).
While most skin rash episodes are considered mild to moderate, some are severe. In many cases the rash leads to severe quality of life issues and can even lead to the interruption or cessation of the EGFRi treatment . 10 The current standard of care for rash treatment in patients undergoing EGFRi treatment varies depending on the rash severity.
While most skin rash episodes are considered mild to moderate, some are severe. In many cases, the rash leads to severe quality of life issues and can even lead to the interruption or cessation of the EGFRi treatment . The current standard of care for rash treatment in patients undergoing EGFRi treatment varies depending on the rash severity.
This could cause significant delays or difficulties in completing planned clinical trials in a timely manner. 22 Clinical Trials Clinical trials involve the administration of the investigational product candidate to healthy volunteers or patients with the disease to be treated under the supervision of a qualified principal investigator in accordance with good clinical practice, or GCP, requirements.
This could cause significant delays or difficulties in completing planned clinical trials in a timely manner. Clinical Trials Clinical trials involve the administration of the investigational product candidate to healthy volunteers or patients with the disease to be treated under the supervision of a qualified principal investigator in accordance with good clinical practice, or GCP, requirements.
Both U.S. and non-U.S. manufacturing establishments must register and provide additional information to the FDA upon their initial participation in the manufacturing process. Any product manufactured by or imported from a facility that has not registered, whether U.S. or non-U.S., is deemed misbranded under the FDCA.
Both U.S. and non-U.S. manufacturing establishments must register and provide additional information to the FDA upon their initial participation in the manufacturing process. Any product manufactured by or imported from a facility that has not registered, whether 25 U.S. or non-U.S., is deemed misbranded under the FDCA.
Not only does the “stealth by engineering” approach enable transformations in genetically intractable bacterial strains, but it has also been shown to drastically increase transformational efficiency. Proof of principle experiments have shown improvements of over 10,000x in yields of genetically engineered colonies.
Not only does the “stealth by engineering” approach enable transformations in genetically intractable bacterial strains, but it has also been shown to drastically increase transformational efficiency. 6 Proof of principle experiments have shown improvements of over 10,000x in yields of genetically engineered colonies.
We believe we can reduce discontinuation rate in patients undergoing EGFRi therapy and thus increase compliance. ● Higher quality of life. Many patients on EGFRi therapy report a poor quality of life due to adverse events and papulopustular rashes. Current treatment options fail to adequately reduce these adverse events.
We believe we can reduce discontinuation rate in patients undergoing EGFRi therapy and thus increase compliance. 12 • Higher quality of life. Many patients on EGFRi therapy report a poor quality of life due to adverse events and papulopustular rashes. Current treatment options fail to adequately reduce these adverse events.
If additional patents were to grant, they would also expire in 2039. 19 Patent Term and Term Extension Individual patents have terms for varying periods depending on the date of filing of the patent application or the date of patent issuance and the legal term of patents in the countries in which they are obtained.
If additional patents were to grant, they would also expire in 2039. Patent Term and Term Extension Individual patents have terms for varying periods depending on the date of filing of the patent application or the date of patent issuance and the legal term of patents in the countries in which they are obtained.
In addition, the fast track designation may be withdrawn by the FDA if the FDA believes that the designation is no longer supported by data emerging in the clinical trial process. 25 Additionally, in 2012, Congress enacted the Food and Drug Administration Safety and Innovation Act, or FDASIA.
In addition, the Fast Track designation may be withdrawn by the FDA if the FDA believes that the designation is no longer supported by data emerging in the clinical trial process. Additionally, in 2012, Congress enacted the Food and Drug Administration Safety and Innovation Act, or FDASIA.
After an emergency has been designated, the FDA may issue an Emergency Use Authorization, or EUA, for the use of a specific product based on criteria established by the FDCA. An EUA is product specific and is subject to specific conditions and restrictions. Once the emergency underlying the EUA ends, then the EUA terminates.
After an 27 emergency has been designated, the FDA may issue an Emergency Use Authorization, or EUA, for the use of a specific product based on criteria established by the FDCA. An EUA is product specific and is subject to specific conditions and restrictions. Once the emergency underlying the EUA ends, then the EUA terminates.
While we believe that our knowledge, experience and scientific resources provide us with competitive advantages, we face potential competition from many different sources, including other biopharmaceutical companies, academic institutions and governmental agencies as well as public and private research institutions.
While we believe that our knowledge, experience and scientific 18 resources provide us with competitive advantages, we face potential competition from many different sources, including other biopharmaceutical companies, academic institutions and governmental agencies as well as public and private research institutions.
The period of exclusivity begins on the date that the marketing application is approved by the FDA and applies only to the indication for which the product has been designated. The FDA may approve a second application for the same product for a different use or a subsequent application for a different drug for the same indication.
The period of exclusivity begins on the date that the marketing application is approved by the FDA and applies only to the indication for which the product has been designated. The FDA may approve a second application for the same product for a different use or a subsequent application for a different drug for the same 29 indication.
Marketing Authorization Authorization to market a product in the member states of the EU proceeds under one of four procedures: a centralized procedure, a mutual recognition procedure, a decentralized procedure or a national procedure. 30 Centralized Procedure The centralized procedure enables applicants to obtain a marketing authorization that is valid in all EU member states based on a single application.
Marketing Authorization Authorization to market a product in the member states of the EU proceeds under one of four procedures: a centralized procedure, a mutual recognition procedure, a decentralized procedure or a national procedure. Centralized Procedure The centralized procedure enables applicants to obtain a marketing authorization that is valid in all EU member states based on a single application.
Other Potential Product Candidates Beyond our three lead product candidates, our goal is to develop a broad portfolio of product candidates focused on expanding the application of our platforms for precision dermatology. We have a proprietary platform for discovering and developing therapeutic products for precision dermatology.
Other Potential Product Candidates 17 Beyond our three lead product candidates, our goal is to develop a broad portfolio of product candidates focused on expanding the application of our platforms for precision dermatology. We have a proprietary platform for discovering and developing therapeutic products for precision dermatology.
We believe that this patent gives us broad protection for using recombinant bacteria to treat skin diseases and disorders. through its expiration in May 2035. Patent applications directed to our most advanced programs are summarized below.
We believe that this patent gives us broad protection for using recombinant bacteria to treat skin diseases and disorders. through its expiration in May 2035. 20 Patent applications directed to our most advanced programs are summarized below.
The applicable regulations aim to ensure that information provided by holders of marketing authorizations regarding their products is truthful, balanced and accurately reflects the safety and efficacy claims authorized by the EMA or by the national authority of the authorizing member state.
The applicable regulations aim to ensure that information provided by holders of marketing authorizations regarding their products is truthful, balanced and accurately reflects the safety and efficacy claims authorized by the 35 EMA or by the national authority of the authorizing member state.
The Pediatric Committee of the EMA, or PDCO, may grant deferrals for some medicines, allowing a company to delay development of the medicine in children until there is enough information to demonstrate its effectiveness and safety in adults.
The Pediatric Committee of the EMA, or PDCO, may grant deferrals for some medicines, allowing a company to delay development of the medicine in children until there is enough information to 33 demonstrate its effectiveness and safety in adults.
In addition, emphasis on managed care in the United States has increased and we expect will continue to increase the pressure on drug pricing. Coverage policies, third-party reimbursement rates and drug pricing regulation may change at any time.
In addition, emphasis on managed care in the United States has increased and we expect will continue to increase the pressure on 37 drug pricing. Coverage policies, third-party reimbursement rates and drug pricing regulation may change at any time.
Information on the operation of the Public Reference Room can be obtained by calling the SEC at 1-800-SEC-0330. The SEC also maintains an internet site that contains reports and other information regarding our filings at www.sec.gov.
Information on the operation of the Public Reference Room can be obtained by calling the SEC at 1-800-SEC-0330. The SEC also maintains an internet site that contains reports and other information regarding our filings at www.sec.gov. 39
This represents a 5- to 11-fold amount above the predicted amount required for activity. 9 Figure 6: In vitro stoichiometry of LEKTI-D6 to inhibit KLK5 In 2022, we obtained pre-IND correspondence with the FDA for purposes of discussing our proposed regulatory pathway for ATR-12 and obtaining guidance from the FDA on the preclinical plan leading to the filing and acceptance of an IND application for ATR-12.
This represents a 5- to 11-fold amount above the predicted amount required for activity. 10 Figure 6: In vitro stoichiometry of LEKTI-D6 to inhibit KLK5 In 2022, we obtained pre-IND correspondence with the FDA for purposes of discussing our proposed regulatory pathway for ATR-12 and obtaining guidance from the FDA on the preclinical plan leading to the filing and acceptance of an IND application for ATR-12.
In both cases, cell-free supernatant or SE484 cells, erlotinib-induced IL-36γ levels were reduced. 12 Figure 7. The anti-IL-36g activity of SE484 on RHE . Reconstructed human epidermis, or RHE, was treated for 72 hours with 1 mM erlotinib alone or with cell-free supernatant (CFS) from SE484 culture (A), or with approximately 10 8 or 10 9 CFU of SE484 (B).
In both cases, cell-free supernatant or SE484 cells, erlotinib-induced IL-36γ levels were reduced. 13 Figure 7. The anti-IL-36g activity of SE484 on RHE . Reconstructed human epidermis, or RHE, was treated for 72 hours with 1 mM erlotinib alone or with cell-free supernatant (CFS) from SE484 culture (A), or with approximately 10 8 or 10 9 CFU of SE484 (B).
Employees As of the date of this report, we have 10 employees and full-time consultants, including our executive officers, providing management and financial services, and general administrative responsibilities. We believe that we maintain a satisfactory working relationship with our employees, and we have not experienced any significant labor disputes or any difficulty in recruiting staff for our operations.
Employees As of the date of this report, we have 12 employees and full-time consultants, including our executive officers, providing management and financial services, and general administrative responsibilities. We believe that we maintain a satisfactory working relationship with our employees, and we have not experienced any significant labor disputes or any difficulty in recruiting staff for our operations.
Thus, topical delivery of a recombinant hFLG unit coupled with a cell penetrating peptide can improve/accelerate the repair of damaged human skin barrier. 15 Figure 10: Topical filaggrin application on tape stripped ex vivo human skin following human filaggrin application. Lastly, we have shown that topical filaggrin can improve skin barrier defects in filaggrin-deficient mouse models.
Thus, topical delivery of a recombinant hFLG unit coupled with a cell penetrating peptide can improve/accelerate the repair of damaged human skin barrier. 16 Figure 10: Topical filaggrin application on tape stripped ex vivo human skin following human filaggrin application. Lastly, we have shown that topical filaggrin can improve skin barrier defects in filaggrin-deficient mouse models.
We reasoned that many species of bacteria that live on human skin probably survive there because they have evolved ways to reduce the human immune system’s response to their presence, and we might be able to identify a resident human skin commensal bacteria that survives thereby specifically reducing IL-36γ activity.
We believed that many species of bacteria that live on human skin probably survive there because they have evolved ways to reduce the human immune system’s response to their presence, and we might be able to identify a resident human skin commensal bacteria that survives thereby specifically reducing IL-36γ activity.
To identify such a Staphylococcus epidermidis strain, we developed an in vitro assay to measure the levels of IL-36γ and IL-8 that are produced by human skin cells that are grown in culture. The cell line we used is called HaCaT and is derived from human keratinocytes, which are a cell type in the epidermis.
To identify such a S. epidermidis strain, we developed an in vitro assay to measure the levels of IL-36γ and IL-8 that are produced by human skin cells that are grown in culture. The cell line we used is called HaCaT and is derived from human keratinocytes, which are a cell type in the epidermis.
We believe that we have established a unique position in advancing the development of biologics for precision dermatology. 2 Our Business Strategies We intend to create a broad portfolio of product candidates for precision dermatology through our development of genetically engineered proteins selected from our proprietary microbial library of approximately 1,500 unique bacterial strains.
We believe that we have established a unique position in advancing the development of biologics for precision dermatology. 2 We intend to create a broad portfolio of product candidates for precision dermatology through our development of genetically engineered proteins selected from our proprietary microbial library of approximately 1,500 unique bacterial strains.
Our solution – ATR-04 for the treatment of EGFRi-associated rash ATR-04 is our formulated, drug product candidate for the treatment of EGFRi associated rash. It includes a novel auxotrophic strain of S. epidermidis strain that was selected from our microbial strain library, based on desired properties of IL-36γ reduction and inhibition of S. aureus and its biofilms.
Our solution – ATR-04 for the treatment of EGFRi-associated rash ATR-04 is our formulated, drug product candidate for the treatment of EGFRi associated rash. It includes a strain of S. epidermidis strain that was selected from our microbial strain library, based on desired properties of IL-36γ reduction and inhibition of S. aureus and its biofilms.
Data exclusivity prevents regulatory authorities in the EU from referencing the innovator’s data to assess a generic or biosimilar (abbreviated) application.
Data exclusivity prevents regulatory authorities in the EU from referencing the innovator’s data to assess a generic or biosimilar (abbreviated) 34 application.
Epidermin-expressing SE484 kills S. aureus with similar activity as mupirocin on in vitro agar plates. We are proposing an initial study of SE484 in the ATR-04 formulation in patients. It is contemplated to be a Phase 1b multi-center, randomized, double-blind, single-dose, placebo-controlled trial in patients with colorectal or head and neck cancer who are initiating EGFRi therapies.
Epidermin-expressing SE484 kills S. aureus with similar activity as mupirocin on in vitro agar plates. We are proposing an initial study of SE484 in the ATR-04 formulation in patients. It is contemplated to be a Phase 1/2 multi-center, randomized, double-blind, single-dose, placebo-controlled trial in patients with colorectal or head and neck cancer who are initiating EGFRi therapies.
The ACA was enacted in the United States in March 2010 and contains provisions that may reduce the profitability of drug products, including, for example, increased rebates for drugs subject to the Medicaid Drug Rebate Program, extension of Medicaid rebates to Medicaid managed care plans, mandatory discounts for certain Medicare Part D beneficiaries and annual fees based on pharmaceutical companies’ share of sales to federal health care programs.
The Affordable Care Act, or ACA, was enacted in the United States in March 2010 and contains provisions that may reduce the profitability of drug products, including, for example, increased rebates for drugs subject to the Medicaid Drug Rebate Program, extension of Medicaid rebates to Medicaid managed care plans, mandatory discounts for certain Medicare Part D beneficiaries and annual fees based on pharmaceutical companies’ share of sales to federal health care programs.
The process regarding approval of medicinal products in the EU follows roughly the same lines as in the United States and likewise generally involves satisfactorily completing each of the following: ● preclinical laboratory tests, animal studies and formulation studies all performed in accordance with the applicable EU Good Laboratory Practice regulations; ● submission to the relevant regulatory agencies in EU member states, or national authorities, of a clinical trial application, or CTA, for each clinical trial, which must be approved before human clinical trials may begin; ● performance of adequate and well-controlled clinical trials to establish the safety and efficacy of the product for each proposed indication; ● submission to the relevant national authorities of a Marketing Authorisation Application, or MAA, which includes the data supporting safety and efficacy as well as detailed information on the manufacture and composition of the product in clinical development and proposed labeling; ● satisfactory completion of an inspection by the relevant national authorities of the manufacturing facility or facilities, including those of third parties, at which the product is produced to assess compliance with cGMP; ● potential audits of the non-clinical and clinical trial sites that generated the data in support of the MAA; and ● review and approval by the relevant national authority of the MAA before any commercial marketing, sale or shipment of the product. 29 Preclinical Studies Preclinical tests include laboratory evaluations of product chemistry, formulation and stability, as well as studies to evaluate the potential efficacy and toxicity in animals.
The process regarding approval of medicinal products in the EU follows roughly the same lines as in the United States and likewise generally involves satisfactorily completing each of the following: • preclinical laboratory tests, animal studies and formulation studies all performed in accordance with the applicable EU Good Laboratory Practice regulations; • submission to the relevant regulatory agencies in EU member states, or national authorities, of a clinical trial application, or CTA, for each clinical trial, which must be approved before human clinical trials may begin; • performance of adequate and well-controlled clinical trials to establish the safety and efficacy of the product for each proposed indication; • submission to the relevant national authorities of a Marketing Authorisation Application, or MAA, which includes the data supporting safety and efficacy as well as detailed information on the manufacture and composition of the product in clinical development and proposed labeling; • satisfactory completion of an inspection by the relevant national authorities of the manufacturing facility or facilities, including those of third parties, at which the product is produced to assess compliance with cGMP; • potential audits of the non-clinical and clinical trial sites that generated the data in support of the MAA; and • review and approval by the relevant national authority of the MAA before any commercial marketing, sale or shipment of the product.
Specifically, this issued patent covers a pharmaceutical composition containing one or more of the following bacterial strains: Bifidobacterium, Brevibacterium, Propionibacterium, Lactococcus, Streptococcus, Staphylococcus, Lactobacillus, Enterococcus, Pediococcus, Leuconostoc, or Oenococcus, wherein the bacterial strain has been engineered to produce a therapeutical polypeptide for treating the abnormal skin conditions.
Specifically, this issued patent covers a pharmaceutical composition containing one or more of the following bacterial strains: Bifidobacterium, Brevibacterium, Propionibacterium, Lactococcus, Streptococcus, Staphylococcus, Lactobacillus, Enterococcus, Pediococcus, Leuconostoc, or Oenococcu s, wherein the bacterial strain has been engineered to produce a therapeutical polypeptide for treating the abnormal skin conditions.
ATR-04 Our ATR-12 product candidate is subject to one issued US patent, two pending US patent applications, and 17 pending foreign applications. These patents and patent applications represent two families of claims directed to auxotrophic strains of bacteria and their therapeutic use for treating disease. We have one issued US patent that covers ATR-04.
ATR-04 Our ATR-04 product candidate is subject to one issued US patent, two pending US patent applications, and 20 pending foreign applications. These patents and patent applications represent two families of claims directed to auxotrophic strains of bacteria and their therapeutic use for treating disease. We have one issued US patent that covers ATR-04.
The platform is augmented by an artificial intelligence and machine learning technology that analyzes, predicts and helps screen our library of strains for drug like molecules. The platform also utilizes a licensed genetic engineering technology, which can enable the transformation of previously genetically intractable strains.
The platform is augmented by an artificial intelligence and machine learning technology that analyzes, predicts and helps screen our library of strains for druglike molecules. The platform also utilizes a licensed genetic engineering technology, which can enable the transformation of previously genetically intractable strains.
Data are representative of two independent experiments. CS = culture supernatant. Figure 8 shows the inhibitory effect of SE484 culture supernatant on the induction of IL-8 by poly I:C. Similar to IL-36γ, when poly I:C is added to HaCaT cells, IL-8 is also secreted, several fold above background (as seen in untreated HaCaT and SE484-treated HaCaT).
Data are representative of two independent experiments. CFS = cell free supernatant. Figure 8 shows the inhibitory effect of SE484 culture supernatant on the induction of IL-8 by poly I:C. Similar to IL-36γ, when poly I:C is added to HaCaT cells, IL-8 is also secreted, several fold above background (as seen in untreated HaCaT and SE484-treated HaCaT).
For more information related to the intellectual property acquired pursuant to the Fred Hutch license agreement, see the section titled “ Business-Licenses and Intellectual Property Rights .” Our Product Candidates ATR-12 for the treatment of Netherton syndrome ATR-12 is our proprietary and patent-pending drug candidate that contains a novel strain of S. epidermidis which has been genetically modified to express and secrete an active fragment of the full-length protein called the lympho-epithelial Kazal-type related inhibitor, or LEKTI.
For more information related to the intellectual property acquired pursuant to the Fred Hutch license agreement, see the section titled “ Licenses and Intellectual Property Rights - Exclusive License Agreement with Fred Hutchinson Cancer Center .” Our Product Candidates ATR-12 for the treatment of Netherton syndrome ATR-12 is our proprietary and patent-pending drug candidate that contains a novel strain of S. epidermidis which has been genetically modified to express and secrete an active fragment of the full-length protein called the lympho-epithelial Kazal-type related inhibitor, or LEKTI.
We expect to report initial safety results in the second half of 2024. ● ATR-04 , a genetically modified strain of S. epidermidis for treating the papulopustular rash experienced by cancer patients undergoing epidermal growth factor receptor inhibitor, or EGFRi, targeted therapy.
We expect to report initial safety results in the first half of 2025. • ATR-04 , a genetically modified strain of S. epidermidis for treating the papulopustular rash experienced by cancer patients undergoing epidermal growth factor receptor inhibitor, or EGFRi, targeted therapy.
ATR-12 Our ATR-12 product candidate is subject to three issued US patents, seven pending US patent applications, and 31 pending foreign patents and patent applications.
ATR-12 Our ATR-12 product candidate is subject to three issued US patents, seven pending US patent applications, and 40 pending foreign patents and patent applications.
The information on or accessible through our website is not part of this annual report on Form 10-K. A copy of this annual report on Form 10-K is located at the SEC’s Public Reference Room at 100 F Street, NE, Washington, D.C. 20549.
Available Information Our website is located at www.azitrainc.com. The information on or accessible through our website is not part of this annual report on Form 10-K. A copy of this annual report on Form 10-K is located at the SEC’s Public Reference Room at 100 F Street, NE, Washington, D.C. 20549.
Intellectual Property Overview We actively seek to protect our proprietary technology, inventions, improvements to inventions and other intellectual property that is commercially important to the development of our business by a variety of means, such as seeking, maintaining and defending patent rights, whether developed internally or licensed from third parties.
Ltd. is developing DWP708 in Korea. Intellectual Property Overview We actively seek to protect our proprietary technology, inventions, improvements to inventions and other intellectual property that is commercially important to the development of our business by a variety of means, such as seeking, maintaining and defending patent rights, whether developed internally or licensed from third parties.
Finally, data from an ex vivo healthy human skin model demonstrate that a single topical dose of ATR-12 administered at the maximum intended dose of 10 9 CFU/g delivers enough active rhLEKTI-D6 into the lower layers of the stratum corneum to effectively inhibit the protease, kallikrein 5 (“KLK5”), at levels typically observed in patients with Netherton syndrome. 8 In particular, data from an ex vivo healthy human skin model demonstrate that a single topical dose of ATR-12 administered at the maximum intended dose of 10 9 Colony Forming Units per gram (CFU/g) delivers enough active rhLEKTI-D6 into the lower layers of the stratum corneum to effectively inhibit KLK5 at levels typically observed in patients with Netherton syndrome.
In particular, data from an ex vivo healthy human skin model demonstrate that a single topical dose of ATR-12 administered at the maximum intended dose of 10 9 Colony Forming Units per gram, or CFU/g delivers enough active rhLEKTI-D6 into the lower layers of the stratum corneum to effectively inhibit KLK5 at levels typically observed in patients with Netherton syndrome.
We believe our genetic engineering techniques and technologies have applicability outside of the field of medicine, including cosmetics and in the generation of clean fuels and bioremediation. ● Leverage our academic partnerships. We currently have partnerships with investigators at the Fred Hutchinson Cancer Center, Yale University, Jackson Laboratory for Genomic Medicine, and Carnegie Mellon University.
We believe our genetic engineering techniques and technologies have 3 applicability outside of the field of medicine, including cosmetics and in the generation of clean fuels and bioremediation. • Leverage our academic partnerships. We currently have partnerships with investigators at the Fred Hutchinson Cancer Center, Yale University, Duke University and Carnegie Mellon University.
Additionally, in the U.S., we must follow rules and regulations established by the FDA requiring the presentation of data indicating that our product candidates are safe and effective and are manufactured in accordance with cGMP regulations.
Additionally, in the U.S., we must follow rules and regulations established by the FDA requiring the presentation of data indicating that our product candidates are safe and effective and are manufactured in accordance with current Good Manufacturing Practices, or cGMP, regulations.
We are planning to complete lead optimization and IND-enabling studies in 2024 to support an IND filing targeted for the second half of 2025. 1 ● Two separate strains of bacterial microbes are being investigated and developed by us and Bayer Consumer Care AG, the consumer products division of Bayer AG, or Bayer, the international life science company.
We are planning to perform lead optimization and IND-enabling studies in 2025 to support an IND filing. • Two separate strains of bacterial microbes are being investigated and developed by us and Bayer Consumer Care AG, the consumer products division of Bayer AG, or Bayer, the international life science company.
Exploratory endpoints include immune and inflammatory mechanism biomarkers. On January 27, 2023, we received notification from the FDA that the “study may proceed” with respect to the proposed Phase 1b clinical trial with initial safety results expected in the second half of 2024.
Exploratory endpoints include immune and inflammatory mechanism biomarkers. On January 27, 2023, we received notification from the FDA that the “study may proceed” with respect to the proposed Phase 1b clinical trial. We dosed the first patient in August 2024 and expect initial safety results in the first half of 2025.
It has also been engineered to be auxotrophic, meaning that it requires the D-alanine nutrient in its formulation to survive and propagate. This provides an additional level of safety against potential systemic infection.
It has also been engineered to be auxotrophic, meaning that it requires the D-alanine nutrient in its formulation to survive and propagate. This provides an additional level of safety against unintentional and environmental exposure to the strain.
The BPCIA also created certain exclusivity periods for biosimilars approved as interchangeable products. 28 Regulation Outside the United States In order to market any product outside of the United States, a company must also comply with numerous and varying regulatory requirements of other countries and jurisdictions regarding quality, safety and efficacy that govern, among other things, clinical trials, marketing authorization, commercial sales and distribution of drug products.
Regulation Outside the United States In order to market any product outside of the United States, a company must also comply with numerous and varying regulatory requirements of other countries and jurisdictions regarding quality, safety and efficacy that govern, among other things, clinical trials, marketing authorization, commercial sales and distribution of drug products.
The principal purposes of our equity and cash incentive plans are to attract, retain and reward personnel through the granting of stock-based and cash-based compensation awards, in order to increase stockholder value and the success of our company by motivating such individuals to perform to the best of their abilities and achieve our objectives. 37 Available Information Our website is located at www.azitrainc.com.
The principal purposes of our equity and cash incentive plans are to attract, retain and reward personnel through the granting of stock-based and cash-based compensation awards, in order to increase stockholder value and the success of our company by motivating such individuals to perform to the best of their abilities and achieve our objectives.
Preclinical Studies and Investigational New Drug Application Preclinical tests include laboratory evaluations of product chemistry, formulation and stability, as well as animal studies to evaluate the potential for efficacy and toxicity in animals. The conduct of the preclinical tests and formulation of the compounds for testing must comply with federal regulations and requirements.
Preclinical Studies Preclinical tests include laboratory evaluations of product chemistry, formulation and stability, as well as studies to evaluate the potential efficacy and toxicity in animals. The conduct of the preclinical tests and formulation of the compounds for testing must comply with the relevant EU regulations and requirements.
Ichthyosis vulgaris is caused by loss-of-function mutations in the gene encoding filaggrin Using synthetic biology tools for protein engineering, we attached a cell penetrating peptide to filaggrin, which helps facilitate deeper skin delivery for filaggrin. This is designed to overcome the impenetrability of the skin barrier, which would otherwise limit topical protein delivery.
Ichthyosis vulgaris is caused by loss-of-function mutations in the gene encoding filaggrin Using synthetic biology tools for protein engineering, we attached a cell penetrating peptide to filaggrin, which helps facilitate deeper skin delivery for filaggrin.
We also have established partnerships with teams from Carnegie Mellon University and the Fred Hutchinson Cancer Center, or Fred Hutch, two of the premier academic centers in the United States. Our collaboration with the Carnegie Mellon based team takes advantage of the power of whole genome sequencing.
Bayer holds the exclusive option to license the patent rights to these strains. We also have established partnerships with teams from Carnegie Mellon University and the Fred Hutchinson Cancer Center, or Fred Hutch, two of the premier academic centers in the United States. Our collaboration with the Carnegie Mellon based team takes advantage of the power of whole genome sequencing.
No topical treatment scheme is universally applicable for all patients. We are aware of the following Phase 2 programs developing investigational drug candidates for EGFRi associated rash. Lutris Pharma is developing LUT014, a topical B-Raf inhibitor, in the US and Israel. Daewoong Pharmaceutical Co. Ltd. is developing DWP708 in Korea.
No topical treatment scheme is universally applicable for all patients. We are aware of the following Phase 2 programs developing investigational drug candidates for EGFRi associated rash; Hoth Therapeutics is developing HT-001, or topical aprepitant, a neurokinin 1 inhibitor in the US; Lutris Pharma is developing LUT014, a topical B-Raf inhibitor, in the US and Israel. Daewoong Pharmaceutical Co.
We have an ongoing scientific advisory board contract with Dr. Julia Oh of the Jackson Laboratories and have historically worked with Jackson Laboratories through sponsored research agreements for mouse experiments.
We have an ongoing scientific advisory board contract with Dr. Julia Oh of Duke University and have historically worked with Jackson Laboratories (Dr. Oh's previous employer) through sponsored research agreements for mouse and other experiments.
After submitting post-IND manufacturing reports, we have commenced operating activities for our Phase 1b clinical trial in December 2023.
After submitting post-IND manufacturing reports, we have commenced operating activities for our Phase 1b clinical trial in December 2023, and we have dosed our first patient in August 2024.
In addition, a BLA for a product that has received orphan drug designation is not subject to a prescription drug user fee unless the application includes an indication other than the rare disease or condition for which the drug was designated. 27 To gain exclusivity, if a product that has orphan drug designation subsequently receives the first FDA approval for the disease or condition for which it has such designation, the product is entitled to the orphan drug exclusivity, which means that the FDA may not approve any other applications to market the same active moiety for the same indication for seven years, except in limited circumstances, such as another drug’s showing of clinical superiority over the drug with orphan exclusivity.
To gain exclusivity, if a product that has orphan drug designation subsequently receives the first FDA approval for the disease or condition for which it has such designation, the product is entitled to the orphan drug exclusivity, which means that the FDA may not approve any other applications to market the same active moiety for the same indication for seven years, except in limited circumstances, such as another drug’s showing of clinical superiority over the drug with orphan exclusivity.
The timelines for the centralized procedure described above also apply with respect to the review by the CHMP of applications for a conditional marketing authorization. 31 Marketing Authorization Under Exceptional Circumstances As per Article 14(8) Regulation (EC) No 726/2004, products for which the applicant can demonstrate that comprehensive data (in line with the requirements laid down in Annex I of Directive 2001/83/EC, as amended) cannot be provided (due to specific reasons foreseen in the legislation) might be eligible for marketing authorization under exceptional circumstances.
Marketing Authorization Under Exceptional Circumstances As per Article 14(8) Regulation (EC) No 726/2004, products for which the applicant can demonstrate that comprehensive data (in line with the requirements laid down in Annex I of Directive 2001/83/EC, as amended) cannot be provided (due to specific reasons foreseen in the legislation) might be eligible for marketing authorization under exceptional circumstances.
The Fred Hutch agreement also requires us to reimburse Fred Hutch for the cost of the prosecution and maintenance of the licensed patents. 20 Pursuant to the Fred Hutch license agreement, we are required to use commercially reasonable efforts to bring a licensed product to market through a vigorous and diligent program for exploitation of the licensed patent rights.
Pursuant to the Fred Hutch license agreement, we are required to use commercially reasonable efforts to bring a licensed product to market through a vigorous and diligent program for exploitation of the licensed patent rights.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeThe PCAOB defines a material weakness as a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of annual or interim financial statements will not be prevented, or detected and corrected, on a timely basis. 60 We are required, pursuant to Section 404 of the Sarbanes-Oxley Act, to furnish a report by management on, among other things, the effectiveness of our internal control over financial reporting for our second annual report on Form 10-K filed with the SEC and in each year thereafter.
Biggest changeWe are required, pursuant to Section 404 of the Sarbanes-Oxley Act, to furnish a report by management on, among other things, the effectiveness of our internal control over financial reporting for our second annual report on Form 10-K filed with the SEC and in each year thereafter.
The market price of our shares on the NYSE American may fluctuate as a result of a number of factors, some of which are beyond our control, including, but not limited to: ● actual or anticipated variations in our and our competitors’ results of operations and financial condition; ● changes in earnings estimates or recommendations by securities analysts, if our shares are covered by analysts; ● market acceptance of our product candidates; ● development of technological innovations or new competitive products by others; ● announcements of technological innovations or new products by us; ● publication of the results of preclinical or clinical trials for our product candidates; ● failure by us to achieve a publicly announced milestone; ● delays between our expenditures to develop and market new or enhanced products and the generation of sales from those products; ● developments concerning intellectual property rights, including our involvement in litigation brought by or against us; ● regulatory developments and the decisions of regulatory authorities as to the approval or rejection of new or modified products; ● changes in the amounts that we spend to develop, acquire or license new products, technologies or businesses; ● changes in our expenditures to promote our product candidates; ● our sale or proposed sale, or the sale by our significant stockholders, of our shares or other securities in the future; 57 ● changes in key personnel; ● success or failure of our research and development projects or those of our competitors; ● the trading volume of our shares; and ● general economic and market conditions and other factors, including factors unrelated to our operating performance.
The market price of our shares on the NYSE American may fluctuate as a result of a number of factors, some of which are beyond our control, including, but not limited to: • actual or anticipated variations in our and our competitors’ results of operations and financial condition; • changes in earnings estimates or recommendations by securities analysts, if our shares are covered by analysts; • market acceptance of our product candidates; • development of technological innovations or new competitive products by others; • announcements of technological innovations or new products by us; • publication of the results of preclinical or clinical trials for our product candidates; • failure by us to achieve a publicly announced milestone; • delays between our expenditures to develop and market new or enhanced products and the generation of sales from those products; • developments concerning intellectual property rights, including our involvement in litigation brought by or against us; • regulatory developments and the decisions of regulatory authorities as to the approval or rejection of new or modified products; • changes in the amounts that we spend to develop, acquire or license new products, technologies or businesses; • changes in our expenditures to promote our product candidates; • our sale or proposed sale, or the sale by our significant stockholders, of our shares or other securities in the future; • changes in key personnel; • success or failure of our research and development projects or those of our competitors; • the trading volume of our shares; and • general economic and market conditions and other factors, including factors unrelated to our operating performance.
The degree of market acceptance for any of our product candidates will depend on a number of factors, including: ● demonstration of clinical safety and efficacy; ● relative convenience, dosing burden and ease of administration; ● the prevalence and severity of any adverse effects; ● the willingness of physicians to prescribe our product candidates, and the target patient population to try new therapies; ● efficacy of our product candidates compared to competing products; ● the introduction of any new products that may in the future become available targeting indications for which our product candidates may be approved; ● new procedures or therapies that may reduce the incidences of any of the indications in which our product candidates may show utility; ● pricing and cost-effectiveness; ● the inclusion or omission of our product candidates in applicable therapeutic and vaccine guidelines; ● the effectiveness of our own or any future collaborators’ sales and marketing strategies; ● limitations or warnings contained in approved labeling from regulatory authorities; 48 ● our ability to obtain and maintain sufficient third-party coverage or reimbursement from government health care programs, including Medicare and Medicaid, private health insurers and other third-party payors or to receive the necessary pricing approvals from government bodies regulating the pricing and usage of therapeutics; and ● the willingness of patients to pay out-of-pocket in the absence of third-party coverage or reimbursement or government pricing approvals.
The degree of market acceptance for any of our product candidates will depend on a number of factors, including: • demonstration of clinical safety and efficacy; • relative convenience, dosing burden and ease of administration; • the prevalence and severity of any adverse effects; • the willingness of physicians to prescribe our product candidates, and the target patient population to try new therapies; • efficacy of our product candidates compared to competing products; • the introduction of any new products that may in the future become available targeting indications for which our product candidates may be approved; • new procedures or therapies that may reduce the incidences of any of the indications in which our product candidates may show utility; • pricing and cost-effectiveness; • the inclusion or omission of our product candidates in applicable therapeutic and vaccine guidelines; • the effectiveness of our own or any future collaborators’ sales and marketing strategies; • limitations or warnings contained in approved labeling from regulatory authorities; • our ability to obtain and maintain sufficient third-party coverage or reimbursement from government health care programs, including Medicare and Medicaid, private health insurers and other third-party payors or to receive the necessary pricing approvals from government bodies regulating the pricing and usage of therapeutics; and • the willingness of patients to pay out-of-pocket in the absence of third-party coverage or reimbursement or government pricing approvals.
The commencement and completion of clinical studies can be delayed for a number of reasons, including delays related to: ● the FDA or a comparable foreign regulatory authority failing to grant permission to proceed and placing the clinical study on hold; ● subjects for clinical testing failing to enroll or remain enrolled in our trials at the rate we expect; ● a facility manufacturing any of our product candidates being ordered by the FDA or other government or regulatory authorities to temporarily or permanently shut down due to violations of cGMP requirements or other applicable requirements, or cross-contaminations of product candidates in the manufacturing process; ● any changes to our manufacturing process that may be necessary or desired; ● subjects choosing an alternative treatment for the indications for which we are developing our product candidates, or participating in competing clinical studies; ● subjects experiencing severe or unexpected drug-related adverse effects; ● reports from clinical testing on similar technologies and products raising safety and/or efficacy concerns; ● third-party clinical investigators losing their license or permits necessary to perform our clinical trials, not performing our clinical trials on our anticipated schedule or employing methods consistent with the clinical trial protocol, cGMP requirements, or other third parties not performing data collection and analysis in a timely or accurate manner; 47 ● inspections of clinical study sites by the FDA, comparable foreign regulatory authorities, or IRBs finding regulatory violations that require us to undertake corrective action, result in suspension or termination of one or more sites or the imposition of a clinical hold on the entire study, or that prohibit us from using some or all of the data in support of our marketing applications; ● third-party contractors becoming debarred or suspended or otherwise penalized by the FDA or other government or regulatory authorities for violations of regulatory requirements, in which case we may need to find a substitute contractor, and we may not be able to use some or any of the data produced by such contractors in support of our marketing applications; ● one or more IRBs refusing to approve, suspending or terminating the study at an investigational site, precluding enrollment of additional subjects, or withdrawing its approval of the trial; reaching agreement on acceptable terms with prospective contract research organizations, or CROs, and clinical trial sites, the terms of which can be subject to extensive negotiation and may vary significantly among different CROs and trial sites; ● deviations of the clinical sites from trial protocols or dropping out of a trial; ● adding new clinical trial sites; ● the inability of the CRO to execute any clinical trials for any reason; and ● government or regulatory delays or “clinical holds” requiring suspension or termination of a trial.
The commencement and completion of clinical studies can be delayed for a number of reasons, including delays related to: • the FDA or a comparable foreign regulatory authority failing to grant permission to proceed and placing the clinical study on hold; • subjects for clinical testing failing to enroll or remain enrolled in our trials at the rate we expect; • a facility manufacturing any of our product candidates being ordered by the FDA or other government or regulatory authorities to temporarily or permanently shut down due to violations of cGMP requirements or other applicable requirements, or cross-contaminations of product candidates in the manufacturing process; • any changes to our manufacturing process that may be necessary or desired; • subjects choosing an alternative treatment for the indications for which we are developing our product candidates, or participating in competing clinical studies; • subjects experiencing severe or unexpected drug-related adverse effects; • reports from clinical testing on similar technologies and products raising safety and/or efficacy concerns; • third-party clinical investigators losing their license or permits necessary to perform our clinical trials, not performing our clinical trials on our anticipated schedule or employing methods consistent with the clinical trial protocol, cGMP requirements, or other third parties not performing data collection and analysis in a timely or accurate manner; • inspections of clinical study sites by the FDA, comparable foreign regulatory authorities, or IRBs finding regulatory violations that require us to undertake corrective action, result in suspension or termination of one or more sites or the imposition of a clinical hold on the entire study, or that prohibit us from using some or all of the data in support of our marketing applications; • third-party contractors becoming debarred or suspended or otherwise penalized by the FDA or other government or regulatory authorities for violations of regulatory requirements, in which case we may need to find a substitute contractor, and we may not be able to use some or any of the data produced by such contractors in support of our marketing applications; • one or more IRBs refusing to approve, suspending or terminating the study at an investigational site, precluding enrollment of additional subjects, or withdrawing its approval of the trial; reaching agreement on acceptable terms with prospective contract research organizations, or CROs, and clinical trial sites, the terms of which can be subject to extensive negotiation and may vary significantly among different CROs and trial sites; • deviations of the clinical sites from trial protocols or dropping out of a trial; 50 • adding new clinical trial sites; • the inability of the CRO to execute any clinical trials for any reason; and • government or regulatory delays or “clinical holds” requiring suspension or termination of a trial.
All such reported information is publicly available; 54 ● analogous state and non-U.S. laws and regulations, such as certain state anti-kickback and false claims laws which may apply to items or services reimbursed by any third-party payor, including commercial insurers; state laws that require pharmaceutical companies to comply with the industry’s voluntary compliance guidelines and the applicable compliance guidance promulgated by the federal government or otherwise restrict payments that may be made to healthcare providers and other potential referral sources; state laws that require drug manufacturers to report information related to payments and other transfers of value to physicians and other healthcare providers or marketing expenditures; and state laws governing the privacy and security of health information in certain circumstances, many of which differ from each other in significant ways and may not have the same effect, thus complicating compliance efforts; and ● regulation by CMS and enforcement by the HHS Office of Inspector General or the U.S.
All such reported information is publicly available; • analogous state and non-U.S. laws and regulations, such as certain state anti-kickback and false claims laws which may apply to items or services reimbursed by any third-party payor, including commercial insurers; state laws that require pharmaceutical companies to comply with the industry’s voluntary compliance guidelines and the applicable compliance guidance promulgated by the federal government or otherwise restrict payments that may be made to healthcare providers and other potential referral sources; state laws that require drug manufacturers to report information related to payments and other transfers of value to physicians and other healthcare providers or marketing expenditures; and state laws governing the privacy and security of health information in certain circumstances, many of which differ from each other in significant ways and may not have the same effect, thus complicating compliance efforts; and • regulation by CMS and enforcement by the HHS Office of Inspector General or the U.S.
We are an “emerging growth company,” as defined in the JOBS Act and we may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies” including, but not limited to: ● not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act; 58 ● reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements; ● exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments; and ● extended transition periods available for complying with new or revised accounting standards.
We are an “emerging growth company,” as defined in the JOBS Act and we may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies” including, but not limited to: • not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act; • reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements; • exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments; and • extended transition periods available for complying with new or revised accounting standards.
Our success depends on our receipt of the regulatory approvals described above, and the issuance of such regulatory approvals is uncertain and subject to a number of risks, including the following: ● such authorities may disagree with the number, design, size, conduct or implementation of our clinical trials or any of our collaborators’ clinical trials; ● such authorities may disagree with our interpretation of data from preclinical studies or clinical trials or the use of results from studies that served as precursors to our current or future product candidates; ● the results of toxicology studies may not support the filing of an Investigational New Drug Application, or IND, or a BLA for our product candidates; ● the FDA or comparable foreign regulatory authorities or Institutional Review Boards, or IRBs, may disagree with the design or implementation of our clinical trials; ● we may not be able to provide acceptable evidence of our product candidates’ safety and efficacy; ● the results of our clinical trials may not be satisfactory or may not meet the level of statistical or clinical significance required by the FDA, European Medicines Agency, or EMA, or other regulatory agencies for us to receive marketing approval for any of our product candidates; ● the dosing of our product candidates in a particular clinical trial may not be at an optimal level; ● patients in our clinical trials may suffer adverse effects for reasons that may or may not be related to our product candidates; ● the data collected from clinical trials may not be sufficient to support the submission of a BLA or other submission or to obtain regulatory approval in the United States or elsewhere; ● the FDA may require development of a Risk Evaluation and Mitigation Strategy, or REMS, as a condition of approval; 45 ● the FDA or comparable foreign regulatory authorities may fail to approve the manufacturing processes or facilities of third-party manufacturers with which we contract for clinical and commercial supplies; and ● the approval policies or regulations of the FDA or comparable foreign regulatory authorities may significantly change in a manner rendering our clinical data insufficient for approval of our product candidates.
Our success depends on our receipt of the regulatory approvals described above, and the issuance of such regulatory approvals is uncertain and subject to a number of risks, including the following: • such authorities may disagree with the number, design, size, conduct or implementation of our clinical trials or any of our collaborators’ clinical trials; • such authorities may disagree with our interpretation of data from preclinical studies or clinical trials or the use of results from studies that served as precursors to our current or future product candidates; 47 • the results of toxicology studies may not support the filing of an Investigational New Drug Application, or IND, or a BLA for our product candidates; • the FDA or comparable foreign regulatory authorities or Institutional Review Boards, or IRBs, may disagree with the design or implementation of our clinical trials; • we may not be able to provide acceptable evidence of our product candidates’ safety and efficacy; • the results of our clinical trials may not be satisfactory or may not meet the level of statistical or clinical significance required by the FDA, European Medicines Agency, or EMA, or other regulatory agencies for us to receive marketing approval for any of our product candidates; • the dosing of our product candidates in a particular clinical trial may not be at an optimal level; • patients in our clinical trials may suffer adverse effects for reasons that may or may not be related to our product candidates; • the data collected from clinical trials may not be sufficient to support the submission of a BLA or other submission or to obtain regulatory approval in the United States or elsewhere; • the FDA may require development of a Risk Evaluation and Mitigation Strategy, or REMS, as a condition of approval; • the FDA or comparable foreign regulatory authorities may fail to approve the manufacturing processes or facilities of third-party manufacturers with which we contract for clinical and commercial supplies; and • the approval policies or regulations of the FDA or comparable foreign regulatory authorities may significantly change in a manner rendering our clinical data insufficient for approval of our product candidates.
Regardless of the merits or eventual outcome, liability claims may result in: ● decreased demand for any of our product candidates or any future products that we may develop; 43 ● injury to our reputation; ● failure to obtain regulatory approval for our product candidates; ● withdrawal of participants in our clinical trials; ● costs associated with our defense of the related litigation; ● a diversion of our management’s time and our resources; ● substantial monetary awards to trial participants or patients; ● product recalls, withdrawals or labeling, marketing or promotional restrictions; ● the inability to commercialize some or all of our product candidates; and ● a decline in the value of our stock.
Regardless of the merits or eventual outcome, liability claims may result in: • decreased demand for any of our product candidates or any future products that we may develop; • injury to our reputation; • failure to obtain regulatory approval for our product candidates; • withdrawal of participants in our clinical trials; • costs associated with our defense of the related litigation; • a diversion of our management’s time and our resources; • substantial monetary awards to trial participants or patients; • product recalls, withdrawals or labeling, marketing or promotional restrictions; • the inability to commercialize some or all of our product candidates; and • a decline in the value of our stock.
Factors that may inhibit our efforts to build an internal sales organization or enter into collaboration arrangements with third parties include: ● our inability to recruit and retain adequate numbers of effective sales and marketing personnel; ● the inability of sales personnel to obtain access to or persuade adequate numbers of physicians to prescribe any of our product candidates; ● the lack of complementary products to be offered by sales personnel, which may put us at a competitive disadvantage relative to companies with more extensive product lines; and ● unforeseen costs and expenses associated with creating an internal sales and marketing organization. 41 We will be completely dependent for the foreseeable future on third parties to manufacture our product candidates for commercial sale, and the commercialization of our product candidates could be halted, delayed or made less profitable if those third parties fail to obtain manufacturing approval from the FDA or comparable foreign regulatory authorities, fail to provide us with sufficient quantities of our product candidates or fail to do so at acceptable quality levels or prices .
Factors that may inhibit our efforts to build an internal sales organization or enter into collaboration arrangements with third parties include: • our inability to recruit and retain adequate numbers of effective sales and marketing personnel; • the inability of sales personnel to obtain access to or persuade adequate numbers of physicians to prescribe any of our product candidates; • the lack of complementary products to be offered by sales personnel, which may put us at a competitive disadvantage relative to companies with more extensive product lines; and • unforeseen costs and expenses associated with creating an internal sales and marketing organization. 43 We will be completely dependent for the foreseeable future on third parties to manufacture our product candidates for commercial sale, and the commercialization of our product candidates could be halted, delayed or made less profitable if those third parties fail to obtain manufacturing approval from the FDA or comparable foreign regulatory authorities, fail to provide us with sufficient quantities of our product candidates or fail to do so at acceptable quality levels or prices .
However, all of our other product candidates are in the early stages of development and as of the date of this report we have not progressed any of our product candidates, other than ATR-12 and ATR-04, beyond performance characterization and animal testing We may not be successful in obtaining approval from the FDA or comparable foreign regulatory authorities to start clinical trials for ATR-04 or any of our other product candidates.
All of our product candidates are in the early stages of development and as of the date of this report we have not progressed any of our product candidates, other than ATR-12 and ATR-04, beyond performance characterization and animal testing We may not be successful in obtaining approval from the FDA or comparable foreign regulatory authorities to start clinical trials for any of our other product candidates.
In the event of a delisting, we can provide no assurance that any action taken by us to restore compliance with listing requirements would allow our common stock to become listed again, stabilize the market price or improve the liquidity of our common stock, prevent our common stock from dropping below the NYSE American’s minimum bid price requirement or prevent future non-compliance with the NYSE American’s listing requirements.
In the event of a delisting, we can provide no assurance that any action taken by us to restore compliance with listing requirements would allow 61 our common stock to become listed again, stabilize the market price or improve the liquidity of our common stock, prevent our common stock from dropping below the NYSE American’s minimum bid price requirement or prevent future non-compliance with the NYSE American’s listing requirements.
If government spending is further reduced, anticipated budgetary shortfalls may also impact the ability of relevant agencies, such as the FDA, to continue to function at current levels, which may impact the ability of relevant agencies to timely review and approve research and development, manufacturing and marketing activities, which may delay our ability to develop, market and sell any product candidates we may develop.
If government spending is further reduced, anticipated budgetary shortfalls may also impact the ability of relevant agencies, such as the FDA, to 55 continue to function at current levels, which may impact the ability of relevant agencies to timely review and approve research and development, manufacturing and marketing activities, which may delay our ability to develop, market and sell any product candidates we may develop.
We do not know whether additional legislative changes will be enacted, or whether the regulations, guidance or interpretations will be changed, or what the impact of such changes on the marketing approvals of our product candidates, if any, may be. 53 Third-party coverage and reimbursement and health care cost containment initiatives and treatment guidelines may constrain our future revenues.
We do not know whether additional legislative changes will be enacted, or whether the regulations, guidance or interpretations will be changed, or what the impact of such changes on the marketing approvals of our product candidates, if any, may be. Third-party coverage and reimbursement and health care cost containment initiatives and treatment guidelines may constrain our future revenues.
Our product candidates may infringe the intellectual property rights of others, which could increase our costs and delay or prevent our development and commercialization efforts. Our success depends in part on avoiding infringement of the proprietary technologies of others. The pharmaceutical industry has been characterized by frequent litigation regarding patent and other intellectual property rights.
Our product candidates may infringe the intellectual property rights of others, which could increase our costs and delay or prevent our development and commercialization efforts. Our success depends in part on avoiding infringement of the proprietary technologies of others. The pharmaceutical industry has been characterized by frequent litigation regarding patent and other intellectual property 59 rights.
The number and complexity of these threats continue to increase over time. If a material breach of, or accidental or intentional loss of data from, our information technology systems or those of our vendors occurs, the market perception of the effectiveness of our security measures could be harmed and our reputation and credibility could be damaged.
The number and complexity of these threats continue to increase over time. If a material breach of, or accidental or intentional loss of data from, our information technology systems or 46 those of our vendors occurs, the market perception of the effectiveness of our security measures could be harmed and our reputation and credibility could be damaged.
Congress of the FDA’s approval process may significantly delay or prevent marketing approval, as well as subject us to more stringent product labeling and post-marketing testing and other requirements. 51 In the United States, the Medicare Modernization Act, or MMA, changed the way Medicare covers and pays for pharmaceutical products.
Congress of the FDA’s approval process may significantly delay or prevent marketing approval, as well as subject us to more stringent product labeling and post-marketing testing and other requirements. In the United States, the Medicare Modernization Act, or MMA, changed the way Medicare covers and pays for pharmaceutical products.
Risks Relating to Our Intellectual Property Rights It is difficult and costly to protect our intellectual property rights, and we cannot ensure the protection of these rights. Our commercial success will depend, in part, on our ability to prosecute and defend, if necessary, our patent rights against third-party challenges and successfully enforcing these patent rights against third party competitors.
Risks Relating to Our Intellectual Property Rights It is difficult and costly to protect our intellectual property rights, and we cannot ensure the protection of these rights. 58 Our commercial success will depend, in part, on our ability to prosecute and defend, if necessary, our patent rights against third-party challenges and successfully enforcing these patent rights against third party competitors.
If we cannot successfully execute any one of the foregoing, our business may not succeed and your investment will be adversely affected. You must be prepared to lose all of your investment. 38 We have a history of significant operating losses and anticipate continued operating losses for the foreseeable future .
If we cannot successfully execute any one of the foregoing, our business may not succeed and your investment will be adversely affected. You must be prepared to lose all of your investment. We have a history of significant operating losses and anticipate continued operating losses for the foreseeable future .
Investors may be unable to compare our business with other companies in our industry if they believe that our reporting is not as transparent as other companies in our industry. If we are unable to raise additional capital as and when we need it, our financial condition and results of operations may be materially and adversely affected.
Investors may be unable to compare our business with other companies in our industry if they believe 62 that our reporting is not as transparent as other companies in our industry. If we are unable to raise additional capital as and when we need it, our financial condition and results of operations may be materially and adversely affected.
Any such product liability claims may include allegations of defects in manufacturing, defects in design, a failure to warn of dangers inherent in the product, negligence, strict liability and a breach of warranties. In the U.S., claims could also be asserted against us under state consumer protection acts.
Any such product liability claims may include allegations of defects in 45 manufacturing, defects in design, a failure to warn of dangers inherent in the product, negligence, strict liability and a breach of warranties. In the U.S., claims could also be asserted against us under state consumer protection acts.
Approval procedures vary among jurisdictions and can involve requirements and administrative review periods different from those in the United States, including additional preclinical studies or clinical trials, as clinical studies conducted in one jurisdiction may not be accepted by regulatory authorities in other jurisdictions.
Approval procedures vary among jurisdictions and can involve requirements 53 and administrative review periods different from those in the United States, including additional preclinical studies or clinical trials, as clinical studies conducted in one jurisdiction may not be accepted by regulatory authorities in other jurisdictions.
Litigation may be necessary to defend against these claims. Even if we are successful in defending against these claims, litigation could result in substantial costs and be a distraction to management. Risks Related to Owning Our Common Stock The market price of our shares may be subject to fluctuation and volatility.
Litigation may be necessary to defend against these claims. Even if we are successful in defending against these claims, litigation could result in substantial costs and be a distraction to management. 60 Risks Related to Owning Our Common Stock The market price of our shares may be subject to fluctuation and volatility.
Further, the costs of insurance may increase and the availability of coverage may decrease. As a result, we may not be able to maintain our current levels of insurance at a reasonable cost, or at all. 59 Our charter documents and Delaware law may inhibit a takeover that stockholders consider favorable.
Further, the costs of insurance may increase and the availability of coverage may decrease. As a result, we may not be able to maintain our current levels of insurance at a reasonable cost, or at all. Our charter documents and Delaware law may inhibit a takeover that stockholders consider favorable.
As a result, it may be more difficult for us to attract and retain qualified people to serve on our Board our Board committees or as executive officers. Unfavorable geopolitical and macroeconomic developments could adversely affect our business, financial condition or results of operations.
As a result, it may be more difficult for us to attract and retain qualified people to serve on our Board our Board committees or as executive officers. 65 Unfavorable geopolitical and macroeconomic developments could adversely affect our business, financial condition or results of operations.
National governments and health service providers have different priorities and approaches to the delivery of health care and the pricing and reimbursement of products in that context. In general, however, the healthcare budgetary constraints in most EU member states have resulted in restrictions on the pricing and reimbursement of medicines by relevant health service providers.
National governments and health service providers have different priorities and approaches to the delivery of health care and the pricing and reimbursement of products in that context. In general, however, the healthcare budgetary constraints in most EU member states have resulted in restrictions on the pricing and 56 reimbursement of medicines by relevant health service providers.
These provisions may have the effect of entrenching our management team and may deprive you of the opportunity to sell your shares to potential acquirers at a premium over prevailing prices. This potential inability to obtain a control premium could reduce the price of our common stock.
These provisions may have the effect of 63 entrenching our management team and may deprive you of the opportunity to sell your shares to potential acquirers at a premium over prevailing prices. This potential inability to obtain a control premium could reduce the price of our common stock.
If any of our product candidates are approved, but do not achieve an adequate level of acceptance by physicians, health care payors, and patients, we may not generate sufficient revenue and we may not be able to achieve or sustain profitability.
If any of our product candidates are approved, but do not achieve an adequate level of acceptance by physicians, health care payors, and patients, we may not generate sufficient revenue and we may not be able to 51 achieve or sustain profitability.
Any such deficiencies, weaknesses or lack of compliance could have a materially adverse effect on our ability to comply with the reporting requirements of the Securities Exchange Act of 1934, or the Exchange Act, which is necessary to maintain our public company status.
Any such deficiencies, weaknesses or lack of compliance could have a materially adverse effect on our ability to comply with the reporting requirements of the Securities Exchange Act of 1934, or the Exchange Act, which is necessary to maintain our public company 64 status.
We expect to continue to incur substantial expenses without any meaningful revenues unless and until we are able to obtain regulatory approval and successfully commercialize at least one of our product candidates.
We expect to continue to 40 incur substantial expenses without any meaningful revenues unless and until we are able to obtain regulatory approval and successfully commercialize at least one of our product candidates.
These setbacks have been caused by, among other things, preclinical findings made while clinical trials were underway and safety or efficacy observations made in clinical trials, including previously unreported adverse events.
These setbacks have been caused by, among other things, preclinical findings made while clinical trials were underway and safety or efficacy observations made in clinical trials, including previously unreported 49 adverse events.
Similar requirements exist in many of these areas in other countries. 49 In addition, if any of our product candidates are approved for a particular indication, our product labeling, advertising and promotion would be subject to regulatory requirements and continuing regulatory review. The FDA strictly regulates the promotional claims that may be made about prescription products.
Similar requirements exist in many of these areas in other countries. 52 In addition, if any of our product candidates are approved for a particular indication, our product labeling, advertising and promotion would be subject to regulatory requirements and continuing regulatory review. The FDA strictly regulates the promotional claims that may be made about prescription products.
The report of our independent registered public accounting firm for the year ended December 31, 2023 states that due to our accumulated deficit, recurring and negative cash flow from operations there is substantial doubt about our ability to continue as a going concern.
The report of our independent registered public accounting firm for the year ended December 31, 2024 states that due to our accumulated deficit, recurring and negative cash flow from operations there is substantial doubt about our ability to continue as a going concern.
Our future financial performance and our ability to commercialize our product candidates and any other future product candidates and our ability to compete effectively will depend, in part, on our ability to effectively manage our future growth. 40 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 financial performance and our ability to commercialize our product candidates and any other future product candidates and our ability to compete effectively will depend, in part, on our ability to effectively manage our future growth. 42 If we are not successful in attracting and retaining highly qualified personnel, we may not be able to successfully implement our business strategy.
In addition, the government may assert that a claim including items or services resulting from a violation of the federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the False Claims Act; ● the federal False Claims Act imposes civil penalties, and provides for civil whistleblower or qui tam actions, against individuals or entities for knowingly presenting, or causing to be presented, to the federal government, claims for payment that are false or fraudulent or making a false statement to avoid, decrease or conceal an obligation to pay money to the federal government; ● HIPAA imposes criminal and civil liability for executing a scheme to defraud any health care benefit program or making false statements relating to health care matters.
In addition, the government may assert that a claim including items or services resulting from a violation 57 of the federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the False Claims Act; • the federal False Claims Act imposes civil penalties, and provides for civil whistleblower or qui tam actions, against individuals or entities for knowingly presenting, or causing to be presented, to the federal government, claims for payment that are false or fraudulent or making a false statement to avoid, decrease or conceal an obligation to pay money to the federal government; • the Health Insurance Portability and Accountability Act, or HIPAA imposes criminal and civil liability for executing a scheme to defraud any health care benefit program or making false statements relating to health care matters.
Since shares of our common stock were sold in our initial public offering, or IPO, in June 2023 at a price of $5.00 per share, the reported high and low sales prices of our common stock have ranged from $5.18 to $0.20 through February 29, 2024.
Since shares of our common stock were sold in our initial public offering, or IPO, in June 2023 at a price of $150.00 per share, the reported high and low sales prices of our common stock have ranged from $5.18 to $0.20 through February 24, 2025.
There have been several recent U.S. 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, reduce the cost of drugs under Medicare, and reform government program reimbursement methodologies for drugs.
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, reduce the cost of drugs under Medicare, and reform government program reimbursement methodologies for drugs.
While we do not currently operate in Russia, Ukraine or the Middle East, as the adverse effects of these conflicts continue to develop our business and results of operations may be adversely affected.
While we do not currently operate in Russia, Ukraine or the Middle East, as the adverse effects of these conflicts continue to develop our business and results of operations may be adversely affected. Item 1B. Unresolved Staff Comments Not applicable.
Because our product candidates are in early stages clinical trials or of preclinical development, they will require extensive preclinical and clinical testing.
Our product candidates are in early-stage clinical trials or early stages of preclinical development, and therefore they will require extensive additional preclinical and clinical testing.
If these manufacturers or any alternate manufacturer of finished drug product experiences any significant difficulties in its respective manufacturing processes for our required raw materials, manufacturing devices, active pharmaceutical ingredients or finished product or should cease doing business with us for any reason, we could experience significant delays in our clinical trials and significant interruptions in the supply of any of our product candidates or may not be able to create a supply of our product candidates at all. 42 Any manufacturing problem or the loss of a contract manufacturer could be disruptive to our operations and result in development and clinical trial delays and lost sales.
If these manufacturers or any alternate manufacturer of finished drug product experiences any significant difficulties in its respective 44 manufacturing processes for our required raw materials, manufacturing devices, active pharmaceutical ingredients or finished product or should cease doing business with us for any reason, we could experience significant delays in our clinical trials and significant interruptions in the supply of any of our product candidates or may not be able to create a supply of our product candidates at all.
We have built a proprietary platform that includes a microbial library comprised of approximately 1,500 unique bacterial strains that can be screened for unique therapeutic characteristics. The platform is augmented by artificial intelligence, machine learning and genetic engineering technologies.
The clinical and commercial utility of our microbial library and genetic engineering platform is uncertain and may never be realized. We have built a proprietary platform that includes a microbial library comprised of approximately 1,500 unique bacterial strains that can be screened for unique therapeutic characteristics. The platform is augmented by artificial intelligence, machine learning and genetic engineering technologies.
To obtain the requisite regulatory approvals to market and sell any of our product candidates, we must demonstrate through extensive preclinical studies and clinical trials that our product candidates are safe, pure, and potent in humans.
Results of preclinical studies of our product candidates may not be predictive of the results of future preclinical studies or clinical trials. To obtain the requisite regulatory approvals to market and sell any of our product candidates, we must demonstrate through extensive preclinical studies and clinical trials that our product candidates are safe, pure, and potent in humans.
If a defendant were to prevail on a legal assertion of invalidity and/or unenforceability, we would lose at least part, and perhaps all, of the patent protection on any of our product candidates.
If a defendant were to prevail on a legal assertion of invalidity and/or unenforceability, we would lose at least part, and perhaps all, of the patent protection on any of our product candidates. Such a loss of patent protection would have a material adverse impact on our business.
We expect we will need additional financing to execute our business plan and fund operations, which additional financing may not be available on reasonable terms or at all. As of December 31, 2023, we had total assets of $5.1 million and working capital of $932,384.
We expect we will need additional financing to execute our business plan and fund operations, which additional financing may not be available on reasonable terms or at all. As of December 31, 2024, we had total assets of $7.4 million and working capital of $3.9 million.
In addition, there can be no assurance that our internal information technology systems or those of our third-party contractors, or our consultants’ efforts to implement adequate security and control measures, will be sufficient to protect us against breakdowns, service disruption, data deterioration or loss in the event of a system malfunction, or prevent data from being stolen or corrupted in the event of a cyberattack, security breach, industrial espionage attacks or insider threat attacks which could result in financial, legal, business or reputational harm. 44 We face significant competition from other biotechnology and pharmaceutical companies targeting medical dermatological indications, and our operating results will suffer if we fail to compete effectively.
In addition, there can be no assurance that our internal information technology systems or those of our third-party contractors, or our consultants’ efforts to implement adequate security and control measures, will be sufficient to protect us against breakdowns, service disruption, data deterioration or loss in the event of a system malfunction, or prevent data from being stolen or corrupted in the event of a cyberattack, security breach, industrial espionage attacks or insider threat attacks which could result in financial, legal, business or reputational harm.
Success in preclinical testing and early-stage clinical trials does not ensure that later clinical trials will generate the same results or otherwise provide adequate data to demonstrate the efficacy and safety of a product candidate.
However, we have not conducted meaningful preclinical studies for any of our other product candidates. Success in preclinical testing and early-stage clinical trials does not ensure that later clinical trials will generate the same results or otherwise provide adequate data to demonstrate the efficacy and safety of a product candidate.
Until such time, if ever, as we are able to provide the FDA with substantial clinical evidence to support a claim of safety, efficacy, purity and potency sufficient to enable the FDA to approve our proprietary product candidates for any indication, our proprietary microbial library and genetic engineering platform will remain unproven. 39 Our product candidates are in early-stage clinical trials or early stages of preclinical development, and therefore they will require extensive additional preclinical and clinical testing.
Until such time, if ever, as we are able to provide the FDA with substantial clinical evidence to support a claim of safety, efficacy, purity and potency sufficient to enable the FDA to approve our 41 proprietary product candidates for any indication, our proprietary microbial library and genetic engineering platform will remain unproven.
If we or any future marketing collaborators or contract manufacturers are slow or unable to adapt to changes in existing requirements or the adoption of new requirements or policies or are not able to maintain regulatory compliance, it could delay or prevent the promotion, marketing or sale of our products, which would adversely affect our business and results of operations. 50 Obtaining and maintaining regulatory approval of our product candidates in one jurisdiction does not mean that we will be successful in obtaining regulatory approval of our product candidates in other jurisdictions.
If we or any future marketing collaborators or contract manufacturers are slow or unable to adapt to changes in existing requirements or the adoption of new requirements or policies or are not able to maintain regulatory compliance, it could delay or prevent the promotion, marketing or sale of our products, which would adversely affect our business and results of operations.
In addition, any significant spending reductions affecting Medicare, Medicaid or other publicly funded or subsidized health programs that may be implemented, or any significant taxes or fees that may be imposed on us, as part of any broader deficit reduction effort or legislative replacement to the Budget Control Act, could have an adverse impact on our anticipated product revenues. 52 Moreover, recently there has been heightened governmental scrutiny over the manner in which manufacturers set prices for their commercial products.
In addition, any significant spending reductions affecting Medicare, Medicaid or other publicly funded or subsidized health programs that may be implemented, or any significant taxes or fees that may be imposed on us, as part of any broader deficit reduction effort or legislative replacement to the Budget Control Act, could have an adverse impact on our anticipated product revenues.
We may experience numerous unforeseen events during, or as a result of, the clinical trial process that could delay or prevent our ability to receive regulatory approval or commercialize our product candidates.
We may experience numerous unforeseen events during, or as a result of, the clinical trial process that could delay or prevent our ability to receive regulatory approval or commercialize our product candidates. Therefore, our business currently depends entirely on the successful development, regulatory approval and commercialization of our product candidates, which may never occur.
Such a loss of patent protection would have a material adverse impact on our business. 55 We rely on know-how and trade secrets to protect technology, especially in cases where we believe patent protection is not appropriate or obtainable. However, know-how and trade secrets are difficult to protect.
We rely on know-how and trade secrets to protect technology, especially in cases where we believe patent protection is not appropriate or obtainable. However, know-how and trade secrets are difficult to protect.
For the fiscal years ended December 31, 2023 and 2022, we incurred a net loss of $12.6 million and $13.4 million, respectively. As of December 31, 2023, we had an accumulated deficit of $48.6 million.
For the fiscal years ended December 31, 2024 and 2023, we incurred a net loss of $9.0 million and $11.3, respectively. As of December 31, 2024, we had an accumulated deficit of $57.6 million.
As of the date of this report, we have 28,804,643 shares of common stock issued and outstanding, all of which are eligible for sale by means of ordinary brokerage transactions in the open market pursuant to Rule 144, promulgated under the Securities Act, subject to certain limitations under Rule 144, except for approximately 925,774 shares of common stock held by our officers and directors which are subject to IPO lock-ups expiring in August 2024.
As of the date of this report, we have 12,483,836 shares of common stock issued and outstanding, all of which are eligible for sale by means of ordinary brokerage transactions in the open market pursuant to Rule 144, promulgated under the Securities Act, subject to certain limitations under Rule 144.
Additionally, we will rely on third parties to supply the raw materials needed to manufacture our product candidates. Any such reliance on suppliers may involve several risks, including a potential inability to obtain critical materials and reduced control over production costs, delivery schedules, reliability and quality.
Any such reliance on suppliers may involve several risks, including a potential inability to obtain critical materials and reduced control over production costs, delivery schedules, reliability and quality.
On February 16, 2024, we completed a public offering of 16,667,000 shares of our common stock, at an offering price of $0.30 per share, in which we received net proceeds of approximately $4.4 million, after deducting underwriter discounts and offering expenses.
In January, 2025, we completed a public offering of 4,857,780 shares of our common stock, at an offering price of $0.30 per share, in which we received net proceeds of approximately $1.3 million, after deducting underwriter discounts and offering expenses, and February 2025 we completed a registered direct offering of 2,495,518 shares of our common stock, at an offering price of $0.2785 per share, in which we received net proceeds of approximately $695 thousand, after deducting placement agent commissions and offering expenses.
Accordingly, an adverse determination in a judicial or administrative proceeding, or the failure to obtain necessary licenses, could prevent us from developing and commercializing any of our product candidates or a future product candidate, which could harm our business, financial condition and operating results. 56 We expect that there are other companies, including major biopharmaceutical companies, working in the areas competitive to our proposed product candidates which either has resulted, or may result, in the filing of patent applications that may be deemed related to our activities.
Accordingly, an adverse determination in a judicial or administrative proceeding, or the failure to obtain necessary licenses, could prevent us from developing and commercializing any of our product candidates or a future product candidate, which could harm our business, financial condition and operating results.
We cannot assure that our existing material weakness will be remediated or that additional material weaknesses will not exist or otherwise be discovered, any of which could adversely affect our reputation, financial condition and results of operations. 61 We have and will continue to incur significant increased costs as a result of being a public company that reports to the SEC and our management will be required to devote substantial time to meet compliance obligations .
We have and will continue to incur significant increased costs as a result of being a public company that reports to the SEC and our management will be required to devote substantial time to meet compliance obligations .
Even if another branded, generic, or OTC product is less effective, it may be quickly adopted by physicians and patients than our product based upon cost or convenience.
We anticipate that, if we are successful in obtaining regulatory approval of our candidates, we will face significant competition from other approved therapies or drugs that will become available in our industry. Even if another branded, generic, or OTC product is less effective, it may be quickly adopted by physicians and patients than our product based upon cost or convenience.
If such financing is not available on satisfactory terms, we may be unable to further pursue our business plan and we may be unable to continue operations, in which case you may lose your entire investment. The clinical and commercial utility of our microbial library and genetic engineering platform is uncertain and may never be realized.
However, there can be no guarantees that such funds will be available on commercially reasonable terms, if at all. If such financing is not available on satisfactory terms, we may be unable required to scale back our proposed plan of operations and we may be unable to continue operations, in which case you may lose your entire investment.
In addition, we will consider alternatives to our current business plan that may enable us to achieve revenue producing operations and meaningful commercial success with a smaller amount of capital. However, there can be no guarantees that such funds will be available on commercially reasonable terms, if at all.
We intend to seek additional funds through various financing sources, including the sale of our equity, licensing fees for our technology and joint ventures with industry partners. In addition, we will consider alternatives to our current business plan that may enable us to achieve revenue producing operations and meaningful commercial success with a smaller amount of capital.
The dermatological therapies market is highly competitive and led by significant technologic developments. We anticipate that, if we are successful in obtaining regulatory approval of our candidates, we will face significant competition from other approved therapies or drugs that will become available in our industry.
We face significant competition from other biotechnology and pharmaceutical companies targeting medical dermatological indications, and our operating results will suffer if we fail to compete effectively. The dermatological therapies market is highly competitive and led by significant technologic developments.
We believe that our cash on hand as of the date of this report will not be sufficient to cover our proposed plan of operations over the next 12 months. We intend to seek additional funds through various financing sources, including the sale of our equity, licensing fees for our technology and joint ventures with industry partners.
After giving effect to both offerings, we believe that our cash on hand as of the date of this report will not be sufficient to cover our proposed plan of operations beyond six months from the date of this report.
We recently initiated our Phase 1b clinical trial for ATR-12 and expect to enroll our first patient in the first half of 2024 and expect to file an IND for a Phase 1b clinical trial of ATR-04 by mid-2024.
We recently initiated our Phase 1b clinical trial for ATR-12 and dosed our first patient in August 2024 and expect to dose the first patient in the Phase 1/2 trial of ATR-04 in the first half of 2025. However, success in early clinical trials does not ensure that large-scale clinical trials will be successful, nor does it predict final results.
We recently initiated our Phase 1b clinical trial for ATR-12 and expect to enroll our first patient in the first half of 2024 and expect to file an IND for a Phase 1b clinical trial of ATR-04 by mid-2024.
Because our product candidates are in early stages clinical trials or of preclinical development, they will require extensive preclinical and clinical testing. We dosed the first patient in our Phase 1b clinical trial for ATR-12 in August 2024,and we expect to dose the first patient in our Phase 1/2 clinical trial for ATR-04 in the first half of 2025.
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However, as of the date of this report, we have tested and evaluated our proprietary strains of S. epidermidis in preclinical studies and have not conducted any clinical trials designed to evaluate safety, tolerability or efficacy. Furthermore, success in early clinical trials does not ensure that large-scale clinical trials will be successful, nor does it predict final results.
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Any manufacturing problem or the loss of a contract manufacturer could be disruptive to our operations and result in development and clinical trial delays and lost sales. Additionally, we will rely on third parties to supply the raw materials needed to manufacture our product candidates.
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We recently initiated our Phase 1b clinical trial for ATR-12 and expect to enroll our first patient in the first half of 2024, and expect to file an IND for a Phase 1b clinical trial of ATR-04 by mid-2024. However, we have not conducted meaningful preclinical studies for any of our other product candidates.
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Disruptions at the FDA and other government agencies caused by funding shortages or global health concerns could hinder their ability to hire, retain, or deploy key leadership and other personnel, or otherwise prevent new or modified products from being developed, approved, or commercialized in a timely manner or at all, which could negatively impact our business. 48 The ability of the FDA and other government agencies to review and approve new products can be affected by a variety of factors, including government budget and funding levels, statutory, regulatory, and policy changes, a government agency’s ability to hire and retain key personnel and accept the payment of user fees, and other events that may otherwise affect the government agency’s ability to perform routine functions.
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Therefore, our business currently depends entirely on the successful development, regulatory approval and commercialization of our product candidates, which may never occur. 46 Results of preclinical studies of our product candidates may not be predictive of the results of future preclinical studies or clinical trials.
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Average review times at the FDA and other government agencies have fluctuated in recent years as a result. In addition, government funding of other government agencies that fund research and development activities is subject to the political process, which is inherently fluid and unpredictable.
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We have granted demand and piggyback registration rights to the former holders of our convertible preferred stock and convertible promissory notes pursuant to which they may request the registration for resale of up to 9,542,519 shares of common stock.
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Disruptions at the FDA and other agencies may also slow the time necessary for new drugs or modifications to approved drugs to be reviewed and/or approved by necessary government agencies, which would adversely affect our business.
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For example, over the last several years, the U.S. government has shut down several times and certain regulatory agencies, such as the FDA, have had to furlough critical employees and stop critical activities.
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With the change in presidential administrations in 2025, there is substantial uncertainty as to how, if at all, the new administration will seek to modify or revise the requirements and policies of the FDA and other regulatory agencies with jurisdiction over our product candidates.
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The impending uncertainty could present new challenges or potential opportunities as we navigate the clinical development and approval process for our product candidates.
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Obtaining and maintaining regulatory approval of our product candidates in one jurisdiction does not mean that we will be successful in obtaining regulatory approval of our product candidates in other jurisdictions.
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For the purposes of the rare pediatric disease program, a “rare pediatric disease” is a serious or life‑threatening disease in which the serious or life‑threatening manifestations primarily affect individuals aged from birth to 18 years or a rare disease or conditions within the meaning of the Orphan Drug Act.
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Under the FDA’s rare pediatric disease priority review voucher, or RPD‑PRV, program, upon the approval of an NDA or BLA for the treatment of a rare pediatric disease, the sponsor of such application would be eligible for an RPD‑PRV that can be used to obtain priority review for a subsequent NDA or BLA.
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The sponsor of the application may transfer (including by sale) the RPD‑PRV to another sponsor. The voucher may be further transferred any number of times before the voucher is used, as long as the sponsor making the transfer has not yet submitted the application.
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Congress has extended the RPD‑PRV program until December 20, 2024, with potential for vouchers to be granted until 2026. This program has been subject to criticism, including by the FDA. As such it is possible that even if we have obtained qualification for an RPD‑PRV, the program may no longer be in effect at the time of approval.
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Also, although priority review vouchers may be sold or transferred to third parties, there is no guaranty that we will be able to 54 realize any value if we obtained, and subsequently were able to sell a priority review voucher. The RPD-PRV program is currently scheduled to sunset as of September 30, 2026.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeIn addition, there can be no assurance that our internal information technology systems or those of our third-party contractors, or our consultants’ efforts to implement adequate security and control measures, will be sufficient to protect us against breakdowns, service disruption, data deterioration or loss in the event of a system malfunction, or prevent data from being stolen or corrupted in the event of a cyberattack, security breach, industrial espionage attacks or insider threat attacks which could result in financial, legal, business or reputational harm.
Biggest changeIn addition, there can be no assurance that our internal information technology systems or those of our third-party contractors, or our consultants’ efforts to implement adequate security and control measures, will be sufficient to protect us against breakdowns, service disruption, data deterioration or loss in the event of a system malfunction, or prevent data from being stolen or corrupted in the event of a cyberattack, security breach, industrial espionage attacks or insider threat attacks which could result in financial, legal, business or reputational harm. 66 As of the date of this report, we are not aware of any risks from cybersecurity threats, including as a result of any previous cybersecurity incidents, that have materially affected or are reasonably likely to materially affect us, including our business strategy, results of operations, or financial condition.
Our senior management team conducts the regular assessment and management of material risks from cybersecurity threats, including review with our IT team and third-party service providers. All employees and consultants are directed to report to our senior management any irregular or suspicious activity that could indicate a cybersecurity threat or incident.
Governance . Our senior management team conducts the regular assessment and management of material risks from cybersecurity threats, including review with our IT team and third-party service providers. All employees and consultants are directed to report to our senior management any irregular or suspicious activity that could indicate a cybersecurity threat or incident.
We also engage in quarterly phishing campaigns as well as cybersecurity awareness training to our end users to keep them vigilant in being able to detect threats. 62 Although we develop and maintain systems and controls designed to prevent cybersecurity threats from occurring, and we have a process to identify and mitigate threats, the development and maintenance of these systems, controls and processes is costly and requires ongoing monitoring and updating as technologies change and efforts to overcome security measures become increasingly sophisticated.
Although we develop and maintain systems and controls designed to prevent cybersecurity threats from occurring, and we have a process to identify and mitigate threats, the development and maintenance of these systems, controls and processes is costly and requires ongoing monitoring and updating as technologies change and efforts to overcome security measures become increasingly sophisticated.
We continuously monitor and maintain our network infrastructure including consistent vulnerability monitoring and remediation.
We continuously monitor and maintain our network infrastructure including consistent vulnerability monitoring and remediation. We also engage in quarterly phishing campaigns as well as cybersecurity awareness training to our end users to keep them vigilant in being able to detect threats.
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As of the date of this report, we are not aware of any risks from cybersecurity threats, including as a result of any previous cybersecurity incidents, that have materially affected or are reasonably likely to materially affect us, including our business strategy, results of operations, or financial condition. Governance .

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeWe currently pay $14,035 per month under the lease, which will increase to $14,385 in 2024, plus our pro rata share of certain operating expenses of the property. We also lease approximately 1,093 square feet of additional laboratory space, which is located at 93 Shennecossett Road, Groton, Connecticut 06340.
Biggest changeWe currently pay $14,385 per month under the lease, which will increase to $14,745 in 2025, plus our pro rata share of certain operating expenses of the property. We also lease approximately 1,093 square feet of additional laboratory space, which is located at 93 Shennecossett Road, Groton, Connecticut 06340.
The lease expires in April 2024, subject to our option to extend the lease for an additional one-year term. We pay $7,235 per month under the lease plus our pro rata share of certain operating expenses of the property.
The lease expires in April 2025, subject to our option to extend the lease for an additional one-year term. We pay $7,235 per month under the lease plus our pro rata share of certain operating expenses of the property.
We also lease approximately 1,868 square feet of office and laboratory space, which is located at 500 Cartier Boulevard, Laval, Quebec, Canada. We pay $6,515 per month under the lease. The lease expires in April 2024, subject to our option to extend the lease for an additional one-year term.
We also lease approximately 1,868 square feet of office and laboratory space, which is located at 500 Cartier Boulevard, Laval, Quebec, Canada. We pay $6,882 per month under the lease. The lease expires in April 2026, subject to our option to extend the lease for an additional one-year term.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeItem 4. Mine Safety Disclosures Not applicable. 63 PART II
Biggest changeItem 4. Mine Safety Disclosures Not applicable. PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changePlan Category (a) Number of Securities to be Issued Upon Exercise of Outstanding Options (b) Weighted- Average Exercise Price of Outstanding Options (c) Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected In Column (a)) Equity compensation plans approved by security holders 1,288,255 $ 1.37 2,202,340 Equity compensation plans not approved by security holders - - - Total 1,288,255 $ 1.37 2,202,340 64 Unregistered Sales of Equity Securities and Use of Proceeds Unregistered Sale of Equity Securities Concurrent with the close of our initial public offering on June 21, 2023, we issued 8,951,526 shares of our common stock in connection with the conversion of all outstanding shares of preferred stock convertible notes.
Biggest changePlan Category (a) Number of Securities to be Issued Upon Exercise of Outstanding Options (b) Weighted- Average Exercise Price of Outstanding Options (c) Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected In Column (a)) Equity compensation plans approved by security holders 41,608 $41.60 1,209,735 Equity compensation plans not approved by security holders — — — Total 41,608 $41.60 1,209,735 68 Unregistered Sales of Equity Securities Unregistered Sale of Equity Securities None.
The 2023 Plan provides that options may not be granted at an exercise price less than the fair market value of our shares of common stock on the date of grant. The following table sets forth certain information as of December 31, 2023 about our 2016 Plan and 2023 Plan under which our equity securities are authorized for issuance.
The 2023 Plan provides that options may not be granted at an exercise price less than the fair market value of our shares of common stock on the date of grant. The following table sets forth certain information as of December 31, 2024 about our 2016 Plan and 2023 Plan under which our equity securities are authorized for issuance.
We currently have reserved 242,340 shares of our common stock under the 2016 Plan. The purpose of the 2016 Plan is to provide eligible participants with an opportunity to acquire an ownership interest in our company. All officers, directors, employees and consultants to our company are eligible to participate under the 2016 Plan.
We currently have reserved 7,457 shares of our common stock under the 2016 Plan. The purpose of the 2016 Plan is to provide eligible participants with an opportunity to acquire an ownership interest in our company. All officers, directors, employees and consultants to our company are eligible to participate under the 2016 Plan.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Repurchases of Equity Securities Market Information Our common stock has trades on the NYSE American Stock Exchange under the symbol “AZTR.” Holders of Record As of March 15, 2024, there were 34 holders of record of our common stock.
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Repurchases of Equity Securities Market Information Our common stock has trades on the NYSE American Stock Exchange under the symbol “AZTR.” 67 Holders of Record As of February 24, 2025, there were 34 holders of record of our common stock.
We currently have reserved 2,000,000 shares of our common stock under the 2023 Plan. The purpose of the 2023 Plan is to provide eligible participants with an opportunity to acquire an ownership interest in our company. All officers, directors, employees and consultants to our company are eligible to participate under the 2023 Plan.
Both amendments were approved by the Company’s stockholders at the Company’s annual stockholder meeting held on November 20, 2024. The purpose of the 2023 Plan is to provide eligible participants with an opportunity to acquire an ownership interest in our company. All officers, directors, employees and consultants to our company are eligible to participate under the 2023 Plan.
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We believe the offers, sales and issuances of the above securities by us were exempt from registration under the Securities Act by virtue of Section 4(a)(2) of the Securities Act and Rule 506 thereunder as transactions not involving a public offering.
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We currently have reserved 1,209,735 shares of our common stock under the 2023 Plan.
Removed
All of the investors were sophisticated and accredited investors as such term is defined in Rule 501 under the Securities Act and represented their intentions to acquire the securities for investment only and not with a view to or for sale in connection with any distribution thereof, and appropriate legends were placed upon the stock certificates, notes and warrants issued in these transactions.
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On October 3, 2024, the Company’s Board of Directors approved amendments to the 2023 Plan that, subject to stockholder approval, would (i) increase the number of shares of Common Stock that may be issued under the 2023 Plan by 1,144,401 shares and (ii) adopt an evergreen provision to the 2023 Plan providing for an automatic 5% annual increase in the shares of Common Stock available for issuance under the 2023 Plan over the next 10 years commencing on January 1, 2026.
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Use of Proceeds from IPO On June 15, 2023, our registration statement on Form S-1, as amended (File No. 333-269876) was declared effective by the SEC in connection with our initial public offering of common stock, pursuant to which we issued and sold, on June 15, 2023, 1,500,000 shares of common stock at a public offering price of $5.00 per share for total gross proceeds of $7.5 million and net proceeds of $6.0 million, after deducting underwriting discounts and offering expenses borne by us.
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The IPO was underwritten by ThinkEquity LLC As of December 31, 2023, we estimate that we have used approximately $4,661,707 of the net proceeds from our IPO for our clinical trials and product development, research and development, clinical manufacturing as well as for working capital and other general corporate purposes.
Removed
Substantially all of the unused net proceeds from the offering are held in interest bearing accounts. There has been no material change in our use of the net proceeds from the IPO as described in our final prospectus filed pursuant to Rule 424(b)(4) under the Securities Act with the SEC on June 21, 2023.
Removed
Other than payments in the ordinary course of business for compensation of officers and to non-employee directors as compensation for board or board committee service, none of the net proceeds from our IPO used by us were direct or indirect payments to any of (i) our directors or officers or their associates, (ii) persons owning 10 percent or more of our common stock, or (iii) our affiliates.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeThe decrease was primarily related to a decrease of $1.9 million in research and development related costs attributable to our Netherton program as the program transitions into the clinic, a net decrease in payroll and related costs of $556,000 attributable to a reduction in staff, a decrease of $183,000 attributable to a decrease in the utilization of consultants offset by an increase of $378,000 in research and development costs attributable to advancing our CTAR program and a net increase of $39,000 of other costs.
Biggest changeThe increase was primarily related to an increase of $450,000 in payroll related costs, $500,000 in research and development related costs attributable to our efforts in moving our EGFR program forward, an increase of $37,000 in moving our Netherton program forward, and a net increase of $113,000 of other costs.
Our initial focus is on the development of our current product candidates, including: ● ATR-12 , a genetically modified strain of S. epidermidis for treating the orphan disease, Netherton syndrome, a chronic and sometimes fatal disease of the skin estimated to affect approximately one in every 100,000, but its prevalence may be underestimated due to misdiagnosis caused by similarities to other skin diseases.
Our initial focus is on the development of our current product candidates, including: • ATR-12 , a genetically modified strain of S. epidermidis for treating the orphan disease, Netherton syndrome, a chronic and sometimes fatal disease of the skin estimated to affect approximately one to nine in every 100,000, but its prevalence may be underestimated due to misdiagnosis caused by similarities to other skin diseases.
If we are unable to raise additional funds through equity or debt financings or other arrangements when needed, we may be required to delay, limit, reduce or terminate our research, product development or future commercialization efforts, or grant rights to develop and market product candidates that we would otherwise prefer to develop and market ourselves.
If we are unable to raise additional funds through equity or debt financings or other arrangements when needed, we may be required to delay, limit, reduce or terminate our research, product development or future 75 commercialization efforts, or grant rights to develop and market product candidates that we would otherwise prefer to develop and market ourselves.
We believe our genetic engineering techniques and technologies have applicability outside of the field of medicine, including cosmetics and in the generation of clean fuels and bioremediation. ● Leverage our academic partnerships . We currently have partnerships with investigators at the Fred Hutchinson Cancer Center, Yale University, Jackson Laboratory for Genomic Medicine, and Carnegie Mellon University.
We believe our genetic engineering techniques and technologies have applicability outside of the field of medicine, including cosmetics and in the generation of clean fuels and bioremediation. 72 • Leverage our academic partnerships. We currently have partnerships with investigators at the Fred Hutchinson Cancer Center, Yale University, Jackson Laboratory for Genomic Medicine, and Carnegie Mellon University.
We hold an exclusive, worldwide license from Fred Hutch regarding the use of its patented SyngenicDNA Minicircle Plasmid, or SyMPL, technologies for all fields of genetic engineering, including to discover, develop and commercialize engineered microbial therapies and microbial-derived peptides and proteins for skin diseases.
We hold an exclusive, worldwide license from Fred Hutch regarding the use of its patented SyngenicDNA Minicircle Plasmid, or SyMPL, technologies for all fields of genetic engineering, including to discover, develop and 71 commercialize engineered microbial therapies and microbial-derived peptides and proteins for skin diseases.
Each of our current product candidates are proprietary and subject to pending patent applications. We expect that most, if not all, genetically engineered product candidates we develop will be eligible for patent protection. 68 ● Advance our lead product candidates, ATR-12 and ATR-04, through clinical trials .
Each of our current product candidates are proprietary and subject to pending patent applications. We expect that most, if not all, genetically engineered product candidates we develop will be eligible for patent protection. • Advance our lead product candidates, ATR-12 and ATR-04, through clinical trials.
We intend to seek additional funds through various financing sources, including the sale of our equity, licensing fees for our technology and joint ventures with industry partners. In addition, we will consider alternatives to our current business plan that may enable us to achieve revenue producing operations and meaningful commercial success with a smaller amount of capital.
We intend to seek additional funds through various financing sources, including the sale of our equity and debt securities, licensing fees for our technology and joint ventures with industry partners. In addition, we will consider alternatives to our current business plan that may enable us to achieve revenue producing operations and meaningful commercial success with a smaller amount of capital.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations Cautionary Statement The following discussion and analysis should be read in conjunction with our consolidated audited financial statements and the related notes thereto contained elsewhere in this report.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations Cautionary Statement The following discussion and analysis should be read in conjunction with our statements and the related notes thereto contained elsewhere in this report.
In December 2022, we submitted an investigational new drug application, or IND, for a Phase 1b clinical trial of ATR-12 in Netherton syndrome patients‌, and in January 2023 we received notification from the FDA that the “study may proceed” with respect to the proposed Phase 1b clinical trial.
In December 2022, we submitted an investigational new drug application, or IND, for a Phase 1b clinical trial of ATR-12 in adult Netherton syndrome patients, and on January 27, 2023 we received notification from the FDA that the “study may proceed” with respect to the proposed Phase 1b clinical trial.
To date, we have capitalized our operations primarily through a series of private placements of our convertible preferred stock and convertible promissory notes and our initial public offering, or IPO, of common stock which closed on June 21, 2023.
To date, we have capitalized our operations primarily through a series of private placements of our convertible preferred stock and convertible promissory notes and our initial public offering, IPO, of common stock which closed on June 21, 2023 and subsequent offerings.
We are planning to complete lead optimization and IND-enabling studies in 2024 to support an IND filing targeted for the second half of 2025. ● Two separate strains of bacterial microbes being investigated and developed by us and Bayer Consumer Care AG, the consumer products division of Bayer AG, or Bayer, the international life science company.
We are planning to perform lead optimization and IND-enabling studies in 2025 to support an IND filing . • Two separate strains of bacterial microbes are being investigated and developed by us and Bayer Consumer Care AG, the consumer products division of Bayer AG, or Bayer, the international life science company.
During the comparable period of fiscal 2022, operating activities used $8.3 million of cash primarily driven by our net loss of $10.7 million offset by non-cash items of $2.4 million. Investing Activities During the year ended December 31, 2023, investing activities used $0.3 million of cash primarily driven by $0.3 million of deferred patent costs and patent and trademark costs.
During fiscal 2023, operating activities used $7.4 million of cash primarily driven by our net loss of $11.3 million offset by non-cash items of $3.9 million. Investing Activities During the year ended December 31, 2024, investing activities used $0.4 million of cash primarily driven by $0.4 million of deferred patent costs and patent and trademark costs.
There was $0 and $4,426 government and nonprofit grant revenue received by us during fiscal year 2023 or 2022; respectively. We expect our research and development expenses to significantly increase in the future due primarily to our planned clinical trial activity and continued development of product candidates.
There was no government and nonprofit grant revenue received by us during fiscal year 2024 or 2023, and do not expect any future grant revenue at this time. We expect our research and development expenses to significantly increase in the future due primarily to our planned clinical trial activity and continued development of product candidates.
During the comparable period of fiscal 2022, investing activities used $0.3 million of cash primarily driven by $0.3 million of deferred patent costs and patent and trademark costs. Financing Activities During the year ended December 31, 2023, financing activities provided $6.0 million in cash primarily driven by proceeds from our initial public offering.
During fiscal 2023, investing activities used $0.3 million of cash primarily driven by $0.3 million of deferred patent costs and patent and trademark costs. Financing Activities During the year ended December 31, 2024, financing activities provided $13.3 million in cash primarily driven by proceeds from our follow-on public offerings.
The particular species demonstrates a number of well-described properties in the skin. As of the date of this report, we have identified among our microbial library over 60 distinct bacterial species that we believe are capable of being engineered to create living organisms or engineered proteins with significant therapeutic effect.
As of the date of this report, we have identified among our microbial library over 60 distinct bacterial species that we believe are capable of being engineered to create living organisms or engineered proteins with significant therapeutic effect. We are a pioneer in genetically engineered bacteria for therapeutic use in dermatology.
We are a pioneer in genetically engineered bacteria for therapeutic use in dermatology. Our goal is to leverage our platforms and internal microbial library bacterial strains to create new therapeutics that are either engineered living organisms or engineered proteins or peptides to treat skin diseases.
Our goal is to leverage our platforms and internal microbial library bacterial strains to create new therapeutics that are either engineered living organisms or engineered proteins or peptides to treat skin diseases.
During the year ended December 31, 2023, non-operating income (expense) increased by $2.4 million, or 198%, compared to the comparable period in fiscal 2022. The increase was primarily related to an increase of $2.4 million attributable to the change in fair value of the convertible note and a decrease of $0.2 million income attributable to the employee retention credit.
During the year ended December 31, 2024, non-operating income (expense) increased by $5.8 million, or (153)%, compared to the comparable period in fiscal 2023. The increase was primarily attributable to a $3.6 million decrease in fair value of the convertible note and an increase of $4.0 million attributable to the decrease in valuation of the warrants.
After giving effect to the February 2024 public offering, we believe that our cash on hand as of the date of this report will not be sufficient to cover our proposed plan of operations over the next 12 months.
After giving effect to both offerings, we believe that our cash on-hand as of the date of this report will be not sufficient to cover our proposed plan of operations beyond six months from the date of this report.
Subject to FDA clearance of our IND, we expect to commence our Phase 1b clinical trial in the fourth quarter of 2024. ● ATR-01 , an engineered recombinant human filaggrin protein for treating ichthyosis vulgaris, a chronic, xerotic (abnormally dry), scaly skin disease with an estimated incidence and prevalence of 1 in 250, which suggests a total patient population of 1.3 million in the United States.
We expect to dose the first patient in the Phase 1/2 clinical trial in the first half of 2025. 70 • ATR-01 , a genetically modified strain of S. epidermidis that expresses an engineered recombinant human filaggrin protein for treating ichthyosis vulgaris, a chronic, xerotic (abnormally dry), scaly skin disease with an estimated incidence and prevalence of 1 in 250, which suggests a total patient population of 1.3 million in the United States.
Non-operating income (expense) Our non-operating income (expense) consists of refundable research and development credits, valuation of warrants, amortization of debt issuance costs, forgiveness of accounts payable, loss on foreign currency translation, employee retention credit, change in fair value of the convertible note, interest income, and interest expense.
Non-operating income (expense) Our non-operating income (expense) consists of refundable research and development credits, change in the valuation of warrants carried at fair market value, loss on the issuance of stock, loss on disposal of equipment, loss on foreign currency translation, change in fair value of the convertible note, interest income, and interest expense.
After submitting post-IND manufacturing reports, we commenced operating activities for our Phase 1b clinical trial in December 2023. We expect to report initial safety results in the second half of 2024. ● ATR-04 , a genetically modified strain of S. epidermidis for treating the papulopustular rash experienced by cancer patients undergoing epidermal growth factor receptor inhibitor, or EGFRi, targeted therapy.
We expect to report initial safety results in the first half of 2025. • ATR-04 , a genetically modified strain of S. epidermidis for treating the papulopustular rash experienced by cancer patients undergoing epidermal growth factor receptor inhibitor, or EGFRi, targeted therapy.
Cash Flows The following table shows a summary of our cash flows for the periods indicated: December 31, 2023 2022 Net cash used in operating activities $ (7,362,375 ) $ (8,349,469 ) Net cash used in investing activities $ (318,259 ) $ (336,761 ) Net cash provided by financing activities $ 5,983,967 $ 4,134,624 Net decrease in cash $ (1,696,667 ) $ (4,551,606 ) Operating Activities During the year ended December 31, 2023, operating activities used $7.4 million of cash primarily driven by our net loss of $11.3 million offset by non-cash items of $3.9 million.
Cash Flows The following table shows a summary of our cash flows for the periods indicated: December 31, 2024 2023 Net cash used in operating activities $ (10,183,740) $ (7,362,375) Net cash used in investing activities $ (379,246) $ (318,259) Net cash provided by financing activities $ 13,321,716 $ 5,983,967 Net decrease in cash $ 2,758,730 $ (1,696,667) Operating Activities During the year ended December 31, 2024, operating activities used $10.2 million of cash primarily driven by our net loss of $9.0 million and by non-cash items of $1.2 million.
If such financing is not available on satisfactory terms, we may be unable to further pursue our business plan and we may be unable to continue operations, in which case you may lose your entire investment. 71 To the extent that we raise additional capital through the sale of equity or convertible debt securities, our common stockholders’ ownership interests will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect rights as a common stockholder.
To the extent that we raise additional capital through the sale of equity or convertible debt securities, our common stockholders’ ownership interests will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect rights as a common stockholder.
The platform also utilizes a licensed genetic engineering technology, which can enable the transformation of previously genetically intractable strains. Our initial focus is on the development of genetically engineered strains of Staphylococcus epidermidis, or S. epidermidis , which we consider to be an optimal therapeutic candidate species for engineering of dermatologic therapies.
Our initial focus is on the development of genetically engineered strains of Staphylococcus epidermidis, or S. epidermidis , which we consider to be an optimal therapeutic candidate species for engineering of dermatologic therapies. The particular species demonstrates a number of well-described properties in the skin.
This was partially offset by an increase of $0.1 million in income attributable to forgiveness of accounts payable and a net increase of $0.1 million attributable to other income (expense). Financial Condition As of December 31, 2023, we had total assets of approximately $5.1 million and working capital of approximately $0.9 million.
This was offset by a one-time $2.1 million loss attributable to the issuance of stock, and a a net increase of $0.3 million attributable to other income (expense). Financial Condition As of December 31, 2024, we had total assets of approximately $7.4 million and working capital of approximately $3.9 million.
The information contained in this annual report on Form 10-K is not a complete description of our business or the risks associated with an investment in our common stock. We urge you to carefully review and consider the various disclosures made by us in this report and in our other filings with the Securities and Exchange Commission, or SEC.
The information contained in this annual report on Form 10-K is not a complete description of our business or the risks associated with an investment in our common stock.
To date, our operations have consisted of the development of our proprietary microbial library, the identification, characterization and testing of certain bacterial species from our microbial library that we believe are capable of being engineered to provide significant therapeutic effect and the development of our initial product candidates. 69 Year Ended December 31, 2023 Compared to Year Ended December 31, 2022 The following table summarizes our results of operations with respect to the items set forth below for the years ended December 31, 2023 and 2022 together with the percentage change for those items.
To date, our operations have consisted of the development of our proprietary microbial library, the identification, characterization and testing of certain bacterial species from our microbial library that we believe are capable of being engineered to provide significant therapeutic effect and the development of our initial product candidates.
Except as otherwise indicated, all share and share price amounts in this report give effect to a forward stock split effected on May 17, 2023 at a ratio of 7.1-for-1. 66 Overview We are focused on developing innovative therapies for precision dermatology using engineered proteins and topical live biotherapeutic products.
Except as otherwise indicated, all share and share price amounts in this report gives effect to a forward stock split effected on May 17, 2023 at a ratio of 7.1-for-1, and the reverse stock split effected on July 1, 2024 at a ratio of 1-for-30.
We believe our use of estimates and underlying accounting assumptions adhere to GAAP and are consistently and conservatively applied. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Actual results may differ materially from these estimates under different assumptions or conditions.
We base our estimates on historical experience, known trends and events, and various other factors that are believed to be reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions. On an ongoing basis, we evaluate our judgments and estimates in light of changes in circumstances, facts and experience.
We have built a proprietary platform that includes a microbial library comprised of approximately 1,500 unique bacterial strains that can be screened for unique therapeutic characteristics. The platform is augmented by an artificial intelligence and machine learning technology that analyzes, predicts and helps screen our library of strains for drug like molecules.
The platform is augmented by an artificial intelligence and machine learning technology that analyzes, predicts and helps screen our library of strains for drug like molecules. The platform also utilizes a licensed genetic engineering technology, which can enable the transformation of previously genetically intractable strains.
However, there can be no guarantees that such funds will be available on commercially reasonable terms, if at all.
However, there can be no guarantees that such funds will be available on commercially reasonable terms, if at all. If such financing is not available on satisfactory terms, we may be required to scale back our proposed plan of operations and we may be unable to continue operations.
On February 15, 2024, we completed a public offering of 16,667,000 shares of our common stock at an offering price of $0.30 per share. We received gross proceeds of approximately $5 million and net proceeds of approximately $4.4 million, after deducting underwriting discounts and offering-related expenses.
In January 2025, we completed a public offering of 4,857,780 shares of our common stock, at an offering price of $0.30 per share, in which we received net proceeds of approximately $1.3 million, after deducting underwriter discounts and offering expenses, and in February 2025 we completed a registered direct offering of 2,495,5818 shares of our common stock, at an offering price of $0.2785 per share, in which we received net proceeds of approximately $695 thousand, after deducting placement agent commissions and offering expenses.
During the year ended December 31, 2023, research and development expenses decreased by $2.3 million, or 37%, to $3.8 million from the prior year period.
General and Administrative General and administrative costs during the year ended December 31, 2024 increased by $1.8 million, or 40%, to $6.3 million from the prior year.
During the comparable period of fiscal 2022, financing activities provided $4.1 million in cash primarily driven by the proceeds from the convertible notes. 72 Critical Accounting Policies and Significant Judgements and Estimates Our financial statements and related public financial information are based on the application of accounting principles generally accepted in the United States (“GAAP”).
During fiscal 2023, financing activities provided $6.0 million in cash primarily driven by the proceeds from our initial public offering. Critical Accounting Estimates Our management’s discussion and analysis of our financial condition and results of operations are based on our consolidated financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles.
In December 2020, Bayer purchased $8 million of our Series B preferred stock, which converted into 1,449,743 shares of our common stock, representing approximately 4.5%, of our outstanding common shares as of the date of this report. 67 We also have established partnerships with teams from Carnegie Mellon University and the Fred Hutchinson Cancer Center, or Fred Hutch, two of the premier academic centers in the United States.
Bayer holds the exclusive option to license the patent rights to these strains. We also have established partnerships with teams from Carnegie Mellon University and the Fred Hutchinson Cancer Center, or Fred Hutch, two of the premier academic centers in the United States.
We intend to submit an IND for a Phase 1b clinical trial in certain cancer patients undergoing EGFRi targeted therapy in mid-2024.
In August 2024, we obtained IND clearance from the FDA to commence a Phase 1/2 clinical trial in certain cancer patients undergoing EGFRi targeted therapy. In September 2024, we obtained Fast Track designation by the FDA in this indication.
We expect to report initial safety results of our Phase 1b clinical trial for our ATR-12 in Netherton syndrome patients in the second half of 2024 and are currently planning to commence a Phase 1b trial of our ATR-04 in certain cancer patients undergoing EGFRi therapy in the second half of 2024.
We expect to report initial safety results of the first patients dosed in our Phase 1b clinical trial for our ATR-12 in Netherton syndrome patients in early 2025 with full results anticipated in the second half of 2025. • Broaden our platform by selectively exploring strategic partnerships that maximize the potential of our precision dermatology programs.
Research and Development Research and development expenses include salaries and benefits of all research personnel, payments to contract research organizations, payments to research consultants, and the purchase of lab supplies. These expenses are offset by income earned from government grant payments.
These expenses are offset by income earned from government grant payments. During the year ended December 31, 2024, research and development expenses increased by $1.1 million, or 30%, to $4.7 million from the prior year period.
As of the date of this filing, management has determined there is substantial doubt about our ability to continue as a going concern based on our lack of revenue from commercial operations, significant losses and the need to raise additional capital to support on-going operations.
Due to our accumulated deficit, recurring and negative cash flow from operations there is substantial doubt about our ability to continue as a going concern.
Removed
We have granted the underwriter an overallotment option to purchase an additional 2,500,000 shares of our common stock, at the public offering less the underwriter’s discount, for a 45-day period ending March 29, 2024.
Added
We urge you to carefully review and consider the various disclosures made by us in this report and in our other filings with the Securities and Exchange Commission, or SEC, including the "Risk Factors" section in this report.
Removed
Bayer holds the exclusive option to license the patent rights to these strains.
Added
In July 2024, we completed a follow-on public offering in which we issued 69 6,665,000 shares of our common stock at a price of $1.50 per share and Class A Warrants exercisable for an aggregate 13,330,000 shares of common stock.
Removed
We have a cleared IND for ATR-12 and expect to file an IND for ATR-04 in mid-2024. ● Broaden our platform by selectively exploring strategic partnerships that maximize the potential of our precision dermatology programs . We intend to maintain significant rights to all of our core technologies and product candidates.
Added
The net proceeds received by us from the follow-on public offering were $9.1 million, after deducting underwriting discounts, commissions and other offering expenses. The Class A Warrants had an initial exercise price of $1.50 that was adjusted to $0.7043 in accordance with a reset price provision determined 30 days following the issuance date.
Removed
Year Ended December 31, 2023 2022 $ Change % Change Service revenue - related party $ 686,000 $ 284,000 $ 402,000 142 % Total revenue 686,000 284,000 402,000 142 % Operating expenses: General and administrative 4,493,332 3,639,666 853,666 23 % Research and development 3,809,063 6,097,938 (2,288,875 ) (38 )% Total operating expenses 8,302,395 9,737,604 (1,435,212 ) (15 )% Loss from operations (7,616,395 ) (9,453,604 ) 1,837,209 (19 )% Non operating income (expense) Interest income 1,577 4,818 (3,241 ) (67 )% Interest expense (167,726 ) (251,891 ) 84,165 (33 )% Employee retention credit — 229,813 (229,813 ) (100 )% Other income — 65,849 (65,849 ) (100 )% Forgiveness of accounts payable 56,285 — 56,285 100 % Change in fair value of convertible note (3,630,100 ) (1,250,000 ) (2,380,100 ) 100 % Other income (expense) 89,886 (25,351 ) 115,237 (455 )% Total non-operating expenses (3,650,078 ) (1,226,762 ) (2,423,316 ) 198 % Loss before income taxes (11,266,473 ) (10,680,366 ) (586,107 ) 5 % Income tax expense (17,308 ) — (17,308 ) 100 % Net loss (11,283,781 ) (10,680,366 ) (603,415 ) 6 % Dividends on preferred stock (1,355,347 ) (2,768,984 ) 1,413,637 (51 )% Net loss attributable to common shareholders $ (12,639,128 ) $ (13,449,350 ) $ 810,222 (6 )% Service Revenue - Related Party We generated $0.7 million of service revenue under the Bayer JDA during the year ended December 31, 2023 compared to service revenue of $0.3 million under the JDA for the year ended December 31, 2022.
Added
As of February 24, 2025, we had 14,979,354 shares of our common stock issued and outstanding.
Removed
The increase of $0.4 million in service revenue is attributable to an increase in the amount of reimbursable development costs in 2023. 70 General and Administrative General and administrative costs during the year ended December 31, 2023 increased by $854,000, or 23%, to $4.5 million from the prior year period.
Added
Overview We focused on developing innovative therapies for precision dermatology using engineered proteins and topical live biotherapeutic products. We have built a proprietary platform that includes a microbial library comprised of approximately 1,500 unique bacterial strains that can be screened for unique therapeutic characteristics.
Removed
The increase was primarily related to an increase of $856,00 of expenses related to our public company emergence, including $216,000 in additional administrative costs related to accounting and finance, $200,000 in increased legal costs, $110,000 of listing fees with the NYSE American Stock Exchange, a $233,000 increase in premiums for directors and officers insurance, and $97,000 in investor and public relations costs.
Added
We received Pediatric Rare Disease Designation for ATR-12 by the United States Food and Drug Administration, or FDA, in 2019.
Removed
The increase in year-over-year general and administrative costs also included $354,000 in IP legal costs due to the impairment and expensing of certain patent families offset by a decrease of $378,000 in payroll and related costs due to certain positions not filled for partial year and a net increase of $22,000 in other overhead expenses.
Added
After submitting post-IND manufacturing reports, we have commenced operating activities for our Phase 1b clinical trial in December 2023, and we have dosed our first patient in August 2024.
Removed
We generate grant revenue on contracts with various federal agencies and nonprofit research institutions for general research conducted by us. These grant arrangements also do not meet the criteria for revenue recognition and amounts earned under these grant contracts are recorded as a negative research and development expense.
Added
In 2022, we obtained pre-IND correspondence with the FDA for purposes of discussing our proposed regulatory pathway for ATR-12 and obtaining guidance from the FDA on the preclinical plan leading to the filing and acceptance of an IND for ATR-12. In December 2022, we filed an IND for a first-in-human trial of ATR-12 in Netherton syndrome patients.
Removed
As of December 31, 2023, our liquidity included approximately $1.8 million of cash and cash equivalents. On February 15, 2024, we completed a public offering of 16,667,000 shares of our common stock, at an offering price of $0.30 per share, in which we received net proceeds of approximately $4.4 million, after deducting underwriting discounts and offering-related expenses.
Added
On January 27, 2023, we received notification from the FDA that the “study may proceed” with respect to the proposed Phase 1b clinical trial, and in August 2024 we initiated dosing the first patient in its Phase 1b clinical trial evaluating ATR-12.
Removed
GAAP requires the use of estimates; assumptions, judgments and subjective interpretations of accounting principles that have an impact on the assets, liabilities, revenue and expense amounts reported. These estimates can also affect supplemental information contained in our external disclosures including information regarding contingencies, risk and financial condition.
Added
In August 2024, we received IND clearance from the FDA for a first-in-human Phase 1b/2a clinical trial in patients with EGFRi-associated rash, and in September 2024, the FDA granted Fast Track designation for ATR-04. We commenced a Phase 1b trial of our ATR-04 in certain cancer patients undergoing EGFRi therapy in the fourth quarter of 2024.
Removed
We continue to monitor significant estimates made during the preparation of our financial statements. Our significant accounting policies are summarized in Note 2 of our financial statements. While all these significant accounting policies impact on our financial condition and results of operations, we view certain of these policies as critical.
Added
We expect to dose the first patient in the Phase 1/2 clinical trial with ATR-04 in the first half of 2025.
Removed
Policies determined to be critical are those policies that have the most significant impact on our financial statements and require management to use a greater degree of judgment and estimates. Actual results may differ from those estimates.
Added
We intend to maintain significant rights to all of our core technologies and product candidates.
Removed
Our management believes that given current facts and circumstances, it is unlikely that applying any other reasonable judgments or estimate methodologies would cause effect on our results of operations, financial position or liquidity for the periods presented in this report.
Added
Year Ended December 31, 2024 Compared to Year Ended December 31, 2023 The following table summarizes our results of operations with respect to the items set forth below for the years ended December 31, 2024 and 2023 together with the percentage change for those items. 73 Year Ended December 31, 2024 2023 $ Change % Change Service revenue - related party $ 7,500 $ 686,000 $ (678,500) (99) % Total revenue 7,500 686,000 (678,500) (99) % Operating expenses: General and administrative 6,269,262 4,493,332 1,775,930 40 % Research and development 4,723,378 3,643,214 1,080,164 30 % Total operating expenses 10,992,640 8,136,546 2,856,094 35 % Loss from operations (10,985,140) (7,450,546) (3,534,594) 47 % Non operating income (expense) Interest income 122,553 1,577 120,976 7671 % Interest expense (12,160) (167,726) 155,566 (93) % Change in fair value of convertible note — (3,630,100) 3,630,100 (100) % Change in fair value of warrants 4,034,072 34,930 3,999,142 (100) % Loss on issuance of common stock (2,132,800) — (2,132,800) (100) % Other income (expense) 15,014 (54,608) 69,622 (127) % Total other income (expense) 2,026,679 (3,815,927) 5,842,606 (153) % Loss before income taxes (8,958,461) (11,266,473) 2,308,012 (20) % Income tax expense (9,031) (17,308) 8,277 (48) % Net loss (8,967,492) (11,283,781) 2,316,289 (21) % Dividends on preferred stock — (1,355,347) 1,355,347 (100) % Net loss attributable to common shareholders $ (8,967,492) $ (12,639,128) $ 3,671,636 (29) % Service Revenue - Related Party We generated $7,500 of service revenue under the Bayer JDA during the year ended December 31, 2024 compared to service revenue of $686,000 under the JDA for the year ended December 31, 2023.
Removed
Internal Control Over Financial Reporting Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements in accordance with U.S. GAAP.
Added
The decrease of $(678,500) in service revenue is attributable to a decrease in the amount of reimbursable development costs in 2024, and the Company does not expect any significant future revenue under the Bayer JDA.
Removed
Under standards established by the Public Company Accounting Oversight Board, or PCAOB, a deficiency in internal control over financial reporting exists when the design or operation of a control does not allow management or personnel, in the normal course of performing their assigned functions, to prevent or detect misstatements on a timely basis.
Added
The increase was primarily related to the costs incurred following, and a result of, our emergence as a public company in June 2023, including $1.2 million of salaries and benefits primarily attributable to hiring our CFO and COO, an increase of $111,000 primarily related to the achievement of a milestone for our CEO's performance based options, an increase of $172,000 in public relations, an increase of $162,000 of insurance costs and a net increase of $111,000 in other overhead expenses. 74 Research and Development Research and development expenses include salaries and benefits of all research personnel, payments to contract research organizations, payments to research consultants, and the purchase of lab supplies.
Removed
The PCAOB defines a material weakness as a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of annual or interim financial statements will not be prevented, or detected and corrected, on a timely basis.
Added
As of December 31, 2024, our liquidity included approximately $4.6 million of cash and cash equivalents.
Removed
During the preparation of our financial statements for the years ended December 31, 2023 and 2022, we and our independent registered public accounting firm identified a material weakness as it relates to a lack of adequate segregation of accounting functions.
Added
In January 2025, we completed a public offering of shares of our common stock for the net proceeds of approximately $1.3 million, and in February 2025 we completed a registered direct offering of shares of our common stock for the net proceeds of approximately $695 thousand.
Removed
We are in the process of implementing measures designed to improve our internal control over financial reporting and remediate this material weakness. We intend to increase staffing within our accounting infrastructure sufficient to facilitate proper segregation of accounting functions and to enable appropriate review of our internally prepared financial statements.
Added
Our financial statements include disclosure with respect to a substantial doubt about our ability to continue as a going concern and the report of our independent auditor includes an explanatory paragraph with respect to that substantial doubt.
Removed
Revenue Recognition As discussed in Note 2 to our audited financial statements included elsewhere in this report, under Accounting Standards Codification, or ASC, 606, Revenue from Contracts with Customers, an entity recognizes revenue when its customer obtains control of promised goods or services, in an amount that reflects the consideration which the entity expects to receive in exchange for those goods or services.
Added
The preparation of these consolidated financial statements requires us to make judgments and estimates that affect the reported amounts of assets, liabilities, and expenses and the disclosure of contingent assets and liabilities in our consolidated financial statements.
Removed
To determine the appropriate amount of revenue to be recognized for arrangements determined to be within the scope of ASC 606, we perform the following five steps: (i) identification of the contract(s) with the customer, (ii) identification of the promised goods or services in the contract and determination of whether the promised goods or services are performance obligations, (iii) measurement of the transaction price, (iv) allocation of the transaction price to the performance obligations, and (v) recognition of revenue when (or as) we satisfy each performance obligation.
Added
The effects of material revisions in estimates, if any, will be reflected in the consolidated financial statements prospectively from the date of change in estimates.
Removed
We only apply the five-step model to contracts when it is probable that the entity will collect consideration it is entitled to in exchange for the goods or services it transfers to the customer. When optional goods or services are offered, we assess the options to determine whether the options grant the customer a material right.

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