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What changed in PharmaCyte Biotech, Inc.'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of PharmaCyte Biotech, Inc.'s 2022 and 2023 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 2023 report.

+338 added−482 removedSource: 10-K (2023-07-31) vs 10-K (2022-07-28)

Top changes in PharmaCyte Biotech, Inc.'s 2023 10-K

338 paragraphs added · 482 removed · 241 edited across 5 sections

Item 1. Business

Business — how the company describes what it does

85 edited+29 added−147 removed240 unchanged
Biggest changeIn order to address the clinical hold, the FDA has requested that we: · Provide additional sequencing data and genetic stability studies; · Conduct a stability study on our final formulated product candidate as well as the cells from our Master Cell Bank (“MCB”); · Evaluate the compatibility of the delivery devices (the prefilled syringe and the microcatheter used to implant the CypCaps ™ ) with our product candidate for pancreatic cancer; · Provide additional detailed description of the manufacturing process of our product candidate for pancreatic cancer; · Provide additional product release specifications for our encapsulated cells; · Demonstrate comparability between the 1 st and 2 nd generation of our product candidate for pancreatic cancer and ensure adequate and consistent product performance and safety between the two generations; · Conduct a biocompatibility assessment using the capsules material; · Address specified insufficiencies in the Chemistry, Manufacturing and Controls information in the cross-referenced Drug Master File; · Conduct an additional nonclinical study in a large animal (such as a pig) to assess the safety, activity, and distribution of the product candidate for pancreatic cancer; and · Revise the Investigators Brochure to include any additional preclinical studies conducted in response to the clinical hold and remove any statements not supported by the data we generated.
Biggest changeIn order to address the clinical hold, the FDA has requested that we: · Provide additional sequencing data and genetic stability studies; · Conduct a stability study on our final formulated product candidate as well as the cells from our Master Cell Bank (“MCB”); · Evaluate the compatibility of the delivery devices (the prefilled syringe and the microcatheter used to implant the CypCaps™) with our product candidate for pancreatic cancer; · Provide additional detailed description of the manufacturing process of our product candidate for pancreatic cancer; · Provide additional product release specifications for our encapsulated cells; · Demonstrate comparability between the 1st and 2nd generation of our product candidate for pancreatic cancer and ensure adequate and consistent product performance and safety between the two generations; · Conduct a biocompatibility assessment using the capsules material; · Address specified insufficiencies in the Chemistry, Manufacturing and Controls information in the cross-referenced Drug Master File; · Conduct an additional nonclinical study in a large animal (such as a pig) to assess the safety, activity, and distribution of the product candidate for pancreatic cancer; and · Revise the Investigators Brochure to include any additional preclinical studies conducted in response to the clinical hold and remove any statements not supported by the data we generated. 2 The FDA also requested that we address the following issues as an amendment to our IND: · Provide a Certificate of Analysis for pc3/2B1 plasmid that includes tests for assessing purity, safety, and potency; · Perform qualification studies for the drug substance filling step to ensure that the product candidate for pancreatic cancer remains sterile and stable during the filling process; · Submit an updated batch analysis for the product candidate for the specific lot that will be used for manufacturing all future product candidates; · Provide additional details for the methodology for the Resorufin (CYP2B1) potency and the PrestoBlue cell metabolic assays; · Provide a few examples of common microcatheters that fit the specifications in our Angiography Procedure Manual; · Clarify the language in our Pharmacy Manual regarding proper use of the syringe fill with the product candidate for pancreatic cancer; and · Provide a discussion with data for trial of the potential for cellular and humoral immune reactivity against the heterologous rat CYP2B1 protein and potential for induction of autoimmune-mediated toxicities in our study population.
We may need to conduct expensive pharmacoeconomic studies in to demonstrate the medical necessity and cost-effectiveness of our product candidates, in addition to the costs required to obtain FDA approvals. Our product candidates, if approved, may not be considered medically necessary or cost-effective.
We may need to conduct expensive pharmacoeconomic studies to demonstrate the medical necessity and cost-effectiveness of our product candidates, in addition to the costs required to obtain FDA approvals. Our product candidates, if approved, may not be considered medically necessary or cost-effective.
The Third Addendum also requires the Company to make future royalty and milestone payments as follows: · Two percent royalty on all gross sales received by us or our affiliates; · Ten percent royalty on gross revenues received by us or our affiliates from a sublicense or right to use the patents or the licenses granted by us or our affiliates; · Milestone payments of $100,000 within 30 days after enrollment of the first human patient in the first clinical trial for each product; $300,000 within 30 days after enrollment of the first human patient in the first Phase 3 clinical trial for each product; and $800,000 within 60 days after having a NDA or a BLA approved by the FDA or a MAA approved by the EMA in Europe, or its equivalent based on the country in which it is accepted for each product; and · Milestone payments of $50,000 due 30 days after enrollment of the first veterinary patient in the first trial for each product and $300,000 due 60 days after having a BLA, a NDA or a MAA or its equivalent approved based on the country in which it is accepted for each veterinary product.
The Third Addendum also requires us to make future royalty and milestone payments as follows: · Two percent royalty on all gross sales received by us or our affiliates; · Ten percent royalty on gross revenues received by us or our affiliates from a sublicense or right to use the patents or the licenses granted by us or our affiliates; · Milestone payments of $100,000 within 30 days after enrollment of the first human patient in the first clinical trial for each product; $300,000 within 30 days after enrollment of the first human patient in the first Phase 3 clinical trial for each product; and $800,000 within 60 days after having a NDA or a BLA approved by the FDA or a MAA approved by the EMA in Europe, or its equivalent based on the country in which it is accepted for each product; and · Milestone payments of $50,000 due 30 days after enrollment of the first veterinary patient in the first trial for each product and $300,000 due 60 days after having a BLA, a NDA or a MAA or its equivalent approved based on the country in which it is accepted for each veterinary product.
The Third Addendum requires us to make the following payments for the purchased assets; these payments were timely made in full under the payment deadlines set forth in the Third Addendum: · A $60,000 payment due under the SG Austria APA; · A payment of Stamp Duty estimated to be $10,000-17,000 to the Singapore Government; · $500,000 to be used to pay off the existing debt of Bio Blue Bird; and · $1,000,000 to SG Austria. 38 Pursuant to the Third Addendum, we agreed to and have entered a manufacturing agreement with SG Austria for the manufacture of the pancreatic cancer clinical trial product to treat LAPC.
The Third Addendum requires us to make the following payments for the purchased assets; these payments were timely made in full under the payment deadlines set forth in the Third Addendum: · A $60,000 payment due under the SG Austria APA; · A payment of Stamp Duty estimated to be $10,000-17,000 to the Singapore Government; · $500,000 to be used to pay off the existing debt of Bio Blue Bird; and · $1,000,000 to SG Austria. 10 Pursuant to the Third Addendum, we agreed to and have entered a manufacturing agreement with SG Austria for the manufacture of the pancreatic cancer clinical trial product to treat LAPC.
The restructuring resulted in us focusing all of our efforts developing a novel, effective and safe way to treat cancer and diabetes. In January 2015, we changed our name from Nuvilex, Inc. to PharmaCyte Biotech, Inc. to reflect the nature of our current business. Our corporate headquarters are located at 3960 Howard Hughes Parkway, Suite 500, Las Vegas, Nevada 89169.
The restructuring resulted in us focusing our efforts developing a novel, effective and safe way to treat cancer and diabetes. In January 2015, we changed our name from Nuvilex, Inc. to PharmaCyte Biotech, Inc. to reflect the nature of our current business. Our corporate headquarters are located at 3960 Howard Hughes Parkway, Suite 500, Las Vegas, Nevada 89169.
All costs for encapsulated cell products will be subject to an annual increase equal to the published rate of inflation in the country of manufacture of the vials. 39 The Diabetes Licensing Agreement requires us to make future royalty and milestone payments as follows: · Ten percent royalty of gross sales of all products we sell; · Twenty percent royalty of the amount received by us from a sub-licensee on its gross sales; and · Milestone payments of $100,000 within 30 days of beginning the first pre-clinical experiments using the encapsulated cells; · $500,000 within 30 days after enrollment of the first human patient in the first clinical trial; $800,000 within 30 days after enrollment of the first human patient in the first Phase 3 clinical trial and; · $1,000,000 within 90 days after having a NDA or a BLA approved by the FDA or a MAA approved by the EMA in Europe, or its equivalent based on the country in which it is accepted for each product.
All costs for encapsulated cell products will be subject to an annual increase equal to the published rate of inflation in the country of manufacture of the vials. 11 The Diabetes Licensing Agreement requires us to make future royalty and milestone payments as follows: · Ten percent royalty of gross sales of all products we sell; · Twenty percent royalty of the amount received by us from a sub-licensee on its gross sales; and · Milestone payments of $100,000 within 30 days of beginning the first pre-clinical experiments using the encapsulated cells; · $500,000 within 30 days after enrollment of the first human patient in the first clinical trial; $800,000 within 30 days after enrollment of the first human patient in the first Phase 3 clinical trial and; · $1,000,000 within 90 days after having a NDA or a BLA approved by the FDA or a MAA approved by the EMA in Europe, or its equivalent based on the country in which it is accepted for each product.
An additional, more ‌finely detailed, analysis of the integration site of the cytochrome P450 2B1 gene from the augmented HEK293 cell clone that is used in our CypCaps™ was found to be intact. In this new study, we were able to confirm the previously determined structure of the integrated transgene sequence using more data points.
An additional, more detailed analysis of the integration site of the cytochrome P450 2B1 gene from the augmented HEK293 cell clone that is used in our CypCaps™ was found to be intact. In this new study, we were able to confirm the previously determined structure of the integrated transgene sequence using more data points.
For more information, see Item 1A. “Risk Factors.” U.S. Government Regulation The FDA is the main regulatory body that controls pharmaceuticals and biologics in the U.S. Its regulatory authority is based in the FDCA and the Public Health Service Act. Pharmaceutical products and biologics are also subject to other federal, state and local statutes and regulations.
For more information, see Item 1A. “Risk Factors.” 15 U.S. Government Regulation The FDA is the main regulatory body that controls pharmaceuticals and biologics in the U.S. Its regulatory authority is based in the FDCA and the Public Health Service Act. Pharmaceutical products and biologics are also subject to other federal, state and local statutes and regulations.
A payor’s decision to provide coverage for a drug product does not imply that an adequate reimbursement rate will be approved. Adequate third-party reimbursement may not be available to enable us to maintain price levels sufficient to realize an appropriate return on our investment in product development. Different pricing and reimbursement schemes exist in other countries.
A payor’s decision to provide coverage for a drug product does not imply that an adequate reimbursement rate will be approved. Adequate third-party reimbursement may not be available to enable us to maintain price levels sufficient to realize an appropriate return on our investment in product development. 23 Different pricing and reimbursement schemes exist in other countries.
Internationally, clinical trials are generally required to be conducted in accordance with GCP standards, applicable regulatory requirements of each jurisdiction and the medical ethics principles that have their origin in the Declaration of Helsinki. 30 Orphan Drug Status In accordance with laws and regulations pertaining to regulatory agencies, a sponsor may request that the regulatory agencies designate a drug or biologic intended to treat a “Rare Disease or Condition” as an “Orphan Drug.” For example, in the U.S., a “Rare Disease or Condition” is defined as one which affects less than 200,000 people in the U.S., or which affects more than 200,000 people but for which the cost of developing and making available the product is not expected to be recovered from sales of the product in the U.S.
Internationally, clinical trials are generally required to be conducted in accordance with GCP standards, applicable regulatory requirements of each jurisdiction and the medical ethics principles that have their origin in the Declaration of Helsinki. 20 Orphan Drug Status In accordance with laws and regulations pertaining to regulatory agencies, a sponsor may request that the regulatory agencies designate a drug or biologic intended to treat a “Rare Disease or Condition” as an “Orphan Drug.” For example, in the U.S., a “Rare Disease or Condition” is defined as one which affects less than 200,000 people in the U.S., or which affects more than 200,000 people but for which the cost of developing and making available the product is not expected to be recovered from sales of the product in the U.S.
“History of the Business.” 41 Sources and Availability of Raw Materials The entire encapsulation process relating to the encapsulation of the cells for the oncology and diabetes-based therapies we are developing is to be carried out by Austrianova. Austrianova is the sole source of our product candidates.
“History of the Business.” Sources and Availability of Raw Materials The entire encapsulation process relating to the encapsulation of the cells for the oncology and diabetes-based therapies we are developing is to be carried out by Austrianova. Austrianova is the sole source of our product candidates.
We believe there will be no therapy comparable to our Cell-in-a-Box ® plus low dose of ifosfamide combination therapy when it is used in these patients. We face intense competition in the field of treating pancreatic cancer.
We believe there will be no therapy comparable to our Cell-in-a-Box ® plus low dose of ifosfamide combination therapy when it is used in these patients. 8 We face intense competition in the field of treating pancreatic cancer.
In this circumstance, the EMA ensures that the opinion of the CHMP is given within 150 days. 32 Healthcare Reform The United States and many foreign jurisdictions have enacted or proposed legislative and regulatory changes affecting the healthcare system.
In this circumstance, the EMA ensures that the opinion of the CHMP is given within 150 days. Healthcare Reform The United States and many foreign jurisdictions have enacted or proposed legislative and regulatory changes affecting the healthcare system.
Imports of Schedule I and II controlled substances for commercial purposes are generally restricted to substances not already available from domestic supplier or where there is not adequate competition among domestic suppliers.
Imports of Schedule I and II controlled substances for commercial purposes are generally restricted to substances not already available from a domestic supplier or where there is not adequate competition among domestic suppliers.
Information contained in our website is not a part of, nor incorporated by reference into, this Report or our other filings with the SEC, and should not be relied upon. 43
Information contained in our website is not a part of, nor incorporated by reference into, this Report or our other filings with the SEC, and should not be relied upon.
The BPCIA bars the FDA from approving biosimilar applications for 12 years after an innovator biological product receives initial marketing approval. 29 Depending upon the timing, duration and specifics of the FDA approval of the use of our product candidates, some of our U.S. patents, if granted, may be eligible for limited patent term extension under the Drug Price Competition and Patent Term Restoration Act of 1984 (“Hatch-Waxman Act”).
The BPCIA bars the FDA from approving biosimilar applications for 12 years after an innovator biological product receives initial marketing approval. 19 Depending upon the timing, duration and specifics of the FDA approval of the use of our product candidates, some of our U.S. patents, if granted, may be eligible for limited patent term extension under the Drug Price Competition and Patent Term Restoration Act of 1984 (“Hatch-Waxman Act”).
ITEM 1. BUSINESS. Product Candidates We are a biotechnology company focused on developing cellular therapies for cancer, diabetes, and malignant ascites based upon a proprietary cellulose-based live cell encapsulation technology known as “Cell-in-a-Box ®. .” The Cell-in-a-Box ® technology is intended to be used as a platform upon which therapies for several types of cancer, including LAPC, will be developed.
ITEM 1. BUSINESS. We are a biotechnology company focused on developing cellular therapies for cancer, diabetes, and malignant ascites based upon a proprietary cellulose-based live cell encapsulation technology known as “Cell-in-a-Box®.” The Cell-in-a-Box® technology is intended to be used as a platform upon which therapies for several types of cancer, including LAPC, will be developed.
The analysis confirmed that the cytochrome P450 2B1 and the surrounding sequence has remained stable with no changes detected at the DNA level. · Biocompatibility Studies . We have been involved with 10 biocompatibility studies requested by the FDA, 8 of which have been completed successfully. The remaining studies are underway or about to start.
The analysis confirmed that the cytochrome P450 2B1 and the surrounding sequence has remained stable with no changes detected at the DNA level. · Biocompatibility Studies . We have been involved with 10 biocompatibility studies requested by the FDA, eight of which have been completed successfully. The remaining studies are underway or about to start.
After approval, some types of changes to the approved product, such as adding new indications and additional labeling claims, are subject to further testing requirements and FDA review and approval. 28 Post Approval Regulations After regulatory approval of a drug or biologic is obtained, a company is required to comply with certain post-approval requirements.
After approval, some types of changes to the approved product, such as adding new indications and additional labeling claims, are subject to further testing requirements and FDA review and approval. 18 Post Approval Regulations After regulatory approval of a drug or biologic is obtained, a company is required to comply with certain post-approval requirements.
In May 2018, the Company entered into a series of binding term sheet amendments (“Binding Term Sheet Amendments”). The Binding Term Sheet Amendments provide that our obligation to make milestone payments to Austrianova is eliminated in their entirety under the: (i) Cannabis License Agreement; and (ii) the Diabetes License Agreement, as amended.
In May 2018, we entered into a series of binding term sheet amendments (“Binding Term Sheet Amendments”). The Binding Term Sheet Amendments provide that our obligation to make milestone payments to Austrianova is eliminated in their entirety under the: (i) Cannabis License Agreement; and (ii) the Diabetes License Agreement, as amended.
Each protocol involving testing on U.S. patients and subsequent protocol amendments must be submitted to the FDA as part of the IND. 26 The product candidates in our pipeline are at various stages of preclinical development.
Each protocol involving testing on U.S. patients and subsequent protocol amendments must be submitted to the FDA as part of the IND. 16 The product candidates in our pipeline are at various stages of preclinical development.
For example: · Cancerous diseases may be treated by placing encapsulated drug-converting cells that convert a chemotherapy prodrug near the cancerous tumor; · Confinement and maintenance of therapeutic cells that activate a chemotherapy prodrug may be placed at the site of implantation in a blood vessel near the cancerous tumor results in “targeted chemotherapy”; · Increased efficacy of a chemotherapy prodrug may allow for lower doses of the prodrug to be given to a patient, significantly reducing or even eliminating side effects from the chemotherapy; · Encapsulating genetically modified live cells has the potential for the treatment of systemic diseases of various types, including diabetes; · Multi-layered trade secret protection and marketing exclusivity for our technology exists and is being expanded; · Cell-in-a-Box ® capsules can prevent immune system attack of functional cells inside them without the need for immunosuppressive drug therapy; and · Promising data with the Cell-in-a-Box ® technology and the cells used with our technology from animal and initial human clinical trials. 18 Pancreatic cancer is increasing in most industrialized countries.
For example: · Cancerous diseases may be treated by placing encapsulated drug-converting cells that convert a chemotherapy prodrug near the cancerous tumor; · Confinement and maintenance of therapeutic cells that activate a chemotherapy prodrug may be placed at the site of implantation in a blood vessel near the cancerous tumor results in “targeted chemotherapy”; · Increased efficacy of a chemotherapy prodrug may allow for lower doses of the prodrug to be given to a patient, significantly reducing or even eliminating side effects from the chemotherapy; · Encapsulating genetically modified live cells has the potential for the treatment of systemic diseases of various types, including diabetes; · Multi-layered trade secret protection and marketing exclusivity for our technology exists and is being expanded; · Cell-in-a-Box ® capsules can prevent immune system attack of functional cells inside them without the need for immunosuppressive drug therapy; and · Promising data with the Cell-in-a-Box ® technology and the cells used with our technology from animal and initial human clinical trials.
The diabetes market is estimated in the tens of billions of dollars, and it continues to grow. 19 The field of diabetes cell therapy development is very competitive. There are numerous companies developing cell-based therapies for diabetes.
The diabetes market is estimated in the tens of billions of dollars, and it continues to grow. 9 The field of diabetes cell therapy development is very competitive. There are numerous companies developing cell-based therapies for diabetes.
In a laboratory setting, this proprietary live cell encapsulation technology has been shown to create a micro-environment in which encapsulated cells survive and flourish. They are protected from environmental challenges, such as the sheer forces associated with bioreactors and passage through catheters and needles, etc., which we believe enables greater growth and production.
In a laboratory setting, this proprietary live cell encapsulation technology has been shown to create a micro-environment in which encapsulated cells survive and flourish. They are protected from environmental challenges, such as the sheer forces associated with bioreactors and passage through catheters and needles, which we believe enables greater cell growth and production of the active molecules.
The result of this analysis of the sequence data confirmed that the genes are intact. 7 · Confirmation of the Exact Sequence of the Cytochrome P450 2B1 Gene Insert .
The result of this analysis of the sequence data confirmed that the genes are intact. 3 · Confirmation of the Exact Sequence of the Cytochrome P450 2B1 Gene Insert .
We have long-lived assets, other than financial instruments, located in the following geographical areas: FY 2022 FY 2021 United States: $ 5,129,308 $ 5,128,992 All foreign countries, in total: $ 0 $ 0 We operate globally and are attempting to develop products in multiple countries.
We have long-lived assets, other than financial instruments, located in the following geographical areas: FY 2023 FY 2022 United States: $ 5,129,308 $ 5,129,308 All foreign countries, in total: $ 0 $ 0 We operate globally and are attempting to develop products in multiple countries.
Under the Cannabis Licensing Agreement, the Upfront Payment must be paid in full by no later than June 30, 2015. The parties amended the Cannabis Licensing Agreement twice pursuant to which the balance of the Upfront Payment is to be paid by June 30, 2016. We have paid the Upfront Payment of $2,000,000 in full.
Under the Cannabis Licensing Agreement, the Upfront Payment must be paid in full by no later than June 30, 2015. The parties amended the Cannabis Licensing Agreement twice pursuant to which the balance of the Upfront Payment is to be paid by June 30, 2016.
The capsules are largely composed of cellulose (cotton) and are bio inert. We are developing therapies for pancreatic and other solid cancerous tumors by using genetically engineered live human cells that we believe are capable of converting a cancer prodrug into its cancer-killing form.
The capsules are largely composed of cellulose (cotton) and are bioinert. We have been developing therapies for pancreatic and other solid cancerous tumors by using genetically engineered live human cells that we believe are capable of converting a cancer prodrug into its cancer-killing form.
These cells, named “Melligen,” were tested by UTS in mice and shown to produce insulin in direct proportion to the amount of glucose in their surroundings. In those studies, when Melligen cells were transplanted into immunosuppressed diabetic mice, the blood glucose levels of the mice became normal.
These cells, named “Melligen,” were tested by UTS in mice and shown to produce insulin in direct proportion to the amount of glucose in their surroundings. In those studies, when Melligen cells were transplanted into immunosuppressed diabetic mice, the blood glucose levels of the mice became normal. In other words, the Melligen cells reportedly reversed the diabetic condition.
The American Cancer Society estimates that in 2022 there will be 62,210 people in the U.S. diagnosed with pancreatic cancer. It also estimates 48,830 patients with pancreatic cancer will die in 2022. Pancreatic cancer accounts for about 3% of all cancers in the U.S. and about 7% of all cancer deaths.
Pancreatic cancer is increasing in most industrialized countries. The American Cancer Society estimates that in 2022 there will be 62,210 people in the U.S. diagnosed with pancreatic cancer. It also estimates 48,830 patients with pancreatic cancer will die in 2022. Pancreatic cancer accounts for about 3% of all cancers in the U.S. and about 7% of all cancer deaths.
In addition, products tested for their safety and effectiveness in treating serious or life-threatening illnesses and that provide meaningful therapeutic benefit over existing treatments may be eligible for accelerated approval and may be approved on the basis of adequate and well-controlled clinical trials establishing that the drug product has an effect on a surrogate endpoint that is reasonably likely to predict clinical benefit, or on a clinical endpoint that can be measured earlier than irreversible morbidity or mortality, or IMM, that is reasonably likely to predict an effect on irreversible morbidity or mortality or other clinical benefit, taking into account the severity, rarity or prevalence of the condition and the availability or lack of alternative treatments.
Most products that are eligible for fast-track designation are also likely to be considered appropriate to receive a priority review. 21 In addition, products tested for their safety and effectiveness in treating serious or life-threatening illnesses and that provide meaningful therapeutic benefit over existing treatments may be eligible for accelerated approval and may be approved on the basis of adequate and well-controlled clinical trials establishing that the drug product has an effect on a surrogate endpoint that is reasonably likely to predict clinical benefit, or on a clinical endpoint that can be measured earlier than irreversible morbidity or mortality, or IMM, that is reasonably likely to predict an effect on irreversible morbidity or mortality or other clinical benefit, taking into account the severity, rarity or prevalence of the condition and the availability or lack of alternative treatments.
The federal Physician Payments Sunshine Act under the Affordable Care Act and its implementing regulations also require that certain manufacturers of drugs, devices, biologics and medical supplies for which payment is available under Medicare, Medicaid or the Children’s Health Insurance Program, with certain exceptions, to report information related to certain payments or other transfers of value made or distributed to physicians, certain other health care professionals, and teaching hospitals, or to entities or individuals at the request of, or designated on behalf of, the physicians, health care professionals, and teaching hospitals.
Guidance on implementation and compliance practices are often updated or otherwise revised. 25 The federal Physician Payments Sunshine Act under the Affordable Care Act and its implementing regulations also require that certain manufacturers of drugs, devices, biologics and medical supplies for which payment is available under Medicare, Medicaid or the Children’s Health Insurance Program, with certain exceptions, to report information related to certain payments or other transfers of value made or distributed to physicians, certain other health care professionals, and teaching hospitals, or to entities or individuals at the request of, or designated on behalf of, the physicians, health care professionals, and teaching hospitals.
Attorney offices within the DOJ and state and local governments. 33 The federal Anti-Kickback Statute prohibits, among other things, knowingly and willfully offering, paying, soliciting or receiving any remuneration, directly or indirectly, to induce or in return for purchasing, leasing, ordering or arranging for the purchase, lease or order of any healthcare item or service reimbursable under Medicare, Medicaid or other federally financed healthcare program.
The federal Anti-Kickback Statute prohibits, among other things, knowingly and willfully offering, paying, soliciting or receiving any remuneration, directly or indirectly, to induce or in return for purchasing, leasing, ordering or arranging for the purchase, lease or order of any healthcare item or service reimbursable under Medicare, Medicaid or other federally financed healthcare program.
The Cannabis Licensing Agreement requires us to pay Austrianova, pursuant to a manufacturing agreement to be entered between the parties, a one-time manufacturing setup fee in the amount of $800,000, of which 50% is required to be paid on the signing of a manufacturing agreement for a product and 50% is required to be paid three months later.
We have paid the Upfront Payment of $2,000,000 in full. 12 The Cannabis Licensing Agreement requires us to pay Austrianova, pursuant to a manufacturing agreement to be entered between the parties, a one-time manufacturing setup fee in the amount of $800,000, of which 50% is required to be paid on the signing of a manufacturing agreement for a product and 50% is required to be paid three months later.
In other words, the Melligen cells reportedly reversed the diabetic condition. 16 In December 2014, we acquired from Austrianova an exclusive, worldwide license to use the Cell-in-a-Box ® technology and trademark in combination with genetically modified non-stem cell lines which are designed to activate cannabinoid prodrug molecules for development of therapies for diseases and their related symptoms using of the Cell-in-a-Box ® technology and trademark (“Cannabis Licensing Agreement”).
In December 2014, we acquired from Austrianova an exclusive, worldwide license to use the Cell-in-a-Box® technology and trademark in combination with genetically modified non-stem cell lines which are designed to activate cannabinoid prodrug molecules for development of therapies for diseases and their related symptoms using of the Cell-in-a-Box® technology and trademark (“Cannabis Licensing Agreement”).
When thawed, the cells are recovered with approximately 85% viability. We are unaware of any other cell encapsulation material that is capable of protecting their encapsulated cells to this degree. The implications of this property of the Cell-in-a-Box ® technology are obvious - long-term storage of encapsulated cells and shipment of encapsulated cells over long distances.
We are unaware of any other cell encapsulation material that is capable of protecting their encapsulated cells to this degree. The implications of this property of the Cell-in-a-Box ® technology are obvious – long-term storage of encapsulated cells and shipment of encapsulated cells over long distances.
The current generation of our product candidate is referred to as “CypCaps™.” The Cell-in-a-Box ® encapsulation technology potentially enables genetically engineered live human cells to be used to produce various biologically -active molecules. The technology is intended to result in the formation of pinhead -sized cellulose-based porous capsules in which genetically modified live human cells can be encapsulated and maintained.
The Cell-in-a-Box® encapsulation technology potentially enables genetically engineered live human cells to be used as a means to produce various biologically active molecules. The technology is intended to result in the formation of pinhead-sized cellulose-based porous capsules in which genetically modified live human cells can be encapsulated and maintained.
A SPA is not binding if new circumstances arise, and there is no guarantee that a study will ultimately be adequate to support an approval even if the study is subject to a SPA. Having a SPA does not guarantee that a product candidate will receive FDA approval.
A SPA is not binding if new circumstances arise, and there is no guarantee that a study will ultimately be adequate to support an approval even if the study is subject to a SPA.
All costs for encapsulated cell products, the manufacturing setup fee and the manufacturing production fee will be subject to annual increases, in accordance with the inflation rate in the country in which the encapsulated cell products are manufactured. 40 The Cannabis Licensing Agreement requires us to make future royalty and milestone payments as follows: · Ten percent royalty of the gross sale of all products sold by us; · Twenty percent royalty of the amount received by us from a sublicense on its gross sales; and · Milestone payments of $100,000 within 30 days of beginning the first pre-clinical experiments using the encapsulated cells; $500,000 within 30 days after enrollment of the first human patient in the first clinical trial; $800,000 within 30 days after enrollment of the first human patient in the first Phase 3 clinical trial; and $1,000,000 within 90 days after having a NDA or a BLA approved by the FDA or a MAA approved by the EMA or its equivalent based on the country in which it is accepted for each product.
The Cannabis Licensing Agreement requires us to make future royalty and milestone payments as follows: · Ten percent royalty of the gross sale of all products sold by us; · Twenty percent royalty of the amount received by us from a sublicense on its gross sales; and · Milestone payments of $100,000 within 30 days of beginning the first pre-clinical experiments using the encapsulated cells; $500,000 within 30 days after enrollment of the first human patient in the first clinical trial; $800,000 within 30 days after enrollment of the first human patient in the first Phase 3 clinical trial; and $1,000,000 within 90 days after having a NDA or a BLA approved by the FDA or a MAA approved by the EMA or its equivalent based on the country in which it is accepted for each product.
Austrianova is responsible for acquiring all of the necessary raw materials used in this process, including the cellulose sulfate necessary for encapsulating the live cells. Austrianova from time to time has experienced significant supply chain delays, some of which may be related to COVID-19. We believe Austrinova may also be experiencing liquidity issues.
Austrianova is responsible for acquiring all of the necessary raw materials used in this process, including the cellulose sulfate necessary for encapsulating the live cells, a process proprietary to Austrianova. Austrianova from time to time has experienced significant supply chain delays, and we believe Austrinova may also be experiencing liquidity issues as well.
As a condition of approval, the FDA may require a sponsor of a drug receiving accelerated approval to perform post-marketing studies to verify and describe the predicted effect on IMM or other clinical endpoint, and the drug may be subject to accelerated withdrawal procedures. 31 Moreover, under the provisions of the Food and Drug Administration Safety and Innovation Act, or FDASIA, passed in July 2012, a sponsor can request designation of a product candidate as a “breakthrough therapy.” A breakthrough therapy is defined as a drug that is intended, alone or in combination with one or more other drugs, to treat a serious or life-threatening disease or condition, and preliminary clinical evidence indicates that the drug may demonstrate substantial improvement over existing therapies on one or more clinically significant endpoints, such as substantial treatment effects observed early in clinical development.
Moreover, under the provisions of the Food and Drug Administration Safety and Innovation Act, or FDASIA, passed in July 2012, a sponsor can request designation of a product candidate as a “breakthrough therapy.” A breakthrough therapy is defined as a drug that is intended, alone or in combination with one or more other drugs, to treat a serious or life-threatening disease or condition, and preliminary clinical evidence indicates that the drug may demonstrate substantial improvement over existing therapies on one or more clinically significant endpoints, such as substantial treatment effects observed early in clinical development.
Furthermore, European data protection authorities may interpret the (UK) GDPR and national or local laws differently, and they may impose additional requirements, which add to the complexity of processing personal data in or from the EEA or United Kingdom. Guidance on implementation and compliance practices are often updated or otherwise revised.
Furthermore, European data protection authorities may interpret the (UK) GDPR and national or local laws differently, and they may impose additional requirements, which add to the complexity of processing personal data in or from the EEA or United Kingdom.
To the extent any of our products are sold in a foreign country, we may be subject to similar foreign laws and regulations, which may include, for instance, applicable post-marketing requirements, including safety surveillance, anti-fraud and abuse laws, and implementation of corporate compliance programs and reporting of payments or transfers of value to healthcare professionals. 35 Controlled Substances Regulation Our product candidates involving Cannabis contain controlled substances, as defined in the federal Controlled Substances Act of 1970 (“CSA”).
To the extent any of our products are sold in a foreign country, we may be subject to similar foreign laws and regulations, which may include, for instance, applicable post-marketing requirements, including safety surveillance, anti-fraud and abuse laws, and implementation of corporate compliance programs and reporting of payments or transfers of value to healthcare professionals.
We assembled a scientific and regulatory team of experts to address the FDA requests. That team has been working diligently to complete the items requested by the FDA.
We assembled a scientific and regulatory team of experts to address the FDA requests. That team has been working diligently to complete the items requested by the FDA. We are in the latter stages of conducting the studies and providing the information requested by the FDA.
Bavarian Nordic/GSF and Bio Blue Bird amended the Bavarian Nordic License Agreement in December 2006 (“First Amendment to Bavarian Nordic/GSF License Agreement”) to reflect that: (i) the license granted was exclusive; (ii) a royalty rate increased from 3% to 4.5%; (iii) Bio Blue Bird assumed the patent prosecution expenses for the existing patents; and (iv) to make clear that the license will survive as a license granted by one of the licensors if the other licensor rejects performance under the Bavarian Nordic License Agreement due to any actions or declarations of insolvency.
Bavarian Nordic/GSF and Bio Blue Bird amended the Bavarian Nordic License Agreement in December 2006 (“First Amendment to Bavarian Nordic/GSF License Agreement”) to reflect that: (i) the license granted was exclusive; (ii) a royalty rate increased from 3% to 4.5%; (iii) Bio Blue Bird assumed the patent prosecution expenses for the existing patents; and (iv) to make clear that the license will survive as a license granted by one of the licensors if the other licensor rejects performance under the Bavarian Nordic License Agreement due to any actions or declarations of insolvency. 5 In June 2013, we acquired from Austrianova an exclusive, worldwide license to use the Cell-in-a-Box® technology and trademark for the development of a therapy for Type 1 and insulin-dependent Type 2 diabetes (“Diabetes Licensing Agreement”).
On October 30, 2020, the FDA sent us a letter setting forth the reasons for the clinical hold and providing specific guidance on what we must do to have the clinical hold lifted.
On October 1, 2020, we received notice from the FDA that it had placed our IND on clinical hold. On October 30, 2020, the FDA sent us a letter setting forth the reasons for the clinical hold and providing specific guidance on what we must do to have the clinical hold lifted.
The Binding Term Sheet Amendments further provide that: (i) the royalty payments on gross sales as specified in the SG Austria APA, the Cannabis License Agreement and the Diabetes License Agreement are changed to 4%; and (ii) the royalty payments on amounts received by us from sublicensees on sublicensees’ gross sales under the same agreements are changed to 20% of the amount received us from our sublicensees, provided, however , that in the event the amounts received by us from sublicensees is 4% or less of sublicensees’ gross sales, Austrianova will receive 50% of what we receive (up to 2%) and then additionally 20% of any amount we receive over that 4%.
Additionally, for a period of one year from August 30, 2017 one of the Binding Term Sheet Amendments provides that Austrianova will not solicit, negotiate or entertain any inquiry regarding the potential acquisition of the Cell-in-a-Box® and its Associated Technologies. 6 The Binding Term Sheet Amendments further provide that: (i) the royalty payments on gross sales as specified in the SG Austria APA, the Cannabis License Agreement and the Diabetes License Agreement are changed to 4%; and (ii) the royalty payments on amounts received by us from sublicensees on sublicensees’ gross sales under the same agreements are changed to 20% of the amount received us from our sublicensees, provided, however, that in the event the amounts received by us from sublicensees is 4% or less of sublicensees’ gross sales, Austrianova will receive 50% of what we receive (up to 2%) and then additionally 20% of any amount we receive over that 4%.
Thus, accelerated approval has been used extensively in the development and approval of drugs for treatment of a variety of cancers in which the goal of therapy is generally to improve survival or decrease morbidity and the duration of the typical disease course requires lengthy and sometimes large trials to demonstrate a clinical or survival benefit.
Thus, accelerated approval has been used extensively in the development and approval of drugs for treatment of a variety of cancers in which the goal of therapy is generally to improve survival or decrease morbidity and the duration of the typical disease course requires lengthy and sometimes large trials to demonstrate a clinical or survival benefit. 22 The accelerated approval pathway is usually contingent on a sponsor’s agreement to conduct, in a diligent manner, additional post-approval confirmatory studies to verify and describe the drug’s clinical benefit.
The federal Civil Monetary Penalties Law imposes penalties against any person or entity that, among other things, is determined to have presented or caused to be presented a claim to a federal health program that the person knows or should know is for an item or service that was not provided as claimed or is false or fraudulent.
The federal Civil Monetary Penalties Law imposes penalties against any person or entity that, among other things, is determined to have presented or caused to be presented a claim to a federal health program that the person knows or should know is for an item or service that was not provided as claimed or is false or fraudulent. 24 The federal False Claims Act prohibits any person from knowingly presenting, or causing to be presented, a false claim for payment to the federal government or knowingly making, using or causing to be made or used a false record or statement material to a false or fraudulent claim to the federal government.
Other encapsulating materials degrade in the human body over time, leaving the encapsulated cells open to immune system attack. Damage to surrounding tissues has also been reported to occur over time when other types of encapsulation materials begin to degrade. The cells encapsulated using the Cell-in-a-Box ® technology can be frozen for extended periods of time.
Damage to surrounding tissues has also been reported to occur over time when other types of encapsulation materials begin to degrade. The cells encapsulated using the Cell-in-a-Box ® technology can be frozen for extended periods of time. When thawed, the cells are recovered with approximately 85% viability.
These treatments can be painful, ineffective and expensive. There is currently no available treatment that delays the production and accumulation of malignant ascites fluid, and we know of no competitors in this area.
These treatments can be painful, ineffective and expensive. There is currently no available treatment that delays the production and accumulation of malignant ascites fluid, and we know of no competitors in this area. Material Agreements Third Addendum to the SG Austria APA In June 2013, we and SG Austria entered the Third Addendum and the Clarification Agreement.
Austrianova is providing additional detailed confidential information on the manufacturing process, including information on the improvements and advancements made to our product candidate for pancreatic cancer since the last clinical trials were conducted with respect to reproducibility and safety. However, Austrianova has not changed the overall physical characteristics of CypCaps™ between the 1 st and 2 nd generations.
Austrianova is providing additional detailed confidential information on the manufacturing process, including information on the improvements and advancements made to our product candidate for pancreatic cancer since the last clinical trials were conducted with respect to reproducibility and safety.
(“SG Austria”) to acquire certain assets from SG Austria as well as an exclusive, worldwide license to use, with a right to sublicense, the Cell-in-a-Box ® technology and trademark for the development of therapies for cancer (“SG Austria APA”). In June 2013, we and SG Austria entered a Third Addendum to the SG Austria APA (“Third Addendum”).
Commencing in May 2011, we entered into a series of agreements and amendments with SG Austria Pte. Ltd. (“SG Austria”) to acquire certain assets from SG Austria as well as an exclusive, worldwide license to use, with a right to sublicense, the Cell-in-a-Box® technology and trademark for the development of therapies for cancer (“SG Austria APA”).
In this way, we believe that when a cancer prodrug is administered to a patient with a particular type of cancer that may be affected by the prodrug, the killing of the patient’s cancerous tumor may be optimized.
We encapsulate those cells using the Cell-in-a-Box® technology and place those capsules in the body as close as possible to the tumor. In this way, we believe that when a cancer prodrug is administered to a patient with a particular type of cancer that may be affected by the prodrug, the killing of the patient’s cancerous tumor may be optimized.
In addition, state laws govern the privacy and security of health information in specified circumstances, many of which differ from each other in significant ways and may not have the same effect - thus complicating compliance efforts. 34 We may be subject to other state and federal privacy laws, including laws that prohibit unfair privacy and security practices and deceptive statements about privacy and security, laws that place specific requirements on certain types of activities, such as data security and texting, and laws requiring holders of personal information to maintain safeguards and to take certain actions in response to a data breach.
We may be subject to other state and federal privacy laws, including laws that prohibit unfair privacy and security practices and deceptive statements about privacy and security, laws that place specific requirements on certain types of activities, such as data security and texting, and laws requiring holders of personal information to maintain safeguards and to take certain actions in response to a data breach.
The DEA may seek civil penalties, refuse to renew necessary registrations, or initiate proceedings to revoke those registrations. In certain circumstances, violations could lead to criminal prosecution.
The DEA may seek civil penalties, refuse to renew necessary registrations, or initiate proceedings to revoke those registrations.
We also paid SG Austria $1,572,193 in exchange for a 14.5% equity interest of SG Austria. The transaction required SG Austria to return to us the 66,667 shares of our common stock held by SG Austria and for us to return to SG Austria the 67 shares of common stock of Austrianova we held.
The transaction required SG Austria to return to us the 66,667 shares of our common stock held by SG Austria and for us to return to SG Austria the 67 shares of common stock of Austrianova we held.
Although cannabis is legal in the State of North Carolina, we had to obtain a Schedule I license for our research with our research university partner (University of Northern Colorado) that relies on federal grants.
The DEA categorizes controlled substances into one of five schedules—Schedule I, II, III, IV or V—with varying qualifications for listing in each schedule. Although cannabis is legal in the State of North Carolina, we had to obtain a Schedule I license for our research with our research university partner (University of Northern Colorado) that relies on federal grants.
The Third Addendum materially changed the transaction contemplated by the SG Austria APA. Under the Third Addendum, we acquired 100% of the equity interests in Bio Blue Bird and received a 14.5% equity interest in SG Austria. We paid: (i) $500,000 to retire all outstanding debt of Bio Blue Bird; and (ii) $1.0 million to SG Austria.
In June 2013, we and SG Austria entered a Third Addendum to the SG Austria APA (“Third Addendum”). The Third Addendum materially changed the transaction contemplated by the SG Austria APA. Under the Third Addendum, we acquired 100% of the equity interests in Bio Blue Bird and received a 14.5% equity interest in SG Austria.
The process of obtaining regulatory marketing approvals and the subsequent compliance with appropriate federal, state, local and foreign statutes and regulations will require the expenditure of substantial time and financial resources and may not be successful. 25 Regulatory approval, when obtained, may be limited in scope which may significantly limit the uses for which a product may be placed into the market.
The process of obtaining regulatory marketing approvals and the subsequent compliance with appropriate federal, state, local and foreign statutes and regulations will require the expenditure of substantial time and financial resources and may not be successful.
The specific security requirements vary by the type of business activity and the schedule and quantity of controlled substances handled. The most stringent requirements apply to manufacturers of Schedule I and Schedule II substances.
The DEA inspects all manufacturing facilities to review security, recordkeeping, reporting and handling prior to issuing a controlled substance registration. The specific security requirements vary by the type of business activity and the schedule and quantity of controlled substances handled. The most stringent requirements apply to manufacturers of Schedule I and Schedule II substances.
In some cases, Schedule III non-narcotic substances may be subject to the import/export permit requirement, if necessary, to ensure that the U.S. complies with its obligations under international drug control treaties. 36 For drugs manufactured in the U.S., the DEA establishes annually an aggregate quota for substances within Schedules I and II that may be manufactured or produced in the U.S. based on the DEA’s estimate of the quantity needed to meet legitimate medical, scientific research and industrial needs.
For drugs manufactured in the U.S., the DEA establishes annually an aggregate quota for substances within Schedules I and II that may be manufactured or produced in the U.S. based on the DEA’s estimate of the quantity needed to meet legitimate medical, scientific research and industrial needs.
Assuming successful completion of all required testing in accordance with all applicable regulatory requirements, detailed investigational product candidate information is submitted to the FDA in the form of an NDA or BLA to request regulatory approval for the product in the specified indication. 27 New Drug Applications and Biologic Licensing Applications To obtain approval to market a drug or biologic in the U.S., a marketing application must be submitted to the FDA that provides data establishing the safety and effectiveness of the product candidate for the proposed indication.
New Drug Applications and Biologic Licensing Applications To obtain approval to market a drug or biologic in the U.S., a marketing application must be submitted to the FDA that provides data establishing the safety and effectiveness of the product candidate for the proposed indication.
“History of the Business.” Melligen Cell License Agreement The Melligen Cell License Agreement requires that we pay royalty, milestone and patent costs to UTS as follows: · Six percent of gross exploitation revenue on product sales; · Twenty-five percent of gross revenues if the product is sublicensed by us; · Milestone payments of AU$ 50,000 at the successful conclusion of a preclinical study, AU$ 100,000 at the successful conclusion of a Phase 1 clinical trial, AU$ 450,000 at the successful conclusion of a Phase 2 clinical trial, and AU$ 3,000,000 at the successful conclusion of a Phase 3 clinical trial; and · Patent costs of fifteen percent of the costs paid by UTS to prosecute and maintain patents related to the licensed intellectual property.
“History of the Business.” Melligen Cell License Agreement The Melligen Cell License Agreement requires that we pay royalty, milestone and patent costs to UTS as follows: · Six percent of gross exploitation revenue on product sales; · Twenty-five percent of gross revenues if the product is sublicensed by us; · Milestone payments of AU$ 50,000 at the successful conclusion of a preclinical study, AU$ 100,000 at the successful conclusion of a Phase 1 clinical trial, AU$ 450,000 at the successful conclusion of a Phase 2 clinical trial, and AU$ 3,000,000 at the successful conclusion of a Phase 3 clinical trial; and · Patent costs of fifteen percent of the costs paid by UTS to prosecute and maintain patents related to the licensed intellectual property. 13 In the event of a default under the Melligen Cell License Agreement, the non-defaulting party may immediately terminate the agreement by notice in writing to the defaulting party if: (i) the default has continued for not less than 14 days or occurred more than 14 days earlier and has not been remedied; (ii) the non-defaulting party serves upon the defaulting party notice in writing requiring the default to be remedied within 30 days of such notice, or such greater number of days as the non-defaulting party may in its discretion allow, and (iii) the defaulting party has failed to comply with the notice referred to in (ii) above.
We are also developing a way to delay the production and accumulation of malignant ascites that results from many types of abdominal cancerous tumors. Our potential therapy for malignant ascites involves using the same encapsulated cells we employ for pancreatic cancer but placing the encapsulated cells in the peritoneal cavity of a patient and administering ifosfamide intravenously.
Our potential therapy for malignant ascites involves using the same encapsulated cells we employ for pancreatic cancer but placing the encapsulated cells in the peritoneal cavity of a patient and administering ifosfamide intravenously. 1 We have also been developing a potential therapy for Type 1 diabetes and insulin-dependent Type 2 diabetes.
The CSA and its implementing regulations establish a “closed system” of regulations for controlled substances. The CSA imposes registration, security, recordkeeping and reporting, storage, manufacturing, distribution, importation and other requirements under the oversight of the U.S. Drug Enforcement Administration (“DEA”). The DEA is the federal agency responsible for regulating controlled substances.
Controlled Substances Regulation Our product candidates involving Cannabis contain controlled substances, as defined in the federal Controlled Substances Act of 1970 (“CSA”). The CSA and its implementing regulations establish a “closed system” of regulations for controlled substances. The CSA imposes registration, security, recordkeeping and reporting, storage, manufacturing, distribution, importation and other requirements under the oversight of the U.S.
We are a biotechnology company focused on developing and preparing to commercialize cellular therapies for cancer, diabetes, and malignant ascites using our live cell encapsulation technology. This resulted from entering into the following agreements. Commencing in May 2011, we entered into a series of agreements and amendments with SG Austria Pte. Ltd.
On January 6, 2015, we changed our name from “Nuvilex, Inc.” to “PharmaCyte Biotech, Inc.” to reflect the nature of our business. We are a biotechnology company focused on developing and preparing to commercialize cellular therapies for cancer, diabetes, and malignant ascites using our live cell encapsulation technology. This resulted from entering into the following agreements.
Implanting these encapsulated cells in the body is designed to have them function as a bio-artificial pancreas for purposes of insulin production.
Our product candidate for the treatment of diabetes consists of encapsulated genetically modified insulin-producing cells. The encapsulation will be done using the Cell-in-a-Box® technology. Implanting these encapsulated cells in the body is designed to have them function as a bio-artificial pancreas for purposes of insulin production.
Market Opportunity and Competitive Landscape The three areas we are developing for live cell encapsulation-based therapies are cancer, diabetes and malignant ascites. The Cell-in-a-Box ® capsules are comprised of cotton’s natural component - cellulose. Other materials used by competitors include alginate, collagen, chitosan, gelatin and agarose. Alginate appears to be the most widely used of these.
The Cell-in-a-Box ® capsules are comprised of cotton’s natural component – cellulose. Other materials used by competitors include alginate, collagen, chitosan, gelatin and agarose. Alginate appears to be the most widely used of these. We believe the inherent strength and durability of our cellulose-based capsules provides us with advantages over the competition.
We believe the inherent strength and durability of our cellulose-based capsules provides us with advantages over the competition. They do so with no evidence of rupture, damage, degradation, fibrous overgrowth or immune system response. The cells within the capsules also remained alive and functioning during these studies.
They do so with no evidence of rupture, damage, degradation, fibrous overgrowth or immune system response. The cells within the capsules also remained alive and functioning during these studies. Other encapsulating materials degrade in the human body over time, leaving the encapsulated cells open to immune system attack.
It requires those individuals or entities that manufacture, import, export, distribute, research, or dispense controlled substances to comply with the regulatory requirements to prevent the diversion of controlled substances to illicit channels of commerce. The DEA categorizes controlled substances into one of five schedules—Schedule I, II, III, IV or V—with varying qualifications for listing in each schedule.
Drug Enforcement Administration (“DEA”). The DEA is the federal agency responsible for regulating controlled substances. It requires those individuals or entities that manufacture, import, export, distribute, research, or dispense controlled substances to comply with the regulatory requirements to prevent the diversion of controlled substances to illicit channels of commerce.
The study has two phases: (i) a pilot study with 2 pigs; and (ii) a 90-pig study. ‌The first phase has commenced. We believe this study should complement the positive data already available from the previous human clinical trials showing the safety of CypCaps™ implantation in human patients. On July 21, 2022, the first phase of the pig study commenced.
We believe this study should complement the positive data already available from the previous human clinical trials showing the safety of CypCaps™ implantation in human patients.
However, until the FDA allows us to commence our clinical trial in LAPC and we are able to validate our Cell-in-a-Box ® encapsulation technology in a clinical trial, we are not spending any further resources developing our Cannabis Program. 1 Cancer Therapy Targeted Chemotherapy Our therapy for cancer involves encapsulating genetically engineered human cells that convert an inactive chemotherapy drug into its active or “cancer-killing” form.
However, until the FDA allows us to commence our clinical trial in LAPC and we are able to validate our Cell-in-a-Box® encapsulation technology in a clinical trial, we are not spending any further resources developing our Cannabis Program. Finally, we have been developing a potential therapy for Type 1 diabetes and insulin-dependent Type 2 diabetes.
However, certain coincident activities are permitted without obtaining a separate DEA registration, such as distribution of controlled substances by the manufacturer that produces them. The DEA inspects all manufacturing facilities to review security, recordkeeping, reporting and handling prior to issuing a controlled substance registration.
For example, separate registrations are required for importation and manufacturing activities, and each registration authorizes which schedules of controlled substances the registrant may handle. However, certain coincident activities are permitted without obtaining a separate DEA registration, such as distribution of controlled substances by the manufacturer that produces them.
We have also been developing a potential therapy for Type 1 diabetes and insulin-dependent Type 2 diabetes. Our product candidate for the treatment of diabetes consists of encapsulated genetically modified insulin-producing cells. The encapsulation will be done using the Cell-in-a-Box ® technology.
Our product candidate for the treatment of diabetes consists of encapsulated genetically modified insulin-producing cells. The encapsulation will be done using the Cell-in-a-Box® technology. Implanting these encapsulated cells in the body is designed to have them function as a bio-artificial pancreas for purposes of insulin production.
We are supporting Austrianova financially with this work. · Additional Documentation Requested by the FDA . We are in the process of updating our IND submission documentation, including our discussion on immunological aspects of our treatment for LAPC. · Pig Study . We have commenced a study in pigs to address biocompatibility and long-term implantation and dispersion of CypCaps™.
However, Austrianova has not changed the overall physical characteristics of CypCaps™ between the 1st and 2nd generations. · Additional Documentation Requested by the FDA . We are in the process of updating our IND submission documentation, including our discussion on immunological aspects of our treatment for LAPC. · Pig Study .
The law also preserves the period of orphan marketing exclusivity for the full seven years such that this period only begins after DEA scheduling. This contrasts with the previous situation whereby the orphan “clock” began to tick upon FDA approval, even though the product could not be marketed until DEA scheduling was complete.
The law also preserves the period of orphan marketing exclusivity for the full seven years such that this period only begins after DEA scheduling.
We believe it may also be experiencing liquidity issues. If Austrianova is unwilling or unable to perform such manufacturing for us, we are not aware of any replacement manufacturer for the Cell-in-a-Box ® technology.
If Austrianova is unwilling or unable to perform such manufacturing for us, we may not be able to locate a replacement manufacturer for our product candidates.
Those cells have been grown by Eurofins to populate a MCB for our future clinical trials. See also “—Manufacturing” in this Item 1. “Business.” Employees As of April 30, 2022, we had 4 full-time employees and 23 consultants who devote substantial time to us. The consultants are physicians, scientists, regulatory experts, clinical operation experts and cGMP experts.
Human Capital As of April 30, 2023, we had two full-time employees and several consultants who devote substantial time to us. The consultants are physicians, scientists, regulatory experts, clinical operation experts and cGMP experts.
To date we believe we have made significant progress in fulfilling the FDA requests needed to lift the clinical hold. 6 The following provides a detailed summary of our activities to have the clinical hold lifted: · Additional Regulatory Expertise Added to IND Team .
We have completed the pilot study of two pigs and are evaluating the preliminary data before it commences the larger study of 90 pigs. The following provides a detailed summary of our activities to have the clinical hold lifted: · Additional Regulatory Expertise Added to IND Team .

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeWe may expend our limited resources on programs that do not yield a successful product candidate and fail to capitalize on product candidates or indications that may be more profitable or for which there is a greater likelihood of success. · We currently have no commercial revenue and may never become profitable. · If we are unable to obtain, or if there are delays in obtaining, required approval from the applicable regulatory agencies, we will not be able to commercialize our product candidates and our ability to generate revenue will be materially impaired. · If allowed to proceed with our clinical development program, we intend to conduct clinical trials for certain of our product candidates at sites outside of the U.S., and the U.S. regulatory agencies may not accept data from trials conducted in such locations. · Promising results in previous clinical trials of our encapsulated live cell and ifosfamide combination for advanced pancreatic cancer may not be replicated in future clinical trials which could result in development delays or a failure to obtain marketing approval. · We may not be able to protect our intellectual property rights throughout the world. · We rely and expect to continue to rely heavily on third parties to conduct our preclinical studies, plan to rely on third parties to conduct our and clinical trials, assuming they are allowed to proceed, and those third parties may not perform satisfactorily, including failing to meet deadlines for the completion of such studies and trials. · Disruptions in the global economy and supply chains may have a material adverse effect on our business, financial condition and results of operations and the financial condition of the third parties on which we rely, including Austrianova. · Our business could be impacted as a result of actions by activist shareholders, including as a result of a potential proxy contest for the election of directors at our annual meeting. · You may experience future dilution as a result of future equity offerings. · If we fail to comply with the continuing listing standards on Nasdaq, our securities could be delisted which could limit investors’ ability to make transactions in our securities and subject us to additional trading restrictions. · We may experience volatility in our stock price, which may adversely affect the trading price of our common stock. · A large number of shares may be issued and subsequently sold upon the exercise of existing options and warrants. · We are a “smaller reporting company” under the SEC’s disclosure rules and have elected to comply with the reduced disclosure requirements applicable to smaller reporting companies. · As a non-accelerated filer, we are not required to comply with the auditor attestation requirements of the Sarbanes-Oxley Act. 45 Risks Related to Our Financial Position, FDA Clinical Hold, Need for Additional Capital and Overall Business We are a biotechnology company with limited resources, a limited operating history, and no products approved for clinical trials or commercial sale, which may make it difficult to evaluate our current business and predict our future success and viability.
Biggest changeWe may expend our limited resources on programs that do not yield a successful product candidate and fail to capitalize on product candidates or indications that may be more profitable or for which there is a greater likelihood of success. · We currently have no commercial revenue and may never become profitable. · If we are unable to obtain, or if there are delays in obtaining, required approval from the applicable regulatory agencies, we will not be able to commercialize our product candidates and our ability to generate revenue will be materially impaired. · If allowed to proceed with our clinical development program, we intend to conduct clinical trials for certain of our product candidates at sites outside of the U.S., and the U.S. regulatory agencies may not accept data from trials conducted in such locations. · Promising results in previous clinical trials of our encapsulated live cell and ifosfamide combination for advanced pancreatic cancer may not be replicated in future clinical trials which could result in development delays or a failure to obtain marketing approval. · We may not be able to protect our intellectual property rights throughout the world. · We rely and expect to continue to rely heavily on third parties to conduct our preclinical studies, plan to rely on third parties to conduct our and clinical trials, assuming they are allowed to proceed, and those third parties may not perform satisfactorily, including failing to meet deadlines for the completion of such studies and trials. · Disruptions in the global economy and supply chains may have a material adverse effect on our business, financial condition and results of operations and the financial condition of the third parties on which we rely, including Austrianova. · You may experience future dilution as a result of future equity offerings. · If we fail to comply with the continuing listing standards on Nasdaq, our securities could be delisted which could limit investors’ ability to make transactions in our securities and subject us to additional trading restrictions. 30 · We may experience volatility in our stock price, which may adversely affect the trading price of our common stock. · A large number of shares may be issued and subsequently sold upon the exercise of existing options and warrants and the conversion of preferred shares. · We are a “smaller reporting company” under the SEC’s disclosure rules and have elected to comply with the reduced disclosure requirements applicable to smaller reporting companies. · As a non-accelerated filer, we are not required to comply with the auditor attestation requirements of the Sarbanes-Oxley Act.
Summary of Risks Associated with Our Business Our business is subject to numerous risks and uncertainties that you should consider before investing in our company. These risks are described more in more detail in the section titled “Risk Factors” in Item 1A of this Report.
Summary of Risks Associated with Our Business Our business is subject to numerous risks and uncertainties that you should consider before investing in our company. These risks are described in more detail in the section titled “Risk Factors” in Item 1A of this Report.
This process can vary substantially based upon a variety of factors, including the type, complexity and novelty of the product candidates involved. Failure to obtain marketing approval for a product candidate will prevent us from commercializing that product candidate. To date, we have not received approval to market any of our product candidates from regulatory agencies in any jurisdiction.
This process can vary substantially based upon a variety of factors, including the type, complexity and novelty of the product candidates involved. Failure to obtain marketing approval for a product candidate will prevent us from commercializing that product candidate. To date, we have not received approval to market any of our product candidates from regulatory agencies in any jurisdiction.
We have no experience in filing and supporting the applications necessary to gain marketing approvals and expect to rely on third-party contract research organizations to assist us in this process.
We have no experience in filing and supporting the applications necessary to gain marketing approvals and expect to rely on third-party contract research organizations to assist us in this process.
Regulatory agencies have substantial discretion in the approval process and may refuse to accept any application or may decide that our data are insufficient for approval and require additional preclinical, clinical or other studies. In addition, varying interpretations of the data obtained from preclinical and clinical testing could delay, limit or prevent marketing approval of a product candidate.
Regulatory agencies have substantial discretion in the approval process and may refuse to accept any application or may decide that our data are insufficient for approval and require additional preclinical, clinical or other studies. In addition, varying interpretations of the data obtained from preclinical and clinical testing could delay, limit or prevent marketing approval of a product candidate.
Changes in marketing approval policies during the development period, changes in or the enactment of additional statutes or regulations, or changes in regulatory review for each submitted product application, may also cause delays in or prevent the approval of an application.
Changes in marketing approval policies during the development period, changes in or the enactment of additional statutes or regulations, or changes in regulatory review for each submitted product application, may also cause delays in or prevent the approval of an application.
New cancer drugs frequently are indicated only for patient populations that have not responded to an existing therapy or have relapsed after such therapies.
New cancer drugs frequently are indicated only for patient populations that have not responded to an existing therapy or have relapsed after such therapies.
Although the FDA may accept data from clinical trials conducted outside the U.S., acceptance of this data is subject to certain conditions imposed by the regulatory agencies outside of the U.S. For example, the clinical trial must be well designed and conducted and performed by qualified investigators in accordance with ethical principles.
Although the FDA may accept data from clinical trials conducted outside the U.S., acceptance of this data is subject to certain conditions imposed by the regulatory agencies outside of the U.S. For example, the clinical trial must be well designed and conducted and performed by qualified investigators in accordance with ethical principles.
The trial population must also adequately represent the population in the country in which the clinical trial is being conducted. The data must be applicable to the U.S. population and medical practice in the U.S. in ways that the FDA deems clinically meaningful.
The trial population must also adequately represent the population in the country in which the clinical trial is being conducted. The data must be applicable to the U.S. population and medical practice in the U.S. in ways that the FDA deems clinically meaningful.
If the FDA does not accept the data from any of our clinical trials that we determine to conduct outside the U.S., it would likely result in the need for additional trials that would be costly and time-consuming and delay or permanently halt the development of our product candidate.
If the FDA does not accept the data from any of our clinical trials that we determine to conduct outside the U.S., it would likely result in the need for additional trials that would be costly and time-consuming and delay or permanently halt the development of our product candidate.
In addition, the conduct of clinical trials outside the U.S. could have a significant impact on us.
In addition, the conduct of clinical trials outside the U.S. could have a significant impact on us.
If they decide to terminate their relationship with us, we may not be successful in the development of our product candidates. We rely on Prof. Walter H. Günzburg and Dr. Brian Salmons, officers of Austrianova, for the development of our product candidates.
We rely on Prof. Günzburg and Dr. Salmons for the development of our product candidates. If they decide to terminate their relationship with us, we may not be successful in the development of our product candidates. We rely on Prof. Walter H. Günzburg and Dr. Brian Salmons, officers of Austrianova, for the development of our product candidates.
Our ability to generate revenue from our product candidates also depends on numerous additional factors, including our ability to: · successfully complete development activities, including the remaining preclinical studies and planned clinical trials for our product candidates; · complete and submit NDAs or BLAs to the FDA and MAAs to the EMA, and obtain regulatory approval for indications for which there is a commercial market; · complete and submit applications to, and obtain regulatory approval from, other foreign regulatory authorities; · manufacture any approved products in commercial quantities and on commercially reasonable terms; · develop a commercial organization, or find suitable partners, to market, sell and distribute approved products in the markets in which we have retained commercialization rights; · achieve acceptance among patients, clinicians and advocacy groups for any products we develop; · obtain coverage and adequate reimbursement from third parties, including government payors; and · set a commercially viable price for any products for which we may receive approval. 51 We are unable to predict the timing or amount of increased expenses, or when or if we will be able to achieve or maintain profitability.
Our ability to generate revenue from our product candidates also depends on numerous additional factors, including our ability to: · successfully complete development activities, including the remaining preclinical studies and planned clinical trials for our product candidates; · complete and submit NDAs or BLAs to the FDA and MAAs to the EMA, and obtain regulatory approval for indications for which there is a commercial market; · complete and submit applications to, and obtain regulatory approval from, other foreign regulatory authorities; · manufacture any approved products in commercial quantities and on commercially reasonable terms; · develop a commercial organization, or find suitable partners, to market, sell and distribute approved products in the markets in which we have retained commercialization rights; · achieve acceptance among patients, clinicians and advocacy groups for any products we develop; · obtain coverage and adequate reimbursement from third parties, including government payors; and · set a commercially viable price for any products for which we may receive approval. 35 We are unable to predict the timing or amount of increased expenses, or when or if we will be able to achieve or maintain profitability.
State and foreign laws also govern the privacy and security of health information in some circumstances, many of which differ from each other in significant ways and often are not preempted by HIPAA, thus complicating compliance efforts. 62 Efforts to ensure that our business arrangements with third parties will comply with applicable healthcare laws and regulations will involve substantial costs.
State and foreign laws also govern the privacy and security of health information in some circumstances, many of which differ from each other in significant ways and often are not preempted by HIPAA, thus complicating compliance efforts. Efforts to ensure that our business arrangements with third parties will comply with applicable healthcare laws and regulations will involve substantial costs.
Also, later discovery of previously unknown adverse events or other problems with our product candidates, manufacturers or manufacturing processes, or failure to comply with regulatory requirements, may yield various results, including: · Restrictions on such products, manufacturers or manufacturing processes; · Restrictions on the labeling or marketing of a product; · Restrictions on product distribution or use; · Requirements to conduct post-marketing studies or clinical trials; · Warning or untitled letters or Form 483s; · Withdrawal of the products from the market; 61 · Refusal to approve pending applications or supplements to approved applications that we submit; · Recall of products; · Fines, restitution or disgorgement of profits or revenues; · Suspension or withdrawal of marketing approvals; · Refusal to permit the import or export of our product candidates; · Product seizure; or · Injunctions or the imposition of civil or criminal penalties Non-compliance with European requirements regarding safety monitoring or pharmacovigilance, and with requirements related to the development of products for the pediatric population, can also result in significant financial penalties.
Also, later discovery of previously unknown adverse events or other problems with our product candidates, manufacturers or manufacturing processes, or failure to comply with regulatory requirements, may yield various results, including: · Restrictions on such products, manufacturers or manufacturing processes; · Restrictions on the labeling or marketing of a product; · Restrictions on product distribution or use; · Requirements to conduct post-marketing studies or clinical trials; · Warning or untitled letters or Form 483s; · Withdrawal of the products from the market; · Refusal to approve pending applications or supplements to approved applications that we submit; · Recall of products; · Fines, restitution or disgorgement of profits or revenues; · Suspension or withdrawal of marketing approvals; · Refusal to permit the import or export of our product candidates; · Product seizure; or · Injunctions or the imposition of civil or criminal penalties 46 Non-compliance with European requirements regarding safety monitoring or pharmacovigilance, and with requirements related to the development of products for the pediatric population, can also result in significant financial penalties.
In addition, even if one or more of our product candidates receives Breakthrough Therapy designation or other similar designations, a regulatory agency may later decide that such product candidates no longer meet the conditions for the designation. 60 Failure to obtain marketing approval in international jurisdictions would prevent our product candidates from being marketed abroad.
In addition, even if one or more of our product candidates receives Breakthrough Therapy designation or other similar designations, a regulatory agency may later decide that such product candidates no longer meet the conditions for the designation. Failure to obtain marketing approval in international jurisdictions would prevent our product candidates from being marketed abroad.
If the clinical hold is not lifted or if the lifting takes an extended period of time, our business and prospects will likely suffer material adverse consequences. 46 We contract with Austrianova for the manufacture of our product candidates for preclinical studies and clinical trials, if allowed to proceed, and expect to continue to do so for commercialization.
If the clinical hold is not lifted or if the lifting takes an extended period of time, our business and prospects will likely suffer material adverse consequences. We contract with Austrianova for the manufacture of our product candidates for preclinical studies and clinical trials, if allowed to proceed, and expect to continue to do so for commercialization.
Furthermore, because of the substantial amount of discovery required in intellectual property litigation, there is a risk that some of our confidential information could be compromised by disclosure. If we breach any of our license or collaboration agreements, it could compromise our development and commercialization efforts for our product candidates.
Furthermore, because of the substantial amount of discovery required in intellectual property litigation, there is a risk that some of our confidential information could be compromised by disclosure. 58 If we breach any of our license or collaboration agreements, it could compromise our development and commercialization efforts for our product candidates.
In support of our IND application to commence a Phase 2b clinical trial in LAPC using genetically -engineered live human cells encapsulated using our Cell-in-a-Box ® technology in combination with ifosfamide we are relying on a Phase 1/2 clinical trial and a Phase 2 clinical trial previously conducted using the same technology in combination with ifosfamide between 1998 and 1999 and between 1999 and 2000, respectively.
In support of our IND application to commence a clinical trial in LAPC using genetically engineered live human cells encapsulated using our Cell-in-a-Box ® technology in combination with ifosfamide we are relying on a Phase 1/2 clinical trial and a clinical trial previously conducted using the same technology in combination with ifosfamide between 1998 and 1999 and between 1999 and 2000, respectively.
We have not previously submitted an NDA, a BLA or a MAA to regulatory agencies for any of our product candidates. 56 Any inability to successfully complete preclinical and clinical development could result in additional costs to us and impair our ability to generate revenues from product sales, regulatory and commercialization milestones and royalties.
We have not previously submitted an NDA, a BLA or a MAA to regulatory agencies for any of our product candidates. Any inability to successfully complete preclinical and clinical development could result in additional costs to us and impair our ability to generate revenues from product sales, regulatory and commercialization milestones and royalties.
If any of our trade secrets were to be disclosed to or independently developed by a competitor, our competitive position would be harmed. 73 The majority of the technology that we license and use for our product candidates is not protected by patents, but rather is based upon confidential know-how and trade secrets.
If any of our trade secrets were to be disclosed to or independently developed by a competitor, our competitive position would be harmed. The majority of the technology that we license and use for our product candidates is not protected by patents, but rather is based upon confidential know-how and trade secrets.
The European exclusivity period can be reduced to six years if a drug no longer meets the criteria for Orphan Drug designation or if the drug is sufficiently profitable so that market exclusivity is no longer justified. We have been granted Orphan Drug designation for our pancreatic cancer therapy in the U.S. and European Union.
The European exclusivity period can be reduced to six years if a drug no longer meets the criteria for Orphan Drug designation or if the drug is sufficiently profitable so that market exclusivity is no longer justified. 44 We have been granted Orphan Drug designation for our pancreatic cancer therapy in the U.S. and European Union.
Such a delay may be costly, and our investment could be lost if we cannot retain or reposition our sales and marketing personnel. 65 In addition, we may not be able to hire or retain a sales force in the U.S. that is sufficient in size or has adequate expertise in the medical markets that we plan to target.
Such a delay may be costly, and our investment could be lost if we cannot retain or reposition our sales and marketing personnel. In addition, we may not be able to hire or retain a sales force in the U.S. that is sufficient in size or has adequate expertise in the medical markets that we plan to target.
If we experience delays in obtaining approval or if we fail to obtain approval of our product candidates, the commercial prospects for our product candidates may be harmed and our ability to generate revenues will be materially impaired. 54 Development of a biologic involves a lengthy and expensive process with an uncertain outcome.
If we experience delays in obtaining approval or if we fail to obtain approval of our product candidates, the commercial prospects for our product candidates may be harmed and our ability to generate revenues will be materially impaired. Development of a biologic involves a lengthy and expensive process with an uncertain outcome.
If we are required to enter alternative arrangements because of any such termination, the introduction of our product candidates to market could be delayed. Our reliance on these third parties for R&D activities will reduce our control over these activities but will not relieve us of our responsibilities.
If we are required to enter alternative arrangements because of any such termination, the introduction of our product candidates to market could be delayed. 51 Our reliance on these third parties for R&D activities will reduce our control over these activities but will not relieve us of our responsibilities.
For instance, Austrianova from time to time has experienced significant supply chain delays, some of which may be related to COVID-19, and we believe it may be experiencing liquidity issues. 66 We rely on numerous consultants for a substantial portion of our R&D related to our product candidates.
For instance, Austrianova from time to time has experienced significant supply chain delays, some of which may be related to COVID-19, and we believe it may be experiencing liquidity issues. We rely on numerous consultants for a substantial portion of our R&D related to our product candidates.
If any disruptions occur, they could have a material adverse effect on our business. We are subject to legal, regulatory, financial and other risks with our operations outside the U.S. We operate globally and are attempting to develop products in multiple countries.
If any disruptions occur, they could have a material adverse effect on our business. 70 We are subject to legal, regulatory, financial and other risks with our operations outside the U.S. We operate globally and are attempting to develop products in multiple countries.
Market prices for our shares of common stock will be influenced by several factors, including, but not limited to: · The issuance of new shares pursuant to future offering; · Changes in interest rates; · New services or significant contracts and acquisitions; · Variations in quarterly operating results; · Change in financial estimates by securities analysts; · The depth and liquidity of the market for the shares; · Investor perceptions of us and of investments based in the countries where we do business or conduct research; and · General economic and other national and international conditions. 78 You may experience future dilution as a result of future equity offerings.
Market prices for our shares of common stock will be influenced by several factors, including, but not limited to: · The issuance of new shares pursuant to future offering; · Changes in interest rates; · New services or significant contracts and acquisitions; · Variations in quarterly operating results; · Change in financial estimates by securities analysts; · The depth and liquidity of the market for the shares; · Investor perceptions of us and of investments based in the countries where we do business or conduct research; and · General economic and other national and international conditions. 64 You may experience future dilution as a result of future equity offerings.
We may not be able to file for marketing approvals and may not receive necessary approvals to commercialize our product candidates in any market. Any product candidate for which we obtain marketing approval will be subject to extensive post-marketing regulatory requirements and could be subject to post-marketing restrictions or withdrawal from the market.
We may not be able to file for marketing approvals and may not receive necessary approvals to commercialize our product candidates in any market. 45 Any product candidate for which we obtain marketing approval will be subject to extensive post-marketing regulatory requirements and could be subject to post-marketing restrictions or withdrawal from the market.
Our determination to first conduct a Phase 2b clinical trial before conducting a pivotal Phase 3 clinical trial will likely result in additional costs to us and resultant delays in the regulatory review process and any future commercialization and marketing if regulatory approval is obtained.
Our determination to first conduct a clinical trial before conducting a pivotal Phase 3 clinical trial will likely result in additional costs to us and resultant delays in the regulatory review process and any future commercialization and marketing if regulatory approval is obtained.
The expansion of our operations may lead to significant costs and may divert our management and business development resources. Any inability to manage growth could delay the execution of our business plans or disrupt our operations. 82 Unfavorable global economic conditions could adversely affect our business, financial condition or results of operations.
The expansion of our operations may lead to significant costs and may divert our management and business development resources. Any inability to manage growth could delay the execution of our business plans or disrupt our operations. Unfavorable global economic conditions could adversely affect our business, financial condition or results of operations.
Results in the previous Phase 1/2 and Phase 2 clinical trials of the encapsulated live cell and ifosfamide combination product may not be predictive of similar results in future clinical trials such as our planned Phase 2b clinical trial in LAPC, if allowed to proceed.
Results in the previous Phase 1/2 and Phase 2 clinical trials of the encapsulated live cell and ifosfamide combination product may not be predictive of similar results in future clinical trials such as our planned clinical trial in LAPC, if allowed to proceed.
These established companies may have a competitive advantage over us due to their size, cash resources and greater clinical development and commercialization capabilities. In addition, companies that perceive us to be a competitor may be unwilling to assign or license rights to us.
These established companies may have a competitive advantage over us due to their size, cash resources and greater clinical development and commercialization capabilities. 59 In addition, companies that perceive us to be a competitor may be unwilling to assign or license rights to us.
Many drugs that initially showed promise in clinical or earlier stage testing have later been found to cause undesirable or unexpected side effects that prevented further development of the drug. 63 Even if one of our product candidates receives marketing approval, it may fail to achieve the degree of market acceptance by physicians, patients, third party payors and others in the medical community necessary for commercial success and the market opportunity for the product candidate may be smaller than we anticipated.
Many drugs that initially showed promise in clinical or earlier stage testing have later been found to cause undesirable or unexpected side effects that prevented further development of the drug. 48 Even if one of our product candidates receives marketing approval, it may fail to achieve the degree of market acceptance by physicians, patients, third party payors and others in the medical community necessary for commercial success and the market opportunity for the product candidate may be smaller than we anticipated.
The loss of the services of our Chief Executive Officer and Chief Financial Officer or other key employees or consultants could severely impede the achievement of our R&D and commercialization of our product candidates and seriously harm our ability to successfully implement our business strategy.
The loss of the services of our Interim Chief Executive Officer and Chief Financial Officer or other key employees or consultants could severely impede the achievement of our R&D and commercialization of our product candidates and seriously harm our ability to successfully implement our business strategy.
Any of these factors could harm our operating results. Due to the significant resources required for the development of our programs, and depending on our ability to access capital, we must prioritize development of certain product candidates.
Any of these factors could harm our operating results. 34 Due to the significant resources required for the development of our programs, and depending on our ability to access capital, we must prioritize development of certain product candidates.
If we are unable to continue to attract and retain high quality personnel, our ability to pursue our growth strategy will be limited. Our ability to use our net operating loss carryforwards and certain other tax attributes may be limited.
If we are unable to continue to attract and retain high quality personnel, our ability to pursue our growth strategy will be limited. 69 Our ability to use our net operating loss carryforwards and certain other tax attributes may be limited.
Accordingly, in markets outside the U.S., the reimbursement for our products may be reduced compared with the U.S. and may be insufficient to generate commercially reasonable revenues and profits. 76 Moreover, increasing efforts by governmental and third-party payors, in the U.S. and abroad, to cap or reduce healthcare costs may cause such organizations to limit both coverage and level of reimbursement for new products approved and, thus, they may not cover or provide adequate payment for our product candidates.
Accordingly, in markets outside the U.S., the reimbursement for our products may be reduced compared with the U.S. and may be insufficient to generate commercially reasonable revenues and profits. 62 Moreover, increasing efforts by governmental and third-party payors, in the U.S. and abroad, to cap or reduce healthcare costs may cause such organizations to limit both coverage and level of reimbursement for new products approved and, thus, they may not cover or provide adequate payment for our product candidates.
Any of these challenges could delay initiation and completion of clinical trials, require bridging clinical trials or the repetition of one or more clinical trials, increase clinical trial costs, delay approval of our product candidate, impair commercialization efforts, increase our cost of goods, and have an adverse effect on our business, prospects, financial condition, results of operations and growth prospects. 68 Risks related to our Intellectual Property We may not be able to protect our intellectual property rights throughout the world.
Any of these challenges could delay initiation and completion of clinical trials, require bridging clinical trials or the repetition of one or more clinical trials, increase clinical trial costs, delay approval of our product candidate, impair commercialization efforts, increase our cost of goods, and have an adverse effect on our business, prospects, financial condition, results of operations and growth prospects. 54 Risks Related to our Intellectual Property We may not be able to protect our intellectual property rights throughout the world.
It is not known whether the FDA would be likely to reject the use of such clinical data due to the significant time that has elapsed since the earlier clinical trials were conducted or because the clinical trial material for our proposed Phase 2b clinical trial is different from that used in the earlier clinical trials because of cloning the cells used in the earlier trials and certain other modifications and improvements that have been made to the Cell-in-a-Box ® technology since the time of the earlier trials.
It is not known whether the FDA would be likely to reject the use of such clinical data due to the significant time that has elapsed since the earlier clinical trials were conducted or because the clinical trial material for our proposed clinical trial is different from that used in the earlier clinical trials because of cloning the cells used in the earlier trials and certain other modifications and improvements that have been made to the Cell-in-a-Box ® technology since the time of the earlier trials.
We may experience numerous unforeseen events during our clinical trials, if allowed to proceed, that could delay or prevent marketing approval of our product candidates, including: · Clinical trials of our product candidates may produce unfavorable or inconclusive results; · We may decide, or regulators may require us, to conduct additional clinical trials or abandon product development programs or candidates; · The number of patients required for clinical trials of our product candidates may be larger than we anticipate, patient enrollment in these clinical trials may be slower than we anticipate, or participants may drop out of these clinical trials at a higher rate than we anticipate; · Our third-party contractors, including those manufacturing our product candidates, components, or ingredients thereof or conducting clinical trials on our behalf, may fail to comply with regulatory requirements or meet their contractual obligations to us in a timely manner or at all; 57 · Regulators or IRBs may not authorize us or our investigators to commence a clinical trial or conduct a clinical trial at a prospective trial site; · We may experience delays in reaching or may fail to reach agreement on acceptable clinical trial contracts or clinical trial protocols with prospective trial sites; · Patients who enroll in a clinical trial may misrepresent their eligibility to do so or may otherwise not comply with the clinical trial protocol, resulting in the need to drop the patients from the clinical trial, increase the needed enrollment size for the clinical trial or extend the clinical trial’s duration; · We may have to suspend or terminate clinical trials of our product candidates for various reasons, including a finding that the participants are being exposed to unacceptable health risks, undesirable side effects or other unexpected characteristics of a product candidate; · Regulatory agencies or IRBs may require that we or our investigators suspend or terminate clinical research for various reasons, including noncompliance with regulatory requirements or their respective standards of conduct, a finding that the participants are being exposed to unacceptable health risks, undesirable side effects or other unexpected characteristics of the product candidate or findings of undesirable effects caused by a chemically or mechanistically similar drug or drug candidate; · Regulatory agencies may disagree with our clinical trial design or our interpretation of data from preclinical studies and clinical trials; · Regulatory agencies may fail to approve or subsequently find fault with the manufacturing processes or facilities of third-party manufacturers with which we enter agreements for clinical and commercial supplies; · The supply or quality of raw materials or manufactured product candidates or other materials necessary to conduct clinical trials of our product candidates may be insufficient, inadequate, delayed, or not available at an acceptable cost, or we may experience interruptions in supply; and · The approval policies or regulations of the regulatory agencies may significantly change in a manner rendering our clinical data insufficient to obtain marketing approval.
We may experience numerous unforeseen events during our clinical trials, if allowed to proceed, that could delay or prevent marketing approval of our product candidates, including: · Clinical trials of our product candidates may produce unfavorable or inconclusive results; · We may decide, or regulators may require us, to conduct additional clinical trials or abandon product development programs or candidates; · The number of patients required for clinical trials of our product candidates may be larger than we anticipate, patient enrollment in these clinical trials may be slower than we anticipate, or participants may drop out of these clinical trials at a higher rate than we anticipate; · Our third-party contractors, including those manufacturing our product candidates, components, or ingredients thereof or conducting clinical trials on our behalf, may fail to comply with regulatory requirements or meet their contractual obligations to us in a timely manner or at all; · Regulators or IRBs may not authorize us or our investigators to commence a clinical trial or conduct a clinical trial at a prospective trial site; · We may experience delays in reaching or may fail to reach agreement on acceptable clinical trial contracts or clinical trial protocols with prospective trial sites; · Patients who enroll in a clinical trial may misrepresent their eligibility to do so or may otherwise not comply with the clinical trial protocol, resulting in the need to drop the patients from the clinical trial, increase the needed enrollment size for the clinical trial or extend the clinical trial’s duration; · We may have to suspend or terminate clinical trials of our product candidates for various reasons, including a finding that the participants are being exposed to unacceptable health risks, undesirable side effects or other unexpected characteristics of a product candidate; · Regulatory agencies or IRBs may require that we or our investigators suspend or terminate clinical research for various reasons, including noncompliance with regulatory requirements or their respective standards of conduct, a finding that the participants are being exposed to unacceptable health risks, undesirable side effects or other unexpected characteristics of the product candidate or findings of undesirable effects caused by a chemically or mechanistically similar drug or drug candidate; · Regulatory agencies may disagree with our clinical trial design or our interpretation of data from preclinical studies and clinical trials; · Regulatory agencies may fail to approve or subsequently find fault with the manufacturing processes or facilities of third-party manufacturers with which we enter agreements for clinical and commercial supplies; · The supply or quality of raw materials or manufactured product candidates or other materials necessary to conduct clinical trials of our product candidates may be insufficient, inadequate, delayed, or not available at an acceptable cost, or we may experience interruptions in supply; and · The approval policies or regulations of the regulatory agencies may significantly change in a manner rendering our clinical data insufficient to obtain marketing approval. 42 Product development costs for us will increase if we experience delays in testing or pursuing marketing approvals.
Any such violations could include prohibitions on our ability to offer our products in one or more countries and could materially damage our reputation, our brand, our international expansion efforts, our ability to attract and retain employees and our business, prospects, operating results and financial condition. 77 Product liability lawsuits against us could cause us to incur substantial liabilities and to limit commercialization of any products that we may develop.
Any such violations could include prohibitions on our ability to offer our products in one or more countries and could materially damage our reputation, our brand, our international expansion efforts, our ability to attract and retain employees and our business, prospects, operating results and financial condition. 63 Product liability lawsuits against us could cause us to incur substantial liabilities and to limit commercialization of any products that we may develop.
Until such time, if ever, as the FDA lifts its clinical hold on our IND related to our planned Phase 2b clinical trial in LAPC, our Cell-in-a-Box ® encapsulation technology is validated in our planned Phase 2b clinical trial, and sufficient additional funding is available, we have halted spending on behalf of our development program with respect to cannabinoids.
Until such time, if ever, as the FDA lifts its clinical hold on our IND related to our planned clinical trial in LAPC, our Cell-in-a-Box ® encapsulation technology is validated in our planned clinical trial, and sufficient additional funding is available, we have halted spending on behalf of our development program with respect to cannabinoids.
On October 1, 2020, we received notice from the FDA that it had placed our IND for a planned Phase 2b clinical trial in LAPC on clinical hold. As part of the clinical hold process, the FDA has asked for additional information, tasks to be performed by us and new preclinical studies and assays.
On October 1, 2020, we received notice from the FDA that it had placed our IND for a planned clinical trial in LAPC on clinical hold. As part of the clinical hold process, the FDA has asked for additional information, tasks to be performed by us and new preclinical studies and assays.
Therefore, we are designing a Phase 2b clinical trial that, if successful, we believe will provide the information necessary to plan a Phase 3 pivotal trial.
Therefore, we are designing a clinical trial that, if successful, we believe will provide the information necessary to plan a Phase 3 pivotal trial.
The degree of market acceptance of our encapsulated live cell plus ifosfamide product candidate or any of our other product candidates, if approved for commercial sale, will depend on several factors, including: · The efficacy and safety of the product; · The potential advantages of the product compared to alternative treatments; · The prevalence and severity of any side effects; · The clinical indications for which the product is approved; · Whether the product is designated under physician treatment guidelines as a first-line therapy or as a second- or third-line therapy; · Limitations or warnings, including distribution or use restrictions, contained in the product’s approved labeling; · Our ability to offer the product for sale at competitive prices; · Our ability to establish and maintain pricing sufficient to realize a meaningful return on our investment; · The product’s convenience and ease of administration compared to alternative treatments; · The willingness of the target patient population to try, and of physicians to prescribe, the product; · The strength of sales, marketing and distribution support; · The approval of other new products for the same indications; · Changes in the standard of care for the targeted indications for the product; · The timing of market introduction of our approved products as well as competitive products and other therapies; · Availability and amount of reimbursement from government payors, managed care plans and other third-party payors; · Adverse publicity about the product or favorable publicity about competitive products; and · Potential product liability claims. 64 The potential market opportunities for our product candidates are difficult to estimate precisely.
The degree of market acceptance of our encapsulated live cell plus ifosfamide product candidate or any of our other product candidates, if approved for commercial sale, will depend on several factors, including: · The efficacy and safety of the product; · The potential advantages of the product compared to alternative treatments; · The prevalence and severity of any side effects; · The clinical indications for which the product is approved; · Whether the product is designated under physician treatment guidelines as a first-line therapy or as a second- or third-line therapy; · Limitations or warnings, including distribution or use restrictions, contained in the product’s approved labeling; · Our ability to offer the product for sale at competitive prices; · Our ability to establish and maintain pricing sufficient to realize a meaningful return on our investment; · The product’s convenience and ease of administration compared to alternative treatments; · The willingness of the target patient population to try, and of physicians to prescribe, the product; 49 · The strength of sales, marketing and distribution support; · The approval of other new products for the same indications; · Changes in the standard of care for the targeted indications for the product; · The timing of market introduction of our approved products as well as competitive products and other therapies; · Availability and amount of reimbursement from government payors, managed care plans and other third-party payors; · Adverse publicity about the product or favorable publicity about competitive products; and · Potential product liability claims.
We have limited resources, a limited operating history, no products approved for clinical trials or commercial sale and therefore have not produced any revenues. We have generated significant operating losses since our inception. Our net losses for the years ended April 30, 2022, and 2021 were approximately $4.2 million and $3.6 million, respectively.
We have limited resources, a limited operating history, no products approved for clinical trials or commercial sale and therefore have not produced any revenues. We have generated significant operating losses since our inception. Our net losses for the years ended April 30, 2023, and 2022 were approximately $4.3 million and $4.2 million, respectively.
The following examples are illustrative: · others may be able to make compositions that are the same as or like our product candidates, but that are not covered by the claims of any patents that we may own or exclusively license; · others may be able to make product that is like the product candidates we intend to commercialize that is not covered by any patents that we might own or exclusively license and have the right to enforce; · we, our licensors or any collaborators might not have been the first to make the inventions covered by issued patents or pending patent applications that we may own; · we, our licensors or any collaborators might not have been the first to file patent applications covering certain of our inventions; · others may independently develop similar or alternative technologies or duplicate any of our technologies without infringing our intellectual property rights; · it is possible that our pending patent applications will not lead to issued patents; · issued patents that we may own may not provide us with any competitive advantages, or may be held invalid or unenforceable because of legal challenges; · our competitors might conduct research and development activities in the U.S. and other countries that provide a safe harbor from patent infringement claims for certain research and development activities, as well as in countries where we do not have patent rights, and then use the information learned from such activities to develop competitive products for sale in our major commercial markets; and · we may not develop additional proprietary technologies that are patentable. 74 Additional Risks Related to Our Business Model and Operations Development of brand awareness is critical to our success.
The following examples are illustrative: · others may be able to make compositions that are the same as or like our product candidates, but that are not covered by the claims of any patents that we may own or exclusively license; · others may be able to make product that is like the product candidates we intend to commercialize that is not covered by any patents that we might own or exclusively license and have the right to enforce; · we, our licensors or any collaborators might not have been the first to make the inventions covered by issued patents or pending patent applications that we may own; · we, our licensors or any collaborators might not have been the first to file patent applications covering certain of our inventions; · others may independently develop similar or alternative technologies or duplicate any of our technologies without infringing our intellectual property rights; · it is possible that our pending patent applications will not lead to issued patents; · issued patents that we may own may not provide us with any competitive advantages, or may be held invalid or unenforceable because of legal challenges; · our competitors might conduct research and development activities in the U.S. and other countries that provide a safe harbor from patent infringement claims for certain research and development activities, as well as in countries where we do not have patent rights, and then use the information learned from such activities to develop competitive products for sale in our major commercial markets; and · we may not develop additional proprietary technologies that are patentable.
If any of the assumptions proves to be inaccurate, the actual markets for our product candidates could be smaller than our estimates of the potential market opportunities.
If any of the assumptions prove to be inaccurate, the actual markets for our product candidates could be smaller than our estimates of the potential market opportunities.
As of April 30, 2022, we had an accumulated deficit of approximately $112 million. Substantially all our losses have resulted from expenses incurred relating to our research and development programs and from general and administrative expenses and operating losses associated with our business. We expect to continue to incur significant expenses and operating losses for the foreseeable future.
As of April 30, 2023, we had an accumulated deficit of approximately $116 million. Substantially all our losses have resulted from expenses incurred relating to our research and development programs and from general and administrative expenses and operating losses associated with our business. We expect to continue to incur significant expenses and operating losses for the foreseeable future.
Marketing exclusivity for a product designated as an Orphan Drug may not effectively protect the product candidate from competition because different drugs can be approved for the same condition, and the same drug may be approved for a different condition that may be used offlabel for an orphan indication.
Marketing exclusivity for a product designated as an Orphan Drug may not effectively protect the product candidate from competition because different drugs can be approved for the same condition, and the same drug may be approved for a different condition that may be used off label for an orphan indication.
Our present and future capital requirements will be significant and will depend on many factors, including: · our ability to complete the studies requested by the FDA with respect to our IND filing; · whether the FDA lifts the clinical hold on our IND filing for LAPC; · the progress and results of our development efforts for our product candidates; · the costs, timing and outcome of regulatory review of our product candidates; · the costs and timing of preparing, filing and prosecuting patent applications, maintaining and enforcing our intellectual property rights and defending any intellectual property-related claims; · the effect of competing technological and market developments; · market acceptance of our product candidates; · the rate of progress in establishing coverage and reimbursement arrangements with domestic and international commercial third-party payors and government payors; · the extent to which we acquire or in-license other products and technologies; and · legal, accounting, insurance and other professional and business-related costs. 50 We may not be able to acquire additional funds on acceptable terms, or at all.
Our present and future capital requirements will be significant and will depend on many factors, including: · our ability to complete the studies requested by the FDA with respect to our IND filing; · whether the FDA lifts the clinical hold on our IND filing for LAPC; · the progress and results of our development efforts for our product candidates; · the costs, timing and outcome of regulatory review of our product candidates; · the costs and timing of preparing, filing and prosecuting patent applications, maintaining and enforcing our intellectual property rights and defending any intellectual property-related claims; · the effect of competing technological and market developments; · market acceptance of our product candidates; · the rate of progress in establishing coverage and reimbursement arrangements with domestic and international commercial third-party payors and government payors; · the extent to which we acquire or in-license other products and technologies; and · legal, accounting, insurance and other professional and business-related costs.
We may have experienced ownership changes in the past and could experience one or more ownership changes in the future, some of which are outside our control. Our net operating loss carryforwards may also be subject to limitation under state laws.
We experienced ownership changes in the past and could experience one or more ownership changes in the future, some of which are outside our control. Our net operating loss carryforwards are subject to limitation under state laws.
Under Sections 382 and 383 of the United States Internal Revenue Code of 1986, as amended, or the Code, and corresponding provisions of state law, if a corporation undergoes an “ownership change,” (generally defined as a greater than 50-percentage-point cumulative change (by value) in the equity ownership of certain stockholders over a rolling three-year period), the corporation’s ability to use its pre-change net operating loss carryforwards and other pre-change tax attributes to offset its post-change taxable income or taxes may be limited.
Under Sections 382 and 383 of the United States Internal Revenue Code of 1986, as amended, or the Code, and corresponding provisions of state law, if a corporation undergoes an “ownership change,” (generally defined as a greater than 50-percentage-point cumulative change (by value) in the equity ownership of certain stockholders over a rolling three-year period), the corporation’s ability to use its pre-change net operating loss carryforwards and other pre-change tax attributes to offset its post-change taxable income or taxes will be limited to approximately $19 million and $6 million for federal and state, respectively.
Our business could be adversely affected by the effects of other future health pandemics in regions where we or third parties on which we rely have significant business operations. 44 · If we are unable to successfully raise additional capital in addition to our recent completed public offering, our future clinical trials and product development could be limited, and our long-term viability may be threatened. · Due to the significant resources required for the development of our programs, and depending on our ability to access capital, we must prioritize development of certain product candidates.
Our business could be adversely affected by the effects of other future health pandemics in regions where we or third parties on which we rely have significant business operations. · If we are unable to successfully raise sufficient capital, our future clinical trials and product development could be limited, and our long-term viability may be threatened. · Due to the significant resources required for the development of our programs, and depending on our ability to access capital, we must prioritize development of certain product candidates.
Future collaborations we may enter may involve the following risks: · Collaborators may have significant discretion in determining the efforts and resources that they will apply to these collaborations; · Collaborators may not perform their obligations as expected; · Changes in the collaborators’ strategic focus or available funding, or external factors, such as an acquisition, may divert resources or create competing priorities; · Collaborators may delay discovery and preclinical development, provide insufficient funding for product development of targets selected by us, stop or abandon preclinical or clinical development of a product candidate or must repeat or conduct new preclinical and clinical development of a product candidate; · Collaborators could independently develop, or develop with third parties, products that compete directly or indirectly with our products or product candidates if the collaborators believe that competitive products are more likely to be successfully developed than ours; · Product candidates may be viewed by our collaborators as competitive with their own product candidates or products, which may cause collaborators to cease to devote resources to the development of our product candidates; · Disagreements with collaborators, including disagreements over proprietary rights, contract interpretation or the preferred course of development might cause delays or termination of the preclinical or clinical development or commercialization of product candidates.
If we fail to enter collaborations and do not have sufficient funds or expertise to undertake the necessary development activities, we may not be able to further develop our product candidates or continue to develop our product candidates and our business may be materially and adversely affected. 52 Future collaborations we may enter may involve the following risks: · Collaborators may have significant discretion in determining the efforts and resources that they will apply to these collaborations; · Collaborators may not perform their obligations as expected; · Changes in the collaborators’ strategic focus or available funding, or external factors, such as an acquisition, may divert resources or create competing priorities; · Collaborators may delay discovery and preclinical development, provide insufficient funding for product development of targets selected by us, stop or abandon preclinical or clinical development of a product candidate or must repeat or conduct new preclinical and clinical development of a product candidate; · Collaborators could independently develop, or develop with third parties, products that compete directly or indirectly with our products or product candidates if the collaborators believe that competitive products are more likely to be successfully developed than ours; · Product candidates may be viewed by our collaborators as competitive with their own product candidates or products, which may cause collaborators to cease to devote resources to the development of our product candidates; · Disagreements with collaborators, including disagreements over proprietary rights, contract interpretation or the preferred course of development might cause delays or termination of the preclinical or clinical development or commercialization of product candidates.
As a non-accelerated filer, we are not required to comply with the auditor attestation requirements of the Sarbanes-Oxley Act. We are a non-accelerated filer under the Securities Exchange Act of 1934, as amended, or the Exchange Act, and we are not required to comply with the auditor attestation requirements of Section 404(b) of the Sarbanes-Oxley Act of 2002.
As a non-accelerated filer, we are not required to comply with the auditor attestation requirements of the Sarbanes-Oxley Act. We are a non-accelerated filer under the Exchange Act, and we are not required to comply with the auditor attestation requirements of Section 404(b) of the Sarbanes-Oxley Act of 2002.
We have licensed rights to intellectual property from third parties to commercialize our product candidates, including our Cell-in-a-Box ® Technology for LAPC and diabetes and our COVID-19 diagnostic kits.
We have licensed rights to intellectual property from third parties to commercialize our product candidates, including our Cell-in-a-Box ® Technology for LAPC and diabetes.
A failure to obtain accelerated approval or any other form of expedited development, review or approval for any of our product candidates that we determine to seek accelerated approval for would result in a longer time to commercialization of such product candidate, could increase the cost of development of such product candidate and could harm our competitive position in the marketplace. 59 We may seek Orphan Drug designation for some of our product candidates, and we may be unsuccessful.
A failure to obtain accelerated approval or any other form of expedited development, review or approval for any of our product candidates that we determine to seek accelerated approval for would result in a longer time to commercialization of such product candidate, could increase the cost of development of such product candidate and could harm our competitive position in the marketplace.
Intellectual property rights do not necessarily address all potential threats to our competitive advantage. The degree of future protection afforded by our intellectual property rights is uncertain because intellectual property rights have limitations, and may not adequately protect our business, or permit us to maintain our competitive advantage.
The degree of future protection afforded by our intellectual property rights is uncertain because intellectual property rights have limitations, and may not adequately protect our business, or permit us to maintain our competitive advantage.
Even if we can establish such arrangements with another third-party manufacturer, reliance on a new third-party manufacturer entails additional risks, including: · Reliance on the third party for regulatory compliance and quality assurance; · The possible breach of the manufacturing agreement by the third party; · The possible misappropriation of our proprietary information, including our trade secrets and know-how; and · The possible termination or nonrenewal of the agreement by the third party at a time that is costly or inconvenient for us.
Even if we can establish such arrangements with another third-party manufacturer, reliance on a new third-party manufacturer entails additional risks, including: · Reliance on the third party for regulatory compliance and quality assurance; · The possible breach of the manufacturing agreement by the third party; · The possible misappropriation of our proprietary information, including our trade secrets and know-how; and · The possible termination or nonrenewal of the agreement by the third party at a time that is costly or inconvenient for us. 32 A new third-party manufacturer may not be able to comply with cGMP standards or the requirements of a regulatory agency.
Moreover, even if one of our product candidates is designated for priority review, such a designation does not necessarily mean a faster overall regulatory review process or necessarily confer any advantage with respect to approval compared to conventional procedures of the regulatory agencies. Receiving priority review from the regulatory agencies does not guarantee approval within an accelerated timeline or thereafter.
Moreover, even if one of our product candidates is designated for priority review, such a designation does not necessarily mean a faster overall regulatory review process or necessarily confer any advantage with respect to approval compared to conventional procedures of the regulatory agencies.
Patient enrollment is a significant factor in the overall duration of a clinical trial and is affected by many factors, including: · The size and nature of the patient population; · The severity of the disease under investigation; · The proximity of patients to clinical sites; · The eligibility criteria for the trial; · The design of the clinical trial; · Efforts to facilitate timely enrollment; · Competing clinical trials for the same patient population; and · Clinicians’ and patients’ perceptions as to the potential advantages and risks of the drug being studied in relation to other available therapies, including any new drugs that may be approved for the indications we are investigating. 58 Our inability to enroll enough patients for our clinical trials could result in significant delays or may require us to abandon one or more clinical trials altogether.
Patient enrollment is a significant factor in the overall duration of a clinical trial and is affected by many factors, including: · The size and nature of the patient population; · The severity of the disease under investigation; · The proximity of patients to clinical sites; · The eligibility criteria for the trial; · The design of the clinical trial; · Efforts to facilitate timely enrollment; · Competing clinical trials for the same patient population; and · Clinicians’ and patients’ perceptions as to the potential advantages and risks of the drug being studied in relation to other available therapies, including any new drugs that may be approved for the indications we are investigating.
Regulatory agencies may designate drugs for relatively small patient populations as Orphan Drugs. Under the standards and requirements of regulatory agencies, they may designate a product as an Orphan Drug if it is a drug intended to treat a rare disease or condition.
We may seek Orphan Drug designation for some of our product candidates, and we may be unsuccessful. Regulatory agencies may designate drugs for relatively small patient populations as Orphan Drugs. Under the standards and requirements of regulatory agencies, they may designate a product as an Orphan Drug if it is a drug intended to treat a rare disease or condition.
Certain factors, some of which are beyond our control, which may cause our share price to fluctuate significantly include, but are not limited to, the following: · Variations in our quarterly operating results; · Loss of a key relationship or failure to complete significant product candidate milestones timely or at all; · Additions or departures of key personnel; and · Fluctuations in the stock market price and volume. 80 In addition, in recent years the stock market in general, and the over-the-counter markets in particular, have experienced extreme price and volume fluctuations.
Certain factors, some of which are beyond our control, which may cause our share price to fluctuate significantly include, but are not limited to, the following: · Variations in our quarterly operating results; · Loss of a key relationship or failure to complete significant product candidate milestones timely or at all; · Additions or departures of key personnel; and · Fluctuations in the stock market price and volume.
This reliance on Austrianova increases the risk that we will not have sufficient quantities of our product candidates or such quantities at an acceptable cost, which could delay, prevent or impair our development or commercialization efforts. · Disruptions in the global economy and supply chains may have a material adverse effect on our business, financial condition and results of operations and the financial condition of the third parties on which we rely, including Austrianova. · Our business could be impacted as a result of actions by activist shareholders, including as a result of a potential proxy contest for the election of directors at our 2022 annual meeting. · The recent and ongoing COVID-19 pandemic has affected and could continue to affect our operations, as well as the business or operations of third parties with whom we conduct business.
This reliance on Austrianova increases the risk that we will not have sufficient quantities of our product candidates or such quantities at an acceptable cost, which could delay, prevent or impair our development or commercialization efforts. 29 · Disruptions in the global economy and supply chains may have a material adverse effect on our business, financial condition and results of operations and the financial condition of the third parties on which we rely, including Austrianova. · The recent and ongoing COVID-19 pandemic has affected and could continue to affect our operations, as well as the business or operations of third parties with whom we conduct business.
The disruptions to the global economy in 2020, 2021 and into 2022 have impeded global supply chains, resulting in longer lead times and also increased critical component costs and freight expenses.
The disruptions to the global economy in recent years have impeded global supply chains, resulting in longer lead times and also increased critical component costs and freight expenses.
Securing marketing approval requires the submission of extensive preclinical and clinical data and supporting information to the regulatory agencies for each product candidate to establish the product candidate’s safety and efficacy. Securing marketing approval also requires the submission of information about the product manufacturing process to, and inspection of manufacturing facilities by, the regulatory agencies.
Securing marketing approval requires the submission of extensive preclinical and clinical data and supporting information to the regulatory agencies for each product candidate to establish the product candidate’s safety and efficacy.
Over the past twelve months, shares of our common stock were quoted and traded at a high of $27.16 per share and a low of $1.79 per share.
Over the past twelve months, shares of our common stock were quoted and traded at a high of $3.10 per share and a low of $1.95 per share.
Our estimates of the potential market opportunities are predicated on many assumptions, including industry knowledge and publications, third party research reports and other surveys.
The potential market opportunities for our product candidates are difficult to estimate precisely. Our estimates of the potential market opportunities are predicated on many assumptions, including industry knowledge and publications, third party research reports and other surveys.
For example, India does not allow patents for methods of treating the human body. Publications of discoveries in the scientific literature often lag the actual discoveries, and patent applications in the U.S. and other jurisdictions are typically not published until 18 or more months after filing, or in some cases not at all.
Publications of discoveries in the scientific literature often lag the actual discoveries, and patent applications in the U.S. and other jurisdictions are typically not published until 18 or more months after filing, or in some cases not at all.
As a result of the clinical hold that has been placed on our IND by the FDA, it has taken and may continue to take considerable time and expense to respond to the FDA and no assurance can be given that the FDA will remove the clinical hold in which case our business and prospects will likely suffer material adverse consequences.
If we do not address these risks and difficulties successfully, our business, operating results and financial condition will suffer. 31 As a result of the clinical hold that has been placed on our IND by the FDA, it has taken and may continue to take considerable time and expense to respond to the FDA and no assurance can be given that the FDA will remove the clinical hold in which case our business and prospects will likely suffer material adverse consequences.
We may experience volatility in our stock price, which may adversely affect the trading price of our common stock. We have experienced significant volatility from time to time in the market price of our shares of common stock.
We have experienced significant volatility from time to time in the market price of our shares of common stock.
Our patent protection could be reduced or eliminated for non-compliance with these requirements. Periodic maintenance fees, renewal fees, annuity fees and various other governmental fees on patents and/or applications will be due to be paid to the USPTO and various governmental patent agencies outside of the U.S. in several stages over the lifetime of the patents and/or applications.
Periodic maintenance fees, renewal fees, annuity fees and various other governmental fees on patents and/or applications will be due to be paid to the USPTO and various governmental patent agencies outside of the U.S. in several stages over the lifetime of the patents and/or applications.
We are seeking FDA approval to commence clinical trials in the U.S. of certain of our product candidates based on clinical data that was obtained in trials conducted outside the U.S., and it is possible that the FDA may not accept data from trials conducted in such locations or conducted nearly 20 years ago.
Any Phase 1, Phase 2 or Phase 3 clinical trial we may conduct may not demonstrate the efficacy and safety necessary to obtain regulatory approval to market our product candidates. 39 We are seeking FDA approval to commence clinical trials in the U.S. of certain of our product candidates based on clinical data that was obtained in trials conducted outside the U.S., and it is possible that the FDA may not accept data from trials conducted in such locations or conducted nearly 20 years ago.
Further, as a strategic response to changes in the competitive environment, we may from time to time make certain pricing, service or marketing decisions that could have a material adverse effect on our business, prospects, financial condition and results of operations.
Further, as a strategic response to changes in the competitive environment, we may from time to time make certain pricing, service or marketing decisions that could have a material adverse effect on our business, prospects, financial condition and results of operations. 36 We may experience significant fluctuations in future operating results due to a variety of factors, many of which are outside of our control.
If we are unable to raise adequate funds, we may have to liquidate some or all of our assets, or delay or reduce the scope of or eliminate some or all of our development programs.
We may not be able to acquire additional funds on acceptable terms, or at all. If we are unable to raise adequate funds, we may have to liquidate some or all of our assets, or delay or reduce the scope of or eliminate some or all of our development programs.
As of April 30, 2022, we had federal net operating loss carryforwards of approximately $62 million, which will begin to expire in varying amounts beginning in 2022.
As of April 30, 2023, we had federal net operating loss carryforwards of approximately $56 million, and approximately $47 million for state net operating losses, which will begin to expire in varying amounts beginning in 2023.
“Controls and Procedures,” the senior management has identified a material weakness in our internal controls over financial reporting and cannot assure you that additional material weaknesses will not be identified in the future. We cannot assure you that these steps will be successful in preventing material weaknesses or significant deficiencies in our internal controls over financial reporting in the future.
As discussed in Item 9A. “Controls and Procedures,” the senior management has identified a material weakness in our internal controls over financial reporting and cannot assure you that additional material weaknesses will not be identified in the future.
Factors that may affect operating results include: (i) the ability to obtain and retain customers; (ii) our ability to attract new customers at a steady rate and maintain customer satisfaction with products; (iii) our announcement or introduction of new products by us or our competitors; (iv) price competition; (v) the level of use and consumer acceptance of its products; (vi) the amount and timing of operating costs and capital expenditures relating to expansion of the business, operations and infrastructure; (vii) governmental regulations; (viii) general economic conditions; (ix) delays or disruptions in our supply chain; and (x) the adverse impacts caused by COVID-19 discussed in more detail below. 52 Additional Risks Related to Regulatory Matters If we are unable to obtain, or if there are delays in obtaining, required approval from the applicable regulatory agencies, we will not be able to commercialize our product candidates and our ability to generate revenue will be materially impaired.
Factors that may affect operating results include: (i) the ability to obtain and retain customers; (ii) our ability to attract new customers at a steady rate and maintain customer satisfaction with products; (iii) our announcement or introduction of new products by us or our competitors; (iv) price competition; (v) the level of use and consumer acceptance of its products; (vi) the amount and timing of operating costs and capital expenditures relating to expansion of the business, operations and infrastructure; (vii) governmental regulations; (viii) general economic conditions; (ix) delays or disruptions in our supply chain; and (x) the adverse impacts caused by COVID-19.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeITEM 2. PROPERTIES Our principal office is located at 3960 Howard Hughes Parkway, Suite 500, Las Vegas, Nevada 89169 (“Leased Premises”). The office we lease consist of approximately 100 square feet plus the use of certain shared facilities, such as a lobby, conference rooms, a kitchen and open workspaces.
Biggest changeITEM 2. PROPERTIES Our principal office is located at 3960 Howard Hughes Parkway, Suite 500, Las Vegas, Nevada 89169 and we lease this space on a month-to-month arrangement. This space consists of approximately 100 square feet of office space plus the use of certain shared facilities, such as a lobby, conference rooms, a kitchen and open workspaces.
Removed
The term of the first lease agreement expired on April 30, 2022. On January 13, 2022, we entered into a new lease agreement for the Leased Premises for an additional six-month term, expiring on October 31, 2022.
Added
We believe this space will be adequate for our operations for the foreseeable future.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeSecurities Authorized for Issuance under Equity Compensation Plans See Item 12 of Part III of this Report regarding information about securities authorized for issuance under our equity compensation plans. Recent Issuance of Unregistered Securities We issued Common Stock Purchase Warrants (“Warrants”) to Aeon (defined below) in connection with our Block Trades (defined below).
Biggest changeSecurities Authorized for Issuance under Equity Compensation Plans See Item 12 of Part III of this Report regarding information about securities authorized for issuance under our equity compensation plans. 72 Recent Sales of Unregistered Securities On May 2, 2022, we issued options to purchase an aggregate of 334 unregistered shares of common stock to one of our directors pursuant to their letter agreements with us.
Thereafter, it reverted to “PMCB.” The following table sets forth the post reverse stock split (1:1500) high and low bid quotations reported on the OTCQB through August 9, 2021 and Nasdaq through April 30, 2022 for our shares for each quarter during the two fiscal years (“FYs”) ended April 30, 2022 and 2021.
(“OTCQB”) as an Over-The-Counter Bulletin Board company under the classification of OTCQB utilizing the trading symbol “PMCB.” The following table sets forth the post reverse stock split (1:1500) high and low bid quotations reported on the OTCQB through August 9, 2021 and Nasdaq through April 30, 2023 for our shares for each quarter during the two fiscal years (“FYs”) ended April 30, 2023 and 2022.
Date Bid Price FY 2022 HIGH LOW First Quarter $ 27.16 5.56 Second Quarter $ 12.01 2.25 Third Quarter $ 3.05 1.89 Fourth Quarter $ 2.51 1.79 FY 2021 First Quarter $ 52.39 19.10 Second Quarter $ 28.36 10.45 Third Quarter $ 40.15 5.97 Fourth Quarter $ 55.22 20.90 As of April 30, 2022, there were 20,721,047 issued and outstanding shares of our common stock.
Bid Price FY 2023 HIGH LOW First Quarter $ 2.51 1.95 Second Quarter $ 3.02 2.33 Third Quarter $ 3.10 2.70 Fourth Quarter $ 3.04 2.78 FY 2022 First Quarter $ 27.16 5.56 Second Quarter $ 12.01 2.25 Third Quarter $ 3.05 1.89 Fourth Quarter $ 2.51 1.79 As of July 25, 2023, there were approximately 1,400 stockholders of record of our common stock.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES. On August 10, 2021, our shares of common stock commenced trading on the Nasdaq Capital Market (“Nasdaq”). Prior to that, shares of our common stock were quoted on the OTC Link™ quotation platform of OTC Markets Group, Inc.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES. Market Information Our shares of common stock are listed on the Nasdaq Capital Market (“Nasdaq”), where they have traded under ticker symbol “PMCB” since initial listing on August 10, 2021.
We are informed these shares are held by approximately 1,400 shareholders of record. Dividend Policy We have not paid and do not plan to pay cash dividends now. Our Board will decide any future payment of dividends, depending on the results of operations, financial condition, capital requirements and other relevant factors.
In addition, the terms of the certificate of designations governing our Series B convertible preferred stock presently restricts our ability to pay dividends. Our Board will decide any future payment of dividends, depending on the results of operations, financial condition, capital requirements and other relevant factors.
Removed
(“OTCQB”) as an Over-The-Counter Bulletin Board company under the classification of OTCQB utilizing the trading symbol “PMCB.” As a result of a 1:1500 reverse stock split effective July 12, 2021, our trading symbol was changed to “PMCBD” until August 6, 2021.
Added
Prior to that, shares of our common stock were quoted on the OTC Link™ quotation platform of OTC Markets Group, Inc.
Removed
We issued Warrants to purchase the number of shares of our restricted common stock listed below. 84 The Warrants have a five-year term and represent 5% of the number of shares of common stock sold at an exercise price equal to the price per share at which the shares were sold in the Block Trade.
Added
The number of stockholders of record does not include beneficial owners of our securities whose shares are held in the name of various security brokers, dealers and registered clearing agencies. Dividend Policy We have not paid and do not plan to pay cash dividends in the foreseeable future.
Removed
They are exercisable by the holder at any time from the sale date through and including the expiration date set forth in the Warrant. Each Warrant has a specified exercise price as set forth below.
Added
The options are exercisable for $2.29 per share and vest immediately upon issuance. The non-cash expense for the share issuances totaled $765. On May 16, 2022, we issued options to purchase an aggregate of 334 unregistered shares of common stock to one of our directors pursuant to their letter agreements with us.
Removed
Sale Date Warrants Issued Exercise Price June 13, 2019 926 $13.50 July 15, 2019 1,296 $13.50 August 7, 2019 2,333 $7.50 February 24, 2020 667 $7.50 March 24, 2020 2,333 $7.50 March 31, 2020 667 $7.50 April 7, 2020 1,667 $15.00 April 21, 2020 556 $22.50 July 10, 2020 2,733 $15.00 July 18, 2020 2,333 $11.25 July 19, 2020 889 $11.25 July 27, 2020 1,667 $11.25 August 3, 2020 3,000 $11.25 August 6, 2020 2,733 $15.00 August 6, 2020 3,333 $7.50 August 7, 2020 3,667 $7.50 August 7, 2020 1,667 $11.25 August 10, 2020 889 $11.25 August 23, 2021 7,000,000 $5.00 August 23, 2021 1,050,000 $6.25 In addition to issuances of unregistered securities by us to our officers and directors previously disclosed in our Quarterly Reports on Form 10-Q, our Form 8-Ks and this Report, on March 1, 2021, we issued 29,144 shares of restricted common stock relating to the cashless exercise of twenty-six (26) warrant agreements to an investment banker.
Added
The options are exercisable for $2.29 per share and vest immediately upon issuance. The non-cash expense for the share issuances totaled $765. On July 1, 2022, we issued options to purchase an aggregate of 334 unregistered shares of common stock to one of our directors pursuant to their letter agreements with us.
Removed
The non-cash expense for these share issuances was zero.
Added
The options are exercisable for $2.24 per share and vest immediately upon issuance. The non-cash expense for the share issuances totaled $748. The foregoing transactions did not involve any underwriters or any public offering.
Removed
All such shares were issued without registration under the Securities Act in reliance upon the exemption afforded by Section 4(a)(2) of the Securities Act based on the limited number of investors, the sophistication of the individuals involved and the use of restrictive legends on the share certificates issued to prevent a public distribution of the relevant securities. ITEM 6.
Added
The sale of the above securities was deemed to be exempt from registration under the Securities Act in reliance on Section 4(a)(2) of the Securities Act (and Regulation D promulgated thereunder) or Rule 701 promulgated under Section 3(b) of the Securities Act as transactions by an issuer not involving any public offering.
Added
The recipients of the securities in the transaction 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 affixed to the securities issued in these transactions.
Added
All recipients received or had, through their relationships with us, adequate access to information about us. Issuer Purchases of Equity Securities The table below summarizes information about the Company’s purchases of its equity securities during the three months ended April 30, 2023.
Added
Period Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Maximum Number (or Approximate Dollar Value) of Shares That May Yet Be Purchased Under the Plans or Programs February 1, 2023 – February 28, 2023 711,131 $ 2.9905 711,131 $ 8,615,102 March 1, 2023 – March 31, 2023 94,433 $ 2.9205 94,433 $ 8,337,421 April 1, 2023 – April 30, 2023 609,474 $ 2.9989 609,474 $ 6,497,474 Total 1,415,038 $ 2.9895 1,415,038 $ 6,497,474 On June 2, 2022, the Company announced that the Board had authorized a share repurchase program to acquire up to $10 million of the Company’s outstanding common stock (the “First Repurchase Program”).
Added
The number of shares of common stock repurchased on any given trading day is determined by a formula, which is based on the market price of the common stock and average daily volumes. The First Repurchase Program expires on May 30, 2024.
Added
On January 31, 2023, the Board authorized a share repurchase program to repurchase up to an additional $10 million of the Company’s outstanding common stock (the “Second Repurchase Program” and together with the First Repurchase Program, the “Repurchase Programs”).
Added
Under the Second Repurchase Program, the shares may be repurchased from time to time in open market transactions, privately negotiated block transactions or other means in accordance with applicable securities laws. For more information on the Repurchase Programs, see “Note 12 – Treasury Stock.” 73 ITEM 6. [RESERVED]

Item 7. Management's Discussion & Analysis

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

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Biggest changeOn August 19, 2021, the Company entered into a securities purchase agreement (“Securities Purchase Agreement”) with certain institutional investors (“Purchasers”) pursuant to which the Company agreed to sell in a registered direct offering (“Registered Direct Offering”), shares of the Company’s common stock and pre-funded warrants to purchase shares of common stock.
Biggest changeIn August 2021, we received twenty-seven (27) exercise notices from holders of the common warrants issued in the First 2021 Offering, pursuant to which we received approximately $10,720,000 and issued 2,522,387 shares of common stock (the “2021 Warrant Exercises”). 2021 Registered Direct Offering and Concurrent Private Placement On August 19, 2021, we entered into a securities purchase agreement with certain institutional investors, pursuant to which we sold (i) 8,430,000 shares of common stock and pre-funded warrants to purchase up to 5,570,000 shares of common stock in a registered direct offering and (ii) unregistered warrants to purchase up to 7,000,000 shares of common stock (the “Series A Warrants”) in a concurrent private placement (collectively, the “Second 2021 Offering”).
We are required to make assumptions and estimates about future events and apply judgments that affect the reported amounts of assets, liabilities, revenue and expenses and the related disclosures. We base our assumptions, estimates and judgments on historical experience, current trends and other factors that management believes to be relevant at the time our Consolidated Financial Statements are prepared.
GAAP”). We are required to make assumptions and estimates about future events and apply judgments that affect the reported amounts of assets, liabilities, revenue and expenses and the related disclosures. We base our assumptions, estimates and judgments on historical experience, current trends and other factors that management believes to be relevant at the time our Consolidated Financial Statements are prepared.
We are working to advance clinical research and development of new cellular-based therapies in oncology and diabetes. 85 We are actively engaged preparing for a Phase 2b clinical trial in LAPC using encapsulated live cells like those used in the previous Phase 1/2 and Phase 2 clinical trials discussed above.
We are working to advance clinical research and development of new cellular-based therapies in oncology and diabetes. We are actively engaged preparing for a clinical trial in LAPC using encapsulated live cells like those used in the previous Phase 1/2 and Phase 2 clinical trials discussed above.
On September 1, 2020, we submitted an IND to the FDA for our planned Phase 2b clinical trial in LAPC. On October 1, 2020, we received notice from the FDA that it had placed our IND on clinical hold.
On September 1, 2020, we submitted an IND to the FDA for our planned clinical trial in LAPC. On October 1, 2020, we received notice from the FDA that it had placed our IND on clinical hold.
Discussion of Operating, Investing and Financing Activities The following table presents a summary of our sources and uses of cash for the years ended April 30, 2022, and 2021.
Discussion of Operating, Investing and Financing Activities The following table presents a summary of our sources and uses of cash for the years ended April 30, 2023 and 2022.
On October 30, 2020, the FDA sent a letter to us setting forth the reasons for the clinical hold and specific guidance on what we must do to have the clinical hold lifted. For the purpose of addressing the clinical hold, we assembled a team of regulatory and scientific experts to respond to the items requested by the FDA.
On October 30, 2020, the FDA sent a letter to us setting forth the reasons for the clinical hold and specific guidance on what we must do to have the clinical hold lifted. To address our clinical hold, we assembled a team of regulatory and scientific experts to respond to the items requested by the FDA.
Performance Indicators Non-financial performance indicators used by management to manage and assess how the business is progressing will include, but are not limited to, the ability to: (i) acquire appropriate funding for all aspects of our operations; (ii) acquire and complete necessary contracts; (iii) complete activities for producing genetically modified human cells and having them encapsulated for our preclinical studies and the planned Phase 2b clinical trial in LAPC; (iv) have regulatory work completed to enable studies and trials to be submitted to regulatory agencies; (v) complete all required tests and studies on the cells and capsules we plan to use in our clinical trial in patients with LAPC; (vi) ensure completion of the production of encapsulated cells according to cGMP regulations to use in our planned clinical trial; (vii) complete all of the tasked the FDA requires of us in order to have the clinical hold lifted; and (viii) obtain approval from the FDA to lift the clinical hold on our IND that we may commence our planned Phase 2b clinical trial in LAPC. 87 There are numerous items required to be completed successfully to ensure our final product candidate is ready for use in our planned clinical trial in LAPC.
Performance Indicators Non-financial performance indicators used by management to manage and assess how the business is progressing will include, but are not limited to, the ability to: (i) acquire appropriate funding for all aspects of our operations; (ii) acquire and complete necessary contracts; (iii) complete activities for producing genetically modified human cells and having them encapsulated for our preclinical studies and the planned clinical trial in LAPC; (iv) have regulatory work completed to enable studies and trials to be submitted to regulatory agencies; (v) complete all required tests and studies on the cells and capsules we plan to use in our clinical trial in patients with LAPC; (vi) ensure completion of the production of encapsulated cells according to cGMP regulations to use in our planned clinical trial; (vii) complete all of the tasked the FDA requires of us in order to have the clinical hold lifted; and (viii) obtain approval from the FDA to lift the clinical hold on our IND that we may commence our planned clinical trial in LAPC.
Implanting these encapsulated cells in the body is designed to function as a bio-artificial pancreas for purposes of insulin production. Reverse Stock Split Effective July 12, 2021, we filed a Certificate of Change with the Nevada Secretary of State that authorized a 1:1500 reverse stock split of our common stock.
Implanting these encapsulated cells in the body is designed to function as a bio-artificial pancreas for purposes of insulin production. 74 Reverse Stock Split Effective July 12, 2021, we filed a Certificate of Change to our Articles of Incorporation, as amended (the “Articles of Incorporation”) with the Nevada Secretary of State that authorized a 1:1500 reverse stock split of our common stock.
Potentially dilutive stock options and warrants to purchase 10,813,635 and 44,314 post reverse stock split shares of common stock at April 30, 2022, and 2021, respectively, were excluded from the computation of diluted net income (loss) per share because the effect would be anti-dilutive.
Potentially dilutive stock options and warrants to purchase 10,172,116 and 10,813,635 post reverse stock split shares of common stock at April 30, 2023 and 2022, respectively, were excluded from the computation of diluted net income (loss) per share because the effect would be anti-dilutive.
The increase is mainly attributable to increases in compensation expense, legal and professional expense, and consulting expense in 2022 from 2021, net of decreases in R&D costs and director fees.
The increase is mainly attributable to increases in director fees and legal and professional expenses, net of decreases in R&D costs and compensation expense.
We do not believe there are factors which will cause materially different amounts to be reported than those presented in this Report. We aim to assess this regularly to provide accurate information to our shareholders.
We do not believe there are factors which will cause materially different amounts to be reported than those presented in this Report.
Financing Activities: The cash provided from financing activities for the years ended April 30, 2022, and 2021, is mainly attributable to the proceeds from the sale of our common stock. Critical Accounting Estimates and Policies Our Consolidated Financial Statements are prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”).
Financing Activities: The cash used in financing activities for the year ended April 30, 2023 was mainly attributable to the Repurchase Programs, and the cash provided for the year ended April 30, 2022, is mainly attributable to the proceeds from the First 2021 Offering and the Second 2021 Offering. 78 Critical Accounting Estimates and Policies Our Consolidated Financial Statements are prepared in accordance with U.S. generally accepted accounting principles (“U.S.
Year Ended April 30, 2022 Year Ended April 30, 2021 Net cash used in operating activities: $ (4,117,319 ) $ (3,330,889 ) Net cash used in investing activities: $ – $ – Net cash provided by financing activities: $ 87,311,244 $ 4,636,807 Effect of currency rate exchange $ 4,625 $ 1,327 Increase in cash $ 83,198,550 $ 1,307,245 Operating Activities: The cash used in operating activities for the years ended April 30, 2022, and 2021, is a result of our net losses offset by securities issued for services and compensation, changes to prepaid expenses, accounts payable and accrued expenses. 89 Investing Activities : We had no investing activities for the years ended April 30, 2022, and 2021.
Year Ended April 30, 2023 Year Ended April 30, 2022 Net cash used in operating activities: $ (3,793,731 ) $ (4,117,319 ) Net cash used in investing activities: $ – $ – Net cash provided by (used in) financing activities: $ (13,559,743 ) $ 87,311,244 Effect of currency rate exchange $ (7,246 ) $ 4,625 Increase (decrease) in cash $ (17,360,720 ) $ 83,198,550 Operating Activities: The cash used in operating activities for the years ended April 30, 2023 and 2022 is a result of our net losses offset by securities issued for services and compensation, changes to prepaid expenses, accounts payable and accrued expenses.
Business. above for a description of these amendments. We have no other off-balance sheet arrangements that could have a material current effect or that are reasonably likely to have a material adverse effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.
For more information on the Repurchase Programs, see “Note 12 – Treasury Stock.” Other Liquidity Matters We have no other off-balance sheet arrangements that could have a material current effect or that are reasonably likely to have a material adverse effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.
The increase is mainly attributable to increases in compensation expense, legal and professional expense, and consulting expense in 2022 from 2021, net of decreases in R&D costs and director fees.
The increase is mainly attributable to increases in director fees and legal and professional expenses, and consulting expenses in 2023 from 2022, net of decreases in R&D costs and compensation expense. See the table under “ Operating Expenses ” above for more detail.
Other Income (Expenses), Net Other income, net for the year ended April 30, 2022, was $152,853 as compared to other expense, net of $71,745 in the year ended April 30, 2021. Other income, net for the year ended April 30, 2022, is attributable to interest income of $157,645 net of interest expense and other expenses of $4,792.
Other income, net for the year ended April 30, 2023 is attributable to interest income of $1,937,499 net settlement of accounts payable of $152,976 and net of other income and expense of $49,026. Other income, net for the year ended April 30, 2022 is attributable to interest income of $157,645 net of interest expense and other expenses of $4,792.
The Company received gross proceeds from the Second Offering, before deducting placement agent fees and other estimated offering expenses payable by the Company, of approximately $70 million. On November 17, 2021, the Company’s Registration Statement on Form S-3 registering the resale of the common stock underlying the Series A Warrants was declared effective by the U.S.
On November 17, 2021, our Registration Statement on Form S-3 registering the resale of the shares of common stock underlying the Series A Warrants and the Placement Agent Warrants was declared effective by the U.S. Securities and Exchange Commission (“Commission”).
Liquidity and Capital Resources As of April 30, 2022, our cash and cash equivalents totaled approximately $85.4 million, compared to approximately $2.2 million as of April 30, 2021. Working capital was approximately $84.8 million as of April 30, 2022, and approximately $1.6 million as of April 30, 2021.
We aim to assess this regularly to provide accurate information to our shareholders. 75 Liquidity and Capital Resources As of April 30, 2023, our cash and cash equivalents totaled approximately $68 million, compared to approximately $85.4 million as of April 30, 2022.
Year ended April 30, 2022, compared to year ended April 30, 2021 Revenue We had no revenues in the fiscal years ended April 30, 2022, and 2021. 88 Operating Expenses The total operating expenses during the year ended April 30, 2022, increased by $769,033 to $4,392,014 from $3,622,981 in the year ended April 30, 2021.
Year ended April 30, 2023, compared to year ended April 30, 2022 Revenue We had no revenues in the fiscal years ended April 30, 2023, and 2022. Operating Expenses Our total operating expenses during the year ended April 30, 2023 were $6,455,494, representing an increase of $2,063,480 compared to the year ended April 30, 2022.
The increase in cash is attributable to proceeds from the sale of our common stock net of an increase in our operating expenses. On August 9, 2021, the Company entered into an underwriting agreement to offer and sell shares of common stock, pre-funded warrants to purchase common stock and warrants to purchase common stock in a public offering (“First Offering”).
The decrease in cash is attributable to the repurchase of our common stock pursuant to the Repurchase Programs, recorded as treasury stock and an increase in our operating expenses. 2021 Underwritten Offering On August 9, 2021, we entered into an underwriting agreement with H.C. Wainwright & Co.
Operating expenses: Year ended April 30, 2022 Change - Increase (Decrease) and Percent Year ended April 30, 2021 R&D $ 690,937 $ (225,312 ) $ 916,249 (25% ) Compensation expense $ 1,544,751 $ 115,601 $ 1,429,150 8% Director fees $ 256,490 $ (16,740 ) $ 273,230 (6% ) General and administrative, legal and professional $ 1,899,836 $ 895,484 $ 1,004,352 89% Loss from Operations Loss from operations during the year ended April 30, 2022, increased by $769,033 to $4,392,014 from $3,622,981 in the year ended April 30, 2021.
Operating expenses: Year ended April 30, 2023 Change - Increase (Decrease) and Percent Year ended April 30, 2022 R&D $ 468,536 $ (222,401 ) $ 690,937 (32% ) Compensation expense $ 1,234,956 $ (309,795 ) $ 1,544,751 (20% ) Director fees $ 951,347 $ 694,857 $ 256,490 271% General and administrative, legal and professional $ 3,800,655 $ 1,900,819 $ 1,899,836 100% 77 Loss from Operations Loss from operations during the year ended April 30, 2023 was $6,455,494, an increase of $2,063,480 compared to the year ended April 30, 2022.
All warrants, option, share and per share information in this Report gives retroactive effect to such 1:1500 reverse stock split. COVID-19 Impact on Our Financial Condition and Results of Operations COVID-19 continues to cause uncertainty and significant, industry-wide delays in clinical trials.
All warrants, option, share and per share information in this Report gives retroactive effect to such 1:1500 reverse stock split. Increase in Authorized Shares On March 14, 2023, we filed a Certificate of Change with the State of Nevada, Secretary of State, to increase the number of authorized shares of our common stock to 133,333,334 shares effective immediately.
The gross proceeds of the First Offering were $15 million, before deduction of underwriting discounts, commissions, and estimated offering expenses. In August 2021, the Company received twenty-seven (27) cash exercise notices relating to the common warrants with respect to the First Offering totaling 2,522,387 warrant shares (“Warrant Exercises”).
The gross proceeds of the First 2021 Offering were $15 million, before deduction of underwriting discounts, commissions, and estimated offering expenses. Wainwright acted as the exclusive placement agent for the Second 2021 Offering pursuant to an engagement letter with the Company dated April 26, 2021 (the “Wainwright Engagement Letter”).
Removed
The availability of vaccines holds promise for the future; however, new variants of the virus and potential waning immunity from vaccines may result in continued impact from COVID-19 in the future, which could adversely impact our operations.
Added
The par value remained $0.0001 per share. COVID-19 Impact on Our Financial Condition and Results of Operations We face the ongoing risk that the coronavirus pandemic may slow our operations, our preclinical studies or the eventual enrollment of our planned clinical trial.
Removed
Although we are not yet in a clinical trial, we have filed an IND with the FDA to commence a clinical trial in LAPC. While the IND has been placed on clinical hold by the FDA, we have assessed the impact of COVID-19 on our operations and that impact is increasing.
Added
In order to prioritize patient health and that of the investigators at clinical trial sites, we may need monitor enrollment of patients in our clinical study. In addition, some patients may be unwilling to enroll in our trials or be unable to comply with clinical trial protocols if quarantines or travel restrictions impede patient movement or interrupt healthcare services.
Removed
The impact relates to delays in: (i) completing studies required by the FDA; (ii) manufacturing a new batch of CypCap™ for our planned clinical trial in LAPC; (iii) manufacturing syringes of CypCaps™ for some of the preclinical studies to be completed and use in our Malignant Ascites Program; and (iv) securing third party contractors to conduct various R&D projects.
Added
These and other factors outside of our control could delay our ability to conduct clinical trials or release clinical trial results.
Removed
As a result, there may be delays in generating responses to the requests from the FDA related to the clinical hold. Many of these potential delays are also due to the impact of COVID-19 in foreign countries where we are conducting these preclinical studies, including India, Europe, Singapore and Thailand.
Added
In addition, the effects of the ongoing coronavirus pandemic may also increase non-trial costs such as insurance premiums, increase the demand for and cost of capital, increase loss of work time from key personnel, and negatively impact our key clinical trial vendors.
Removed
There have also been supply chain interruptions due to COVID-19. 86 As a result of COVID-19 and the mitigation efforts to address it, we may experience additional disruptions that could adversely impact our business and clinical trial, if allowed to proceed, including: (i) delays or difficulties in enrolling patients in our Phase 2b clinical trial if the FDA allows us to go forward with the trial; (ii) delays or difficulties in clinical site activation, including difficulties in recruiting clinical site investigators and clinical site personnel; (iii) delays in clinical sites receiving the supplies and materials needed to conduct our clinical trial, including interruption in global shipping that may affect the transport of our clinical trial product; (iv) changes in local regulations as part of a response to COVID-19 which may require us to change the ways in which our clinical trial is to be conducted, which may result in unexpected costs, or to discontinue the clinical trial altogether; (v) diversion of healthcare resources away from the conduct of clinical trials, including the diversion of hospitals serving as our clinical trial sites and hospital staff supporting the conduct of our clinical trial; (vi) interruption of key clinical trial activities, such as clinical trial site monitoring, due to limitations on travel imposed or recommended by federal or state governments, employers and others, or interruption of clinical trial subject visits and study procedures, the occurrence of which could affect the integrity of clinical trial data; (vii) risk that participants enrolled in our clinical trials will acquire COVID-19 while the clinical trial is ongoing, which could impact the results of the clinical trial, including by increasing the number of observed adverse events; (viii) delays in necessary interactions with local regulators, ethics committees, and other important agencies and contractors due to limitations in employee resources or forced furlough of government employees; (ix) limitations in employee resources that would otherwise be focused on the conduct of our clinical trial because of sickness of employees or their families or the desire of employees to avoid contact with large groups of people; (x) refusal of the FDA to accept data from clinical trials in affected geographies; and (xi) interruption or delays to our clinical trial activities.
Added
There are numerous items required to be completed successfully to ensure our final product candidate is ready for use in our planned clinical trial in LAPC.
Removed
As a result of COVID-19, commencement of our planned clinical trial to treat LAPC may be delayed beyond the lifting of the clinical hold by the FDA should that occur. Also, enrollment may be difficult for the reasons discussed above.
Added
Working capital was approximately $67.6 million as of April 30, 2023, and approximately $84.8 million as of April 30, 2022.
Removed
In addition, after enrollment in the trial, if patients contract COVID-19 during their participation in the trial or are subject to isolation or shelter in place restrictions, this may cause them to drop out of our clinical trial, miss scheduled therapy appointments or follow-up visits or otherwise fail to follow the clinical trial protocol.
Added
(“Wainwright”), pursuant to which we offered and sold an aggregate of 2,630,385 shares of common stock, and 899,027 pre-funded warrants to purchase common stock, and common warrants to purchase 4,028,528 shares of common stock (the “First 2021 Offering”).
Removed
If patients are unable to follow the clinical trial protocol or if the trial results are otherwise affected by the consequences of COVID-19 on patient participation or actions taken to mitigate COVID-19 spread, the integrity of data from the clinical trial may be compromised or not be accepted by the FDA.
Added
The common warrants sold in the First 2021 Offering have an exercise price of $4.25 per share, were exercisable immediately upon issuance, and expire five years following the date of issuance. The pre-funded warrants sold in the First 2021 Offering have an exercise price of $0.001 per share, were exercisable immediately upon issuance, and do not have an expiration date.
Removed
This could further adversely impact or delay our clinical development program if the FDA allows it to proceed. Clinical trials in the biopharma industry may be delayed due to COVID-19. There are numerous reasons for these potential delays.
Added
Pursuant to the Wainwright Engagement Letter and in connection with the First 2021 Offering, we paid Wainwright a placement agent fee equal to 7.5% of the aggregate gross proceeds and a management fee equal to 1.0% of the gross proceeds, and we issued Wainwright warrants to purchase up to [ ] shares of common stock (the “Placement Agent Warrants”).
Removed
For example, patients have shown a reluctance to enroll or continue in a clinical trial due to fear of exposure to COVID-19 when they are in a hospital or doctor’s office. There are local, regional and state-wide orders and regulations restricting usual normal activity by people.
Added
The Placement Agent Warrants have an exercise price of $6.25 per share, were exercisable immediately upon issuance, and expire five years following the date of issuance.
Removed
These discourage and interfere with patient visits to a doctor’s office if the visit is not COVID-19 related. Healthcare providers and health systems have shifted their resources away from clinical trials toward the care of COVID-19 patients. The FDA and other healthcare providers are making product candidates for the treatment of COVID-19 a priority over product candidates unrelated to COVID-19.
Added
The pre-funded warrants sold in the Second 2021 Offering have an exercise price of $0.001 per share, were exercisable immediately upon issuance, and do not have an expiration date. The Series A Warrants have an exercise price of $5.00 per share, were exercisable immediately upon issuance, and expire five years following the date of issuance.
Removed
It is highly speculative in projecting the effects of COVID-19 on our proposed clinical development program and the Company generally.
Added
Wainwright acted as the exclusive placement agent for the Second 2021 Offering pursuant to the Wainwright Engagement Letter.
Removed
Moreover, the various precautionary measures taken by many governmental authorities around the world in order to limit the spread of COVID-19 has had and may continue to have an adverse effect on the global markets and global economy, including on the availability and pricing of employees, resources, materials, manufacturing and delivery efforts and other aspects of the global economy.
Added
Pursuant to such engagement letter and in connection with the Second 2021 Offering, we paid Wainwright a placement agent fee equal to 7.5% of the aggregate gross proceeds and a management fee equal to 1.0% of the gross proceeds, and we issued Wainwright an additional 1,050,000 Placement Agent Warrants.
Removed
The continuation of the COVID-19 pandemic could materially disrupt our business and operations, hamper our ability to raise additional funds or sell or securities, continue to slow down the overall economy, curtail consumer spending, interrupt our sources of supply, and make it hard to adequately staff our operations. The effects of COVID-19 quickly and dramatically change over time.
Added
We received gross proceeds from the Second 2021 Offering, before deducting placement agent fees and other estimated offering expenses payable by the Company, of approximately $70 million.
Removed
Its evolution is difficult to predict, and no one is able to say with certainty when the pandemic will fully cease to have an impact on our operations.
Added
During the year ended April 30, 2022, we received approximately $87.4 million from the First 2021 Offering, the Second 2021 Offering and the 2021 Warrant Exercises. 76 Repurchase Programs Pursuant to the First Repurchase Program, we may acquire up to $10 million of our outstanding shares of common stock, as determined by a formula based on the market price of the common stock and average daily volumes.
Removed
The Company received approximately $10,720,000 and issued 2,522,387 shares of common stock as a result of the exercise notices.
Added
Pursuant to the Second Repurchase Program, we may acquire up to $10 million of our outstanding shares of common stock from time to time in open market transactions, privately negotiated block transactions or other means in accordance with applicable securities laws.
Removed
Further, pursuant to the Securities Purchase Agreement, in a concurrent private placement (together with the Registered Direct Offering, “Second Offering”), the Company also agreed to issue to the Purchasers unregistered warrants (“Series A Warrants”) to purchase shares of common stock.
Added
To meet our short and long-term liquidity needs, we expect to use existing cash balances and a variety of other means. Other sources of liquidity could include additional potential issuances of debt or equity securities in public or private financings, partnerships, collaborations and sale of assets.
Removed
Securities and Exchange Commission (“Commission”). During the year ended April 30, 2022, funding in the amount of approximately $87.4 million was provided by investors to maintain and expand our operations and R&D through the First Offering and the Second Offering and the Warrant Exercises.
Added
Our history of operating losses and liquidity challenges may make it difficult for us to raise capital on acceptable terms or at all. The demand for the equity and debt of pharmaceutical companies like ours is dependent upon many factors, including the general state of the financial markets.
Removed
Sales of our common stock, pre-funded warrants and exercise of Common Warrants occurred in the First Offering, Second Offering, and the Warrant Exercises. During the year ended April 30, 2021, the Company sold and issued approximately 462,000 shares of common stock, pursuant to an effective S-3 registration statement, at prices ranging from approximately $15 to $45 per share.
Added
During times of extreme market volatility, capital may not be available on favorable terms, if at all. Our inability to obtain such additional capital could materially and adversely affect our business operations.
Removed
Net of underwriting discounts, legal, accounting, and other offering expenses, the Company received proceeds of approximately $4.7 million from the sale of these shares for the year ended April 30, 2021. On May 14, 2018, we entered into amendments to all of the material agreements with SG Austria and Austrianova. See Section entitled, History of the Business” in Item 1.
Added
Our future capital requirements are difficult to forecast and will depend on many factors, but we believe that our cash on hand will enable us to fund operating expenses for at least the next 12 months following the issuance of our consolidated financial statements.
Removed
Other income, net for the year ended April 30, 2021, is attributable to the forgiveness of the Paycheck Protection Program loan and accrued interest of $75,979 net of interest and other expenses of $4,234.
Added
Other Income (Expenses), Net Other income, net for the year ended April 30, 2023, was $2,139,501, as compared to other income, net of $152,853 in the year ended April 30, 2022.
Removed
New Accounting Pronouncements For a discussion of all recently adopted and recently issued but not yet adopted accounting pronouncements, see “Recent Accounting Pronouncements” in Note 2 of our Notes to our Consolidated Financial Statements included in Item 8, “Financial Statements and Supplementary Data” of this Report. 90
Added
Investing Activities : We had no investing activities for the years ended April 30, 2023, and 2022.
Added
New Accounting Pronouncements During the current and prior year, there were no new accounting pronouncements that need to be disclosed in the Company’s consolidated financial statements.

Other PMCB 10-K year-over-year comparisons