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What changed in Shuttle Pharmaceuticals Holdings, Inc.'s 10-K — 2023 vs 2024

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

+338 added−261 removedSource: 10-K (2025-02-26) vs 10-K (2024-03-21)

Top changes in Shuttle Pharmaceuticals Holdings, Inc.'s 2024 10-K

338 paragraphs added · 261 removed · 176 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

43 edited+41 added−62 removed122 unchanged
Biggest changeUsing rational drug design, we discovered dual function molecules, HDAC inhibitors and ATM activators capable of sensitizing cancer cells to radiation and protecting normal cells. The drug candidate may serve as a direct chemotherapeutic agent or as radiation sensitizers for treating cancers. ● SP-2-225 is Shuttle Pharma’s pre-clinical class IIb selective HDAC inhibitor that selectively affects histone deacetylase HDAC6.
Biggest changeThe IPdR/TPI formulation will undergo preclinical development for use as a radiation sensitizer and represents a “next generation” drug product for clinical evaluation. ● SP-2-225 is Shuttle Pharma’s pre-clinical class IIb selective HDAC inhibitor that selectively affects histone deacetylase HDAC6. SP-2-225 has effects on the regulation of the immune system.
Our pipeline is represented in the diagram below: Timeline for clinical phase (Ropidoxuridine) and pre-clinical phase (HDAC inhibitors) pipeline. Our lead product candidates include: ● Ropidoxuridine (IPdR) is our lead candidate radiation sensitizer for use in combination with RT to treat brain tumors (glioblastoma) and sarcomas.
Our pipeline is represented in the diagram below: Timeline for our clinical phase (Ropidoxuridine) and pre-clinical phase (HDAC inhibitors) pipeline. Our lead product candidates include: ● Ropidoxuridine (IPdR) is our lead candidate radiation sensitizer for use in combination with RT to treat brain tumors (glioblastoma) and sarcomas.
SBIR Contracts The SBIR Program The Small Business Innovation Research program, as developed by Congress under the Small Business Innovation Development Act of 1982, is designed to encourage domestic small businesses to engage in Federal Research/Research and Development (“R/R&D”) that has the potential for commercialization.
SBIR Contracts The SBIR Program The Small Business Innovation Research or SBIR, program, as developed by Congress under the Small Business Innovation Development Act of 1982, is designed to encourage domestic small businesses to engage in Federal Research/Research and Development (“R/R&D”) that has the potential for commercialization.
Based on the Phase I data of our clinical trial we know that therapeutic levels of IUdR are reached by administering the orally available prodrug, IPdR. 12 Clinical Data The Phase I results of the clinical trial supported by an SBIR contract to Shuttle Pharma and a sub-contract to the Brown University Oncology Group (BrUOG) at the LifeSpan/Rhode Island Hospital were reported by the subcontractor at the 30th EORTC-NCI-AACR Symposium in November 2018 and in the medical journal, Clinical Cancer Research, in 2019.
Based on the Phase I data of our clinical trial we know that therapeutic levels of IUdR are reached by administering the orally available prodrug, IPdR. 10 Clinical Data The Phase I results of the clinical trial supported by an SBIR contract to Shuttle Pharma and a sub-contract to the Brown University Oncology Group (BrUOG) at the LifeSpan/Rhode Island Hospital were reported by the subcontractor at the 30th EORTC-NCI-AACR Symposium in November 2018 and in the medical journal, Clinical Cancer Research, in 2019.
Our inability to meet any of the aforementioned milestones in the Phase II or Phase III clinical trials will cause us to be unable to proceed with our present efforts and will likely cause us to be unable to raise additional funds. 13 Our HDAC Small Molecule Delivery Platform General Since the founding of Shuttle Pharma, our discovery research and development efforts have been focused on our small molecule technology delivery platform which uses HDAC inhibitors, designed to target cancer cells, while protecting healthy tissue.
Our inability to meet any of the aforementioned milestones in the Phase II or Phase III clinical trials will cause us to be unable to proceed with our present efforts and will likely cause us to be unable to raise additional funds. 11 Our HDAC Small Molecule Delivery Platform General Since the founding of Shuttle Pharma, our discovery research and development efforts have been focused on our small molecule technology delivery platform which uses HDAC inhibitors, designed to target cancer cells, while protecting healthy tissue.
Our primary strategy for Ropidoxuridine and RT therapy is to provide oral drug delivery to effect radiation sensitization of cancers and validate effectiveness in glioblastoma and sarcoma, potential “Orphan” indications. 17 Brain Cancer Treatment Efficacy compared to historical RT-alone controls for treatment of high-grade primary brain tumors (RTOG*, NCI** trials) ** IUdR continuous IV infusion (1000 mg/m2/ day/ 14 days), Total of 39 patients (F.
Our primary strategy for Ropidoxuridine and RT therapy is to provide oral drug delivery to effect radiation sensitization of cancers and validate effectiveness in glioblastoma and sarcoma, potential “Orphan” indications. 15 Brain Cancer Treatment Efficacy compared to historical RT-alone controls for treatment of high-grade primary brain tumors (RTOG*, NCI** trials) ** IUdR continuous IV infusion (1000 mg/m2/ day/ 14 days), Total of 39 patients (F.
“Development of dual Function Small Molecules as Therapeutic Agents for Cancer Research,” Poster presentation #A178, American Association of Cancer Research Oct 2017). 14 SP-2-225 SP-2-225 is a selective HDAC inhibitor that affects histone deacetylase (HDAC6) and is a member of the class IIb HDAC family. Class II HDACs play important roles in cancer motility, invasion, neurological diseases, and immune checkpoint.
“Development of dual Function Small Molecules as Therapeutic Agents for Cancer Research,” Poster presentation #A178, American Association of Cancer Research Oct 2017). 12 SP-2-225 SP-2-225 is a selective HDAC inhibitor that affects histone deacetylase (HDAC6) and is a member of the class IIb HDAC family. Class II HDACs play important roles in cancer motility, invasion, neurological diseases, and immune checkpoint.
SP-1-303 data show direct cellular toxicity in ER positive breast cancer cells. Furthermore, SP-1-303 increases PD-L1 expression. A manuscript reporting completed preclinical in vitro studies is in preparation. We plan to seek collaborations to complete SP-1-303 pre-clinical development in 2024. Our Approach We believe that we have established a leadership position in radiation sensitizer discovery and development.
SP-1-303 data show direct cellular toxicity in ER positive breast cancer cells. Furthermore, SP-1-303 increases PD-L1 expression. A manuscript reporting completed preclinical in vitro studies is in preparation. We plan to seek collaborations to complete SP-1-303 pre-clinical development in 2025. Our Approach We believe that we have established a leadership position in radiation sensitizer discovery and development.
No other future milestone or royalty payments owed related to the Propagenix agreement. 16 Competition “Off-Label” Use Drugs with radiation sensitizing properties. Our Product Candidates We are advancing a clinical stage product candidate, Ropidoxuridine, that we believe will target cancer cells while protecting healthy tissue when used in conjunction with RT.
No other future milestone or royalty payments owed related to the Propagenix agreement. 14 Competition “Off-Label” Use Drugs with radiation sensitizing properties. Our Product Candidates We are advancing a clinical stage product candidate, Ropidoxuridine, that we believe will target cancer cells while protecting healthy tissue when used in conjunction with RT.
GMP synthesis of API, drug formulation and human dosage preparation will be performed under contracts with third-party manufacturers. 15 Strategic Agreements We have developed important strategic agreements with academic institutions for access to resources such as intellectual property, core facilities and contracting relationships. In addition, we have established an agreement with Propagenix for intellectual property in-licensing.
GMP synthesis of API, drug formulation and human dosage preparation will be performed under contracts with third-party manufacturers. 13 Strategic Agreements We have developed important strategic agreements with academic institutions for access to resources such as intellectual property, core facilities and contracting relationships. In addition, we have established an agreement with Propagenix for intellectual property in-licensing.
These Phase I trial results demonstrate oral bioavailability and an MTD of 1,200 mg per day for 28 days for use in combination with radiation for Phase II clinical trials that we propose to perform in brain tumors and in sarcomas. The brain tumor, glioblastoma multiforme (GB) is eligible for orphan disease designations.
These Phase I trial results demonstrate oral bioavailability and an MTD of 1,200 mg per day for 28 days for use in combination with radiation for Phase II clinical trials that we proposed to perform in brain tumors and in sarcomas. The brain tumor, glioblastoma multiforme (GB) is eligible for orphan disease designations.
Through a competitive awards-based program, SBIR enables small businesses to explore their technological potential and provides the incentive to profit from its commercialization. Some of the SBIR’s program goals include stimulating technological innovation, meeting Federal research and development needs and encouraging participation in innovation and entrepreneurship. 18 The SBIR program is a three-phase program.
Through a competitive awards-based program, SBIR enables small businesses to explore their technological potential and provides the incentive to profit from its commercialization. Some of the SBIR’s program goals include stimulating technological innovation, meeting Federal research and development needs and encouraging participation in innovation and entrepreneurship. 16 The SBIR program is a three-phase program.
The failure to obtain a license may have a material adverse effect on our business, results of operations and financial condition. 21 We also rely on trade secret protection for our confidential and proprietary information. No assurance can be given that we can meaningfully protect our trade secrets on a continuing basis.
The failure to obtain a license may have a material adverse effect on our business, results of operations and financial condition. 19 We also rely on trade secret protection for our confidential and proprietary information. No assurance can be given that we can meaningfully protect our trade secrets on a continuing basis.
The discovery and validation of metabolite panels to serve as a predictive biomarker of patient outcomes following radiation therapy and supports future development and commercialization of a diagnostic product through a Phase 2 SBIR effort. 19 The development to commercialization of the metabolite predictive biomarker panel requires additional support through the SBIR funding mechanism.
The discovery and validation of metabolite panels to serve as a predictive biomarker of patient outcomes following radiation therapy and supports future development and commercialization of a diagnostic product through a Phase 2 SBIR effort. 17 The development to commercialization of the metabolite predictive biomarker panel requires additional support through the SBIR funding mechanism.
Phase I clinical trial results supported by Shuttle Pharma and the NCI (CTEP) were reported in the medical journal, Clinical Cancer Research, in July 2019, by our SBIR subcontractor. Eighteen patients completed dose escalations to 1,800 mg/day for 30 days, establishing the maximum tolerated dose (MTD) of 1,200 mg/day in combination with RT.
Phase I clinical trial results supported by an NIH contract to Shuttle Pharma and the NCI (CTEP) were reported in the medical journal, Clinical Cancer Research, in July 2019, by our SBIR subcontractor. Eighteen patients completed dose escalations to 1,800 mg/day for 30 days, establishing the maximum tolerated dose (MTD) of 1,200 mg/day in combination with RT.
In January 2024, we received the ‘Safe to Proceed’ letter from the FDA for our IND application for the Phase II study of Ropidoxuridine (IPdR) as a radiation sensitizing agent during radiotherapy in patients with newly diagnosed IDH-wildtype glioblastoma with unmethylated MGMT promoter.
In January 2024, we received the ‘Safe to Proceed’ letter from the FDA for our IND application for the Phase II study of Ropidoxuridine (IPdR) as a radiation sensitizing agent during radiotherapy in patients with newly diagnosed IDH-wildtype glioblastoma with unmethylated MGMT promoter. Receipt of the letter allows us to commence the Phase II study of Ropidoxuridine (IPdR).
SP-2-225 has effects on the regulation of the immune system. The interactions of RT with the immune response for cancer treatment are of great current interest, offering insight into potential mechanisms for primary site and metastatic cancer treatment. For this reason, Shuttle Pharma has selected SP-2-225 as the candidate lead HDAC inhibitor for preclinical development.
The interactions of RT with the immune response for cancer treatment are of great current interest, offering insight into potential mechanisms for primary site and metastatic cancer treatment. For this reason, Shuttle Pharma has selected SP-2-225 as the candidate lead HDAC inhibitor for preclinical development.
We will be eligible to apply for Phase IIb SBIR funding the next round of solicitation. A Phase IIb will help de-risk the project by providing up to $4 million of matching funds for performing the clinical validation trial for product development to commercialization. We intend to apply for such government funding to advance this project.
We will be eligible to apply for Phase IIb SBIR funding for the next round of solicitation. A Phase IIb funding may help de-risk the project by providing matching funds for performing the clinical validation trial for product development to commercialization. We intend to apply for such government funding to advance this project.
This funding provided partial support for the Phase I clinical trial of Ropidoxuridine and RT. ● Develop prostate cancer cell cultures from African-American men, with donor matched normal prostate cells, establishing 50 pairs for accelerating research to reduce prostate cancer health disparities in African-American men.
This funding provided partial support for the Phase I clinical trial of Ropidoxuridine and RT. ● Develop prostate cancer cell cultures from African-American men, with donor matched normal prostate cells, establishing 50 pairs for accelerating research to reduce prostate cancer health disparities in African-American men. This project was funded under “Moonshot” designation.
The Company is eligible to apply for SBIR Phase IIb funding to “bridge” the funding gap should Shuttle Pharma elect to advance the “Moonshot” health disparities or the predictive biomarker project. The NIH SBIR program is designed to encourage small businesses to engage in Federal Research/Research and Development (“R/R&D”) that has the potential for commercialization.
The Company is eligible to apply for SBIR Phase IIb funding to advance the “Moonshot” health disparities or the predictive biomarker project. The NIH SBIR program is designed to encourage small businesses to engage in Federal Research/Research and Development (“R/R&D”) that has the potential for commercialization.
Shuttle Pharma entered into a research agreement (the “Research Agreement”) with Georgetown University for testing small molecule radiation sensitizers and immune activation candidates discovered and developed by Shuttle Pharma in cell-based and animal xenograft models. ○ In conjunction with the Research Agreement, Shuttle Pharma also entered into a material transfer agreement (the “MTA”), dated March 21, 2023, with Georgetown University.
The Patent Rights will be available for the Company’s use worldwide. ○ Shuttle Pharma entered into a research agreement (the “Research Agreement”) with Georgetown University for testing small molecule radiation sensitizers and immune activation candidates discovered and developed by Shuttle Pharma in cell-based and animal xenograft models. ○ In conjunction with the Research Agreement, Shuttle Pharma also entered into a material transfer agreement (the “MTA”), dated March 21, 2023, with Georgetown University.
The intellectual property for cells derived from African American patients under the Georgetown University subcontract belong to Shuttle Pharmaceuticals, Inc. based on our sub-licensing agreement with Propagenix. ○ Sub-contractor for the SBIR supported metabolomic predictive biomarker project (completed). The metabolomic biomarker intellectual property belongs to Georgetown University and Shuttle Pharma holds an exclusive option to license the intellectual property.
The intellectual property for cells derived from African American patients under the Georgetown University subcontract belong to Shuttle Pharmaceuticals, Inc. based on our sub-licensing agreement with Propagenix. ○ Sub-contractor for the SBIR supported metabolomic predictive biomarker project (completed).
The following is the status of the patent applications Shuttle has filed to date: 20 Summary of Shuttle Pharma’s Intellectual Property Portfolio Morgan, Lewis & Bockius LLP prepared patent applications related to Ropidoxuridine (IPdR) and HDAC inhibitors, and, in the fourth quarter of 2018, found no freedom to operate (FTO) issue for Ropidoxuridine used as radiosensitizer and used with tipiracil, and HDAC inhibitors SP-1-161 and SP-2-225.
The following table sets forth Shuttle Pharma’s key patents to date: 18 Summary of Shuttle Pharma’s Key Intellectual Property Portfolio Morgan, Lewis & Bockius LLP prepared patent applications related to Ropidoxuridine (IPdR) and HDAC inhibitors, and, in the fourth quarter of 2018, found no freedom to operate (FTO) issue for Ropidoxuridine used as radiosensitizer and used with tipiracil, and HDAC inhibitors SP-1-161 and SP-2-225.
Intellectual Property We invest significant amounts of funds in research and development. Our research and development expenses before contract reimbursements were $3,517,093 and $1,360,167 for the fiscal years ended December 31, 2023 and 2022 respectively.
Intellectual Property We invest significant amounts of funds in research and development. Our research and development expenses before contract reimbursements were $3,618,796 and $3,517,093 for the fiscal years ended December 31, 2024 and 2023 respectively, without receiving any reimbursements.
We also intend to raise capital through the public market for predictive biomarker development through the Shuttle Diagnostics entity. We do not intend to use the funds raised through our IPO for the health disparities project. Should we not be successful for SBIR IIb funding, we will terminate this project.
We also intend to raise capital through the public market for predictive biomarker development through the Shuttle Diagnostics entity. Should we not be successful in obtaining SBIR IIb funding, we will terminate this project.
As of the date of this Annual Report, we have filed five patent applications with the USPTO with respect to various aspects of our HDAC small molecule delivery platform and Ropidoxuridine, our lead product candidate.
As of the date of this Annual Report, we have 20 granted patents overall, of which we have five core patents granted by the USPTO with respect to various aspects of our HDAC small molecule delivery platform and one for Ropidoxuridine, our lead product candidate.
While this process may require years to complete, we believe achieving this goal could result in new radiation sensitizer and immunotherapy products. Key elements of our strategy include: ● Capitalize on Ropidoxuridine as an orally available, small molecule radiation sensitizer. To date, there is one drug (Cetuximab, a monoclonal antibody) approved by the FDA specifically as a radiation sensitizer.
Key elements of our strategy include: ● Capitalize on Ropidoxuridine as an orally available, small molecule radiation sensitizer. To date, there is one drug (Cetuximab, a monoclonal antibody) approved by the FDA specifically as a radiation sensitizer.
Companies that have completed Phase I and II SBIR awards are eligible to apply for Phase IIb SBIR funding. These awards are intended to de-risk a project by providing up to $4 million of matching funding for product development to commercialization.
Companies that have completed Phase I and II SBIR awards are eligible to apply for Phase IIb SBIR funding. These awards were historically intended to de-risk a project by providing matching funding for product development to commercialization. We intend to apply for such government funding to advance laboratory facilities and to expand the availability of the cell cultures.
We intend to seek collaborations centered on our platform to maximize applications for cancer treatment. 7 Radiation Therapy Radiation Oncologists use Radiation Therapy (RT) to treat cancers that cannot be completely removed by surgery but have not yet spread to distant sites within the body.
We intend to seek collaborations centered on our platform to maximize applications for cancer treatment. ● Establish Shuttle Diagnostics, Inc. as a subsidiary of SHPH to advance development of the predictive biomarker (PC-RAD Test) and the PSMA ligand (PSMA-B) to advance prostate cancer treatment. 8 Radiation Therapy Radiation Oncologists use Radiation Therapy (RT) to treat cancers that cannot be completely removed by surgery but have not yet spread to distant sites within the body.
Activation of the DNA damage response pathway to kill cancer cells and protect adjacent normal cells. 3. Activation of the immune system to kill any remaining cells after RT.
Activation of the DNA damage response pathway to kill cancer cells and protect adjacent normal cells. 3. Activation of the immune system to kill any remaining cells after RT. Our platform technology allows for the creation of an inventory of products for radiation sensitizing, immune modulation, and protection of healthy tissue.
Employees As of the date of this Annual Report, we have eight full-time employees, including our five executive officers, and three engaged in research and development. We consider our relationship with our employees to be good.
Employees As of the date of this Annual Report, we have nine full-time employees, including our six executive officers and three employees engaged in research and development. We consider our relationship with our employees to be good. Nasdaq Deficiency and 2024 Reverse Stock Split Our common stock currently is listed for quotation on the Nasdaq Capital Market (the “Nasdaq”).
Our product candidates include Ropidoxuridine, Extended Bio-availability Ropidoxuridine (IPdR/TPI), and a platform of HDAC inhibitors (SP-1-161, SP-2-225 and SP-1-303). In December 2023, we submitted an Investigational New Drug (“IND”) application with the U.S. Food and Drug Administration (“FDA”) to support the next phase of development of Ropidoxuridine.
In December 2023, we submitted an Investigational New Drug (“IND”) application with the U.S. Food and Drug Administration (“FDA”) to support the next phase of development of Ropidoxuridine.
Our Strategy Our goal is to maintain and build upon our leadership position in radiation sensitization. We plan to develop Ropidoxuridine and the HDAC6 inhibitor (SP-2-225) and, if approved by the FDA, commercialize our product candidates for the treatment of cancers.
We plan to develop Ropidoxuridine and the HDAC6 inhibitor (SP-2-225) and, if approved by the FDA, commercialize our product candidates for the treatment of cancers. While this process may require years to complete, we believe achieving this goal could result in new radiation sensitizer and immunotherapy products.
We enter into confidentiality and proprietary rights agreements with our employees, consultants, collaborators, subcontractors and other third parties and generally control access to our documentation and proprietary information.
We are seeking multifaceted protection for our intellectual property that includes licenses, confidentiality and non-disclosure agreements, copyrights, patents, trademarks and common law rights, such as trade secrets. We enter into confidentiality and proprietary rights agreements with our employees, consultants, collaborators, subcontractors and other third parties and generally control access to our documentation and proprietary information.
Radiation Oncology has gone through transformative technological innovation over the last several years to better define tumors, allow improved shaping of radiation delivery and support dose escalation with shorter courses of treatment.
We believe our management team’s expertise in radiation therapy, combined modality cancer treatment and immuno-oncology will help drive the development and, if approved, the commercialization of these potentially curative therapies for patients with aggressive cancers. 4 Radiation Oncology has gone through transformative technological innovation over the last several years to better define tumors, allow improved shaping of radiation delivery and support dose escalation with shorter courses of treatment.
We have contracted with investigators at Georgetown University to perform preclinical studies of immune activation after radiation therapy in an animal tumor model. Requests for proposals for advancing drug manufacture and IND-enabling studies have been submitted and are under review to enable drug development to a Phase I clinical trial in 2024.
We have contracted with investigators at Georgetown University to perform preclinical studies of immune activation after radiation therapy in an animal tumor model.
We intend to apply for such government funding to advance laboratory facilities and to expand the availability of the cell cultures. We did not raise capital through our IPO for the health disparities project. Should we not be successful with SBIR IIb funding, we will pause and may have to terminate this project.
We did not raise capital through our IPO for the health disparities project. Should we not be successful with SBIR IIb funding, we will pause and may have to terminate this project. Prostate Cancer Biomarker Development Patients treated for prostate cancer may experience treatment related late effects that adversely affect quality of life and may prove life-threatening.
Currently, such drugs are chemotherapy agents used off-label, and many have inherent toxicities since they were designed for direct cancer treatments and not for sensitization.
Currently, such drugs are chemotherapy agents used off-label, and many have inherent toxicities since they were designed for direct cancer treatments and not for sensitization. However, the clinical value of using radiation sensitizing drugs in combination with RT has been accepted in a variety of cancer types, including gynecological, gastro-intestinal, pulmonary and other malignancies.
Receipt of the letter allows us to commence the Phase II study of Ropidoxuridine (IPdR). 5 ● Ropidoxuridine and Tipiracil (IPdR/TPI) is a new combination formulation demonstrating extended bioavailability after oral administration in an animal model system.
The optimum dose will then continue to enroll 14 additional patients to provide the required 34 patients for statistical significance in comparison to historical controls. ● Ropidoxuridine and Tipiracil (IPdR/TPI) is a new combination formulation demonstrating extended bioavailability after oral administration in an animal model system.
Exclusive licensing agreement with Georgetown University pursuant to which Georgetown University agreed to license the intellectual property known as “Predictive Biomarkers for Adverse Effects of Radiation Therapy” (U.S. Patent Application No. 17/476,184, filed on September 15, 2021) (the “Patent Rights”), which was developed by Dr. Anatoly Dritschilo, the Company’s Chief Executive Officer, Dr.
Patent Application No. 17/476,184, filed on September 15, 2021) (the “Patent Rights”), which was developed by Dr. Anatoly Dritschilo, the Company’s Chief Executive Officer, Dr. Scott Grindrod, the Company’s Principal Scientist, and Drs. Amrita Cheema and Yaoxiang Li, employees of Georgetown.
Census estimates that the age group of 65-84 will grow by 23% within the next five years, indicating a likely increase in the overall number of cancer patients in the U.S. 8 The table below details the number of cancers estimated in the United States in 2024: Estimated New Cancer Cases in the U.S.
Census estimates that the age group of 65-84 will grow by 23% within the next five years, indicating a likely increase in the overall number of cancer patients in the U.S. 9 ROPIDOXURIDINE The halogenated thymidine (TdR) analogs, bromodeoxyuridine (BUdR) and iododeoxyuridine (IUdR), are a class of pyrimidine analogs that have been recognized as potent radiosensitizing agents since the early 1960s.
We have applied for and received FDA approval of Orphan designation for Ropidoxuridine and RT for treating brain cancer (glioblastoma). We believe our management team’s expertise in radiation therapy, combined modality cancer treatment and immuno-oncology will help drive the development and, if approved, the commercialization of these potentially curative therapies for patients with aggressive cancers.
We have applied for and received FDA approval of Orphan designation for Ropidoxuridine and RT for treating brain cancer (glioblastoma).
Cells from African-American patients are distributed to investigators who are conducting health disparities research. ● Develop predictive biomarkers for determining outcomes for prostate cancer patients following treatment with SBRT.
Shuttle Pharma is eligible to apply for additional SBIR (Phase IIb) funding to commercialize these cells for research purposes. Currently, cells from African-American patients are distributed, on request, to investigators who are conducting health disparities research.
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Our platform technology allows for the creation of an inventory of products for radiation sensitizing, immune modulation, and protection of healthy tissue. 4 Our Pipeline We are currently developing a pipeline of small molecule radiation sensitizers and immune response regulating drugs.
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The corporate structure is based on Shuttle Pharmaceuticals Holdings, Inc. (Nasdaq SHPH – a Delaware company) serving as a holding company with drug discovery and development performed in the Company’s wholly-owned subsidiary Shuttle Pharmaceuticals, Inc. (a Maryland Company) and diagnostics performed in the Company’s wholly-owned subsidiary Shuttle Diagnostics, Inc. (a Maryland Company).
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The IPdR/TPI formulation will undergo preclinical development for use as a radiation sensitizer of rectal cancers after the Phase II brain tumor clinical trial has been initiated. ● SP-1-161 is Shuttle Pharma’s pre-clinical candidate lead HDAC inhibitor, radiation sensitizing candidate product. This pan HDAC inhibitor initiates the mutated in ataxia-telangiectasia (ATM) response pathway.
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Our product candidates include Ropidoxuridine, a Phase II clinical-stage radiation sensitizer, a platform of HDAC inhibitors (SP-1-161, SP-2-225 and SP-1-303), and two preclinical, prostate cancer-oriented diagnostics assets – the PC-RAD Test, a blood test to predict clinical response to radiation therapy and the PSMA-B ligand for potential use as a theranostic agent.
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We propose to perform Phase I and Phase II clinical trials to advance our clinical product candidates.
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Hence, there is a critical need for new drugs that preferentially sensitize cancer cells to radiation therapy and that stimulate the innate immune response against irradiated cancer cells.
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In addition, candidate HDAC inhibitor molecules will be tested in animal models, and IND-enabling studies will be performed to prepare for Phase I clinical trials. 6 To date, we have been awarded three SBIR contracts from the NIH to: ● Develop IPdR as a radiation sensitizer for the treatment of gastro-intestinal cancers, in combination with radiation therapy.
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Furthermore, to advance precision medicine in radiation oncology, there is a need for imaging and molecular diagnostic tests for determining the extent of cancer spread in the body and for predicting clinical responses to therapy.
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This project was funded under “Moonshot” designation and Shuttle Pharma is eligible to submit an application for additional SBIR (Phase IIb) funding to establish the infrastructure required to expand and distribute cells for research purposes.
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Operations to date have focused on continuing our research and development efforts to advance Ropidoxuridine clinical testing and improved drug formulation to advance HDAC6 inhibitor (SP-2-225) preclinical development and explore application of the PC-RAD Test, predictive biomarkers of radiation response.
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This SBIR-funded project was completed on March 15, 2022 and Shuttle Pharma is eligible to apply for additional funding through the SBIR (Phase IIb) mechanism The Phase IIb SBIR grant mechanism is designed to de-risk clinical validation to develop the predictive biomarkers to commercialization.
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The clinical development of Ropidoxuridine has included completion of a Phase I clinical trial to establish drug bioavailability and a maximum tolerated dose for use in Phase II clinical trials. TCG GreenChem, Inc.
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Male Female Prostate 299,010 27 % Breast 310,720 31 % Lung & bronchus 116,310 12 % Lung & bronchus 118,270 13 % Colon & rectum 81,540 8 % Colon & rectum 71,270 8 % Urinary bladder 118,330 6 % Uterine corpus 67,880 7 % Melanoma of the skin 59,170 6 % Melanoma of the skin 41,470 5 % Kidney & renal pelvis 52,380 5 % Thyroid 31,520 3 % Non-Hodgkin lymphoma 44,590 4 % Non-Hodgkin lymphoma 36,030 4 % Oral cavity & pharynx 41,510 4 % Kidney & renal pelvis 29,230 3 % Leukemia 36,450 4 % Pancreas 31,910 3 % Pancreas 34,530 3 % Leukemia 26,320 3 % All sites 983,160 All sites 934,870 ACS Facts & Figures, 2024 The U.S. estimated incidence, deaths and five-year survival rate of cancer patients responsive to radiation therapy is significant (ACS Facts & Figures, 2024).
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(“TCG GreenChem”), with whom we have contracted for process research, development and Good Manufacturing Practices (“cGMP”) compliant manufacture of IPdR, has manufactured the active pharmaceutical ingredient (API) of Ropidoxuridine and the University of Iowa Pharmaceuticals has formulated the drug product for use in the Company’s upcoming Phase II clinical trial in brain cancer patients undergoing radiation therapy.
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The top cancers responsive to radiation are shown, based on the number of newly diagnosed patients. The incidence rates for some cancers are increasing by approximately 1-2% per year in the U.S. The number of newly diagnosed patients is significant and growing due to the aging of the population and improved diagnostic techniques.
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The drug product (capsules) was shipped to contract research organization (CRO) Theradex Oncology and distributed to clinical trial sites that are fully approved to enroll patients in the trial.
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The cancers listed above illustrate the opportunity presented for radiation sensitizers. Of note is the low five-year survival of pancreas, brain, lung and esophagus cancers—all are candidates for Shuttle Pharma’s pipeline of radiation sensitizing compounds.
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The Company received approval from the FDA to begin the clinical trial, after which time the FDA made recommendations to expand the clinical trial to include a randomized dose “optimization” step and we agreed with the recommendation.
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Cancers with low survival rates are of interest since they show a high unmet need for new therapeutics and an opportunity for Shuttle Pharma to gain significant uptake of their pipeline compounds.
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Meetings with engaged clinical sites to review the protocol documents have occurred and FDA required Institutional Review Board, or IRB approvals have been received. With FDA recommended changes incorporated into the revised protocol and the completion of site initiation visits, the Company has commenced its Phase II clinical study.
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Factors that present challenges and may restrict growth in the radiation sensitizer market include the safety and tolerability of many of the newer agents with radiation sensitizing properties; a regulatory environment that engenders greater levels of scrutiny of clinical practice issues; the high cost of newer agents; and the changing (and more restrictive) reimbursement environment in radiation oncology through CMS (Center for Medicare and Medicaid Services) and private payors.
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The radiation biomarker project and the health disparities project have been completed and the Company is proceeding with plans for clinical validation and potential for commercialization of Ropidoxuridine as a radiation sensitizer.
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These factors may negatively impact the potential for growth in the U.S. market. Many of the drugs used “off-label” as radiation sensitizers currently require close scrutiny of their potential for side effects that can affect the safety and tolerability of their use with patients.
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We also worked with University of Iowa Pharmaceuticals to develop the formulation, produce the capsules, and which have been shipped to Contract Research Organization (CRO) Theradex Oncology for distribution to clinical trial sites. Both activities have now been completed. In addition, we received approval from the FDA to begin the clinical trial.
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All of the current agents carry significant potential for side effects that can affect patients’ therapies and quality of life. Radiation sensitizing agents can cause both acute and chronic side effects in patients.
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The FDA made recommendations to expand the clinical trial and the Company agreed with the recommendation.
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Side effects can vary from person to person depending on age, sex, type of cancer, dose given per day, total dose given, and the patient’s general medical condition.
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With this change incorporated into the revised protocol, the Company commenced its Phase II clinical study with finalized agreements with all six of the planned site enrollment locations to administer the Phase II clinical trial of Ropidoxuridine and has enrolled the first three patients in October 2024. 5 Our Pipeline We are currently developing a pipeline of small molecule radiation sensitizers and immune response regulating drugs.
Removed
Some common side effects of currently used radiation sensitizers include leukopenia, skin damage, hair loss, fatigue, bladder problems, nausea, fibrosis, memory loss, infertility, and enhanced risk of developing a second cancer, which may arise as a result of the patient’s weakened immune system due to cytotoxic drugs used in treatment or when newer biologic agents cause the over-production of specific cytokines or proteins, which can lead to developing secondary cancers.
Added
The clinical development of Ropidoxuridine has shown drug bioavailability and a maximum tolerated dose has been established for use in Phase II clinical trials. TCG GreenChem, Inc.
Removed
Over the past five years, the FDA has taken an increasingly conservative approach to the approval of new agents for oncology treatment. There is greater scrutiny of results from clinical trials regarding progression free survival, overall survival, and safety and tolerability of new agents.
Added
(“TCG GreenChem”), with whom we have contracted for process research, development and cGMP compliant manufacture of IPdR, has successfully completed the manufacturing campaign for the active pharmaceutical ingredient (API) of Ropidoxuridine for use in the Company’s upcoming Phase II clinical trial in brain cancer patients undergoing radiation therapy.
Removed
Restrictions such as black box warnings and REMS (Risk Evaluation and Migration Strategies) are being applied to more new products over the past five years compared to the previous five years. These restrictions require physicians to be more careful in evaluating the use of newer agents and newer diagnostic tools to select the most appropriate patients for newer approved agents.
Added
The Company also worked with University of Iowa Pharmaceuticals to develop the formulation and produce the capsules, which have been shipped to contract research organization (CRO) Theradex Oncology for distribution to clinical trial sites. Both activities have now been completed. In addition, Shuttle received approval from the FDA to begin the clinical trial.
Removed
Many of the new agents are molecularly targeted therapies that are biologic in their development and manufacturing. The cost of the newer agents can be significant. For example, the cost for Avastin for one treatment course as a radiation sensitizer is estimated at $9,000-12,000 according to one Key Opinion Leader in the U.S.
Added
The FDA made recommendations that led to an expanded clinical trial to include randomized dose optimization and we agreed with the recommendation. We met with representatives from six candidate clinical sites to review the protocol documents and FDA required IRB approvals have been obtained.
Removed
(Carl Schmidt, Consultant, Shuttle Pharmaceuticals Holdings, Inc., Business Plan 2018). Recently, a CAR-T gene therapy from Novartis was launched with a yearly cost of $475,000.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

75 edited+61 added−6 removed268 unchanged
Biggest changeIf these companies develop technologies or product candidates more rapidly than we do or their technologies, including delivery technologies, are more effective, our ability to develop and commercialize product candidates may be adversely affected. ● If we fail to comply with U.S. and foreign regulatory requirements, regulatory authorities could limit or withdraw any marketing or commercialization approvals we may receive and subject us to other penalties that could materially harm our business. ● If we do not comply with laws regulating the protection of the environment and health and human safety, our business could be adversely affected. ● If we are not able to obtain and enforce patent protection for our technologies or product candidates, development and commercialization of our product candidates may be adversely affected. ● We or our licensors, or any future collaborators or a strategic partners may become subject to third party claims or litigation alleging infringement of patents or other proprietary rights or seeking to invalidate patents or other proprietary rights, and we may need to resort to litigation to protect or enforce our patents or other proprietary rights, all of which could be costly, time consuming, delay or prevent the development and commercialization of our product candidates, or put our patents and other proprietary rights at risk. ● If we are unable to protect the confidentiality of our trade secrets, our business and competitive position would be harmed. ● We may be unable to obtain U.S. or foreign regulatory approval and, as a result, unable to commercialize our product candidates. ● Any drugs we develop may become subject to unfavorable pricing regulations, third-party reimbursement practices or healthcare reform initiatives, thereby harming our business. ● Our ability to obtain services, reimbursement or funding from the federal government may be impacted by possible reductions in federal spending. ● If any of our product candidates receives marketing approval and we or others later identify undesirable side effects caused by the product candidate, our ability to market and derive revenue from the product candidates could be compromised. ● Our stock price is presently trading below $1.00 and, while Nasdaq has granted us until August 26, 2024 to regain compliance, there is no guarantee that we will regain compliance without effectuating a reverse stock split. ● Our stock price may be volatile, and purchasers of our common stock could incur substantial losses. ● The future issuance of equity or of debt securities that are convertible into common stock will dilute our share capital. ● If securities or industry analysts do not publish research or reports about our business, or if they issue an adverse or misleading opinion regarding our stock, our stock price and trading volume could decline. 24 RISK FACTORS An investment in our common stock involves a high degree of risk.
Biggest changeIf these companies develop technologies or product candidates more rapidly than we do or their technologies, including delivery technologies, are more effective, our ability to develop and commercialize product candidates may be adversely affected. ● If we fail to comply with U.S. and foreign regulatory requirements, regulatory authorities could limit or withdraw any marketing or commercialization approvals we may receive and subject us to other penalties that could materially harm our business. ● If we do not comply with laws regulating the protection of the environment and health and human safety, our business could be adversely affected. ● If we are not able to obtain and enforce patent protection for our technologies or product candidates, development and commercialization of our product candidates may be adversely affected. ● We or our licensors, or any future collaborators or a strategic partners may become subject to third party claims or litigation alleging infringement of patents or other proprietary rights or seeking to invalidate patents or other proprietary rights, and we may need to resort to litigation to protect or enforce our patents or other proprietary rights, all of which could be costly, time consuming, delay or prevent the development and commercialization of our product candidates, or put our patents and other proprietary rights at risk. ● If we are unable to protect the confidentiality of our trade secrets, our business and competitive position would be harmed. ● We may be unable to obtain U.S. and/or foreign regulatory approval and, as a result, unable to commercialize our product candidates. ● Any drugs we develop may become subject to unfavorable pricing regulations, third-party reimbursement practices or healthcare reform initiatives, thereby harming our business. ● Our ability to obtain services, reimbursement or funding from the federal government may be impacted by possible reductions in federal spending. ● If any of our product candidates receives marketing approval and we or others later identify undesirable side effects caused by the product candidate, our ability to market and derive revenue from the product candidates could be compromised. ● On December 31, 2024, the Company received a letter from Nasdaq stating that for the 30 consecutive business day period between November 15, 2024 to December 30, 2024 the Company’s common stock had failed to maintain a minimum closing bid price of $1.00 per share, as required for continued listing pursuant to Nasdaq Listing Rule 5550(a)(2).
We have not yet completed clinical trials and thus do not yet have commercial sales of our products and have not yet not generated any revenues from commercial sales of our product candidates.
We have not yet completed clinical trials and thus do not yet have commercial sales of our products and have not yet generated any revenues from commercial sales of our product candidates.
The market price for our common stock may be influenced by many factors, including the other risks described in this section of this Annual Report entitled “Risk Factors” and the following: ● the success of competitive products or technologies; ● results of preclinical and clinical studies of our product candidates, or those of our competitors, our existing collaborator or any future collaborators; ● regulatory or legal developments in the U.S. and other countries, especially changes in laws or regulations applicable to our products; ● introductions and announcements of new products by us, our commercialization partners, or our competitors, and the timing of these introductions or announcements; ● actions taken by regulatory agencies with respect to our products, clinical studies, manufacturing process or sales and marketing terms; ● actual or anticipated variations in our financial results or those of companies that are perceived to be similar to us; ● the success of our efforts to acquire or in-license additional technologies, products or product candidates; ● developments concerning our collaborations, including but not limited to those with our sources of manufacturing supply and our commercialization partners; ● announcements by us or our competitors of significant acquisitions, strategic partnerships, joint ventures or capital commitments; ● developments or disputes concerning patents or other proprietary rights, including patents, litigation matters and our ability to obtain patent protection for our products; ● our ability or inability to raise additional capital and the terms on which we raise it; ● the recruitment or departure of key personnel; ● changes in the structure of healthcare payment systems; ● market conditions in the pharmaceutical and biotechnology sectors; 48 ● actual or anticipated changes in earnings estimates or changes in stock market analyst recommendations regarding our common stock, other comparable companies or our industry generally; ● our failure or the failure of our competitors to meet analysts’ projections or guidance that we or our competitors may give to the market; ● fluctuations in the valuation of companies perceived by investors to be comparable to us; ● announcement and expectation of additional financing efforts; ● speculation in the press or investment community; ● trading volume of our common stock; ● sales of our common stock by us or our stockholders; ● the concentrated ownership of our common stock; ● changes in accounting principles; ● terrorist acts, acts of war or periods of widespread civil unrest; ● natural disasters and other calamities; and ● general economic, industry and market conditions.
The market price for our common stock may be influenced by many factors, including the other risks described in this section of this Annual Report entitled “Risk Factors” and the following: ● the success of competitive products or technologies; ● results of preclinical and clinical studies of our product candidates, or those of our competitors, our existing collaborator or any future collaborators; ● regulatory or legal developments in the U.S. and other countries, especially changes in laws or regulations applicable to our products; ● introductions and announcements of new products by us, our commercialization partners, or our competitors, and the timing of these introductions or announcements; ● actions taken by regulatory agencies with respect to our products, clinical studies, manufacturing process or sales and marketing terms; ● actual or anticipated variations in our financial results or those of companies that are perceived to be similar to us; ● the success of our efforts to acquire or in-license additional technologies, products or product candidates; ● developments concerning our collaborations, including but not limited to those with our sources of manufacturing supply and our commercialization partners; ● announcements by us or our competitors of significant acquisitions, strategic partnerships, joint ventures or capital commitments; ● developments or disputes concerning patents or other proprietary rights, including patents, litigation matters and our ability to obtain patent protection for our products; ● our ability or inability to raise additional capital and the terms on which we raise it; ● the recruitment or departure of key personnel; ● changes in the structure of healthcare payment systems; ● market conditions in the pharmaceutical and biotechnology sectors; 45 ● actual or anticipated changes in earnings estimates or changes in stock market analyst recommendations regarding our common stock, other comparable companies or our industry generally; ● our failure or the failure of our competitors to meet analysts’ projections or guidance that we or our competitors may give to the market; ● fluctuations in the valuation of companies perceived by investors to be comparable to us; ● announcement and expectation of additional financing efforts; ● speculation in the press or investment community; ● trading volume of our common stock; ● sales of our common stock by us or our stockholders; ● the concentrated ownership of our common stock; ● changes in accounting principles; ● terrorist acts, acts of war or periods of widespread civil unrest; ● natural disasters and other calamities; and ● general economic, industry and market conditions.
In addition, we may seek additional capital due to favorable market conditions or strategic considerations even if we believe we have sufficient funds for our current or future operating plans. 28 Our future capital requirements depend on many factors, including: ● the scope, progress, results and costs of researching and developing our current product candidates, future product candidates and conducting preclinical and clinical trials; ● the cost of commercialization activities if our current product candidates and future product candidates are approved for sale, including securing collaborative ventures for completing development of, securing marketing approval for and ultimately marketing, selling and distributing our product candidates, if approved or building a corporate infrastructure if we have to undertake these activities directly; ● our ability to establish and maintain strategic collaborations, licensing or other arrangements and the financial terms of such agreements; ● the number and characteristics of any additional product candidates we may develop or acquire; ● any product liability or other lawsuits related to our products or commenced against us; ● the expenses needed to attract and retain skilled personnel; ● the costs associated with being a public company; ● the costs involved in preparing, filing, prosecuting, maintaining, defending and enforcing patent claims, including litigation costs and the outcome of such litigation; and ● the timing, receipt and amount of sales of, or royalties on, any future approved products, if any.
In addition, we may seek additional capital due to favorable market conditions or strategic considerations even if we believe we have sufficient funds for our current or future operating plans. 25 Our future capital requirements depend on many factors, including: ● the scope, progress, results and costs of researching and developing our current product candidates, future product candidates and conducting preclinical and clinical trials; ● the cost of commercialization activities if our current product candidates and future product candidates are approved for sale, including securing collaborative ventures for completing development of, securing marketing approval for and ultimately marketing, selling and distributing our product candidates, if approved or building a corporate infrastructure if we have to undertake these activities directly; ● our ability to establish and maintain strategic collaborations, licensing or other arrangements and the financial terms of such agreements; ● the number and characteristics of any additional product candidates we may develop or acquire; ● any product liability or other lawsuits related to our products or commenced against us; ● the expenses needed to attract and retain skilled personnel; ● the costs associated with being a public company; ● the costs involved in preparing, filing, prosecuting, maintaining, defending and enforcing patent claims, including litigation costs and the outcome of such litigation; and ● the timing, receipt and amount of sales of, or royalties on, any future approved products, if any.
In addition, there can be no assurance that: ● others will not or may not be able to make, use or sell compounds that are the same as or similar to our product candidates but that are not covered by the claims of the patents that we own or license; ● we or our licensors, collaborators or any future collaborators are the first to make the inventions covered by each of our issued patents and pending patent applications that we own or license; ● we or our licensors, collaborators or any future collaborators are the first to file patent applications covering certain aspects of our inventions; ● others will not independently develop similar or alternative technologies or duplicate any of our technologies without infringing our intellectual property rights; ● A third party may not challenge our patents and, if challenged, a court may not hold that our patents are valid, enforceable and infringed; ● any issued patents that we own or have licensed will provide us with any competitive advantages, or will not be challenged by third parties; ● we may develop additional proprietary technologies that are patentable; ● the patents of others will not have an adverse effect on our business; and ● our competitors do not conduct research and development activities in countries where we do not have enforceable patent rights and then use the information learned from such activities to develop competitive products for sale in our major commercial markets. 37 We intend to license patent rights from third-party owners or licensees.
In addition, there can be no assurance that: ● others will not or may not be able to make, use or sell compounds that are the same as or similar to our product candidates but that are not covered by the claims of the patents that we own or license; ● we or our licensors, collaborators or any future collaborators are the first to make the inventions covered by each of our issued patents and pending patent applications that we own or license; ● we or our licensors, collaborators or any future collaborators are the first to file patent applications covering certain aspects of our inventions; ● others will not independently develop similar or alternative technologies or duplicate any of our technologies without infringing our intellectual property rights; ● A third party may not challenge our patents and, if challenged, a court may not hold that our patents are valid, enforceable and infringed; ● any issued patents that we own or have licensed will provide us with any competitive advantages, or will not be challenged by third parties; ● we may develop additional proprietary technologies that are patentable; ● the patents of others will not have an adverse effect on our business; and ● our competitors do not conduct research and development activities in countries where we do not have enforceable patent rights and then use the information learned from such activities to develop competitive products for sale in our major commercial markets. 34 We intend to license patent rights from third-party owners or licensees.
Corresponding changes have been made to the Exchange Act, which relates to periodic reporting requirements, which would be applicable if the Company were required to comply with them. ● As long as we are an EGC, we may comply with Item 402 of Regulation S-K, which requires extensive quantitative and qualitative disclosure regarding executive compensation, by disclosing the more limited information required of a “smaller reporting company.” ● The Jobs Act will also exempt us from the following additional compensation-related disclosure provisions that were imposed on U.S. public companies pursuant to the Dodd-Frank Act: (i) the advisory vote on executive compensation required by Section 14A(a) of the Exchange Act; (ii) the requirements of Section 14A(b) of the Exchange Act relating to stockholders advisory votes on “golden parachute” compensation; (iii) the requirements of Section 14(i) of the Exchange Act as to disclosure relating to the relationship between executive compensation and our financial performance; and (iv) the requirement of Section 953(b)(1) of the Dodd-Frank Act, which requires disclosure as to the relationship between the compensation of our chief executive officer and median employee pay. 47 Our stock price may be volatile, and purchasers of our common stock could incur substantial losses.
Corresponding changes have been made to the Exchange Act, which relates to periodic reporting requirements, which would be applicable if the Company were required to comply with them. ● As long as we are an EGC, we may comply with Item 402 of Regulation S-K, which requires extensive quantitative and qualitative disclosure regarding executive compensation, by disclosing the more limited information required of a “smaller reporting company.” ● The Jobs Act will also exempt us from the following additional compensation-related disclosure provisions that were imposed on U.S. public companies pursuant to the Dodd-Frank Act: (i) the advisory vote on executive compensation required by Section 14A(a) of the Exchange Act; (ii) the requirements of Section 14A(b) of the Exchange Act relating to stockholders advisory votes on “golden parachute” compensation; (iii) the requirements of Section 14(i) of the Exchange Act as to disclosure relating to the relationship between executive compensation and our financial performance; and (iv) the requirement of Section 953(b)(1) of the Dodd-Frank Act, which requires disclosure as to the relationship between the compensation of our chief executive officer and median employee pay. 44 Our stock price may be volatile, and purchasers of our common stock could incur substantial losses.
Various of Russia’s actions have led to sanctions and other penalties being levied by the United States, Australia, the European Union, and other countries, as well as other public and private actors and companies, against Russia and certain other geographic areas, including agreement to remove certain Russian financial institutions from the Society for Worldwide Interbank Financial Telecommunication payment system and restrictions on imports of Russian oil, liquified natural gas and coal.
For example, various of Russia’s actions have led to sanctions and other penalties being levied by the United States, Australia, the European Union, and other countries, as well as other public and private actors and companies, against Russia and certain other geographic areas, including agreement to remove certain Russian financial institutions from the Society for Worldwide Interbank Financial Telecommunication payment system and restrictions on imports of Russian oil, liquified natural gas and coal.
These provisions, among other things: ● permit the board of directors to establish the number of directors; ● provide that directors may only be removed “for cause” and only with the approval of 66 2/3 percent of our stockholders; 51 ● require super-majority voting to amend some provisions in our Certificate of Incorporation and Bylaws; ● authorize the issuance of “blank check” preferred stock that our board of directors could use to implement a stockholder rights plan (also known as a “poison pill”); ● eliminate the ability of our stockholders to call special meetings of stockholders; ● prohibit stockholder action by written consent, which requires all stockholder actions to be taken at a meeting of our stockholders; ● provide that the board of directors is expressly authorized to make, alter or repeal our bylaws; and ● establish advance notice requirements for nominations for election to our board of directors or for proposing matters that can be acted upon by stockholders at annual stockholder meetings.
These provisions, among other things: ● permit the board of directors to establish the number of directors; ● provide that directors may only be removed “for cause” and only with the approval of 66 2/3 percent of our stockholders; 48 ● require super-majority voting to amend some provisions in our Certificate of Incorporation and Bylaws; ● authorize the issuance of “blank check” preferred stock that our board of directors could use to implement a stockholder rights plan (also known as a “poison pill”); ● eliminate the ability of our stockholders to call special meetings of stockholders; ● prohibit stockholder action by written consent, which requires all stockholder actions to be taken at a meeting of our stockholders; ● provide that the board of directors is expressly authorized to make, alter or repeal our bylaws; and ● establish advance notice requirements for nominations for election to our board of directors or for proposing matters that can be acted upon by stockholders at annual stockholder meetings.
In addition, we have limited experience and have not yet demonstrated an ability to successfully overcome many of the risks and uncertainties frequently encountered by companies in new and rapidly evolving fields, particularly in the specialty pharmaceutical industry. We have not generated any revenue and have incurred losses in each year since our founding in December 2012.
In addition, we have limited experience and have not yet demonstrated an ability to successfully overcome many of the risks and uncertainties frequently encountered by companies in new and rapidly evolving fields, particularly in the specialty pharmaceutical industry. We have not generated any revenue to date and have incurred losses in each year since our founding in December 2012.
As our product candidates enter and advance through preclinical studies and any clinical trials, we will need to expand our development, regulatory and manufacturing capabilities or contract with other organizations to provide these capabilities for us. In the future, we expect to have to manage additional relationships with collaborators or partners, suppliers and other organizations.
As our product candidates enter into and advance through preclinical studies and any clinical trials, we will need to expand our development, regulatory and manufacturing capabilities or contract with other organizations to provide these capabilities for us. In the future, we expect to have to manage additional relationships with collaborators or partners, suppliers and other organizations.
The clinical and commercial success of product candidates will depend on a number of factors, including the following: ● building on favorable results from our Phase I clinical trial for IPdR and proceeding to Phase II and Phase III clinical trials, which may be slower or cost more than we currently anticipate; ● our ability to demonstrate safety and efficacy of our product candidates, which are ongoing determinations that are solely within the authority of the FDA; ● even if our clinical trials are completed, there can be no assurance that the FDA will agree that we have satisfactorily demonstrated safety or efficacy or that the FDA will not raise new issues regarding the design of our clinical trials; ● whether we are required by the FDA to conduct additional clinical trials to support the approval of our product candidates; ● the acceptance by the FDA of our proposed parameters for regulatory approval, including our proposed indication, endpoints and endpoint measurement tools relating to our product candidates; ● the incidence, duration and severity of adverse side effects; ● the timely receipt of necessary marketing approvals from the FDA; ● whether we are able to secure collaborations for completing the development and, if approved, commercialization of our product candidates; ● the effectiveness of our and our potential collaborators’ marketing, sales and distribution strategy and operations of product candidates that are approved; ● our success in educating physicians and patients about the benefits, administration and use of our product candidates; ● the ability of our third-party manufacturers and potential collaborators to manufacture clinical trial and commercial supplies of our product candidates to remain in good standing with regulatory bodies, and to develop, validate and maintain commercially viable manufacturing processes that are compliant with current Good Manufacturing Practices (“cGMP”) regulations; ● our ability to commercialize our product candidates, if approved for marketing; ● our ability to enforce our intellectual property rights; ● our ability to avoid third-party patent interference or patent infringement claims; ● acceptance of our product candidates as safe and effective by patients and the medical community; and ● a continued acceptable quality profile of our product candidates following approval.
The clinical and commercial success of product candidates will depend on a number of factors, including the following: ● building on favorable results from our Phase I clinical trial for IPdR and proceeding to Phase II and Phase III clinical trials, which may be slower or cost more than we currently anticipate; ● our ability to demonstrate safety and efficacy of our product candidates, which are ongoing determinations that are solely within the authority of the FDA; ● even if our clinical trials are completed, there can be no assurance that the FDA will agree that we have satisfactorily demonstrated safety or efficacy or that the FDA will not raise new issues regarding the design of our clinical trials; ● whether we are required by the FDA to conduct additional clinical trials to support the approval of our product candidates; ● the acceptance by the FDA of our proposed parameters for regulatory approval, including our proposed indication, endpoints and endpoint measurement tools relating to our product candidates; ● the incidence, duration and severity of adverse side effects; ● the timely receipt of necessary marketing approvals from the FDA; ● whether we are able to secure collaborations for completing the development and, if approved, commercialization of our product candidates; ● the effectiveness of our and our potential collaborators’ marketing, sales and distribution strategy and operations of product candidates that are approved; ● our success in educating physicians and patients about the benefits, administration and use of our product candidates; ● the ability of our third-party manufacturers and potential collaborators to manufacture clinical trial and commercial supplies of our product candidates to remain in good standing with regulatory bodies, and to develop, validate and maintain commercially viable manufacturing processes that are compliant with cGMP regulations; ● our ability to commercialize our product candidates, if approved for marketing; ● our ability to enforce our intellectual property rights; ● our ability to avoid third-party patent interference or patent infringement claims; ● acceptance of our product candidates as safe and effective by patients and the medical community; and ● a continued acceptable quality profile of our product candidates following approval.
For example, in 2008, the global financial crisis caused extreme volatility and disruptions in the capital and credit markets and the current COVID-19 pandemic has caused significant volatility and uncertainty in U.S. and international markets. Inflation rates, particularly in the United States, have increased recently to levels not seen in years.
For example, in 2008, the global financial crisis caused extreme volatility and disruptions in the capital and credit markets and the COVID-19 pandemic has caused significant volatility and uncertainty in U.S. and international markets. Inflation rates, particularly in the United States, have increased recently to levels not seen in years.
Market acceptance of our product candidates will depend on, among other factors: ● timing of our receipt of any marketing and commercialization approvals; 27 ● terms of any approvals and the countries in which approvals are obtained; ● safety and efficacy of our product candidates, which are determinations solely within the authority of the FDA; ● prevalence and severity of any adverse side effects associated with our product candidates; ● warnings contained in any labeling approved by the FDA or other regulatory authority; ● convenience and ease of administration of our product candidates; ● success of our physician education programs; ● availability of adequate government and third-party payor reimbursement; ● pricing of our products, particularly as compared to alternative treatments; and ● availability of alternative effective products for indications our product candidates are intended to treat.
Market acceptance of our product candidates will depend on, among other factors: ● timing of our receipt of any marketing and commercialization approvals; 24 ● terms of any approvals and the countries in which approvals are obtained; ● safety and efficacy of our product candidates, which are determinations solely within the authority of the FDA; ● prevalence and severity of any adverse side effects associated with our product candidates; ● warnings contained in any labeling approved by the FDA or other regulatory authority; ● convenience and ease of administration of our product candidates; ● success of our physician education programs; ● availability of adequate government and third-party payor reimbursement; ● pricing of our products, particularly as compared to alternative treatments; and ● availability of alternative effective products for indications our product candidates are intended to treat.
Under currently applicable U.S. law, certain drugs that are not usually self-administered (including injectable drugs) may be eligible for coverage under the Medicare Part B program if: ● they are incident to a physician’s services; ● they are reasonable and necessary for the diagnosis or treatment of the illness or injury for which they are administered according to accepted standards of medical practice; and ● they have been approved by the FDA and meet other requirements of the statute. 43 There may be significant delays in obtaining coverage for newly-approved drugs, and coverage may be more limited than the purposes for which the drug is approved by the FDA.
Under currently applicable U.S. law, certain drugs that are not usually self-administered (including injectable drugs) may be eligible for coverage under the Medicare Part B program if: ● they are incident to a physician’s services; ● they are reasonable and necessary for the diagnosis or treatment of the illness or injury for which they are administered according to accepted standards of medical practice; and ● they have been approved by the FDA and meet other requirements of the statute. 40 There may be significant delays in obtaining coverage for newly-approved drugs, and coverage may be more limited than the purposes for which the drug is approved by the FDA.
These enforcement actions include, among others: ● adverse regulatory inspection findings; ● warning letters; ● voluntary or mandatory product recalls or public notification or medical product safety alerts to healthcare professionals; ● restrictions on, or prohibitions against, marketing our products; 42 ● restrictions on, or prohibitions against, importation or exportation of our products; ● suspension of review or refusal to approve pending applications or supplements to approved applications; ● exclusion from participation in government-funded healthcare programs; ● exclusion from eligibility for the award of government contracts for our products; ● suspension or withdrawal of product approvals; ● product seizures; ● injunctions; and ● civil and criminal penalties and fines.
These enforcement actions include, among others: ● adverse regulatory inspection findings; ● warning letters; ● voluntary or mandatory product recalls or public notification or medical product safety alerts to healthcare professionals; ● restrictions on, or prohibitions against, marketing our products; 39 ● restrictions on, or prohibitions against, importation or exportation of our products; ● suspension of review or refusal to approve pending applications or supplements to approved applications; ● exclusion from participation in government-funded healthcare programs; ● exclusion from eligibility for the award of government contracts for our products; ● suspension or withdrawal of product approvals; ● product seizures; ● injunctions; and ● civil and criminal penalties and fines.
Conversely, any failure to enter into any collaboration or other strategic transaction that would be beneficial to us could delay the development and potential commercialization of our product candidates and have a negative impact on the competitiveness of any product candidate that reaches market. 32 We face competition from entities that have developed or may develop product candidates for our target disease indications, including companies developing novel treatments and technology platforms based on modalities and technology similar to ours.
Conversely, any failure to enter into any collaboration or other strategic transaction that would be beneficial to us could delay the development and potential commercialization of our product candidates and have a negative impact on the competitiveness of any product candidate that reaches market. 29 We face competition from entities that have developed or may develop product candidates for our target disease indications, including companies developing novel treatments and technology platforms based on modalities and technology similar to ours.
Despite the precautionary measures we and our third-party service providers have taken to prevent unanticipated problems that could affect our IT systems, sustained or repeated system failures or problems arising during the upgrade of any of our IT systems that interrupt our ability to generate and maintain data, and in particular to operate our proprietary technology platform, could adversely affect our ability to operate our business. 35 If we do not comply with laws regulating the protection of the environment and health and human safety, our business could be adversely affected.
Despite the precautionary measures we and our third-party service providers have taken to prevent unanticipated problems that could affect our IT systems, sustained or repeated system failures or problems arising during the upgrade of any of our IT systems that interrupt our ability to generate and maintain data, and in particular to operate our proprietary technology platform, could adversely affect our ability to operate our business. 32 If we do not comply with laws regulating the protection of the environment and health and human safety, our business could be adversely affected.
If we are not able to commercialize any product approved in the future, either on our own or through third parties, our business, financial condition, results of operations and prospects could be materially adversely affected. 33 If we fail to comply with U.S. and foreign regulatory requirements, regulatory authorities could limit or withdraw any marketing or commercialization approvals we may receive and subject us to other penalties that could materially harm our business.
If we are not able to commercialize any product approved in the future, either on our own or through third parties, our business, financial condition, results of operations and prospects could be materially adversely affected. 30 If we fail to comply with U.S. and foreign regulatory requirements, regulatory authorities could limit or withdraw any marketing or commercialization approvals we may receive and subject us to other penalties that could materially harm our business.
As a result, we may be unable to obtain sufficient insurance at a reasonable cost to protect us against losses caused by product liability claims that could have a material adverse effect on our business. 34 Our employees, principal investigators, CROs and consultants may engage in misconduct or other improper activities, including noncompliance with regulatory standards and requirements.
As a result, we may be unable to obtain sufficient insurance at a reasonable cost to protect us against losses caused by product liability claims that could have a material adverse effect on our business. 31 Our employees, principal investigators, CROs and consultants may engage in misconduct or other improper activities, including noncompliance with regulatory standards and requirements.
These reductions may also impact the ability of relevant agencies to timely review and approve drug research and development, manufacturing, and marketing activities, which may delay our ability to develop, market and sell any products we may develop. 44 If any of our product candidates receives marketing approval and we or others later identify undesirable side effects caused by the product candidate, our ability to market and derive revenue from the product candidates could be compromised.
These reductions may also impact the ability of relevant agencies to timely review and approve drug research and development, manufacturing, and marketing activities, which may delay our ability to develop, market and sell any products we may develop. 41 If any of our product candidates receives marketing approval and we or others later identify undesirable side effects caused by the product candidate, our ability to market and derive revenue from the product candidates could be compromised.
The ability of the Company to continue as a going concern is dependent upon our ability to successfully conduct clinical trials, bring a drug candidate to commercialization, generate revenues, and to raise additional equity or debt financing to fund our operations. 25 Our success is primarily dependent on the successful development, regulatory approval and commercialization of our product candidates, all of which are in the early stages of development.
The ability of the Company to continue as a going concern is dependent upon our ability to successfully conduct clinical trials, bring a drug candidate to commercialization, generate revenues, and to raise additional equity or debt financing to fund our operations. 22 Our success is primarily dependent on the successful development, regulatory approval and commercialization of our product candidates, all of which are in the early stages of development.
These limitations and restrictions may limit the size of the market for the product and affect reimbursement by third-party payors. 41 If we or our collaborators, manufacturers or service providers fail to comply with healthcare laws and regulations, we or they could be subject to enforcement actions, which could affect our ability to develop, market and sell our products and may harm our reputation.
These limitations and restrictions may limit the size of the market for the product and affect reimbursement by third-party payors. 38 If we or our collaborators, manufacturers or service providers fail to comply with healthcare laws and regulations, we or they could be subject to enforcement actions, which could affect our ability to develop, market and sell our products and may harm our reputation.
If we cannot provide reliable financial reports or prevent fraud, our business and operating results could be harmed, investors could lose confidence in our reported financial information, and the trading price of our common stock, if a market ever develops, could drop significantly. 46 The Jobs Act has reduced the information that we are required to disclose.
If we cannot provide reliable financial reports or prevent fraud, our business and operating results could be harmed, investors could lose confidence in our reported financial information, and the trading price of our common stock, if a market ever develops, could drop significantly. 43 The Jobs Act has reduced the information that we are required to disclose.
Rates of patient enrollment are affected by many factors, including the size of the patient population, the eligibility criteria for the clinical trial, the age and condition of the patients, the stage and severity of disease, the nature of the protocol, the proximity of patients to clinical sites and the availability of effective treatments for the relevant disease. 30 A product candidate can unexpectedly fail at any stage of preclinical and clinical development.
Rates of patient enrollment are affected by many factors, including the size of the patient population, the eligibility criteria for the clinical trial, the age and condition of the patients, the stage and severity of disease, the nature of the protocol, the proximity of patients to clinical sites and the availability of effective treatments for the relevant disease. 27 A product candidate can unexpectedly fail at any stage of preclinical and clinical development.
Uncertainties resulting from the initiation and continuation of patent litigation or other proceedings could delay our research and development efforts and limit our ability to continue our operations. 38 If we were to initiate legal proceedings against a third party to enforce a patent covering one of our products or our technology, the defendant could counterclaim that our patent is invalid or unenforceable.
Uncertainties resulting from the initiation and continuation of patent litigation or other proceedings could delay our research and development efforts and limit our ability to continue our operations. 35 If we were to initiate legal proceedings against a third party to enforce a patent covering one of our products or our technology, the defendant could counterclaim that our patent is invalid or unenforceable.
Any such event could have a material adverse effect on our business, financial condition, results of operations and/or prospects. 31 Because we rely on third party manufacturing and supply partners, our supply of research and development, preclinical and clinical development materials may become limited or interrupted or may not be of satisfactory quantity or quality.
Any such event could have a material adverse effect on our business, financial condition, results of operations and/or prospects. 28 Because we rely on third party manufacturing and supply partners, our supply of research and development, and preclinical and clinical development materials, may become limited or interrupted or may not be of satisfactory quantity or quality.
If we are unable to establish name recognition based on our trademarks and trade names, we may not be able to effectively compete and our business may be adversely affected. 40 Risks Related to Government Regulation and Product Approvals We may be unable to obtain U.S. or foreign regulatory approval and, as a result, unable to commercialize our product candidates.
If we are unable to establish name recognition based on our trademarks and trade names, we may not be able to effectively compete and our business may be adversely affected. 37 Risks Related to Government Regulation and Product Approvals We may be unable to obtain U.S. or foreign regulatory approval and, as a result, unable to commercialize our product candidates.
Under the Jobs Act, the information that we will be required to disclose has been reduced in a number of ways. As a company that had gross revenues of less than $1.0 billion during the Company’s last fiscal year, the Company is an “emerging growth company,” as defined in the Jobs Act (an “EGC”).
Under the Jobs Act, the information that we will be required to disclose has been reduced in a number of ways. As a company that had gross revenues of less than $1.235 billion during the Company’s last fiscal year, the Company is an “emerging growth company,” as defined in the Jobs Act (an “EGC”).
The full impact on our business of these automatic cuts is uncertain. If federal spending is reduced, anticipated budgetary shortfalls may also impact the ability of relevant agencies, such as the FDA or the NIH to continue to function at current levels. Amounts allocated to federal grants and contracts may be reduced or eliminated.
The full impact on our business of such cuts is uncertain. If federal spending is reduced, anticipated budgetary shortfalls may also impact the ability of relevant agencies, such as the FDA or the NIH to continue to function at current levels. Amounts allocated to federal grants and contracts may be reduced or eliminated.
If third parties disclose or misappropriate our proprietary rights, it may materially and adversely impact our position in the market. 36 The USPTO and various foreign governmental patent agencies require compliance with a number of procedural, documentary, fee payment and other requirements during the patent process.
If third parties disclose or misappropriate our proprietary rights, it may materially and adversely impact our position in the market. 33 The USPTO and various foreign governmental patent agencies require compliance with a number of procedural, documentary, fee payment and other requirements during the patent process.
Our success largely depends on the continued service of certain key management and other specialized personnel, including Anatoly Dritschilo, M.D., our Chief Executive Officer, Mira Jung, Ph.D., our Chief Scientific Officer, Michael Vander Hoek, our Chief Financial Officer and Vice President Operations and Regulatory, and Peter Dritschilo, our President and Chief Operating Officer.
Our success largely depends on the continued service of certain key management and other specialized personnel, including Anatoly Dritschilo, M.D., our Chief Executive Officer, Timothy Lorber, our Chief Financial Officer, Mira Jung, Ph.D., our Chief Scientific Officer, Michael Vander Hoek, our Vice President Operations and Regulatory, and Peter Dritschilo, our President and Chief Operating Officer.
As of the date of this Annual Report, we have filed 6 patent applications with the U.S. Patent and Trademark Office (the “USPTO”) with respect to various aspects of our HDAC inhibitor small molecule delivery platforms and Ropidoxuridine, our lead product candidate.
As of the date of this Annual Report, we have filed six patent applications with the U.S. Patent and Trademark Office (the “USPTO”) with respect to various aspects of our HDAC inhibitor small molecule delivery platforms and Ropidoxuridine, our lead product candidate.
Our ability to generate future product revenue from our current or future product candidates also depends on a number of additional factors, including our ability to: ● complete research and clinical development of current and future product candidates, either directly or through collaborative relationships; ● establish and maintain supply and manufacturing relationships with third parties, and ensure adequate and legally compliant manufacturing of bulk drug substances and drug products to maintain that supply; ● obtain regulatory approval from relevant regulatory authorities in jurisdictions where we intend to market our product candidates, either directly or through collaborative relationships; ● launch and commercialize future product candidates for which we obtain marketing approval, if any, through collaborative partners; ● obtain coverage and adequate product reimbursement from third-party payors, including government payors; ● achieve market acceptance for our products, if any; ● establish, maintain and protect our intellectual property rights; and ● attract, hire and retain qualified personnel.
Our ability to generate future product revenue from our current or future product candidates also depends on a number of additional factors, including our ability to: ● our ability to raise funds to enable us to finance and complete research and clinical development of current and future product candidates, either directly or through collaborative relationships; ● establish and maintain supply and manufacturing relationships with third parties, and ensure adequate and legally compliant manufacturing of bulk drug substances and drug products to maintain that supply; ● obtain regulatory approval from relevant regulatory authorities in jurisdictions where we intend to market our product candidates, either directly or through collaborative relationships; ● launch and commercialize future product candidates for which we obtain marketing approval, if any, through collaborative partners; ● obtain coverage and adequate product reimbursement from third-party payors, including government payors; ● achieve market acceptance for our products, if any; ● establish, maintain and protect our intellectual property rights; and ● attract, hire and retain qualified personnel.
These rights and preferences could negatively affect the holders of our common stock. 50 The ability of our executive officers and directors, who are our principal stockholders, to control our business may limit or eliminate the ability of minority stockholders to influence corporate affairs.
These rights and preferences could negatively affect the holders of our common stock. 47 The ability of our executive officers and directors, who are our principal stockholders, to control our business may limit or eliminate the ability of minority stockholders to influence corporate affairs.
Therefore, even if we are able to develop and commercialize products, we may be unable to achieve or maintain profitability. 39 If we are unable to protect the confidentiality of our trade secrets, our business and competitive position would be harmed.
Therefore, even if we are able to develop and commercialize products, we may be unable to achieve or maintain profitability. 36 If we are unable to protect the confidentiality of our trade secrets, our business and competitive position would be harmed.
We will retain that status until the earliest of (a) the last day of the fiscal year which we have total annual gross revenues of $1,000,000,000 (as indexed for inflation in the manner set forth in the Jobs Act) or more; (b) the last day of the fiscal year of following the fifth anniversary of the date of the first sale of the common stock pursuant to an effective registration statement under the Securities Act of 1933, as amended (the “Securities Act”); (c) the date on which we have, during the previous three year period, issued more than $1,000,000,000 in non-convertible debt; or (d) the date on which we are deemed to be a “large accelerated filer,” as defined in Rule 12b-2 under the Exchange Act or any successor thereto.
We will retain that status until the earliest of (a) the last day of the fiscal year which we have total annual gross revenues of $1.235 billion (as indexed for inflation in the manner set forth in the Jobs Act) or more; (b) the last day of the fiscal year of following the fifth anniversary of the date of the first sale of the common stock pursuant to an effective registration statement under the Securities Act; (c) the date on which we have, during the previous three year period, issued more than $1,000,000,000 in non-convertible debt; or (d) the date on which we are deemed to be a “large accelerated filer,” as defined in Rule 12b-2 under the Exchange Act or any successor thereto.
Any drugs we develop may become subject to unfavorable pricing regulations, third-party reimbursement practices or healthcare reform initiatives, thereby harming our business. The regulations that govern marketing approvals, pricing and reimbursement for new drugs vary widely from country to country. Some countries require approval of the sale price of a drug before it can be marketed.
Any drugs we develop may become subject to unfavorable pricing regulations, third-party reimbursement practices or healthcare reform initiatives, which may harm our business. The regulations that govern marketing approvals, pricing and reimbursement for new drugs vary widely from country to country. Some countries require approval of the sale price of a drug before it can be marketed.
We intend to use the net proceeds to us from our IPO and follow-on offering to fund preclinical and clinical trials of product candidates, Ropidoxuridine and new formulations of Ropidoxuridine with Tipiracil, O-18 containing molecules for proton radiation sensitization, continued HDAC technology platform development, working capital and general corporate purposes, including the costs of operating as a public company, as well as potential acquisition or in-licensing activities.
We intend to use the net proceeds to us from any follow-on offerings to fund preclinical and clinical trials of product candidates, Ropidoxuridine and new formulations of Ropidoxuridine with Tipiracil, O-18 containing molecules for proton radiation sensitization, continued HDAC technology platform development, working capital and general corporate purposes, including the costs of operating as a public company, as well as potential acquisition or in-licensing activities.
We are required to include a report of management on the effectiveness of our internal control over financial reporting. We expect to incur additional expenses and diversion of management’s time as a result of performing the system and process evaluation, testing and remediation required in order to comply with the management certification requirements.
We are required to include in our Annual Report on Form 10-K a report of management on the effectiveness of our internal control over financial reporting. We expect to incur additional expenses and diversion of management’s time as a result of performing the system and process evaluation, testing and remediation required in order to comply with the management certification requirements.
While Nasdaq’s notice to the Company of noncompliance has no immediate effect on the listing of our common stock and our common stock will continue to be listed on The Nasdaq Capital Market under the symbol “SHPH,” there can be no assurance that we will regain compliance with the Minimum Bid Price Requirement or maintain compliance with any of the other Nasdaq continued listing requirements.
Nasdaq’s notice to the Company of noncompliance has no immediate effect on the listing of the Company’s common stock and its common stock will continue to be listed on The Nasdaq Capital Market under the symbol “SHPH.” There can be no assurance that the Company will regain compliance with the Minimum Bid Price Requirement or maintain compliance with any of the other Nasdaq continued listing requirements.
If we raise additional funds through strategic collaborations and alliances and licensing arrangements with third parties, we may have to relinquish valuable rights to our technologies or product candidates or grant licenses on terms unfavorable to us. 29 Unfavorable and/or unstable global market and economic conditions, including those caused by the ongoing conflict between the Ukraine and Russia and the ongoing COVID-19 pandemic, could have serious adverse consequences on our business, financial condition and results of operations.
If we raise additional funds through strategic collaborations and alliances and licensing arrangements with third parties, we may have to relinquish valuable rights to our technologies or product candidates or grant licenses on terms unfavorable to us. 26 Unfavorable and/or unstable global market and economic conditions, including those caused by the ongoing conflict between the Ukraine and Russia, as well as in the Middle East, and the COVID-19 pandemic, could have serious adverse consequences on our business, financial condition and results of operations.
Our executive officers and directors, who are our principal stockholders, own approximately 39.6% of our issued and outstanding common stock. Accordingly, they may be able to effectively control the election of directors, as well as all other matters requiring stockholder approval.
Our executive officers and directors, who are our principal stockholders, own approximately 22.78% of our issued and outstanding common stock. Accordingly, they may be able to effectively control the election of directors, as well as all other matters requiring stockholder approval.
If we fail to comply with the applicable listing standards and Nasdaq delists our common stock, we and our stockholders could face significant material adverse consequences, including: ● a limited availability of market quotations for shares of our common stock; ● reduced liquidity for our common stock; ● a determination that our common stock is “penny stock,” which would require brokers trading in our common stock to adhere to more stringent rules and possibly result in a reduced level of trading activity in the secondary trading market for shares of our common stock; ● a limited amount of news about us and analyst coverage of us; and ● a decreased ability for us to issue additional equity securities or obtain additional equity or debt financing in the future.
If we fail to comply with the applicable listing standards, including the requirement that we regain compliance with the $2.5 million stockholders’ equity requirement and the Minimum Bid Price Requirement, and Nasdaq delists our common stock, we and our stockholders could face significant material adverse consequences, including: ● a limited availability of market quotations for shares of our common stock; ● reduced liquidity for our common stock; ● a determination that our common stock is “penny stock,” which would require brokers trading in our common stock to adhere to more stringent rules and possibly result in a reduced level of trading activity in the secondary trading market for shares of our common stock; ● a limited amount of news about us and analyst coverage of us; and ● a decreased ability for us to issue additional equity securities or obtain additional equity or debt financing in the future.
Suppliers and manufacturers must meet applicable manufacturing requirements and undergo rigorous facility and process validation tests required by regulatory authorities in order to comply with regulatory standards, such as Current Good Manufacturing Practice (or CGMP).
Suppliers and manufacturers must meet applicable manufacturing requirements and undergo rigorous facility and process validation tests required by regulatory authorities in order to comply with regulatory standards, such as cGMP.
Many of the above-listed risk factors are beyond our control. Accordingly, we cannot assure you that we will ever be able to generate revenue through the sale of our product candidates.
Many of the risk factors detailed herein are beyond our control. Accordingly, we cannot assure you that we will ever be able to generate revenue through the sale of our product candidates.
In addition, Section 203 of the Delaware General Corporation Law may discourage, delay or prevent a change in control of our company. Section 203 imposes certain restrictions on merger, business combinations and other transactions between us and holders of 15% or more of our common stock. Item 1B. Unresolved Staff Comments None.
In addition, Section 203 of the Delaware General Corporation Law may discourage, delay or prevent a change in control of our company. Section 203 imposes certain restrictions on merger, business combinations and other transactions between us and holders of 15% or more of our common stock.
For example, the loss of preclinical data or data from any future clinical trial involving our product candidates could result in delays in our development and regulatory filing efforts and significantly increase our costs.
Such events could cause interruptions of our operations. For example, the loss of preclinical data or data from any future clinical trial involving our product candidates could result in delays in our development and regulatory filing efforts and significantly increase our costs.
Additionally, in January 2023, the Company entered into a securities purchase agreement with an institutional investor through which the Company sold a convertible note with a principal value of $4.3 million, along with a four-year warrant to purchase 1,018,079 shares of common stock, exercisable at $2.35 per share, providing the Company with approximately $3.6 million in net proceeds.
Additionally, in January 2023, the Company entered into a securities purchase agreement with an institutional investor through which the Company sold a convertible note with a principal value of $4.3 million, along with a four-year warrant to purchase 127,260 shares of common stock, exercisable at $18.80 per share, providing the Company with approximately $3.6 million in net proceeds.
Our accumulated deficit as of December 31, 2023 was $15.5 million. We expect to continue to incur significant losses for the foreseeable future. Even if we achieve profitability in the future, we may not be able to sustain profitability in subsequent periods. 26 We currently have no source of product sales revenue.
Our accumulated deficit as of December 31, 2024 was $34.6 million. We expect to continue to incur significant losses for the foreseeable future. Even if we achieve profitability in the future, we may not be able to sustain profitability in subsequent periods. 23 We currently have no source of product sales revenue.
We are a clinical stage pharmaceutical company, preparing to commence Phase II clinical trials of our lead drug candidate, with a limited operating history upon which you can evaluate our business and prospects. Specialty pharmaceutical product development is a highly speculative undertaking and involves a substantial degree of risk.
We are a clinical stage pharmaceutical company, have only recently commenced our Phase II clinical trials of our lead drug candidate, and have a limited operating history upon which you can evaluate our business and prospects. Specialty pharmaceutical product development is a highly speculative undertaking and involves a substantial degree of risk.
On August 31, 2023, we received a letter from the Nasdaq Listing Qualifications Staff of The Nasdaq Stock Market LLC (“Nasdaq”) stating that for the 30 consecutive business day period between July 20, 2023 to August 30, 2023 the Company’s common stock had failed to maintain a minimum closing bid price of $1.00 per share, as required for continued listing on The Nasdaq Capital Market pursuant to Nasdaq Listing Rule 5550(a)(2) (the “Minimum Bid Price Requirement”).
On December 31, 2024, the Company received a letter from the Nasdaq Listing Qualifications Staff of The Nasdaq Stock Market LLC stating that for the 30 consecutive business day period between November 15, 2024 to December 30, 2024 the Company’s common stock had failed to maintain a minimum closing bid price of $1.00 per share, as required for continued listing on The Nasdaq Capital Market pursuant to Nasdaq Listing Rule 5550(a)(2) (the “Minimum Bid Price Requirement”).
The global economy, including credit and financial markets, has experienced extreme volatility and disruptions as a result of the ongoing conflict between the Ukraine and Russia and challenges arising from the ongoing COVID-19 pandemic, including severely diminished liquidity and credit availability, declines in consumer confidence, declines in economic growth, increases in unemployment rates, increases in inflation rates and uncertainty about economic stability.
The global economy, including credit and financial markets, has experienced extreme volatility and disruptions as a result of the ongoing conflict between the Ukraine and Russia, as well as in the Middle East, including severely diminished liquidity and credit availability, declines in consumer confidence, declines in economic growth, increases in unemployment rates, increases in inflation rates and uncertainty about economic stability.
Further, if we were no longer listed on Nasdaq, our securities would not be covered securities and we would be subject to regulations in each state in which we offer our securities. 49 Because our management has broad discretion over the use of the net proceeds we received from our IPO and follow-on offering, you may not agree with how we use them and the proceeds may not be invested successfully.
Further, if we were no longer listed on Nasdaq, our securities would not be covered securities and we would be subject to regulations in each state in which we offer our securities. 46 Because our management has broad discretion over the use of the net proceeds we have received, or will receive, from our equity and/or debt follow-on offerings, you may not agree with how we use them and the proceeds may not be invested successfully.
Although the length and impact of the ongoing military conflict is highly unpredictable, the conflict in Ukraine has led to market disruptions, including significant volatility in commodity prices, credit and capital markets, as well as supply chain disruptions.
Although the length and impact of the ongoing military conflict is highly unpredictable, these conflicts could lead to market disruptions, including significant volatility in commodity prices, credit and capital markets, as well as supply chain disruptions.
A weak or declining economy could also strain our suppliers, possibly resulting in supply disruption, or cause our customers to delay making payments for our services. The extent and duration of the military action, sanctions, and resulting market disruptions are impossible to predict, but could be substantial.
A weak or declining global economy could also strain our suppliers, possibly resulting in supply disruption. The extent and duration of the military action, sanctions, and resulting market disruptions are impossible to predict, but could be substantial.
Some of the more significant challenges we face include: ● Our ability to continue as a going concern in the near term is dependent upon us successfully raising additional equity or debt financing to fund our operations. ● Our success is primarily dependent on the successful development, regulatory approval and commercialization of our product candidates, all of which are in the early stages of development. ● We currently have no source of product sales revenue. ● We face competition from entities that have developed or may develop product candidates for our target disease indications, including companies developing novel treatments and technology platforms based on modalities and technology similar to ours.
Some of the more significant challenges we face include: ● Our ability to continue as a going concern in the near term is dependent upon us successfully raising additional equity or debt financing to fund our operations. ● Presently, there is substantial regulatory uncertainty surrounding future access to government funding of research activities, including access to grants awarded by the NIH which have traditionally provided support for certain of Shuttle Pharma’s research activities. ● Our success is primarily dependent on the successful development, regulatory approval and commercialization of our product candidates, all of which are in the early stages of development. ● We currently have no source of product sales revenue. ● We face competition from entities that have developed or may develop product candidates for our target disease indications, including companies developing novel treatments and technology platforms based on modalities and technology similar to ours.
Our ability to generate product revenue depends upon our ability to develop and commercialize products, including any of our current product candidates or other product candidates that we may develop, in-license or acquire in the future. We do not anticipate generating revenue from the sale of products for the foreseeable future.
Our ability to generate product revenue depends upon our ability to develop and commercialize products, including any of our current product candidates or other product candidates that we may develop, in-license or acquire in the future.
In addition, U.S. and global markets are experiencing volatility and disruption following the escalation of geopolitical tensions and the start of the military conflict between Russia and Ukraine. On February 24, 2022, a full-scale military invasion of Ukraine by Russian troops began.
In addition, U.S. and global markets are experiencing volatility and disruption following the escalation of geopolitical tensions and the ongoing military conflict between Russia and Ukraine, which began with a full-scale military invasion of Ukraine by Russian Troops on February 24, 2022, and the ongoing conflict between Israel and Hamas, which began on with a terrorist attack by Hamas against Israel on October 7, 2024.
Therefore, our management has broad discretion as to the use of the IPO proceeds and proceeds from our subsequent private placement.
Therefore, our management has broad discretion as to the use of the IPO proceeds and proceeds from our subsequent private placements or follow-on offerings.
Since commencement of trading on Nasdaq Stock Market LLC or Nasdaq, on August 29, 2022, our stock price has been extremely volatile, having traded as high as $126.26 and as low as $0.42. As a result of this volatility, investors may not be able to sell their common stock at or above the price when they purchased our common stock.
Since commencement of trading on Nasdaq, our stock price has been extremely volatile. As a result of this volatility, investors may not be able to sell their common stock at or above the price when they purchased our common stock.
Such reforms could have an adverse effect on anticipated revenues from product candidates that we may develop and for which we may obtain regulatory approval and may affect our overall financial condition and ability to develop product candidates. Our ability to obtain services, reimbursement or funding from the federal government may be impacted by possible reductions in federal spending.
Such reforms could have an adverse effect on anticipated revenues from product candidates that we may develop and for which we may obtain regulatory approval and may affect our overall financial condition and ability to develop product candidates.
However, if the Company cannot regain compliance with the Minimum Bid Price Requirement during the Additional Compliance Period, Nasdaq will provide the Company with notice that our common stock will be subject to delisting. At that time, the Company may appeal Nasdaq’s delisting determination to a Nasdaq Hearings Panel.
If the Company cannot regain compliance prior to June 30, 2025, Nasdaq will provide the Company with notice that its common stock will be subject to delisting. At that time, the Company may appeal Nasdaq’s delisting determination to a Nasdaq Hearings Panel.
Management intends to initiate a rights offering for $4.5 million and has submitted SBIR applications for non-dilutive NIH funding for our pre-clinical project.
Management intends to initiate additional follow-on offerings and has submitted SBIR applications for non-dilutive NIH funding for our pre-clinical project.
To date, the warrant has not yet been exercised. However, the Company’s existing cash resources, marketable securities and the cash received from the Company’s initial public offering and convertible note offering are not expected to provide sufficient funds to support the Company’s operations and clinical trials through the next twelve months.
However, the Company’s existing cash resources, marketable securities and the cash received from the Company’s offerings are not expected to provide sufficient funds to support the Company’s operations and clinical trials through the next 12 months.
Our internal computer systems, or those of our CROs or other contractors or consultants, may fail or suffer security breaches, which could result in a material disruption of our product development programs.
Our internal computer systems, or those of our CROs or other contractors or consultants, may fail or suffer security breaches, which could result in a material disruption of our product development programs. We have established a cybersecurity subcommittee, consisting of two independent directors and two officers of the Company (the “Cybersecurity Subcommittee”).
Despite the implementation of cyber security measures, our internal computer systems and those of our CROs and other contractors and consultants are vulnerable to damage from computer viruses, unauthorized access, natural disasters, terrorism, war and telecommunication and electrical failures. Such events could cause interruptions of our operations.
Additionally, in April 2024, our Cybersecurity Subcommittee requested our employees to complete a series of cybersecurity related trainings. Despite the implementation of cyber security measures, our internal computer systems and those of our CROs and other contractors and consultants are vulnerable to damage from computer viruses, unauthorized access, natural disasters, terrorism, war and telecommunication and electrical failures.
While our Company’s management is working to improve our internal controls and procedures, at present management has determined that our internal controls were deemed to be inadequate, which could cause our financial reporting to be unreliable and lead to misinformation being disseminated to the public. Our management is responsible for establishing and maintaining adequate internal control over financial reporting.
In that event, the Company will have an opportunity to appeal Nasdaq’s decision to a hearings panel. 42 While our Company’s management is working to improve our internal controls and procedures, at present management has determined that our internal controls were deemed to be inadequate, which could cause our financial reporting to be unreliable and lead to misinformation being disseminated to the public.
U.S. federal government agencies currently face potentially significant spending reductions. Under the Budget Control Act of 2011, the failure of Congress to enact deficit reduction measures of at least $1.2 trillion for the years 2013 through 2021 triggered automatic cuts to most federal programs.
Under the Budget Control Act of 2011, the failure of Congress to enact deficit reduction measures of at least $1.2 trillion for the years 2013 through 2021 triggered automatic cuts to most federal programs. These cuts would include aggregate reductions to Medicare payments to providers of up to two percent per fiscal year, starting in 2013.
The Company has incurred losses since inception and had a net loss of approximately $6.6 million and no revenues for the year ended December 31, 2023, with working capital of approximately $4.6 million as of December 31, 2023. In addition, the convertible note payable outstanding at December 31, 2023 includes covenants and certain cash payment requirements.
The Company has incurred losses since inception and had a net loss of approximately $9.1 million and no revenues for the year ended December 31, 2024, with working capital of approximately $0.7 million as of December 31, 2024.
Pursuant to Nasdaq Listing Rule 5810(c)(3)(A), the Company has an initial period of 180 calendar days, or until February 27, 2024 (the “Compliance Period”), to regain compliance with the Minimum Bid Price Requirement.
Pursuant to Nasdaq Listing Rule 5810(c)(3)(A), the Company has an initial period of 180 calendar days, or until June 30, 2025, to regain compliance with the Minimum Bid Price Requirement. To regain compliance, the closing bid price of the Company’s common stock must meet or exceed $1.00 per share for a minimum of 10 consecutive business days.
We will continue to monitor the closing bid price of our common stock and may, if appropriate, consider available options to regain compliance with the Minimum Bid Price Requirement. The financial covenants of the convertible note could result in default and could have a material adverse effect on our liquidity.
The Company will continue to monitor the closing bid price of its common stock and may, if appropriate, consider available options to regain compliance with the Minimum Bid Price Requirement.
To regain compliance, the closing bid price of the Company’s common stock must meet or exceed $1.00 per share for a minimum of 10 consecutive trading days, unless such period is extended by Nasdaq.
Pursuant to Nasdaq Listing Rule 5810(c)(3)(A), the Company has a grace period of 180 calendar days, or until June 30, 2025, to regain compliance with the Minimum Bid Price Requirement. To regain compliance, the closing bid price of the Company’s common stock must meet or exceed $1.00 per share for a minimum of 10 consecutive business days.
These cuts would include aggregate reductions to Medicare payments to providers of up to two percent per fiscal year, starting in 2013. Under the American Taxpayer Relief Act of 2012, which was enacted on January 1, 2013, the imposition of these automatic cuts was delayed until March 1, 2013. Certain of these automatic cuts have been implemented.
Under the American Taxpayer Relief Act of 2012, which was enacted on January 1, 2013, the imposition of these automatic cuts was delayed until March 1, 2013. Certain of these automatic cuts have been implemented and the federal government has implemented, and may be poised to implement, additional budget cuts.
We believe that the proceeds we received in our IPO and subsequent $4.0 million follow on convertible note offering, for which we received net proceeds of $3.6 million, along with our existing capital resources, will not be sufficient to fund our operations through March 2025 without additional capital infusion.
We believe that the proceeds we received in the $4.0 million, net of $0.5 million in placement agent fees, October 2024 offering and the $790 thousand senior secured convertible note offering, along with our existing capital resources, will not be sufficient to fund our operations one year after the date that the consolidated financial statements are issued without additional capital infusion.
Presently, we do not have a sufficient number of employees to segregate responsibilities and may be unable to afford increasing our staff or engaging outside consultants or professionals to overcome our lack of employees. During the course of our testing, we may identify other deficiencies that we may not be able to timely remediate.
While we have improved our organizational capabilities, we still may not have a sufficient number of employees to segregate responsibilities and may be unable to afford further enhancements to our staff or engaging outside consultants or professionals further to fully mitigate these internal control deficiencies.
Removed
We currently have one clinical stage product candidate in the early stages of development. Ropidoxuridine has undergone an SBIR funded Phase I clinical trial at Lifespan/Rhode Island Hospital. We also have an HDAC inhibitor small molecule platform. The three lead drug candidate molecules are in preclinical phases of development.
Added
Additional risks and uncertainties not presently known to us or that we currently believe to be immaterial may also adversely affect our business. Certain statements below are forward-looking statements.
Removed
As the Company had not regained compliance with the Minimum Bid Price Requirement by February 27, 2024 , the Company requested and was granted an additional 180-day period to regain compliance (the “Additional Compliance Period”).
Added
In the event the Company has not regained compliance prior to the end of May 2025, the Company will have to effectuate a reverse stock split in order to regain compliance. ● On September 10, 2024, the Company received a letter from Nasdaq notifying the Company that it is no longer in compliance with the minimum stockholders’ equity requirement for continued listing on the Nasdaq Capital Market.
Removed
To qualify, the Company was required to meet the continued listing requirement for market value of publicly held shares and all other initial listing standards for The Nasdaq Capital Market, with the exception of the Minimum Bid Price Requirement, and we would need to provide written notice of our intention to cure the bid price deficiency during the second compliance period, by effecting a reverse stock split, if necessary.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeOur Board of Directors is responsible for monitoring and assessing strategic risk exposure, and our executive officers are responsible for the day-to-day management of the material risks we face.
Biggest changeOur Board of Directors is responsible for monitoring and assessing strategic risk exposure, and our executive officers are responsible for the day-to-day management of the material risks we face. Our Board of Directors administers its cybersecurity risk oversight function directly as a whole, and we recently established a Cybersecurity Subcommittee to further enhance our cybersecurity oversight.
For additional information regarding whether any risks from cybersecurity threats, including as a result of any previous cybersecurity incidents, have materially affected or are reasonably likely to materially affect our company, including our business strategy, results of operations, or financial condition, please refer to Item 1A, “Risk Factors,” in this annual report on Form 10-K , including the risk factors entitled “Our internal computer systems, or those of our CROs or other contractors or consultants, may fail or suffer security breaches, which could result in a material disruption of our product development programs,” “Our proprietary information, or that of our customers, suppliers and business partners, may be lost or we may suffer security breaches,” and “Failure of our information technology systems could significantly disrupt the operation of our business. 52 Governance One of the key functions of our Board of Directors is informed oversight of our risk management process, including risks arising from cybersecurity threats.
For additional information regarding whether any risks from cybersecurity threats, including as a result of any previous cybersecurity incidents, have materially affected or are reasonably likely to materially affect our company, including our business strategy, results of operations, or financial condition, please refer to Item 1A, “Risk Factors,” in this annual report on Form 10-K , including the risk factors entitled “Our internal computer systems, or those of our CROs or other contractors or consultants, may fail or suffer security breaches, which could result in a material disruption of our product development programs,” “Our proprietary information, or that of our customers, suppliers and business partners, may be lost or we may suffer security breaches,” and “Failure of our information technology systems could significantly disrupt the operation of our business . 53 Governance One of the key functions of our Board of Directors is informed oversight of our risk management process, including risks arising from cybersecurity threats.
We routinely assess material risks from cybersecurity threats, including any potential unauthorized occurrence on or conducted through our information systems that may result in adverse effects on the confidentiality, integrity, or availability of our information systems or any information residing therein. We conduct risk assessments at least annually to identify cybersecurity threats.
We routinely assess material risks from cybersecurity threats, including any potential unauthorized occurrence on or conducted through our information systems that may result in adverse effects on the confidentiality, integrity, or availability of our information systems or any information residing therein. We have begun to conduct risk assessments at least annually to identify cybersecurity threats.
As part of our overall risk management program, we provide required training to employees in high risk areas on cybersecurity and have distributed standard operating procedures to all employees subsequent to this filing.
As part of our overall risk management program, we provide cybersecurity training to employees in high risk areas and have distributed standard operating procedures to all employees.
The Cybersecurity Committee consists of two Board members, both of whom are independent. Our Chief Financial Officer is primarily responsible for assessing and managing material risks from cybersecurity threats on a day to day basis.
Members of the Cybersecurity Subcommittee are appointed by, and serve at the discretion of, the Board. The Cybersecurity Subcommittee consists of two Board members, both of whom are independent. Our President and Chief Operating Officer is primarily responsible for assessing and managing material risks from cybersecurity threats on a day-to-day basis.
We believe we have allocated adequate resources related to our cybersecurity risk management processes and have designated our Chief Financial Officer with the responsibility of managing the cybersecurity risk assessment and mitigation process.
We believe we have allocated adequate resources related to our cybersecurity risk management processes and have designated our President and Chief Operating Officer with the responsibility of managing the cybersecurity risk assessment and mitigation process with the oversight of the Chief Financial Officer responsible for the consolidated financial statements for the year ended December 31, 2024 .
Removed
Our Board of Directors administers its cybersecurity risk oversight function directly as a whole, and we recently established a Cybersecurity Committee of the Board of Directors (the “Cybersecurity Committee”) to further enhance our cybersecurity oversight. Members of the Cybersecurity Committee are appointed by, and serve at the discretion of, the Board.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeWe are not presently party to any pending or other threatened legal proceedings or claims that we believe will have a material adverse effect on our business, financial condition or operating results, although from time to time, we may become involved in legal proceedings in the ordinary course of business. Item 4. Mine Safety Disclosures Not applicable. 53 PART II
Biggest changeWe are not presently party to any pending or other threatened legal proceedings or claims that we believe will have a material adverse effect on our business, financial condition or operating results, although from time to time, we may become involved in legal proceedings in the ordinary course of business. Item 4. Mine Safety Disclosures Not applicable. 54 PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeOn February 8, 2022 and March 11, 2022, the Company sold to certain accredited investors $365,000 and $224,985, respectively, in 6% convertible notes (the “Notes”), which bore 6% interest, were repayable three years from the date of issuance, and converted automatically into shares of common stock or, in the event that units were sold in the offering, units, at a conversion price of $4.00 per unit upon closing of our IPO.
Biggest changeRecent Sales of Unregistered Securities During the past three years, we effected the following transactions in reliance upon exemptions from registration under the Securities Act: On February 8, 2022 and March 11, 2022, the Company sold to certain accredited investors $365,000 and $225,000, respectively, in 6% convertible notes (the “Notes”), which bore 6% interest, were repayable on December 31, 2024, and converted automatically into shares of common stock or, in the event that units were sold in the offering, units, at a conversion price of $32.00 per unit upon closing of our IPO.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information Our common stock commenced trading on the Nasdaq Capital Market, under the symbol “SHPH” on August 29, 2022. Prior to that time, our common stock was not traded on any exchange or quoted on any over the counter market.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information Our common stock commenced trading on the Nasdaq Capital Market, under the symbol “SHPH” on August 31, 2022. Prior to that time, our common stock was not traded on any exchange or quoted on any over the counter market.
Boustead Securities LLC acted as placement agent and received compensation of (i) $36,500 in cash and warrants to purchase 10% of the total number of shares issuable upon conversion of the Convertible Notes, exercisable at the conversion price of the Convertible Notes for the February offering and (ii) $22,750 in cash and warrants to purchase 10% of the total number of shares issuable upon conversion of the Convertible Notes, exercisable at the conversion price of the Convertible Notes for the March offering. 54 Effective March 30, 2022, the Company issued a total of 1,678 shares (839 shares on a post-reverse split basis) of common stock (the “Issuance”) to some 23 existing shareholders in satisfaction of certain interest that had accrued as the result of an inaccurate conversion of convertible notes in our 2018 share exchange.
Boustead Securities LLC acted as placement agent and received compensation of (i) $36,500 in cash and warrants to purchase 10% of the total number of shares issuable upon conversion of the Convertible Notes, exercisable at the conversion price of the Convertible Notes for the February offering and (ii) $22,750 in cash and warrants to purchase 10% of the total number of shares issuable upon conversion of the Convertible Notes, exercisable at the conversion price of the Convertible Notes for the March offering. 55 Effective March 30, 2022, the Company issued a total of 839 shares (105 shares on a post-reverse split basis) of common stock (the “Issuance”) to some 23 existing shareholders in satisfaction of certain interest that had accrued as the result of an inaccurate conversion of convertible notes in our 2018 share exchange.
Such warrants were sold to three accredited investors pursuant to an exemption from registration under Rule 506(b) of the Securities Act. Boustead Securities LLC acted as placement agent and received warrants to purchase 5,000 shares of common stock exercisable at $2.50 per share, equal to 10% of the value of the note offering, and $12,500 in cash compensation.
Such warrants were sold to three accredited investors pursuant to an exemption from registration under Rule 506(b) of the Securities Act. Boustead Securities LLC acted as placement agent and received warrants to purchase 625 shares of common stock exercisable at $20.00 per share, equal to 10% of the value of the note offering, and $12,500 in cash compensation.
On August 1, 2022, in conjunction with entering into three loan agreements for a total of $125,000, which were repayable following consummation of our IPO, we issued warrants to purchase a total of 50,000 shares of our common stock, exercisable at $2.50 per share.
On August 1, 2022, in conjunction with entering into three loan agreements for a total of $125,000, which were repayable following consummation of our IPO, we issued warrants to purchase a total of 6,250 shares of our common stock, exercisable at $20.00 per share.
Holders As of March 20, 2024, we had 55 holders of record of our common stock and 16,794,893 shares of common stock issued and outstanding.
Holders As of February 7, 2025, we had 61 holders of record of our common stock and 4,076,567 shares of common stock issued and outstanding.
Removed
Preferred dividends Our board of directors has designated and authorized the issuance of up to 10,000 shares of Series A Convertible preferred stock, par value $0.00001 per share (the “Series A Convertible Preferred Stock”), of which there were 1,212.5 shares issued, all of which were converted into 336,810 shares of or common stock and 336,810 warrants to purchase common stock upon closing of our IPO on September 2, 2022.
Added
Preferred dividends As of the date of this Annual Report, we have not issued any preferred stock nor paid any preferred dividends.
Removed
The Series A Convertible Preferred Stock had a stated value of $1,000 per share, was entitled to receive a dividend at the rate of 8.5% per annum, which dividend was cumulative and was payable at our option in shares of common stock or cash upon the date of conversion or redemption, as so determined by the Company.
Added
On January 11, 2023, we entered into a stock purchase agreement (the “SPA”) with the Alto Opportunity Master Fund, SPC – Segregated Master Portfolio B, a Cayman entity (the “Investor”), pursuant to which the Company sold to the Investor a $4.3 million convertible note (the “Convertible Note”) and warrant (the “Warrant”) to purchase 127,260 shares of common stock of the Company, in exchange for gross proceeds of $4.0 million Investment Amount.
Removed
For the year ended December 31, 2022, the Company accrued $71,009 for the 8.5% cumulative dividends on the Series A Convertible Preferred Stock and $103,062 for the year ended December 31, 2021, for a total of $402,068 and $331,059 respectively, all of which was paid in the form of 100,517 shares of our common stock following completion of our IPO.
Added
The Convertible Note amortizes on a monthly basis and the Company can make such monthly amortization payments in cash or, subject to certain equity conditions, in registered shares of common stock or a combination thereof.
Removed
Recent Sales of Unregistered Securities During the past three years, we effected the following transactions in reliance upon exemptions from registration under the Securities Act: On December 28, 2021, in conjunction with entering into two loan agreements for a total of $500,000, which were repayable at the time of our IPO, we issued warrants to purchase a total of 500,000 shares of our common stock, exercisable at $1.00 per share.
Added
For equity repayment, the Convertible Note is convertible into shares of common stock at price per share equal to the lower of (i) $18.80 (ii) 90% of the three lowest daily VWAPs of the 15 trading days prior to the payment date or (iii) 90% of the VWAP of the trading day prior to payment date.
Removed
Such warrants were sold to two accredited investors pursuant to an exemption from registration under Rule 506(b) of the Securities Act. Boustead Securities LLC acted as placement agent but waived its cash compensation related to such offering and, to date, has received no warrant compensation related to the transaction.
Added
The Convertible Note is repayable over 26 months and bears interest at the rate of 5% per annum. The Warrant is exercisable for four years from the date of closing and is exercisable at $0.48 per share.
Removed
The above disclosures do not include 678,180 shares granted pursuant to the Shuttle Pharmaceuticals Holdings, Inc. 2018 Equity Incentive Plan, which were issued to certain employees, directors and consultants, and vest on a periodic basis in accordance with the grant agreements between such individuals and the Company. Issuer Purchases of Equity Securities None. Use of proceeds None. Item 6. [Reserved]
Added
In the event the Investor exercises the Warrant in full, such exercise would result in additional gross proceeds to the Company of approximately $0.1 million. On May 10, 2023, we entered into an amendment agreement to the SPA (the “Amendment Agreement”).
Added
Under the Amendment Agreement, the Company and the Investor amended the transaction documents as follows: (i) amended and restated Section 2 of the Warrant so as to remove a provision that would have potentially required an adjustment to the number of warrant shares exercisable under the Warrant, (ii) stipulated that the Company would obtain majority shareholder approval to issue up to an additional $10 million Subsequent Notes and Subsequent Warrants equal to 42.5% of the outstanding principal value of the Subsequent Notes, which Subsequent Note and Subsequent Warrant would be sold to the Investor on substantially the same terms as the existing Convertible Note and Warrant (each as amended by the Amendment Agreement) and upon conversion and/or exercise would cause the potential issuance of in excess of 19.9% of the Company’s issued and outstanding stock, (iii) that, upon obtaining majority stockholder approval, the Company would file a Schedule 14C related to such potential issuance of the shares of common stock related to the potential sale of the Subsequent Notes and Subsequent Warrants to the Investor within 30 calendar days of entry into the Amendment Agreement, and (iv) stipulated that the Investor would release $1,500,000 in cash collateral to the Company, with $1,000,000 to be released to the Company immediately upon singing of the Amendment Agreement and $500,000 to be released upon the Company’s filing of the Schedule 14C.
Added
The Company obtained majority stockholder consent to the potential sale of the Subsequent Notes and Subsequent Warrants to the Investor in advance of entry into the Amendment Agreement. On June 4, 2023, we entered into an amendment to the Amendment Agreement dated May 11, 2023 (the “Amendment to the Amendment Agreement”), for purposes of amending the terms of the SPA.
Added
Under the Amendment to the Amendment Agreement, the Company and the Investor agreed as follows: (i) that Section 15(q) to the Convertible Note, which required the Company to hold the Cash Collateral in a Controlled Account Agreement (as defined in the Convertible Note), would no longer be applicable, (ii) that the Investor would stipulate the release to the Company of the remaining Cash Collateral totaling $2,924,000 (thus releasing the full amount of the Cash Collateral to the Company), and (iii) that, should the Investor exercise its option to purchase the Subsequent Notes and Subsequent Warrants, that such Subsequent Notes would omit Section 15(q) and that the Company would not be required to maintain any controlled accounts or otherwise be subject to any controlled account agreements.
Added
On October 14, 2024, the Company commenced the first closing of $600,000 in investments of an up to $1.3 million offering of 5% original issue discount senior secured convertible notes and warrants (the “First Closing”).
Added
On October 21, 2024, the Company closed on an additional $231,579 in notes and warrants purchased in the offering (the “Second Closing”), receiving an additional $220,000 in proceeds and bringing the offering to a close after receiving a total of $790,000 in gross proceeds, including $237,500 invested by the Company’s Chief Executive Officer, Dr. Anatoly Dritschilo, in the First Closing.
Added
In the Second Closing, two accredited investors purchased a total of $231,579 in notes and 88,544 warrants, exercisable at $1.49 per share, or 125% of the closing price of the Company’s common stock on the day prior to closing. Issuer Purchases of Equity Securities None. Use of proceeds None.

Item 7. Management's Discussion & Analysis

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

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Biggest changeChanges in operational, administrative, legal and professional expenses related to our operations are set forth in more detail in the discussion below. 55 Results of Operations Comparison of the year ended December 31, 2023 and 2022 The following table summarizes the results of our operations: Years Ended December 31, 2023 2022 Change % Revenue $ - $ - $ - - Operating expenses: Research and development, net of contract expense reimbursements 3,517,093 1,148,712 2,368,381 206 % General and administrative 1,046,854 538,796 508,058 94 % Legal and professional 1,328,435 866,770 461,665 53 % Total operating expenses and loss of operations 5,892,382 2,554,278 3,338,104 131 % Other income (expense): Interest expense - related parties (6,825 ) (52,010 ) 45,185 (87 %) Interest expense (2,484,193 ) (917,879 ) (1,566,314 ) 171 % Interest income 79,117 - 79,117 100 % Finance fee (104,245 ) - (104,245 ) (100 %) Change in fair value of derivative liabilities 2,216,488 94,025 2,122,463 2,257 % Gain on sale of marketable securities 4,970 - 4,970 100 % Change in fair value of marketable securities 71,568 - 71,568 100 % Loss on settlement of convertible debt (477,221 ) - (477,221 ) (100 %) Gain on settlement of accounts payable - 328,687 (328,687 ) (100 %) Gain on forgiveness of Paycheck Protection Program note payable - 73,007 (73,007 ) (100 %) Total other expense (700,341 ) (474,170 ) (226,171 ) 48 % Net loss $ (6,592,723 ) $ (3,028,448 ) $ (3,564,275 ) 118 % Research and Development, net of contract expense reimbursements.
Biggest changeIn that event, the Company will have an opportunity to appeal Nasdaq’s decision to a hearings panel. 58 Results of Operations Comparison of the year ended December 31, 2024 and 2023 The following table summarizes the results of our operations: Years Ended December 31, 2024 2023 Change % Revenue $ — $ — $ — — Operating expenses: Research and development 3,618,796 3,517,093 101,703 3 % General and administrative 1,392,709 1,046,854 345,855 33 % Legal and professional 2,684,665 1,328,435 1,356,230 102 % Total operating expenses and loss of operations 7,696,170 5,892,382 1,803,788 31 % Other income (expense): Interest expense - related parties (8,692 ) (6,825 ) (1,867 ) 27 % Interest expense (1,198,738 ) (2,484,193 ) 1,285,455 (52 )% Interest income 38,138 79,117 (40,979 ) (52 )% Finance fee (152,726 ) (104,245 ) (48,481 ) 47 % Change in fair value of derivative liabilities 555,789 2,216,488 (1,660,699 ) (75 )% Change in fair value of convertible notes 122,553 — 122,553 — % Gain on sale of marketable securities 28,550 4,970 23,580 474 % Change in fair value of marketable securities — 71,568 (71,568 ) (100 )% Loss on settlement of convertible debt (833,501 ) (477,221 ) (356,280 ) 75 % Total other expense (1,448,627 ) (700,341 ) (748,286 ) 107 % Net loss $ (9,144,797 ) $ (6,592,723 ) (2,552,074 ) 39 % Research and Development.
Originally formed as Shuttle Pharmaceuticals, LLC in 2012, our goal is to extend the benefits of cancer treatments by leveraging insights into cancer therapy with surgery, radiation therapy, chemotherapy and immunotherapy. While there are several therapies being developed with the goal of curing cancer, one of the most effective and proven approaches to this is radiation therapy (RT).
Originally formed as Shuttle Pharmaceuticals, LLC in 2012, our goal is to extend the benefits of cancer treatments by leveraging insights into cancer therapy with surgery, radiation therapy, chemotherapy and immunotherapy. While there are several therapies being developed with the goal of curing cancer, one of the most effective and proven approaches to this is RT.
The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported expenses incurred during the reporting periods.
The preparation of these consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements, as well as the reported expenses incurred during the reporting periods.
Our estimates are based on our historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.
Our estimates are based on our historical experience and on various other factors that the Company believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.
We are developing a pipeline of products designed to address the limitations of the current standard of cancer therapies. We believe that our product candidates will enable us to deliver cancer treatments that are safer, more reliable and at a greater scale than that of the current standard of care.
The Company is developing a pipeline of products designed to address the limitations of the current standard of cancer therapies. We believe that our product candidates will enable us to deliver cancer treatments that are safer, more reliable and at a greater scale than that of the current standard of care.
The model requires the use of simulations that are weighted based on significant unobservable inputs including the average volatility of a population set and probabilities assigned. Each simulation is based on the range of inputs in a scenario with the mean of the output on each simulation calculated as an average.
The model requires the use of simulations that are weighted based the volatility of a set of guideline companies and significant unobservable inputs including probabilities assigned. Each simulation is based on the range of inputs in a scenario with the mean of the output on each simulation calculated as an average.
In addition, we continued progress on our R&D programs during the year ended December 31, 2023 that resulted in increased cash expenditures.
In addition, we continued progress on our R&D programs during the year ended December 31, 2024 that resulted in increased cash expenditures.
The Company obtained majority stockholder consent to the potential sale of the Subsequent Notes and Subsequent Warrants to the Investor in advance of entry into the Amendment Agreement. On June 4, 2023, we entered into the Amendment to the Amendment Agreement dated May 11, 2023, for purposes of amending the terms of the SPA.
The Company obtained majority stockholder consent to the potential sale of the Subsequent Notes and Subsequent Warrants to the Investor in advance of entry into the Amendment Agreement. 62 On June 4, 2023, the Company entered into an amendment to the Amendment Agreement dated May 11, 2023 (the “Amendment to the Amendment Agreement”), for purposes of amending the terms of the SPA.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations The following Management’s Discussion and Analysis should be read in conjunction with our financial statements and the related notes thereto included elsewhere in this Annual Report.
ITEM 7. MANAGEMENT ’ S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following Management’s Discussion and Analysis of Financial Condition and Result of Operations (the “MD&A”) should be read in conjunction with our financial statements and the related notes thereto included elsewhere in this Annual Report.
The Management’s Discussion and Analysis contains forward-looking statements that involve risks and uncertainties, such as statements of our plans, objectives, expectations, and intentions. Any statements that are not statements of historical fact are forward-looking statements.
The MD&A contains forward-looking statements that involve risks and uncertainties, such as statements of our plans, objectives, expectations, and intentions. Any statements that are not statements of historical fact are forward-looking statements.
The Convertible Note is repayable over 26 months and bears interest at the rate of 5% per annum. The Warrant is exercisable for four years from the date of closing and is exercisable at $2.35 per share.
The Convertible Note is repayable over 26 months and bears interest at the rate of 5% per annum. The Warrant is exercisable for four years from the date of closing and is exercisable at $0.48 per share, as adjusted.
While our significant accounting policies are described in more detail in the notes to our financial statements included elsewhere in this registration statement, we believe that the following accounting policies are critical to understanding our historical and future performance, as these policies relate to the more significant areas involving management’s judgments and estimates.
While the significant accounting policies are described in more detail in the notes to the consolidated financial statements included elsewhere in this report, the Company believes that the following accounting policies are critical to understanding our historical and future performance, as these policies relate to the more significant areas involving management’s judgments and estimates.
Compensation related expenses, excluding reimbursements, for the year ended December 31, 2023 was 43% as a percent of R&D expense, representing a decrease from the 59% of total R&D incurred in the year ended December 31, 2022.
For the year ended December 31, 2024, R&D compensation related expenses was 35% as a percent of total R&D expense, representing a decrease from the 43% of total R&D incurred in the year ended December 31, 2023.
For equity repayment, the Convertible Note is convertible into shares of common stock at price per share equal to the lower of (i) $2.35 (ii) 90% of the three lowest daily VWAPs of the 15 trading days prior to the payment date or (iii) 90% of the VWAP of the trading day prior to payment date.
For equity repayment, the Convertible Note is convertible into shares of common stock at price per share equal to the lower of (i) $18.80 (ii) 90% of the three lowest daily volume-weighted average price (“VWAP”) of the 15 trading days prior to the payment date or (iii) 90% of the VWAP of the trading day prior to payment date.
R&D compensation related expenses were $1.5 million in the year ended December 31, 2023 as compared to $0.8 million in the year ended December 31, 2022.
R&D compensation related expenses were $1.3 million in the year ended December 31, 2024 as compared to $1.5 million in the year ended December 31, 2023.
In the event the Investor exercises the Warrant in full, such exercise would result in additional gross proceeds to the Company of approximately $2.4 million. On May 10, 2023, we entered into the Amendment Agreement to the SPA.
In the event the Investor exercises the Warrant in full, such exercise would result in additional gross proceeds to the Company of approximately $0.1 million. On May 10, 2023, the Company entered into an amendment agreement to the SPA (the “Amendment Agreement”).
As of December 31, 2022, total current assets were $8.6 million and total current liabilities were $1.0 million, resulting in a working capital of $7.6 million.
As of December 31, 2023, total current assets were $5.6 million and total current liabilities were $1.0 million, resulting in a working capital of $4.6 million.
General and Administrative expenses in the year ended December 31, 2023 increased by $0.5 million, or 94%, from $0.5 million in the year ended December 31, 2022 to $1.0 million in the year ended December 31, 2023.
General and Administrative expenses in the year ended December 31, 2024 increased by $0.3 million, or 33%, from $1.0 million in the year ended December 31, 2023 to $1.4 million in the year ended December 31, 2024.
To date, the warrant has not yet been exercised. However, the Company’s existing cash resources, marketable securities and the cash received from the equity offering and convertible note are not expected to provide sufficient funds to carry out the Company’s operations and clinical trials through the next twelve months.
However, our existing cash resources and the cash received from the equity offering and senior convertible note are not expected to provide sufficient funds to carry out our operations and clinical trials through the next twelve months.
The Monte Carlo simulation uses an implied VWAP for valuation. The implied VWAP was backsolved by setting the summation of the parts (e.g., derivatives and debt without derivatives) equal to the cash proceeds, and is updated each period.
The Monte Carlo simulation uses an implied VWAP for valuation. The implied VWAP was backsolved by setting the summation of the parts (e.g., derivatives and debt without derivatives) equal to the cash proceeds and is updated each period. The use of Monte Carlo valuation models require key inputs, some of which are based on estimates and judgements by management.
Under the Amendment to the Amendment Agreement, the Company and the Investor agreed as follows: (i) that Section 15(q) to the Convertible Note, which required the Company to hold the Cash Collateral in a Controlled Account Agreement (as defined in the Convertible Note), would no longer be applicable, (ii) that the Investor would stipulate the release to the Company of the remaining Cash Collateral totaling $2,924,000 (thus releasing the full amount of the Cash Collateral to the Company), and (iii) that, should the Investor exercise its option to purchase the Subsequent Notes and Subsequent Warrants, that such Subsequent Notes would omit Section 15(q) and that the Company would not be required to maintain any controlled accounts or otherwise be subject to any controlled account agreements. 59 Off-Balance Sheet Arrangements We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.
Under the Amendment to the Amendment Agreement, the Company and the Investor agreed as follows: (i) that Section 15(q) to the Convertible Note, which required the Company to hold the Cash Collateral in a Controlled Account Agreement (as defined in the Convertible Note), would no longer be applicable, (ii) that the Investor would stipulate the release to the Company of the remaining Cash Collateral totaling $2,924,000 (thus releasing the full amount of the Cash Collateral to the Company), and (iii) that, should the Investor exercise its option to purchase the Subsequent Notes and Subsequent Warrants, that such Subsequent Notes would omit Section 15(q) and that the Company would not be required to maintain any controlled accounts or otherwise be subject to any controlled account agreements.
(“TCG GreenChem”), with whom we have contracted for process research, development and cGMP compliant manufacture of IPdR, has successfully completed the manufacturing campaign for the active pharmaceutical ingredient (API) of Ropidoxuridine for use in the Company’s upcoming Phase II clinical trial in brain cancer patients undergoing radiation therapy.
TCG GreenChem, with whom we have contracted for process research, development and cGMP compliant manufacture of IPdR, has manufactured the API of Ropidoxuridine and the University of Iowa Pharmaceuticals has formulated the drug product for use in the Company’s upcoming Phase II clinical trial in brain cancer patients undergoing radiation therapy.
Operations to date have focused on continuing our research and development efforts to advance Ropidoxuridine clinical testing and improved drug formulation, to advance HDAC6 inhibitor (SP-2-225) preclinical development and explore new SBIR contract work on predictive biomarkers of radiation response, as well as prostate cell lines for health disparities research.
Operations to date have focused on continuing our research and development efforts to advance Ropidoxuridine clinical testing and improved drug formulation, to advance HDAC6 inhibitor (SP-2-225) preclinical development and explore application of the PC-RAD Test, predictive biomarkers of radiation response.
Recent Financing On January 11, 2023, we entered into the SPA with the Investor, pursuant to which the Company sold to the Investor a $4.3 million convertible note (the “Convertible Note”) and warrant (the “Warrant”) to purchase 1,018,079 shares of common stock of the Company, in exchange for gross proceeds of $4.0 million Investment Amount.
Recent Financings On January 11, 2023, the Company entered into a stock purchase agreement (the “SPA”) with the Alto Opportunity Master Fund, SPC – Segregated Master Portfolio B, a Cayman entity (the “Investor”), pursuant to which the Company sold to the Investor a $4.3 million convertible note (the “Convertible Note”) and warrant (the “Warrant”) to purchase 127,260 shares of common stock of the Company, in exchange for gross proceeds of $4.0 million Investment Amount.
Subcontract work, excluding reimbursements, made up 52% of total R&D expenses in the year ended December 31, 2023 and 35% of total R&D expenses during the year ended December 31, 2022. 56 General and Administrative Expenses.
Subcontractor expense made up 60% of total R&D expenses in the year ended December 31, 2024 and 52% of total R&D expenses during the year ended December 31, 2023. General and Administrative Expenses .
Total research and development (“R&D”) expense was $3.5 million for the year ended December 31, 2023, as compared to $1.1 million for the year ended December 31, 2022, which included R&D expense reimbursements of $0 and $211,455, respectively.
Total research and development (“R&D”) expense was $3.6 million for the year ended December 31, 2024, as compared to $3.5 million for the year ended December 31, 2023.
The increase in general and administrative expenses was primarily due to increases in insurance expenses of $0.1 million, compensation of $0.2 million and advertising costs of $0.1 million. Legal and Professional Expenses . During the year ended December 31, 2023, legal and professional expenses increased by $0.5 million or 53%.
The increase in general and administrative expenses was primarily due to costs associated with advertising of $0.1 million and marketing of $0.1 for investor relations and other administrative costs. Legal and Professional Expenses. During the year ended December 31, 2024, legal and profession al expenses increased by $1.4 million or 102%.
For the year ended December 31, 2023, net cash flows used in operating activities was $5.6 million, primarily consisting of a net loss of $6.6 million, increased by a gain on change in derivative liabilities of $2.2 million, offset by amortization of debt discount of $2.1 million, loss on settlement of convertible debt of $0.5 million, accrued interest settled with common stock of $0.3 million, stock-based compensation of $0.2 million and further reduced by a net change in operating assets and liabilities of $0.2 million.
During the year ended December 31, 2023, net cash used in operating activities of $5.6 million was primarily due to our net loss of $6.6 million, partially offset by $0.5 million of loss on settlement of convertible notes payable and $0.3 million of accrued interest settled with common stock.
The capital raise has supported operations leading up to the manufacture of drug product and FDA approval of the IND for the Phase II clinical trial of Ropidoxuridine and radiation therapy in glioblastoma. The FDA recommended and the company agreed to an expansion of the clinical trial, necessitating additional capital to complete the trial.
Our capital raises have to date supported operations, the manufacture of drug product and FDA approval of the IND for the Phase II clinical trial of Ropidoxuridine and radiation therapy in glioblastoma and other radiation sensitizer discovery and therapy.
Critical Accounting Policies and Significant Judgments and Estimates This discussion and analysis of our financial condition and results of operations is based on our financial statements, which have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”).
Off-Balance Sheet Arrangements The Company does not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors. 63 Critical Accounting Policies and Significant Judgments and Estimates This discussion and analysis of our financial condition and results of operations is based on our consolidated financial statements, which have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”).
Management intends to initiate a rights offering for $4.5 million and has submitted SBIR applications for non-dilutive NIH funding for pre-clinical project. The ability of the Company to continue as a going concern is dependent upon our ability to successfully conduct clinical trials, bring a drug candidate to commercialization to generate revenues, and to raise additional equity or debt financing.
The ability of the Company to continue as a going concern is dependent upon its ability to continue to successfully raise additional equity or debt financing to allow it to fund ongoing operations, conduct clinical trials and bring a drug candidate to commercialization to generate revenues.
This is stated in the consolidated financial statements as research and development, net of contract expense reimbursements. Fair Value of Financial Instruments We evaluate all of our financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives.
Fair Value of Financial Instruments We evaluate our financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives, such as the Acceleration Option in the Alto Convertible Note (as defined in Note 5).
The use of Black Scholes valuation model requires the input of highly subjective assumptions, including the expected price volatility, that is based on an analysis of the historical volatility of the common stock of a group of comparable entities. Any change to these inputs could produce significantly higher or lower fair value measurements.
The use of these valuation models requires the input of highly subjective assumptions. Any change to these inputs could produce significantly higher or lower fair value measurements.
These conditions, and the Company’s ability to comply with such conditions, raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date that these financial statements are issued. In September 2022, the Company completed its initial public offering of common stock, generating net proceeds of $10.0 million.
These conditions raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date that the consolidated financial statements are issued.
The classification of derivative instruments, including whether such instruments should be recorded as equity, is evaluated at the end of each reporting period. For our derivative financial instruments classified as equity, the Company used a Black Scholes valuation model, to calculate the fair value on issuance date, without revaluation.
For warrants that are determined to be liability-classified, we estimate the fair value at issuance and each subsequent reporting date, with changes in the fair value reported in the consolidated statements of operations. The classification of all outstanding warrants, including whether such instruments should be recorded as equity, is evaluated at the end of each reporting period.
The increase in current liabilities is primarily due to the current portion of the $4.3 million convertible note which is $0.7 million of convertible note payable and accrued interest, an increase in accounts payable of $0.2 million, offset by the reduction of $0.8 million in related party notes payable and accrued interest.
The increase in current liabilities is primarily due to an increase in accounts payable and accrued expenses of $0.2 million, notes payable to related parties of $0.2 million, and convertible note payable of $0.1 million, primarily attributable to our efforts to preserve cash while we strive to raise funds to finance ongoing business and operations.
For the year ended December 31, 2022, we had no investing activities. Cash Flows from Financing Activities For the year ended December 31, 2023, we received net proceeds of $3,590,000 from the sale and issuance of convertible notes payable and warrants and repaid $334,444 in convertible notes and $685,473 in related party notes payable.
For the year ended December 31, 2023, the Company received net proceeds of $3.9 million from the sale and issuance of convertible notes payable and warrants and repaid $0.3 million in convertible notes, $0.3 million for finance costs related to convertible note payable, and $0.7 million in related party notes payable, all of which was used to finance the Company’s ongoing operations.
The increase in legal and professional fees was primarily due to increases in our expenses related to our public filing requirements, contracts and financing related work.
The increase in legal and professional fees was primarily due to increases in our accounting expenses related to our public filing requirements, legal and professional fees related to our restatement of certain prior periods and contracts. 59 Other Income (expense). During the year ended December 31, 2024, other expense increased by $0.7 million or 107%.
The use of Monte Carlo valuation models require key inputs, some of which are based on estimates and judgements by management and/or external consultants. Any change to these key inputs could produce significantly higher or lower fair value measurements.
Any change to these key inputs could produce significantly higher or lower fair value measurements.
Other Income (expense) Other expense was $0.7 million for the year ended December 31, 2023, which mainly consisted of $2.5 million in interest expense on convertible notes, loss on settlement of convertible debt of $0.5 million, and offset by a gain on change in fair value of derivative liabilities of $2.2 million.
The increase was primarily driven by a $1.7 million change in fair value of derivative liabilities and a $0.4 million loss on settlement of convertible debt related to the settlement of the Alto Convertible Note.
The Company has incurred losses since inception and had a net loss of $6.6 million and no revenues during the year ended December 31, 2023 and working capital of approximately $4.6 million as of December 31, 2023. In addition, the convertible notes payable outstanding at December 31, 2023 includes covenants and certain cash payment requirements.
We have incurred losses since inception and had a net loss of $9.1 million and no revenues during the year ended December 31, 2024 and working capital of approximately $0.7 million as of December 31, 2024. We do not expect to generate positive cash flows from operating activities in the near future.
We received Small Business Innovation Research (“SBIR”) contract funding from the National Institutes of Health (“NIH”) for the aforementioned projects. The clinical development of Ropidoxuridine has shown drug bioavailability and a maximum tolerated dose has been established for use in Phase II clinical trials. TCG GreenChem, Inc.
The clinical development of Ropidoxuridine has included completion of a Phase I clinical trial to establish drug bioavailability and a maximum tolerated dose for use in Phase II clinical trials.
Our most critical accounting policies and estimates relate to the following: ● Research and Development Expenses ● Fair Value of Derivative Financial Instruments ● Initial Measurement of Equity-Based Warrants Research and Development Research and development expenses are expensed as incurred and, prior to our initial public offering in September 2022, have historically been offset by contract receivable payments from an NIH SBIR contract that has supported our scientific research.
Our most critical accounting policies and estimates relate to the following: ● Research and Development Expenses ● Fair Value of Convertible Notes ● Fair Value of Warrant to Purchase Common Stock ● Fair Value of Derivative Financial Instruments Research and Development Expenses Research and development expenses are expensed as incurred, net of contract expense reimbursements, if applicable.
For the year ended December 31, 2022, net cash flows used in operating activities was $2.7 million, primarily consisting of a net loss of $3.0 million increased by a gain on change in derivative liability of $94.0 thousand, a gain on settlement of accounts payable of $0.3 million, a net change in in operating assets and liabilities of $0.5 million, amortization of debt discount of $0.9 million, and stock-based compensation of $0.4 million. 58 Cash Flows from Investing Activities For the year ended December 31, 2023, we invested in trading marketable securities for $2,998,572 and received $187,895 in proceeds from disposition of marketable securities and purchased $19,046 of equipment.
During the year ended December 31, 2024, net cash used in operating activities of $7.3 million was primarily due to our net loss of $9.1 million and a change in derivative liability of $0.6 million, partially offset by $1.1 million of amortization of debt discount and finance fees and $0.8 million of loss on settlement of convertible notes payable.
The accompanying financial statements do not include any adjustments to reflect the future effects on the recoverability and classification of assets or the amounts and classification of liabilities if the Company is unable to continue as a going concern. 57 Balance Sheet Data: December 31, December 31, 2023 2022 Change % Current assets $ 5,593,005 $ 8,578,351 $ (2,985,346 ) (35 %) Current liabilities 1,042,237 975,676 66,561 7 % Working capital $ 4,550,768 $ 7,602,675 $ (3,051,907 ) (40 %) As of December 31, 2023, total current assets were $5.6 million and total current liabilities were $1.0 million, resulting in working capital of $4.6 million.
Balance Sheet Data: December 31, December 31, 2024 2023 Change % Current assets $ 2,210,917 $ 5,593,005 $ (3,382,088 ) (60 )% Current liabilities 1,533,769 1,042,237 491,532 47 % Working capital $ 677,148 $ 4,550,768 $ (3,873,620 ) (85 )% 60 As of December 31, 2024, total current assets were $2.2 million and total current liabilities were $1.5 million, resulting in working capital of $0.7 million.
Removed
Shuttle also worked with University of Iowa Pharmaceuticals to develop the formulation, produce the capsules, and which have been shipped to Contract Research Organization (CRO) Theradex Oncology for distribution to clinical trial sites. Both activities have now been completed. In addition, Shuttle received approval from the FDA to begin the clinical trial.
Added
The drug product (capsules) were shipped to CRO Theradex Oncology and distributed to clinical trial sites that are fully approved to enroll patients in the trial. Shuttle received approval from the FDA to begin the clinical trial. The FDA made recommendations to expand the clinical trial to include a randomized dose “optimization” step and we agreed with the recommendation.
Removed
The FDA made recommendations to expand the clinical trial and the company agreed with the recommendation. With this change incorporated into the revised protocol, the Company believes it remains on track to commence its Phase II clinical study in the second quarter of 2024.
Added
Meetings with engaged clinical sites to review the protocol documents have occurred and FDA required IRB approvals have been received. With FDA recommended changes incorporated into the revised protocol and the completion of site initiation visits, the Company has commenced its Phase II clinical study.
Removed
The radiation biomarker project and the health disparities project have been completed and the company is following up with plans for clinical validation and potential commercialization.
Added
The radiation biomarker project and the health disparities project have been completed and the Company is proceeding with plans for clinical validation and potential for commercialization of Ropidoxuridine as a radiation sensitizer. 57 Nasdaq Listing Compliance On December 31, 2024, the Company received a letter from the Nasdaq Listing Qualifications Staff of The Nasdaq Stock Market LLC (“Nasdaq”) stating that for the 30 consecutive business day period between November 15, 2024 to December 30, 2024 the Company’s common stock had failed to maintain a minimum closing bid price of $1.00 per share, as required for continued listing on The Nasdaq Capital Market pursuant to Nasdaq Listing Rule 5550(a)(2) (the “Minimum Bid Price Requirement”).
Removed
The increase of $2.4 million, or 206%, is primarily related to the Company increasing R&D spending as a result of having received funding from the Company’s initial public offering in the third quarter of fiscal 2022 and, the convertible note issued during the period ended March 31, 2023.
Added
Pursuant to Nasdaq Listing Rule 5810(c)(3)(A), the Company has until June 30, 2025 to regain compliance with the Minimum Bid Price Requirement. To regain compliance, the closing bid price of the Company’s common stock must meet or exceed $1.00 per share for a minimum of 10 consecutive business days.
Removed
Other expense was $0.5 million for the year ended December 31, 2022, which mainly consisted of $0.9 million in interest expense on convertible notes, offset by a gain on change in warrant liability of $94.0 thousand and a $0.3 million gain on settlement of accounts payable.
Added
If the Company cannot regain compliance during the Compliance Period by June 30, 2025, whether organically or by completing a reverse stock split and subsequently trading above $1.00 per share for 10 consecutive trading days, Nasdaq will provide the Company with notice that its common stock will be subject to delisting.
Removed
Additionally, in January 2023, the Company entered into a securities purchase agreement with an institutional investor through which the Company sold a convertible note with a principal value of $4.3 million, along with a four-year warrant to purchase 1,018,079 shares of common stock, exercisable at $2.35 per share, providing the Company with $3.6 million in net proceeds.
Added
At that time, the Company may appeal Nasdaq’s delisting determination to a Nasdaq Hearings Panel.
Removed
The Company’s current assets as of December 31, 2023 primarily resulted from $3.6 million in net cash received from the issuance of a convertible note payable, offset by $0.8 million repaid for related party notes ($685,473 in principal and $98,135 of accrued interest), and $0.4 million repaid in cash for a convertible note ($334,444 in principal and $59,846 in accrued interest).
Added
Nasdaq’s notice to the Company of noncompliance has no immediate effect on the listing of the Company’s common stock and its common stock will continue to be listed on The Nasdaq Capital Market under the symbol “SHPH.” There can be no assurance that the Company will regain compliance with the Minimum Bid Price Requirement or maintain compliance with any of the other Nasdaq continued listing requirements.
Removed
Cash Flows Years Ended December 31, 2023 2022 Change % Cash used in operating activities $ (5,581,147 ) $ (2,710,454 ) $ (2,870,693 ) 106 % Cash used in investing activities $ (2,829,723 ) $ - $ (2,829,723 ) (100 %) Cash provided by financing activities $ 2,570,083 $ 10,622,908 $ (8,052,825 ) (76 %) Cash on hand $ 2,576,416 $ 8,417,203 $ (5,840,787 ) (69 %) Cash Flows from Operating Activities To date, we have not generated positive cash flows from operating activities.
Added
The Company will continue to monitor the closing bid price of its common stock and will, as appropriate, consider available options to regain compliance with the Minimum Bid Price Requirement.
Removed
For the year ended December 31, 2022, we received $10,022,193 from the issuance of shares of common stock and exercise of warrants and $600,715 from the issuance of convertible notes and warrants.
Added
On September 10, 2024, the Company received a letter from Nasdaq, notifying the Company that it is no longer in compliance with the minimum stockholders’ equity requirement for continued listing on the Nasdaq Capital Market. Nasdaq Listing Rule 5550(b)(1) requires listed companies to maintain stockholders’ equity of at least $2.5 million.
Removed
Initial Measurement of Equity-Based Warrants We evaluate all of our financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives. For derivative financial instruments that are accounted for as equity, the derivative instrument is initially recorded at its fair value and recorded to additional paid in capital.
Added
In the Company’s Quarterly Report on Form 10-Q for the period ended June 30, 2024, the Company reported stockholders’ equity of $801,434, which is below the minimum stockholders’ equity required for continued listing pursuant to Nasdaq Listing Rule 5550(b)(1).
Added
In addition, presently, the Company does not meet the alternatives of market value of listed securities or net income from continuing operations. On October 15, 2024, the Company submitted a plan to Nasdaq to regain compliance and Nasdaq subsequently granted the Company until March 10, 2025 to regain compliance.
Added
We are now in the process of evaluating potential fundraising opportunities, have filed a preliminary registration statement on Form S-1 with the intent of completing an up to $6.5 million public offering, and are working to complete the offering on or prior to March 10, 2025.
Added
Nonetheless, there can be no assurance that the Company will be able to regain compliance prior to March 10, 2025, or if the Company fails to satisfy another Nasdaq requirement for continued listing, Nasdaq could provide notice that the Company’s securities will become subject to delisting.
Added
The increase in total R&D expense of $0.1 million, or 3%, is primarily related to the Company having completed production of the drug product and the start of work related to the initiation of trials including contract research organization (“CRO”) expenses, clinical trial sites, other regulatory activities.
Added
These increases were partially offset by a decrease in interest expense of $1.3 million which was also due to the settlement of the Alto Convertible Note during the period ended September 30, 2024.
Added
In October 2024, we completed an equity raise that provided $3.7 million net cash, after deducting placement agent fees of $0.5 million and issuance costs of $0.3 million, for the issuance of 395,574 shares of common stock and 2,555,246 pre-funded warrants, accompanied by an aggregate of 2,950,820 warrants with an exercise price of $1.40 per share.
Added
Also in October 2024, we completed an offering of senior secured convertible bridge notes, receiving $0.7 million in cash, after deducting issuance costs. The notes have a term of one-year and were accompanied by 329,461 warrants with a weighted-average exercise price of $1.42 per share. Refer to the “Recent Financing” section below for additional information.
Added
In September 2024, our CEO provided $0.3 million to us in exchange for a promissory note repayable in equal monthly installments of principal and interest over a term of one year.
Added
The FDA recommended and we have agreed to an expansion of the Phase II clinical trial, necessitating additional capital to complete the trial as well as fund ongoing operations.
Added
Additionally, the Phase II clinical trial of Ropidoxuridine has evolved with finalized agreements with all six of the planned site enrollment locations to administer the Phase II clinical trial of Ropidoxuridine and the enrollment of the first three patients.
Added
The Company’s current assets as of December 31, 2024 are comprised of $1.9 million of cash and cash equivalents and $0.3 million of prepaid expenses, with the decrease from December 31, 2023 being primarily due to ongoing cash burn from our R&D programs, filing expenses, reaudits, and general operations.
Added
The Company’s current liabilities as of December 31, 2024 are primarily comprised of $0.7 million of convertible notes payable, $0.6 million of accounts payable and accrued expenses, $0.2 million of notes payable to related parties, and the current portion of our operating lease liability of $0.1 million.
Added
Cash Flows Years Ended December 31, 2024 2023 Change % Cash used in operating activities (7,327,230 ) (5,581,147 ) (1,746,083 ) 31 % Cash used in investing activities 2,915,765 (2,829,723 ) 5,745,488 100 % Cash provided by financing activities 3,755,193 2,570,083 1,185,110 46 % Cash and cash equivalents on hand 1,920,144 2,576,416 (656,272 ) (25 )% Cash Flows from Operating Activities Our cash flows from operating activities are greatly influenced by our use of cash for operating expenses and working capital requirements to support the business.
Added
We have historically experienced negative cash flows from operating activities as we invested in research and development activities.
Added
The cash used in operating activities resulted primarily from our net losses adjusted for non-cash charges, which are generally attributable to stock-based compensation, changes in fair value of our derivative liabilities and amortization of debt discounts and finance fees, as well as changes in components of operating assets and liabilities, which are generally attributable to increased expenses and timing of vendor payments.

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