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What changed in Dogwood Therapeutics, Inc.'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of Dogwood Therapeutics, Inc.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+373 added−449 removedSource: 10-K (2024-03-01) vs 10-K (2023-03-14)

Top changes in Dogwood Therapeutics, Inc.'s 2023 10-K

373 paragraphs added · 449 removed · 302 edited across 5 sections

Item 1. Business

Business — how the company describes what it does

90 edited+32 added−116 removed143 unchanged
Biggest changeIf approved, this could differentiate IMC-1 from current standard of care and pipeline products and, we believe, alter treatment outcomes in FM, and potentially a number of other chronic pain conditions in the Somatic Symptom Disorders where herpes viruses may play a role. 15 Biomarker — Gastrointestinal Tissue Study to see if Herpes Simplex Type 1 (“HSV-1”) is present in IBS/FM ​ The stomach of FM patients is one of the few sites that presents an opportunity for biopsy of tissue to determine if FM patients are burdened with herpes virus infection, where active FM is resultant upon reactivation of herpes virus infection.
Biggest changeIf approved, this could differentiate IMC-1 from current standard of care and pipeline products and, we believe, 11 alter treatment outcomes in FM, and potentially a number of other chronic pain conditions in the Somatic Symptom Disorders where herpesviruses may play a role.
We estimate that there are approximately 3.6 million patients in the U.S. that have been diagnosed with FM, with approximately 2 million being treated.
We estimate that there are approximately 3.6 million patients in the U.S. that have been diagnosed with FM, with approximately 2 million patients being treated.
This review typically takes twelve months from the date the NDA is submitted to FDA because the FDA has approximately two months to make a “filing” decision.
This review typically takes twelve months from the date the NDA is submitted to the FDA because the FDA has approximately two months to make a “filing” decision.
The process required by the FDA before a drug may be marketed in the United States generally involves the following: ● Completion of preclinical laboratory tests, animal studies and formulation studies in compliance with the FDA’s good laboratory practice (“GLP”) regulations. ● Submission to the FDA of an IND, which must become effective before human clinical trials may begin. ● Approval by an independent institutional review board (“IRB”) at each clinical site before each trial may be initiated. ● Performance of adequate and well-controlled human clinical trials in accordance with good clinical practice (“GCP”) requirements to establish the safety and efficacy of the proposed drug product for each indication. ● Submission to the FDA of an NDA. ● Satisfactory completion of an FDA advisory committee review, if applicable. ● Satisfactory completion of an FDA inspection of the manufacturing facility or facilities at which the product is produced to assess compliance with current good manufacturing practice (“cGMP”) requirements and to assure that the facilities, methods and controls are adequate to preserve the drug’s identity, strength, quality and purity. ● Satisfactory completion of FDA audits of clinical trial sites to assure compliance with GCPs and the integrity of the clinical data. ● Payment of user fees and securing FDA approval of the NDA. ● Compliance with any post-approval requirements, including the potential requirement to implement a Risk Evaluation and Mitigation Strategy (“REMS”) and the potential requirement to conduct post-approval studies.
The process required by the FDA before a drug may be marketed in the United States generally involves the following: ● Completion of preclinical laboratory tests, animal studies and formulation studies in compliance with the FDA’s good laboratory practice (“GLP”) regulations. ● Submission to the FDA of an IND, which must become effective before human clinical trials may begin. ● Approval by an independent institutional review board (“IRB”) at each clinical site before each trial may be initiated. ● Performance of adequate and well-controlled human clinical trials in accordance with good clinical practice (“GCP”) requirements to establish the safety and efficacy of the proposed drug product for each indication. ● Submission to the FDA of an NDA. ● Satisfactory completion of an FDA advisory committee review, if applicable. ● Satisfactory completion of an FDA inspection of the manufacturing facility or facilities at which the product is produced to assess compliance with current good manufacturing practice (“cGMP”) requirements and to assure that the facilities, methods and controls are adequate to preserve the drug’s identity, strength, quality and purity. ● Satisfactory completion of FDA audits of clinical trial sites to assure compliance with GCPs and the integrity of the clinical data. ● Payment of user fees and securing FDA approval of the NDA. 18 ● Compliance with any post-approval requirements, including the potential requirement to implement a Risk Evaluation and Mitigation Strategy (“REMS”) and the potential requirement to conduct post-approval studies.
Even if the FDA approves a product, it may limit the approved indications for use of the product, require that contraindications, warnings or precautions be included in the product labeling, require that post-approval studies, including Phase 4 clinical trials, be conducted to further assess a drug’s safety after approval, require testing and surveillance programs to monitor the product after commercialization, or impose other conditions, including distribution and use restrictions or other risk management mechanisms under a REMS, which can materially affect the potential market and profitability of the product.
Even if the FDA approves a product, it may limit the approved indications for use of the product, require that contraindications, warnings or precautions be included in the product labeling, require that post-approval 20 studies, including Phase 4 clinical trials, be conducted to further assess a drug’s safety after approval, require testing and surveillance programs to monitor the product after commercialization, or impose other conditions, including distribution and use restrictions or other risk management mechanisms under a REMS, which can materially affect the potential market and profitability of the product.
Any applicant who files an ANDA seeking approval of a generic equivalent version of a drug listed in the Orange Book or a Section 505(b)(2) NDA referencing a drug listed in the Orange Book must certify to the FDA, as applicable, that (1) no patent information on the drug product that is the subject of the application has been submitted to the FDA; (2) such patent has expired; (3) the date on which such patent expires; or (4) such patent is invalid or will not be 38 infringed upon by the manufacture, use or sale of the drug product for which the application is submitted.
Any applicant who files an ANDA seeking approval of a generic equivalent version of a drug listed in the Orange Book or a Section 505(b)(2) NDA referencing a drug listed in the Orange Book must certify to the FDA, as applicable, that (1) no patent information on the drug product that is the subject of the application has been submitted to the FDA; (2) such patent has expired; (3) the date on which such patent expires; or (4) such patent is invalid or will not be infringed upon by the manufacture, use or sale of the drug product for which the application is submitted.
In addition, HIPAA, as amended by the 37 Health Information Technology for Economic and Clinical Health Act and its implementing regulations, impose certain requirements relating to the privacy, security and transmission of individually identifiable health information; and ● the federal Physician Payment Sunshine Act requirements, under the Patient Protection and Affordable Care Act, which require manufacturers of certain drugs and biologics to track and report to CMS payments and other transfers of value they make to U.S. physicians and teaching hospitals as well as physician ownership and investment interests in the manufacturer.
In addition, HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act and its implementing regulations, impose certain requirements relating to the privacy, security and transmission of individually identifiable health information; and ● the federal Physician Payment Sunshine Act requirements, under the Patient Protection and Affordable Care Act, which require manufacturers of certain drugs and biologics to track and report to CMS payments and other transfers of value they make to U.S. physicians and teaching hospitals as well as physician ownership and investment interests in the manufacturer.
The laws that may affect our operations include: ● the federal Anti-Kickback Statute, which prohibits, among other things, persons from soliciting, receiving, offering or paying remuneration, directly or indirectly, in cash or in kind, to induce or reward, or in return for, either the referral of an individual for, or the purchase, order or recommendation of, an item or service reimbursable under a federal healthcare program, such as the Medicare and Medicaid programs.
The laws that may affect our operations include: ● the federal Anti-Kickback Statute, which prohibits, among other things, persons from soliciting, receiving, offering or paying remuneration, directly or indirectly, in cash or in kind, to induce or reward, or in return for, either the referral of an individual for, or the purchase, order or recommendation of, an item or service reimbursable under a federal healthcare program, such as the 24 Medicare and Medicaid programs.
Because there are no specific clinical or laboratory tests available to diagnose FM, diagnosis is established by demonstrating that a patient has widespread chronic pain in 7 or more of the 19 bodily locations for at least 3 months in duration. Additionally, these patients may 10 also have non-restorative sleep, life altering fatigue, and cognitive impairment.
Because there are no specific clinical or laboratory tests available to diagnose FM, diagnosis is established by demonstrating that a patient has widespread chronic pain in 7 or more of the 19 bodily locations for at least 3 months in duration. Additionally, these patients may also have non-restorative sleep, life altering fatigue, and cognitive impairment.
Other potential consequences include, among other things: ● Restrictions on the marketing or manufacturing of the product, complete withdrawal of the product from the market or product recalls. ● Fines, warning letters or holds on post-approval clinical trials. ● Refusal of the FDA to approve pending NDAs or supplements to approved NDAs, or suspension or revocation of product approvals. ● Product seizure or detention, or refusal to permit the import or export of products. ● Injunctions or the imposition of civil or criminal penalties.
Other potential consequences include, among other things: ● Restrictions on the marketing or manufacturing of the product, complete withdrawal of the product from the market or product recalls. ● Fines, warning letters or holds on post-approval clinical trials. ● Refusal of the FDA to approve pending NDAs or supplements to approved NDAs, or suspension or revocation of product approvals. 23 ● Product seizure or detention, or refusal to permit the import or export of products. ● Injunctions or the imposition of civil or criminal penalties.
In September 2022, we announced the top line results from our FORTRESS study in FM. Overall, the FORTRESS study did not achieve statistical significance on the prespecified primary efficacy endpoint of change from baseline to Week 14 in the weekly average of daily self-reported average pain severity scores comparing IMC-1 to placebo (p=0.302).
In September 2022, we announced the top line results from our FORTRESS study in FM. Overall, the FORTRESS study did not achieve statistical significance on the prespecified primary efficacy endpoint of 8 change from baseline to Week 14 in the weekly average of daily self-reported average pain severity scores comparing IMC-1 to placebo (p=0.302).
In particular, FM patients conveyed that they felt noticeably better when placed on the combination of famciclovir and celecoxib. We believe that stress and other environmental factors reactivate a persistent (indolent) herpes infection, resulting in a continuous nociceptive stimulation and immune response. The cyclical process of virus reactivation and lytic infection of herpes virus perpetuates FM symptoms.
In particular, FM patients conveyed that they felt noticeably better when placed on the combination of famciclovir and celecoxib. We believe that stress and other environmental factors reactivate a persistent (indolent) herpes infection, resulting in a continuous nociceptive stimulation and immune response. The cyclical process of virus reactivation and lytic infection of herpesvirus perpetuates FM symptoms.
To market our future products in the EEA (which is comprised of the 27 Member States of the EU plus Norway, Iceland and Liechtenstein) and many other foreign jurisdictions, we must obtain separate regulatory 39 approvals. More concretely, in the EEA, medicinal products can only be commercialized after obtaining a Marketing Authorization (“MA”).
To market our future products in the EEA (which is comprised of the 27 Member States of the EU plus Norway, Iceland and Liechtenstein) and many other foreign jurisdictions, we must obtain separate regulatory approvals. More concretely, in the EEA, medicinal products can only be commercialized after obtaining a Marketing Authorization (“MA”).
The FDA also may require submission of a REMS plan to ensure that the benefits of the drug outweigh its risks. The REMS plan could include medication guides, physician communication plans, assessment plans, 32 and/or elements to assure safe use, such as restricted distribution methods, patient registries, or other risk minimization tools.
The FDA also may require submission of a REMS plan to ensure that the benefits of the drug outweigh its risks. The REMS plan could include medication guides, physician communication plans, assessment plans, and/or elements to assure safe use, such as restricted distribution methods, patient registries, or other risk minimization tools.
Drugs granted accelerated approval must meet the same statutory standards for safety and effectiveness as those granted traditional approval. 34 For the purposes of accelerated approval, a surrogate endpoint is a marker, such as a laboratory measurement, radiographic image, physical sign or other measure that is thought to predict clinical benefit but is not itself a measure of clinical benefit.
Drugs granted accelerated approval must meet the same statutory standards for safety and effectiveness as those granted traditional approval. For the purposes of accelerated approval, a surrogate endpoint is a marker, such as a laboratory measurement, radiographic image, physical sign or other measure that is thought to predict clinical benefit but is not itself a measure of clinical benefit.
During this market exclusivity period, the EMA or the member state 40 competent authorities, cannot accept another application for a marketing authorization, or grant a marketing authorization, for a similar medicinal product for the same indication. The period of market exclusivity is extended by two years for medicines that have also complied with an agreed pediatric investigation plan .
During this market exclusivity period, the EMA or the member state competent authorities, cannot accept another application for a marketing authorization, or grant a marketing authorization, for a similar medicinal product for the same indication. The period of market exclusivity is extended by two years for medicines that have also complied with an agreed pediatric investigation plan .
Sales and Marketing If IMC-1 is approved, we plan to enter into sales and marketing agreements with one or several pharmaceutical companies to sell to neurologists, geriatric specialists and to primary care physicians. Manufacturing We rely on third-party contractors for manufacturing clinical supplies and plan to do so for commercial amounts also.
Sales and Marketing If IMC-1 or IMC-2 is approved, we plan to enter into sales and marketing agreements with one or several pharmaceutical companies to sell to neurologists, geriatric specialists and to primary care physicians. Manufacturing We rely on third-party contractors for manufacturing clinical supplies and plan to do so for commercial amounts also.
Should this occur, the FDA would be precluded from approving any ANDA or Section 505(b)(2) application for the protected modification until after that three-year exclusivity period has run. However, unlike NCE exclusivity, the FDA can accept an application and begin the review process during the exclusivity period.
Should this occur, the FDA would be precluded from approving any ANDA or Section 505(b)(2) application for the protected modification 26 until after that three-year exclusivity period has run. However, unlike NCE exclusivity, the FDA can accept an application and begin the review process during the exclusivity period.
Sales in the U.S. will 36 depend in part on the availability of adequate financial coverage and reimbursement from third-party payors, which include government health programs such as Medicare, Medicaid, TRICARE and the Veterans Administration, as well as managed care organizations and private health insurers.
Sales in the U.S. will depend in part on the availability of adequate financial coverage and reimbursement from third-party payors, which include government health programs such as Medicare, Medicaid, TRICARE and the Veterans Administration, as well as managed care organizations and private health insurers.
Conversely, during the second half of the trial from November 2021 to April 2022, for the patients who were enrolled (n=214) (Cohort 2) when vaccination rates improved, the Omicron variant of COVID-19 became the dominant U.S. strain and quarantining restrictions were less, IMC-1-treated patients demonstrated a statistically significant improvement on the primary pain reduction endpoint (p=0.03) at Week 14, as well as a statistically significant improvement in the key secondary PROMIS Fatigue assessment (p=0.006) and the Fibromyalgia Impact Questionnaire-Revised (FIQR) symptoms domain score (p=0.015).
Conversely, during the second half of the trial from November 2021 to April 2022, for the patients who were enrolled (n=214) (Cohort 2) when vaccination rates improved, the Omicron variant of COVID-19 became the dominant U.S. strain and quarantining restrictions were lessened, IMC-1-treated patients demonstrated a statistically significant improvement on the primary pain reduction endpoint (p=0.03) at Week 14, as well as a statistically significant improvement in the key secondary PROMIS Fatigue assessment (p=0.006) and the Fibromyalgia Impact Questionnaire-Revised (FIQR) symptoms domain score (p=0.015).
Facilities We do not own or lease any offices at this time other than a “virtual office” at the address set forth on the cover page of this Annual Report. Website Our internet address is https://www.virios.com . ​
Facilities We do not own or lease any offices at this time other than a “virtual office” at the address set forth on the cover page of this Annual Report. Website Our internet address is https://www.virios.com . ​ 28
Drugs designated as breakthrough therapies are also eligible for accelerated approval. The FDA must take certain actions, such as holding timely meetings and providing advice, intended to expedite the development and review of an application for approval of a breakthrough therapy.
Drugs designated as breakthrough therapies are also eligible for accelerated approval. The FDA must take certain actions, such as 21 holding timely meetings and providing advice, intended to expedite the development and review of an application for approval of a breakthrough therapy.
ANDAs are termed abbreviated because they generally do not include preclinical and clinical data to demonstrate safety and effectiveness. Instead, a generic applicant must demonstrate that its product is bioequivalent to the innovator drug.
ANDAs are termed abbreviated because they generally do not include preclinical and clinical data to demonstrate safety and effectiveness. Instead, a generic applicant must demonstrate that its product is bioequivalent to 25 the innovator drug.
Our Novel Mechanism of Action (“MOA”) Scientists and clinicians agree that patients with FM have a problem with central pain processing. The exact causality of the heightened pain sensitivity in FM is poorly understood.
Our Novel Mechanism of Action (“MOA”) Scientists and clinicians generally agree that patients with FM have a problem with central pain processing. The exact causality of the heightened pain sensitivity in FM is poorly understood.
“Composition of Matter” Synergistic Patent (US 10,251,853) Synergistic combination for total daily dose of famciclovir and celecoxib Issued Foreign IMC-1 Patents ● European Patent (EP 2 811 833 & 2 965 759 – validated in 18 countries) ● Japan (JP 5855770 & 6422848) ● Australia (AU 2013217110) 28 ● China (CN 104144606) ● Korea (KR 10-1485748) ● Canada (2,863,812) U.S.
“Composition of Matter” Synergistic Patent (US 10,251,853) Synergistic combination for total daily dose of famciclovir and celecoxib 15 Issued Foreign IMC-1 Patents ● European Patent (EP 2 811 833 & 2 965 759 – validated in 18 countries) ● Japan (JP 5855770 & 6422848) ● Australia (AU 2013217110) ● China (CN 104144606) ● Korea (KR 10-1485748) ● Canada (2,863,812) U.S.
Moreover, under the provisions of the Food and Drug Administration Safety and Innovation Act passed in July 2012, a sponsor can request designation of a product candidate as a “breakthrough therapy.” A breakthrough therapy is defined as a drug that is intended, alone or in combination with one or more other drugs, to treat a serious or life-threatening disease or condition, and preliminary clinical evidence indicates that the drug may demonstrate substantial improvement over existing therapies on one or more clinically significant endpoints, such as substantial treatment effects observed early in clinical development.
Moreover, under the provisions of the Food and Drug Administration Safety and Innovation Act, a sponsor can request designation of a product candidate as a “breakthrough therapy.” A breakthrough therapy is defined as a drug that is intended, alone or in combination with one or more other drugs, to treat a serious or life-threatening disease or condition, and preliminary clinical evidence indicates that the drug may demonstrate substantial improvement over existing therapies on one or more clinically significant endpoints, such as substantial treatment effects observed early in clinical development.
We have postulated that herpes virus infected nerve tissue located in the gastric mucosa provides a site for biopsy and represents an excellent site to confirm active herpes virus infection in patients with recurrent active FM . To test this hypothesis, we engaged the University of Alabama to analyze GI biopsy tissue to search for active HSV-1 virus.
We have postulated that herpesvirus infected nerve tissue located in the gastric mucosa provides a site for biopsy and represents an excellent site to confirm active herpesvirus infection in patients with recurrent active FM . To test this hypothesis, we engaged the University of Alabama to analyze GI biopsy tissue to search for active HSV-1 virus.
As of December 31, 2022, our portfolio of owned patents totaled 21 issued patents in the United States and abroad. This includes three Composition of Matter patents, including a Synergistic Patent, and two Method of Use patents in the United States, all of which relate to IMC-1. Exclusivity with all patents extends to 2033. Issued US IMC-1 Patents ● U.S.
As of December 31, 2023, our portfolio of owned patents totaled 21 issued patents in the United States and abroad. This includes three Composition of Matter patents, including a Synergistic Patent, and two Method of Use patents in the United States, all of which relate to IMC-1. Exclusivity with all patents extends to 2033. Issued US IMC-1 Patents ● U.S.
Medicinal products designated as orphan drugs are eligible for incentives made available by the EU and its Member States to support research into, and the development and availability of, orphan drugs. Human Capital Resources As of December 31, 2022, we had four full-time employees.
Medicinal products designated as orphan drugs are eligible for incentives made available by the EU and its Member States to support research into, and the development and availability of, orphan drugs. Human Capital Resources As of December 31, 2023, we had four full-time employees.
To interrupt and reverse viral reactivation and immune response, and resultant continuous nociceptive stimulation requires the suppression of the herpes virus, reverting it into a dormant (latency) status. We believe the coaction (synergy) of therapeutic agents with different antiviral properties is required to suppress herpes virus and reverse the symptoms of FM.
To interrupt and reverse viral reactivation and immune response, and resultant continuous nociceptive stimulation requires the suppression of the herpesvirus, reverting it into a dormant (latency) status. We believe the coaction (synergy) of therapeutic agents with different antiviral properties is required to suppress herpesvirus and reverse the symptoms of FM.
COX-2 activation is involved in the induction of herpetic recurrences, and COX-2 inhibition is accompanied not only by a reduction of viral shedding, but also a reduction of viral DNA in nerve ganglia. 14 The anti-herpes virus MOA of the nucleoside analogs (which include famciclovir) is well characterized, and this drug class has been used to treat viruses over decades.
COX-2 activation is involved in the induction of herpetic recurrences, and COX-2 inhibition is accompanied not only by a reduction of viral shedding, but also a reduction of viral DNA in nerve ganglia. The anti-herpesvirus MOA of the nucleoside analogs (which include famciclovir) is well characterized, and this drug class has been used to treat viruses over decades.
On July 23, 2020, the Company changed its name from Innovative Med Concepts, LLC to Virios Therapeutics, LLC. We are a development-stage biotechnology company focused on advancing novel antiviral therapies to treat diseases associated with a viral triggered abnormal immune response such as fibromyalgia (“FM”).
On July 23, 2020, the Company changed its name from Innovative Med Concepts, LLC to Virios Therapeutics, LLC. We are a development-stage biotechnology company focused on advancing novel antiviral therapies to treat diseases associated with a viral triggered abnormal immune response such as fibromyalgia (“FM”) and Long-COVID (“LC”).
During the first half of the trial from June 2021 to November 2021, for the patients who were enrolled (n=208) (Cohort 1) when the Delta variant of COVID-19 was the dominant strain in the U.S., full vaccination rates were below 50% and some form of quarantining was still in place in most geographies, IMC-1 demonstrated no improvement versus placebo-treated patients.
During the first half of the trial from June 2021 to November 2021, for the patients who were enrolled (n=208) (Cohort 1) when the Delta variant of COVID-19 was the dominant strain in the U.S., full vaccination rates were below 50% and some form of quarantining had been in place for over a year and was still in place in most geographies, IMC-1 demonstrated no improvement versus placebo-treated patients.
Coverage and Reimbursement Significant uncertainty exists as to the coverage and reimbursement status of our product candidate, IMC-1, or any other development candidate for which we may seek regulatory approval.
Coverage and Reimbursement Significant uncertainty exists as to the coverage and reimbursement status of our product candidates, IMC-1 and IMC-2, or any other product candidate for which we may seek regulatory approval.
A summary of this data is presented below. ​ The study found that 83% of patients with FM and chronic GI conditions had ICP8, a protein only found in active HSV-1 infections as demonstrated in the GI biopsy. While only 9% of control patients had ICP8 (p = 0.0001).
A summary of this data is presented below. ​ The study found that 83% of patients with FM and chronic GI conditions had detectable ICP8, a protein only found in actively replicating HSV-1 infections. While only 9% of control patients had ICP8 (p = 0.0001).
IMC-1 combines two specific mechanisms of action purposely designed to inhibit herpes virus activation and replication, thereby keeping the herpes virus in a latent (dormant) state or “down-regulating” the virus from a lytic (active) state back to latency. The famciclovir component of IMC-1 inhibits viral DNA replication.
IMC-1 and IMC-2 combine two specific mechanisms of action purposely designed to inhibit herpesvirus activation and replication, thereby keeping the herpesvirus in a latent (dormant) state or “down-regulating” the herpesvirus from a lytic (active) state back to latency. The famciclovir component of IMC-1 and the valacyclovir component of IMC-2 inhibit viral DNA replication.
The underlying cause of FM has remained elusive and frustrated treating physicians and the scientific community alike. To date, the three products approved by the FDA for the treatment of FM have the potential to cause troublesome side effects and/or deliver limited efficacy. The American College of Rheumatology (“ACR”) has provided working definitions for the diagnosis of FM.
The underlying cause of FM has remained elusive and frustrated treating physicians and the scientific community alike. To date, the three products approved by the FDA for the treatment of FM have the potential to cause troublesome side effects and/or deliver limited efficacy.
Overactive immune response related to activation of tissue resident herpes virus has been postulated to be a potential root cause of chronic illnesses such as FM, irritable bowel disease (“IBS”), chronic fatigue syndrome and other functional somatic syndromes, all of which are characterized by a waxing and waning manifestation of disease.
Overactive immune response related to activation of tissue resident herpesvirus has been postulated to be a potential root cause of chronic illnesses such as FM, irritable bowel disease (“IBS”), LC, chronic fatigue syndrome and other functional somatic syndromes, all of which are characterized by a waxing and waning manifestation of disease, often triggered by events which compromise the immune system.
Sally A. Kendall and her colleagues and published in 2004 in the Journal of Rheumatology. Dr. Kendall evaluated valacyclovir 1 gram three times a day vs placebo in 60 patients with FM. The results showed no difference in change of pain between valacyclovir and placebo. Virally induced upregulation of COX enzymes is important for efficient viral replication.
Kendall evaluated valacyclovir 1 gram three times a day vs placebo in 60 patients with FM. The results showed no difference in change of pain between valacyclovir and placebo. Virally induced upregulation of COX enzymes is important for efficient viral replication. An article published by Dr. Lynn W.
The process of obtaining regulatory approvals and the subsequent compliance with applicable federal, state, local and foreign statutes and regulations requires the expenditure of substantial time and financial resources. 30 Failure to comply with the applicable U.S. requirements at any time during the product development process, approval process or after approval, may subject an applicant to a variety of administrative or judicial sanctions, such as the FDA’s refusal to approve pending NDAs, withdrawal of an approval, imposition of a clinical hold, issuance of warning letters, product recalls, product seizures, total or partial suspension of production or distribution, injunctions, fines, refusals of government contracts, restitution, disgorgement or civil or criminal penalties.
Failure to comply with the applicable U.S. requirements at any time during the product development process, approval process or after approval, may subject an applicant to a variety of administrative or judicial sanctions, such as the FDA’s refusal to approve pending NDAs, withdrawal of an approval, imposition of a clinical hold, issuance of warning letters, product recalls, product seizures, total or partial suspension of production or distribution, injunctions, fines, refusals of government contracts, restitution, disgorgement or civil or criminal penalties.
As a result, submission of an IND may not result in the FDA allowing clinical trials to initiate. 31 Clinical Trials Clinical trials involve the administration of the investigational new drug to human subjects under the supervision of qualified investigators in accordance with GCP requirements, which include the requirement that all research subjects provide their informed consent in writing for their participation in any clinical trial.
Clinical Trials Clinical trials involve the administration of the investigational new drug to human subjects under the supervision of qualified investigators in accordance with GCP requirements, which include the requirement that all research subjects provide their informed consent in writing for their participation in any clinical trial.
The table below demonstrates the significant differences observed in the proof-of-concept study between IMC-1 and placebo in change from baseline using both the Numerical Rating Scale (NRS) 24-hour recall pain data and the Revised Fibromyalgia Impact Questionnaire (FIQ-R) with LOCF/BOCF imputation. ​ 7 IMC-1 also exhibited consistent improvement across several secondary FM treatment outcomes, including 50% responder analysis, improved functional assessments, lower chronic fatigue, increased time to rescue medication and improvements in FM patient’s overall global health status.
However, regulatory authorities, including the FDA and EMA, do not rely on strict statistical significance thresholds as criteria for marketing approval and maintain the flexibility to evaluate the overall risks and benefits of a new treatment. 7 The table below demonstrates the significant differences observed in the proof-of-concept study between IMC-1 and placebo in change from baseline using both the Numerical Rating Scale (NRS) 24-hour recall pain data and the Revised Fibromyalgia Impact Questionnaire (FIQ-R) with LOCF/BOCF imputation. ​ IMC-1 also exhibited consistent improvement across several secondary FM treatment outcomes, including 50% responder analysis, improved functional assessments, lower chronic fatigue, increased time to rescue medication and improvements in FM patient’s overall global health status.
While not completely understood, there is general agreement in the medical community that activation of the herpes virus is triggered by some form of environmental and/or health stressor. Our lead candidate, IMC-1, is a novel, proprietary, fixed dose combination of famciclovir and celecoxib.
While not completely understood, there is general agreement in the medical community that activation of the herpesvirus is triggered by some form of environmental and/or health stressor. Our lead product candidates, IMC-1 and IMC-2, are novel, proprietary, fixed dose combinations of anti-herpes antivirals and celecoxib.
The FDA has provided the following guidance with respect to the development of IMC-1 for the treatment of FM. Since we are combining proprietary doses of two previously approved drugs, our fixed dose combination product candidate is eligible for submission to the FDA for approval under Section 505(b)(2) of the Federal Food, Drug and Cosmetic Act (“FDCA”).
Regulatory and Development Timeline IMC-1 We have continued to regularly engage the FDA regarding IMC-1 for the treatment of FM. Since we are combining proprietary doses of two previously approved drugs, our fixed dose combination product candidates are eligible for submission to the FDA for approval under Section 505(b)(2) of the Federal Food, Drug and Cosmetic Act (“FDCA”).
The 505(b)(2) NDA filing will rely on portions of the development programs conducted by the sponsors of the reference drugs, as described in the FDA-approved US Prescribing Information. The FDA has agreed to our (b)(2) filing plan.
We expect our 505(b)(2) NDA filing to rely on portions of the development programs conducted for the reference drugs, as described in the FDA-approved United States Prescribing Information. In our discussions with the FDA, the FDA has agreed to our 505(b)(2) filing plan.
For the Phase 3 program, we intend to run two qualifying pivotal trials demonstrating the safety and efficacy of IMC-1 treating patients with FM. The first Phase 3 study is planned to be a four-arm, multifactorial design to demonstrate the relative safety and efficacy of IMC-1 as compared to celecoxib alone, famciclovir alone and placebo.
The Phase 3 program agreed with FDA includes two qualifying pivotal trials demonstrating the safety and efficacy of IMC-1 treating patients with FM. One of the Phase 3 studies will be a four-arm, multifactorial design to demonstrate the relative safety and efficacy of IMC-1 as compared to celecoxib alone, famciclovir alone and placebo.
The purpose of these programs is to provide important new drugs to patients earlier than under standard FDA review procedures. 33 To be eligible for a fast track designation, the FDA must determine, based on the request of a sponsor, that a product is intended to treat a serious or life-threatening disease or condition and demonstrates the potential to address an unmet medical need.
To be eligible for a fast track designation, the FDA must determine, based on the request of a sponsor, that a product is intended to treat a serious or life-threatening disease or condition and demonstrates the potential to address an unmet medical need.
Under Section 505(b)(2), we plan to rely upon FDA’s previous findings of safety and effectiveness, and extensively reference several sections of the US Prescribing Information for Famvir (famciclovir), from Novartis, and Celebrex (celecoxib), from Pfizer, the reference drugs for our program.
Under Section 505(b)(2), we are able to rely upon FDA’s previous findings of safety and effectiveness, and extensively reference several sections of the United States Prescribing Information for Famvir (famciclovir) and Celebrex (celecoxib).
If a product with orphan status receives the first FDA approval for the disease or condition for which it has such designation or for a select indication or use within the rare disease or condition for which it was designated, the product generally will be receiving orphan product exclusivity.
Orphan product designation does not convey any advantage in or shorten the duration of the regulatory review and approval process. 22 If a product with orphan status receives the first FDA approval for the disease or condition for which it has such designation or for a select indication or use within the rare disease or condition for which it was designated, the product generally will be receiving orphan product exclusivity.
The study also analyzed patients suffering from symptoms of IBS and demonstrates a strong correlation with HSV-1 (p = 0.0005) as well, when compared to controls. The correlation of HSV-1 activation to FM (and IBS) was shown and we believe corroborates the underlying mechanistic rationale for IMC-1.
The study also analyzed patients suffering from symptoms of IBS and demonstrates a strong correlation with HSV-1 (p = 0.0005) as well, when compared to controls.
However, the actual protection afforded by a patent varies on a product-by-product basis, from country to country and depends upon many factors, including the type of patent, the scope of its coverage, the availability of regulatory-related extensions, the availability of legal remedies in a particular country and the validity and enforceability of the patent.
However, the actual protection afforded by a patent varies on a product-by-product basis, from country to country and depends upon many factors, including the type of patent, the scope of its coverage, the availability of regulatory-related extensions, the availability of legal remedies in a particular country and the validity and enforceability of the patent. 16 Furthermore, we rely upon trade secrets and know-how and continuing technological innovation to develop and maintain our competitive position.
No adverse event category in the IMC-1 group exceeded a 4% rate with the exception of COVID-19 infection. Overall discontinuations were 18.5% in the IMC-1 treated group versus 23% in the placebo treated group. Patients in the FORTRESS trial were randomized one-to-one to either IMC-1 or placebo and patient background demographics and baseline pain scores were well matched.
Overall discontinuations were 18.5% in the IMC-1 treated group versus 23% in the placebo treated group. Patients in the FORTRESS trial were randomized one-to-one to either IMC-1 or placebo and patient background demographics and baseline pain scores were well matched.
It is uncertain whether the issuance of any third-party patent would require us to alter our development or commercial strategies, or our drugs or processes, obtain licenses or cease certain activities.
Our commercial success will also depend in part on not infringing upon the proprietary rights of third parties. It is uncertain whether the issuance of any third-party patent would require us to alter our development or commercial strategies, or our drugs or processes, obtain licenses or cease certain activities.
Moreover, competitors may receive approval of different products for the indication for which the orphan product has exclusivity or obtain approval for the same product but for a different indication for which the orphan product has exclusivity. 35 Post-Approval Requirements Drugs manufactured or distributed pursuant to FDA approvals are subject to pervasive and continuing regulation by the FDA, including, among other things, requirements relating to recordkeeping, periodic reporting, product sampling and distribution, advertising and promotion and reporting of adverse experiences with the product.
Post-Approval Requirements Drugs manufactured or distributed pursuant to FDA approvals are subject to pervasive and continuing regulation by the FDA, including, among other things, requirements relating to recordkeeping, periodic reporting, product sampling and distribution, advertising and promotion and reporting of adverse experiences with the product.
A company must request orphan product designation before submitting an NDA. If the request is granted, the FDA will disclose the identity of the therapeutic agent and its potential use. Orphan product designation does not convey any advantage in or shorten the duration of the regulatory review and approval process.
A company must request orphan product designation before submitting an NDA. If the request is granted, the FDA will disclose the identity of the therapeutic agent and its potential use.
Private payors often rely on the lead of the governmental payors in rendering coverage and reimbursement determinations. Sales of IMC-1 or any other candidates will therefore depend substantially on the extent to which the costs of our products will be paid by third-party payors.
Sales of IMC-1, IMC-2 or any other product candidates will therefore depend substantially on the extent to which the costs of our products will be paid by third-party payors.
The celecoxib component of IMC-1 inhibits cyclooxegenase-2 (“COX-2”) and to a lesser degree COX-1 enzymes, used by the herpes virus to amplify or accelerate its own replication. We are unaware of any other antivirals in development for the treatment of FM. We believe this novel approach was a germane consideration in the U.S.
The celecoxib component of IMC-1 and IMC-2 inhibits cyclooxegenase-2 (COX-2) and to a lesser degree cyclooxegenase-1 (COX-1) enzymes, which are used by the herpesvirus to amplify or accelerate its own replication. We are unaware of any other antivirals currently in development for the treatment of FM or related conditions.
Further, the FDA may approve more than one product for the same orphan indication or disease if the products contain different active ingredients.
Further, the FDA may approve more than one product for the same orphan indication or disease if the products contain different active ingredients. Moreover, competitors may receive approval of different products for the indication for which the orphan product has exclusivity or obtain approval for the same product but for a different indication for which the orphan product has exclusivity.
However, when administered in combination, the synergistic response was unexpected and promising. This IMC-1 synergistic response resulted from a combination of famciclovir inhibiting viral DNA polymerase and celecoxib inhibiting upregulation of COX-2 (and to a lesser extent COX-1). There have been multiple published studies using NSAIDS/COX-2’s in the treatment of FM.
Studies have shown that neither antivirals nor COX-2/NSAIDS taken alone result in a meaningful clinical benefit. However, when administered in combination, the synergistic response was unexpected and promising. This IMC-1 synergistic response resulted from a combination of famciclovir inhibiting viral DNA polymerase and celecoxib inhibiting upregulation of COX-2 (and to a lesser extent, COX-1).
We believe the likelihood of such a differential response based on the timing of patient enrollment is highly unlikely due to chance or a random occurrence, thus further analysis of the data was warranted, particularly in the context of our previous IMC-1 Phase 2a study success. 8 Importantly, IMC-1 displayed a first in class safety profile with excellent tolerability and with only 4.6% of IMC-1 treated patients dropping out due to adverse events, as compared with 8.1% of placebo treated patients.
We believe the likelihood of such a differential response based on the timing of patient enrollment is highly unlikely due to chance or a random occurrence, thus further analysis of the data was warranted, particularly in the context of our previous IMC-1 Phase 2a study success.
Famciclovir, a nucleoside analog DNA inhibitor, inhibits the replication of viral DNA. The herpes virus upregulates COX-2, and to a lesser degree COX-1, and this upregulation of COX enzymes is critical for efficient viral replication.
Famciclovir, a nucleoside analog DNA inhibitor, inhibits the replication of viral DNA. The herpesvirus upregulates COX-2, and to a lesser degree COX-1, and this upregulation of COX enzymes is critical for efficient viral replication. Celecoxib effectively blocks virally induced upregulation of COX enzymes, hence the combined activity of Famciclovir and Celecoxib results in the reversion of the herpesvirus to latency.
In such a case, the IND sponsor and the FDA must resolve any outstanding concerns before the clinical trial can begin.
In such a case, the IND sponsor and the FDA must resolve any outstanding concerns before the clinical trial can begin. As a result, submission of an IND may not result in the FDA allowing clinical trials to initiate.
Researchers estimate that FM affects 2% to 8% of the US population and is the second most common “rheumatic disorder,” second to osteoarthritis. The National Fibromyalgia & Chronic Pain Association estimates that 10 million Americans have FM.
FM is also characterized by generalized aching, muscle stiffness, non-restorative sleep, chronic fatigue, depression, cognitive impairment and disturbances in bowel function. Researchers estimate that FM affects 2% to 8% of the US population and is the second most common “rheumatic disorder,” second to osteoarthritis. The National Fibromyalgia & Chronic Pain Association estimates that 10 million Americans have FM.
Orphan Drug Designation In the EEA, a medicinal product can be designated as an orphan drug if its sponsor can establish that the product is intended for the diagnosis, prevention or treatment of a life-threatening or chronically debilitating condition affecting not more than five in ten thousand persons in the EU when the application is made, or that the product is intended for the diagnosis, prevention or treatment of a life-threatening, seriously debilitating or serious and chronic condition in the EU and that without incentives it is unlikely that the marketing of the drug in the EU would generate sufficient return to justify the necessary investment in development.
The 10-year market exclusivity period can be extended to a maximum of eleven years if, during the first eight years of those 10 years, the marketing authorization holder obtains an authorization for one or more new therapeutic indications which, during the scientific evaluation prior to their authorization, are held to bring a significant clinical benefit in comparison with existing therapies. 27 Orphan Drug Designation In the EEA, a medicinal product can be designated as an orphan drug if its sponsor can establish that the product is intended for the diagnosis, prevention or treatment of a life-threatening or chronically debilitating condition affecting not more than five in ten thousand persons in the EU when the application is made, or that the product is intended for the diagnosis, prevention or treatment of a life-threatening, seriously debilitating or serious and chronic condition in the EU and that without incentives it is unlikely that the marketing of the drug in the EU would generate sufficient return to justify the necessary investment in development.
Furthermore, we rely upon trade secrets and know-how and continuing technological innovation to develop and maintain our competitive position. We seek to protect our proprietary information, in part, using confidentiality agreements with our collaborators, employees and consultants and invention assignment agreements with our employees. We also have confidentiality agreements or invention assignment agreements with our collaborators and selected consultants.
We seek to protect our proprietary information, in part, using confidentiality agreements with our collaborators, employees and consultants and invention assignment agreements with our employees. We also have confidentiality agreements or invention assignment agreements with our collaborators and selected consultants.
Furthermore, IMC-1 has been granted a synergy patent based on the fact that neither antivirals nor NSAIDS/COX-2 inhibitors (the individual components of IMC-1) has proven effective in the management of FM when used as a monotherapy, yet the dual mechanism combination therapy generated a result in preliminary studies that appears to be greater than the sum of its parts.
IMC-1 has also been granted a synergy patent based on the fact that neither of the individual components has proven effective in the management of FM, yet the combination therapy generated a result that is greater than the sum of its parts.
Marketing Approval Assuming successful completion of the required clinical testing, the results of the preclinical and clinical studies, together with detailed information relating to the product’s chemistry, manufacture, controls and proposed labeling, among other things, are submitted to the FDA as part of an NDA requesting approval to market the product for one or more indications.
Similarly, an IRB can suspend or terminate approval of a clinical trial at its institution if the clinical trial is not being conducted in accordance with the IRB’s requirements or if the drug has been associated with unexpected serious harm to patients. 19 Marketing Approval Assuming successful completion of the required clinical testing, the results of the preclinical and clinical studies, together with detailed information relating to the product’s chemistry, manufacture, controls and proposed labeling, among other things, are submitted to the FDA as part of an NDA requesting approval to market the product for one or more indications.
An article published by Dr. Lynn W. Enquist, a professor at Princeton University, and his colleagues in the Journal of Virology (2004), demonstrated that many herpes viruses significantly up-regulate COX-2 and to a lesser degree COX-1.
Enquist, a professor at Princeton University, and his colleagues in the Journal of Virology (2004), demonstrated that many herpesviruses significantly up-regulate COX-2 and to a lesser degree COX-1. In an article published by Yuehong Liu and colleagues in 2014 in The Scientific World Journal, they estimated 14-fold increase in COX-2, 1.8-fold increase in COX-1 during herpesvirus infection.
Government Regulation The FDA and comparable regulatory authorities in state and local jurisdictions and in other countries impose substantial and burdensome requirements upon companies involved in the clinical development, manufacture, marketing and distribution of drugs, such as those we are developing.
Presently we are working with an overseas supplier for the manufacture of the cGMP API and with a local supplier for the storage stability, encapsulating, blister packing, blinding and distribution of the capsules or pills to the clinical sites. 17 Government Regulation The FDA and comparable regulatory authorities in state and local jurisdictions and in other countries impose substantial and burdensome requirements upon companies involved in the clinical development, manufacture, marketing and distribution of drugs, such as those we are developing.
The second Phase 3 study is planned to be a two-arm study comparing IMC-1 to placebo. All patients from the Phase 3 program will be offered the opportunity to enroll into an open label safety follow-on extension study in which all patients will be treated with IMC-1, which is the third key component of the Phase 3 program proposal.
The other Phase 3 study is planned as a two-arm study comparing IMC-1 to placebo. All patients from the two pivotal Phase 3 studies will be offered the opportunity to enroll into an open label safety extension study in which all patients will be treated with IMC-1. Long-term safety data is required for chronic therapy approval.
Food and Drug Administration (“FDA”) designating IMC-1 for fast-track review status for the treatment of FM.
We believe this novel approach was a germane consideration in the U.S. Food and Drug Administration (“FDA”) designating IMC-1 for fast-track review status for the treatment of FM.
Patents Covering Other Anti-Viral Combinations ● U.S. 9,682,051 (acyclovir/meloxicam) ● U.S. 8,623,882 (acyclovir/diclofenac) ● U.S. 9,259,405 (famciclovir/diclofenac) ● U.S. 9,642,824 (valacyclovir/diclofenac) ● U.S. 9,980,932 (valacyclovir/meloxicam) ● U.S. 10,543,184 (acyclovir/celecoxib) ● U.S. 10,632,087 (famciclovir/meloxicam) ● U.S. 11,096,912 (valacyclovir/celecoxib) Individual patents extend for varying periods depending on the date of filing of the patent application or the date of patent issuance and the legal term of patents in the countries in which they are obtained.
Patents Covering Other Anti-Viral Combinations ● U.S. 9,682,051 (acyclovir/meloxicam) ● U.S. 8,623,882 (acyclovir/diclofenac) ● U.S. 9,259,405 (famciclovir/diclofenac) ● U.S. 9,642,824 (valacyclovir/diclofenac) ● U.S. 9,980,932 (valacyclovir/meloxicam) ● U.S. 10,543,184 (acyclovir/celecoxib) ● U.S. 10,632,087 (famciclovir/meloxicam) ● U.S. 11,096,912 (valacyclovir/celecoxib) U.S.
According to a 2017 review published in the Cochrane Database of Systemic Reviews, NSAIDs/COX-2’s alone were shown to be no more effective than placebo in treating pain associated with FM. Products included in the review were ibuprofen 2400mg daily, naproxen 1000mg daily, tenoxicam 20mg daily and COX-2 etoricoxib 90mg daily. Antiviral monotherapy treatment of FM was studied by Dr.
There have been multiple published studies using NSAIDS/COX-2’s in the treatment of FM. According to a 2017 review published in the Cochrane Database of Systemic Reviews, NSAIDs/COX-2’s alone were shown to be no more effective than placebo in treating pain associated with FM.
We have also been granted additional U.S. and EU patents, representing all possible combinations of targeted antivirals and non-steroidal anti-inflammatory drugs (NSAIDs/COX-2s) containing appropriate COX-2 & COX-1 inhibition.
We have also been granted additional U.S. and EU patents, representing all possible combinations of targeted antivirals and non-steroidal anti-inflammatory drugs (NSAIDs/COX-2s) containing appropriate COX-2 & COX-1 inhibition. At present, we are developing only IMC-1 (famciclovir/celecoxib) with the other patents being obtained to increase the therapeutic combinations that we may explore in the future to treat other virally medicated illnesses.
At this meeting, we will discuss plans for a Phase 3 program that would support submission of a NDA for IMC-1 for the treatment of FM. ​ ​ Market and Competition The three pharmaceutical agents currently approved for the treatment of FM, pregabalin (Lyrica), duloxetine (Cymbalta) and milnacipran (Savella), are all associated with significant adverse events and limited clinical efficacy.
The Phase 2 study will compare IMC-2 versus placebo in a randomized, double-blind study of LC patients for 12 weeks. ​ ​ FM Market and Competition The three pharmaceutical agents currently approved for the treatment of FM, pregabalin (Lyrica), duloxetine (Cymbalta) and milnacipran (Savella), are all associated with significant adverse events and limited clinical efficacy.
A diagnosis of FM is valid irrespective of other diagnoses and does not exclude the presence of other clinically important illnesses. Fibromyalgia: A Serious Condition with Unmet Medical Need FM is associated with increased mortality due to suicide or accident.
Fibromyalgia: A Serious Condition with Unmet Medical Need FM is associated with increased mortality due to suicide or accident.
Based on Phase 2a study results, the synergy of the fixed-dose combination of famciclovir and celecoxib (IMC-1) has potential as a FM therapy.
Multiple published clinical studies have confirmed that neither antivirals (such as famciclovir) nor COX-2/NSAIDs (such as celecoxib) administered singly deliver any meaningful clinical benefit. Based on Phase 2a study results, the synergy of the fixed-dose combination of famciclovir and celecoxib (IMC-1) has potential as a FM therapy.
Dormant Herpes Virus is Reactivated by External Triggers and Amplifies Its Own Replication via Cyclooxygenase (COX 1 and COX 2) Enzymes ​ 6 IMC-1’s Novel, Synergistic Antiviral Mechanism Suppresses Viral Replication, Demonstrates FM Treatment Effect ​ The potential of IMC-1 in FM was demonstrated by statistically significant improvement versus placebo in the primary endpoint of pain reduction in our double-blinded, placebo-controlled, randomized Phase 2a proof-of-concept study in FM patients.
We have received FDA feedback on our proposed Phase 2b study of IMC-2 for the treatment of LC and project to commence this trial in the second half of 2024, either as a stand-alone entity or via partnership. 6 Dormant Herpesvirus is Reactivated by External Triggers and Amplifies Its Own Replication via Cyclooxygenase (COX-1 and COX-2) Enzymes ​ Fibromyalgia Program Background The potential of IMC-1 in FM was demonstrated by statistically significant improvement versus placebo in the primary endpoint of pain reduction in our double-blinded, placebo-controlled, randomized Phase 2a proof-of-concept study in FM patients.
We are scheduled to meet with the FDA in March 2023 to discuss the most appropriate next steps in advancing IMC-1 development as a treatment for FM.
Based on the analysis of the FORTRESS data, we believe focusing the forward development of IMC-1 on New FM patients represents a viable and manageable path forward. The Company met with the FDA in March 2023 to discuss the most appropriate next steps in advancing IMC-1 development as a treatment for FM.
Government Regulation of Drug Products In the United States, the FDA regulates drugs under the FDCA and its implementing regulations.
Government Regulation of Drug Products In the United States, the FDA regulates drugs under the FDCA and its implementing regulations. The process of obtaining regulatory approvals and the subsequent compliance with applicable federal, state, local and foreign statutes and regulations requires the expenditure of substantial time and financial resources.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeWhile we remain an emerging growth company, we will not be required to include an attestation report on internal control over financial reporting issued by our independent registered public accounting firm. 77 To comply with Section 404, we are required to engage in a process to document and evaluate our internal control over financial reporting, which is both costly and challenging.
Biggest changePursuant to Section 404 of SOX, we are required to furnish a report by our senior management on our internal control over financial reporting. While we remain an emerging growth company, we will not be required to include an attestation report on internal control over financial reporting issued by our independent registered public accounting firm.
Furthermore, our ability to successfully develop, commercialize and license any candidates and generate product revenue is subject to substantial additional risks and uncertainties, as described below under “— Risks Related to Development, Clinical Testing, Manufacturing and Regulatory Approval” and “— Risks Related to Commercialization.” As a result, we expect to continue to incur net losses and negative cash flows for the foreseeable future.
Furthermore, our ability to successfully develop, commercialize and license any product candidates and generate product revenue is subject to substantial additional risks and uncertainties, as described below under “— Risks Related to Development, Clinical Testing, Manufacturing and Regulatory Approval” and “— Risks Related to Commercialization.” As a result, we expect to continue to incur net losses and negative cash flows for the foreseeable future.
If unacceptable side effects arise in the development of our candidates, we, the FDA or the IRBs at the institutions in which our studies are conducted, or the DSMB, if constituted for our clinical trials, could recommend a suspension or termination of our clinical trials, or the FDA or comparable foreign regulatory authorities could order us to cease further development of or deny approval of a product candidate for any or all targeted indications.
If unacceptable side effects arise in the development of our product candidates, we, the FDA or the IRBs at the institutions in which our studies are conducted, or the DSMB, if constituted for our clinical trials, could recommend a suspension or termination of our clinical trials, or the FDA or comparable foreign regulatory authorities could order us to cease further development of or deny approval of a product candidate for any or all targeted indications.
Any candidate for which we obtain marketing approval, along with the manufacturing processes, post-approval clinical data, labeling, packaging, distribution, adverse event reporting, storage, recordkeeping, export, import, advertising and promotional activities for such product, among other things, will be subject to extensive and ongoing requirements of and review by the FDA and other regulatory authorities.
Any product candidate for which we obtain marketing approval, along with the manufacturing processes, post-approval clinical data, labeling, packaging, distribution, adverse event reporting, storage, recordkeeping, export, import, advertising and promotional activities for such product, among other things, will be subject to extensive and ongoing requirements of and review by the FDA and other regulatory authorities.
Without patent protection for our current or future product candidates, we may be open to competition from generic versions of such products. Given the amount of time required for the development, testing and regulatory review of new product candidates, patents protecting such candidates might expire before or shortly after such candidates are commercialized.
Without patent protection for our current or future product candidates, we may be open to competition from generic versions of such products. Given the amount of time required for the development, testing and regulatory review of new product candidates, patents protecting such product candidates might expire before or shortly after such product candidates are commercialized.
Given the amount of time required for the development, testing and regulatory review of new product candidates, patents protecting such candidates might expire before or shortly after such candidates are commercialized. As a result, our owned and licensed patent portfolio may not provide us with sufficient rights to exclude others from commercializing products similar or identical to ours.
Given the amount of time required for the development, testing and regulatory review of new product candidates, patents protecting such product candidates might expire before or shortly after such product candidates are commercialized. As a result, our owned and licensed patent portfolio may not provide us with sufficient rights to exclude others from commercializing products similar or identical to ours.
HITECH also created new tiers of civil monetary penalties, amended HIPAA to make civil and criminal penalties directly applicable to business associates and gave state attorneys general new authority to file civil actions for damages or injunctions in federal courts to enforce the federal HIPAA laws and seek attorneys’ fees and costs associated with pursuing federal civil actions; ● the FDCA, which prohibits, among other things, the adulteration or misbranding of drugs, biologics and medical devices; ● the U.S. federal legislation commonly referred to as the Physician Payments Sunshine Act, enacted as part of the ACA, and its implementing regulations, which requires certain manufacturers of drugs, devices, biologics, and medical supplies that are reimbursable under Medicare, Medicaid, or the Children’s Health Insurance Program to report annually to the government information related to certain payments and other transfers of value to physicians and teaching hospitals, as well as ownership and investment interests held by the physicians described above and their immediate family members; and ● analogous U.S. state laws and regulations, including: state anti-kickback and false claims laws, which may apply to our business practices, including but not limited to, research, distribution, sales, and marketing arrangements and claims involving healthcare items or services reimbursed by any third-party payor, including private insurers; state laws that require pharmaceutical companies to comply with the pharmaceutical industry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by the U.S. federal government, or otherwise restrict payments that may be made to healthcare providers and other potential referral sources; state laws and regulations that require drug manufacturers to file reports relating to pricing and marketing information, which requires tracking gifts and other remuneration and items of value provided to healthcare professionals and entities; and state laws governing the privacy and security of health information in certain circumstances, many of which differ from each other in significant ways and often are not preempted by HIPAA, thus complicating compliance efforts.
HITECH also created new tiers of civil monetary penalties, amended HIPAA to make civil and criminal penalties directly applicable to business associates and gave state attorneys general new authority to file civil actions for damages or injunctions in federal courts to enforce the federal HIPAA laws and seek attorneys’ fees and costs associated with pursuing federal civil actions; ● the FDCA, which prohibits, among other things, the adulteration or misbranding of drugs, biologics and medical devices; ● the U.S. federal legislation commonly referred to as the Physician Payments Sunshine Act, enacted as part of the ACA, and its implementing regulations, which requires certain manufacturers of drugs, devices, biologics, and medical supplies that are reimbursable under Medicare, Medicaid, or the Children’s Health Insurance Program to report annually to the government information related to certain payments and other transfers of value to physicians and teaching hospitals, as well as ownership and investment interests held by the physicians described above and their immediate family members; and ● analogous U.S. state laws and regulations, including: state anti-kickback and false claims laws, which may apply to our business practices, including but not limited to, research, distribution, sales, and marketing arrangements and claims involving healthcare items or services reimbursed by any third-party payor, including private insurers; state laws that require pharmaceutical companies to comply with the pharmaceutical industry’s voluntary compliance guidelines and the relevant compliance 52 guidance promulgated by the U.S. federal government, or otherwise restrict payments that may be made to healthcare providers and other potential referral sources; state laws and regulations that require drug manufacturers to file reports relating to pricing and marketing information, which requires tracking gifts and other remuneration and items of value provided to healthcare professionals and entities; and state laws governing the privacy and security of health information in certain circumstances, many of which differ from each other in significant ways and often are not preempted by HIPAA, thus complicating compliance efforts.
Doing business internationally involves a number of risks, including but not limited to: ● difficulties maintaining compliance with multiple, conflicting and changing laws and regulations, such as privacy regulations, tax laws, export and import restrictions, employment laws, regulatory requirements and other governmental approvals, permits and licenses; ● failure by us to obtain and maintain regulatory approvals for the use of our products in various countries; ● additional potentially relevant third-party patent rights; ● complexities and difficulties in obtaining protection and enforcing our intellectual property; ● difficulties in staffing and managing foreign operations; ● complexities associated with managing multiple payor reimbursement regimes, government payors or patient self-pay systems; ● limits in our ability to penetrate international markets; ● financial risks, such as longer payment cycles, difficulty collecting accounts receivable, the impact of local and regional financial crises on demand and payment for our products and exposure to foreign currency exchange rate fluctuations; ● natural disasters, political and economic instability, including wars, terrorism and political unrest, outbreak of disease, boycotts, curtailment of trade and other business restrictions; ● certain expenses including, among others, expenses for travel, translation and insurance; and ● regulatory and compliance risks that relate to maintaining accurate information and control over sales and activities that may fall within the purview of the U.S.
Doing business internationally involves a number of risks, including but not limited to: ● difficulties maintaining compliance with multiple, conflicting and changing laws and regulations, such as privacy regulations, tax laws, export and import restrictions, employment laws, regulatory requirements and other governmental approvals, permits and licenses; ● failure by us to obtain and maintain regulatory approvals for the use of our products in various countries; ● additional potentially relevant third-party patent rights; ● complexities and difficulties in obtaining protection and enforcing our intellectual property; ● difficulties in staffing and managing foreign operations; 46 ● complexities associated with managing multiple payor reimbursement regimes, government payors or patient self-pay systems; ● limits in our ability to penetrate international markets; ● financial risks, such as longer payment cycles, difficulty collecting accounts receivable, the impact of local and regional financial crises on demand and payment for our products and exposure to foreign currency exchange rate fluctuations; ● natural disasters, political and economic instability, including wars, terrorism and political unrest, outbreak of disease, boycotts, curtailment of trade and other business restrictions; ● certain expenses including, among others, expenses for travel, translation and insurance; and ● regulatory and compliance risks that relate to maintaining accurate information and control over sales and activities that may fall within the purview of the U.S.
Similar to the U.S. federal Anti-Kickback Statute, a person or entity does 63 not need to have actual knowledge of the statute or specific intent to violate it in order to have committed a violation; ● HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act of 2009, or HITECH, and their respective implementing regulations, which impose, among other things, specified requirements relating to the privacy, security and transmission of individually identifiable health information without appropriate authorization by covered entities subject to the rule, such as health plans, healthcare clearinghouses and healthcare providers as well as their business associates that perform certain services involving the use or disclosure of individually identifiable health information.
Similar to the U.S. federal Anti-Kickback Statute, a person or entity does not need to have actual knowledge of the statute or specific intent to violate it in order to have committed a violation; ● HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act of 2009, or HITECH, and their respective implementing regulations, which impose, among other things, specified requirements relating to the privacy, security and transmission of individually identifiable health information without appropriate authorization by covered entities subject to the rule, such as health plans, healthcare clearinghouses and healthcare providers as well as their business associates that perform certain services involving the use or disclosure of individually identifiable health information.
The degree of market acceptance of our product candidates, if approved, will depend on a number of factors, including but not limited to: ● the efficacy and potential advantages compared to alternative treatments; ● effectiveness of our sales and marketing efforts; ● the cost of treatment in relation to alternative treatments, including any similar generic treatments; ● our ability to offer our products for sale at competitive prices; ● the convenience and ease of administration compared to alternative treatments; ● the willingness of the target patient population to try new therapies and of physicians to prescribe these therapies; ● the strength of marketing and distribution support; 56 ● the availability of third-party coverage and adequate reimbursement; ● the prevalence and severity of any side effects; and ● the impact of any restrictions on the use of our product together with other medications.
The degree of market acceptance of our product candidates, if approved, will depend on a number of factors, including but not limited to: ● the efficacy and potential advantages compared to alternative treatments; ● effectiveness of our sales and marketing efforts; ● the cost of treatment in relation to alternative treatments, including any similar generic treatments; ● our ability to offer our products for sale at competitive prices; ● the convenience and ease of administration compared to alternative treatments; ● the willingness of the target patient population to try new therapies and of physicians to prescribe these therapies; ● the strength of marketing and distribution support; ● the availability of third-party coverage and adequate reimbursement; ● the prevalence and severity of any side effects; and ● the impact of any restrictions on the use of our product together with other medications.
If our operations are found to be in violation of any of the laws described above or any other governmental laws and regulations that may apply to us, we may be subject to the imposition of civil, criminal and administrative penalties, damages, disgorgement, monetary fines, possible exclusion from participation in Medicare, Medicaid and other federal healthcare programs, individual imprisonment, contractual damages, reputational harm, diminished profits and future earnings, additional reporting requirements or oversight if we become subject to a corporate integrity agreement or similar agreement to resolve allegations of non- 64 compliance with these laws, and curtailment or restructuring of our operations, any of which could adversely affect our ability to operate our business and our results of operations.
If our operations are found to be in violation of any of the laws described above or any other governmental laws and regulations that may apply to us, we may be subject to the imposition of civil, criminal and administrative penalties, damages, disgorgement, monetary fines, possible exclusion from participation in Medicare, Medicaid and other federal healthcare programs, individual imprisonment, contractual damages, reputational harm, diminished profits and future earnings, additional reporting requirements or oversight if we become subject to a corporate integrity agreement or similar agreement to resolve allegations of non-compliance with these laws, and curtailment or restructuring of our operations, any of which could adversely affect our ability to operate our business and our results of operations.
The U.S. federal Anti-Kickback Statute has been interpreted to apply to arrangements between pharmaceutical manufacturers on the one hand and prescribers, purchasers and formulary managers on the other hand; ● the U.S. federal false claims and civil monetary penalties laws, including the civil False Claims Act, or FCA, which, among other things, impose criminal and civil penalties, including through civil whistleblower or qui tam actions, against individuals or entities for knowingly presenting, or causing to be presented, to the U.S. federal government, claims for payment or approval that are false or fraudulent, knowingly making, using or causing to be made or used, a false record or statement material to a false or fraudulent claim, or from knowingly making a false statement to avoid, decrease or conceal an obligation to pay money to the U.S. federal government.
The U.S. federal Anti-Kickback Statute has been interpreted to 51 apply to arrangements between pharmaceutical manufacturers on the one hand and prescribers, purchasers and formulary managers on the other hand; ● the U.S. federal false claims and civil monetary penalties laws, including the civil False Claims Act, or FCA, which, among other things, impose criminal and civil penalties, including through civil whistleblower or qui tam actions, against individuals or entities for knowingly presenting, or causing to be presented, to the U.S. federal government, claims for payment or approval that are false or fraudulent, knowingly making, using or causing to be made or used, a false record or statement material to a false or fraudulent claim, or from knowingly making a false statement to avoid, decrease or conceal an obligation to pay money to the U.S. federal government.
If any such actions are instituted against us and we are not successful in defending ourselves or asserting our rights, those actions could have a significant impact on our business and results of operations, including the imposition of significant civil, criminal and administrative penalties, damages, monetary fines, disgorgements, possible exclusion from participation in Medicare, Medicaid, other U.S. federal healthcare programs or healthcare programs in other jurisdictions, individual imprisonment, other sanctions, contractual damages, reputational harm, diminished profits and future earnings, and curtailment of our operations.
If any such actions are instituted against us and we are not successful in defending ourselves or asserting our rights, those actions could have a significant impact on our business and results of operations, including the imposition of significant civil, criminal and administrative penalties, damages, monetary fines, disgorgements, possible exclusion from participation in Medicare, Medicaid, other U.S. federal healthcare programs or healthcare programs in other jurisdictions, individual imprisonment, other 47 sanctions, contractual damages, reputational harm, diminished profits and future earnings, and curtailment of our operations.
In addition, regardless of merit or eventual outcome, product liability claims may result in: ● impairment of our business reputation and significant negative media attention; ● withdrawal of participants from our clinical trials; ● significant costs to defend the litigation; ● distraction of management’s attention from our primary business; ● substantial monetary awards to patients or other claimants; ● inability to commercialize IMC-1 or any other product candidate; ● product recalls, withdrawals or labeling, marketing or promotional restrictions; ● decreased market demand for any product; and ● loss of revenue.
In addition, regardless of merit or eventual outcome, product liability claims may result in: ● impairment of our business reputation and significant negative media attention; ● withdrawal of participants from our clinical trials; ● significant costs to defend the litigation; ● distraction of management’s attention from our primary business; ● substantial monetary awards to patients or other claimants; ● inability to commercialize IMC-1, IMC-2 or any other product candidate; ● product recalls, withdrawals or labeling, marketing or promotional restrictions; ● decreased market demand for any product; and ● loss of revenue.
The following examples are illustrative: ● others may be able to make products that are similar to IMC-1 or our future product candidates but that are not covered by the claims of the patents that we own or license from others; 71 ● others may independently develop similar or alternative technologies or otherwise circumvent any of our technologies without infringing our intellectual property rights; ● we or any of our collaborators might not have been the first to conceive and reduce to practice the inventions covered by the patents or patent applications that we own, license or will own or license; ● we or any of our collaborators might not have been the first to file patent applications covering certain of the patents or patent applications that we or they own or have obtained a license, or will own or will have obtained a license; ● it is possible that our pending patent applications will not lead to issued patents; ● issued patents that we own may not provide us with any competitive advantage, or may be held invalid or unenforceable, as a result of legal challenges by our competitors; ● our competitors might conduct research and development activities in countries where we do not have patent rights, or in countries where research and development safe harbor laws exist, and then use the information learned from such activities to develop competitive products for sale in our major commercial markets; ● ownership of our patents or patent applications may be challenged by third parties; and ● the patents of third parties or pending or future applications of third parties, if issued, may have an adverse effect on our business.
The following examples are illustrative: ● others may be able to make products that are similar to IMC-1, IMC-2 or our future product candidates but that are not covered by the claims of the patents that we own or license from others; ● others may independently develop similar or alternative technologies or otherwise circumvent any of our technologies without infringing our intellectual property rights; ● we or any of our collaborators might not have been the first to conceive and reduce to practice the inventions covered by the patents or patent applications that we own, license or will own or license; ● we or any of our collaborators might not have been the first to file patent applications covering certain of the patents or patent applications that we or they own or have obtained a license, or will own or will have obtained a license; ● it is possible that our pending patent applications will not lead to issued patents; ● issued patents that we own may not provide us with any competitive advantage, or may be held invalid or unenforceable, as a result of legal challenges by our competitors; ● our competitors might conduct research and development activities in countries where we do not have patent rights, or in countries where research and development safe harbor laws exist, and then use the information learned from such activities to develop competitive products for sale in our major commercial markets; ● ownership of our patents or patent applications may be challenged by third parties; and ● the patents of third parties or pending or future applications of third parties, if issued, may have an adverse effect on our business.
Our future funding requirements, both near and long-term, will depend on many factors, including, but not limited to the: ● initiation, progress, timing, costs and results of preclinical studies and clinical trials, including patient enrollment in such trials, for IMC-1 or any other future candidates; ● clinical development plans we establish for IMC-1 and any other future candidates; ● obligation to make royalty and non-royalty sublicense receipt payments to third-party licensors, if any, under our licensing agreements; ● number and characteristics of candidates that we discover or in-license and develop; ● outcome, timing and cost of regulatory review by the FDA and comparable foreign regulatory authorities, including the potential for the FDA or comparable foreign regulatory authorities to require that we perform more studies than those that we currently expect; ● costs of filing, prosecuting, defending and enforcing any patent claims and maintaining and enforcing other intellectual property rights; ● effects of competing technological and market developments; ● costs and timing of the implementation of commercial-scale manufacturing activities; and ● costs and timing of establishing sales, marketing and distribution capabilities for any product candidates for which we may receive regulatory approval.
Our future funding requirements, both near and long-term, will depend on many factors, including, but not limited to the: ● initiation, progress, timing, costs and results of preclinical studies and clinical trials, including patient enrollment in such trials, for IMC-1 or IMC-2 or any other future product candidates; ● clinical development plans we establish for IMC-1 and/or IMC-2 and any other future product candidates; ● obligation to make royalty and non-royalty sublicense receipt payments to third-party licensors, if any, under our licensing agreements; 30 ● number and characteristics of product candidates that we discover or in-license and develop; ● outcome, timing and cost of regulatory review by the FDA and comparable foreign regulatory authorities, including the potential for the FDA or comparable foreign regulatory authorities to require that we perform more studies than those that we currently expect; ● costs of filing, prosecuting, defending and enforcing any patent claims and maintaining and enforcing other intellectual property rights; ● effects of competing technological and market developments; ● costs and timing of the implementation of commercial-scale manufacturing activities; and ● costs and timing of establishing sales, marketing and distribution capabilities for any product candidates for which we may receive regulatory approval.
In addition, the FDA or the applicable foreign regulatory agency also may approve a product candidate for a more limited indication or patient population than we originally requested, the FDA or applicable foreign regulatory agency may approve a product candidate with a label that does not include the labeling claims necessary or desirable for the successful commercialization of that product candidate, or may require warnings, other safety-related labeling information, or impose post-market safety requirements, including distribution restrictions, that negatively impact the commercial potential of the drug.
In addition, the FDA or the applicable comparable foreign regulatory agency also may approve a product candidate for a more limited indication or patient population than we originally requested, the FDA or applicable foreign regulatory agency may approve a product candidate with a label that does not include the labeling claims necessary or desirable for the successful commercialization of that product candidate, or may require warnings, other safety-related labeling information, or impose post-market safety requirements, including distribution restrictions, that negatively impact the commercial potential of the drug.
As discussed elsewhere herein, we have procured several patents that we believe cover IMC-1 and would be eligible for listing in FDA’s Orange Book, and as such would require any proposed generic competitor to IMC-1 seeking FDA approval prior to the expiration of such patents to submit a Paragraph IV Certification alleging that our patent(s) are invalid, unenforceable, or would not be infringed by the marketing of the proposed generic product.
As discussed elsewhere herein, we have procured several patents that we believe cover IMC-1 and would be eligible for listing in FDA’s Orange Book, and as such would require any proposed generic competitor to IMC-1 or IMC-2 seeking FDA approval prior to the expiration of such patents to submit a Paragraph IV Certification alleging that our patent(s) are invalid, unenforceable, or would not be infringed by the marketing of the proposed generic product.
Though we intend to carefully manage our relationships with our CROs, there can be no assurance that we will not encounter challenges or delays in the future or that these delays or challenges will not have an adverse impact on our business, financial condition and prospects. ● the number and type of our collaborations could adversely affect our attractiveness to future collaborators or acquirers; and ● the loss of, or a disruption in our relationship with, any one or more collaborators could harm our business.
Though we intend to carefully manage our relationships with our 49 CROs, there can be no assurance that we will not encounter challenges or delays in the future or that these delays or challenges will not have an adverse impact on our business, financial condition and prospects. ● the number and type of our collaborations could adversely affect our attractiveness to future collaborators or acquirers; and ● the loss of, or a disruption in our relationship with, any one or more collaborators could harm our business.
Legally mandated price controls on payment amounts by third-party payors or other restrictions could harm our business, results of operations, financial condition and prospects. In addition, regional healthcare authorities and individual hospitals are increasingly using bidding procedures to determine what pharmaceutical products and which suppliers will be included in their prescription drug and 62 other healthcare programs.
Legally mandated price controls on payment amounts by third-party payors or other restrictions could harm our business, results of operations, financial condition and prospects. In addition, regional healthcare authorities and individual hospitals are increasingly using bidding procedures to determine what pharmaceutical products and which suppliers will be included in their prescription drug and other healthcare programs.
Even if we believe third party infringement claims are without merit, a court of competent jurisdiction could hold that these third-party patents are valid, enforceable and infringed, and the holders of any such patents may be able to block our ability to commercialize the applicable product candidate unless we obtained a license under the applicable patents, or until such patents expire or are finally determined to be invalid or unenforceable.
Even if we believe third party infringement claims are without merit, a court of competent jurisdiction could hold that these third-party patents are valid, enforceable and infringed, and the holders of any such patents may be able to block our ability to commercialize the applicable product candidate unless we obtained a license under the applicable patents, or until such patents expire or are finally determined to be 55 invalid or unenforceable.
Accordingly, certain diagnostic methods are considered ineligible for patenting because they are directed to a “law of nature.” Further, publications of discoveries in scientific literature often lag the actual discoveries, and patent applications in the United States and other jurisdictions are typically not published until 18 months after filing, or in some cases not at all.
Accordingly, certain diagnostic 54 methods are considered ineligible for patenting because they are directed to a “law of nature.” Further, publications of discoveries in scientific literature often lag the actual discoveries, and patent applications in the United States and other jurisdictions are typically not published until 18 months after filing, or in some cases not at all.
While an inadvertent failure to make payment of such fees or to comply with such provisions can in many cases be cured by payment of a late fee or by other 69 means in accordance with the applicable rules, there are situations in which such noncompliance will result in the abandonment or lapse of the patent or patent application, and the partial or complete loss of patent rights in the relevant jurisdiction.
While an inadvertent failure to make payment of such fees or to comply with such provisions can in many cases be cured by payment of a late fee or by other means in accordance with the applicable rules, there are situations in which such noncompliance will result in the abandonment or lapse of the patent or patent application, and the partial or complete loss of patent rights in the relevant jurisdiction.
In addition, conclusions based on promising data from analyses of clinical results may be shown to be incorrect when implemented in prospective clinical trials. Even if our clinical trials for IMC-1 are completed as planned, we cannot be certain that their results will support the safety and efficacy sufficient to obtain regulatory approval.
In addition, conclusions based on promising data from analyses of clinical results may be shown to be incorrect when implemented in prospective clinical trials. Even if our clinical trials for IMC-1 and IMC-2 are completed as planned, we cannot be certain that their results will support the safety and efficacy sufficient to obtain regulatory approval.
While there can be no assurance that federal or state courts will follow the holding of the Delaware Supreme Court or determine that the Federal Forum Provision should be enforced in a particular case, application of the Federal Forum Provision means that suits brought by our stockholders to 79 enforce any duty or liability created by the Securities Act must be brought in federal court and cannot be brought in state court.
While there can be no assurance that federal or state courts will follow the holding of the Delaware Supreme Court or determine that the Federal Forum Provision should be enforced in a particular case, application of the Federal Forum Provision means that suits brought by our stockholders to enforce any duty or liability created by the Securities Act must be brought in federal court and cannot be brought in state court.
A Breakthrough Therapy is defined as a drug that is intended, alone or in combination with one or more other drugs, to treat a serious condition, and preliminary clinical evidence indicates that the drug may demonstrate substantial improvement over existing therapies on one or more clinically significant endpoints, such as substantial treatment effects observed early in clinical development.
A Breakthrough Therapy is defined as a drug that is intended, alone or in combination with one or 40 more other drugs, to treat a serious condition, and preliminary clinical evidence indicates that the drug may demonstrate substantial improvement over existing therapies on one or more clinically significant endpoints, such as substantial treatment effects observed early in clinical development.
It is possible that a third-party payor may consider our product candidates as substitutable and offer to reimburse patients only for the less expensive product. Even if we show improved efficacy or improved convenience of administration with our product candidates, pricing of existing drugs may limit the amount we will be able to charge for our product candidates.
It is possible that a third-party payor may consider our product candidates as substitutable and offer to reimburse patients only for the less expensive product. Even if we show improved efficacy or improved convenience of 43 administration with our product candidates, pricing of existing drugs may limit the amount we will be able to charge for our product candidates.
Although we generally have not, and do not intend to, begin a clinical trial unless we believe we have on hand, or will be able to obtain, a sufficient supply of our product candidates to complete the clinical trial, any significant delay in the supply of our product candidates or the raw materials needed to produce our product candidates, could considerably delay conducting our clinical trials and potential regulatory approval of our product candidates.
Although we generally have not, and do not intend to, begin a clinical trial unless we believe we have on hand, or will be able to obtain, a sufficient supply of our product candidates to complete the clinical trial, any significant delay 48 in the supply of our product candidates or the raw materials needed to produce our product candidates, could considerably delay conducting our clinical trials and potential regulatory approval of our product candidates.
If we face such litigation, it could result in substantial costs and a diversion of management’s attention and resources, which could harm our business. 76 If securities or industry analysts do not publish research or reports about our business, or if they issue an adverse or misleading opinion regarding our common stock, our stock price and trading volume could decline.
If we face such litigation, it could result in substantial costs and a diversion of management’s attention and resources, which could harm our business. If securities or industry analysts do not publish research or reports about our business, or if they issue an adverse or misleading opinion regarding our common stock, our stock price and trading volume could decline.
If we identify one or more material weaknesses, it could result in an adverse reaction in the financial markets due to a loss of confidence in the reliability of our financial statements. If we fail to establish and maintain proper and effective internal control over financial reporting, our operating results and our ability to operate our business could be harmed.
If we identify one or more material weaknesses, it could result in an adverse reaction in the financial markets due to a loss of confidence in the reliability of our financial statements. 66 If we fail to establish and maintain proper and effective internal control over financial reporting, our operating results and our ability to operate our business could be harmed.
Patient enrollment and retention in clinical trials depends on many factors, including: ● the patient eligibility criteria defined in the protocol; ● the size of the patient population required for analysis of the trial’s primary endpoints; ● the nature of the trial protocol; ● the existing body of safety and efficacy data with respect to the product candidate; ● the proximity of patients to clinical sites; ● our ability to recruit clinical trial investigators with the appropriate competencies and experience; ● clinicians’ and patients’ perceptions as to the potential advantages of the product candidate being studied in relation to other available therapies, including any new drugs that may be approved for the indications we are investigating; ● competing clinical trials being conducted by other companies or institutions; 48 ● our ability to maintain patient consents; and ● the risk that patients enrolled in clinical trials will drop out of the trials before completion.
Patient enrollment and retention in clinical trials depends on many factors, including: ● the patient eligibility criteria defined in the protocol; ● the size of the patient population required for analysis of the trial’s primary endpoints; ● the nature of the trial protocol; ● the existing body of safety and efficacy data with respect to the product candidate; ● the proximity of patients to clinical sites; ● our ability to recruit clinical trial investigators with the appropriate competencies and experience; 36 ● clinicians’ and patients’ perceptions as to the potential advantages of the product candidate being studied in relation to other available therapies, including any new drugs that may be approved for the indications we are investigating; ● competing clinical trials being conducted by other companies or institutions; ● our ability to maintain patient consents; and ● the risk that patients enrolled in clinical trials will drop out of the trials before completion.
We may also have to enter into collaborative arrangements for IMC-1 at an earlier stage than otherwise would be ideal and we may be required to relinquish rights to it or otherwise agree to terms unfavorable to us. Any of these occurrences may have an adverse effect on our business, operating results and prospects.
We may also have to enter into collaborative arrangements for IMC-1 or IMC-2 at an earlier stage than otherwise would be ideal and we may be required to relinquish rights to it or otherwise agree to terms unfavorable to us. Any of these occurrences may have an adverse effect on our business, operating results and prospects.
Factors that may inhibit our efforts to commercialize our product candidates on our own include: ● our inability to recruit, train and retain adequate numbers of effective sales and marketing personnel; ● the inability of sales personnel to obtain access to physicians or attain adequate numbers of physicians to prescribe our products; and ● unforeseen costs and expenses associated with creating an independent sales and marketing organization.
Factors that may inhibit our efforts to commercialize our product candidates on our own include: ● our inability to recruit, train and retain adequate numbers of effective sales and marketing personnel; 45 ● the inability of sales personnel to obtain access to physicians or attain adequate numbers of physicians to prescribe our products; and ● unforeseen costs and expenses associated with creating an independent sales and marketing organization.
We may need to license certain intellectual property from third parties, and such licenses may not be available or may not be available on commercially reasonable terms. A third party may hold intellectual property, including patent rights that are important or necessary to the development or commercialization of IMC-1 or our future product candidates.
We may need to license certain intellectual property from third parties, and such licenses may not be available or may not be available on commercially reasonable terms. A third party may hold intellectual property, including patent rights that are important or necessary to the development or commercialization of IMC-1, IMC-2 or our future product candidates.
Clinical trials can be delayed for a variety of reasons, including delays related to: ● the FDA or comparable foreign regulatory authorities disagreeing as to the design or implementation of our clinical studies; ● obtaining regulatory approval to commence a trial; ● reaching an agreement on acceptable terms with prospective contract research organizations, or CROs, and clinical trial sites, the terms of which can be subject to extensive negotiation and may vary significantly among different CROs and trial sites; ● obtaining Institutional Review Board, or IRB, approval at each site, or Independent Ethics Committee, or IEC, approval at sites outside the United States; 45 ● recruiting suitable patients to participate in a trial in a timely manner and in sufficient numbers; ● having patients complete a trial or return for post-treatment follow-up; ● imposition of a clinical hold by regulatory authorities or IRBs, including as a result of unforeseen safety issues or side effects or failure of trial sites to adhere to regulatory requirements or follow trial protocols; ● clinical sites deviating from trial protocol, committing fraud or other violations of regulatory requirements, or dropping out of a trial, which can render data from that site unusable in support of regulatory approval; ● addressing patient safety concerns that arise during the course of a trial; ● adding a sufficient number of clinical trial sites; or ● manufacturing sufficient quantities of IMC-1 for use in clinical trials.
Clinical trials can be delayed for a variety of reasons, including delays related to: ● the FDA or comparable foreign regulatory authorities disagreeing as to the design or implementation of our clinical studies; ● obtaining regulatory approval to commence a trial; ● reaching an agreement on acceptable terms with prospective contract research organizations, or CROs, and clinical trial sites, the terms of which can be subject to extensive negotiation and may vary significantly among different CROs and trial sites; ● obtaining Institutional Review Board, or IRB, approval at each site, or Independent Ethics Committee, or IEC, approval at sites outside the United States; 33 ● recruiting suitable patients to participate in a trial in a timely manner and in sufficient numbers; ● having patients complete a trial or return for post-treatment follow-up; ● imposition of a clinical hold by regulatory authorities or IRBs, including as a result of unforeseen safety issues or side effects or failure of trial sites to adhere to regulatory requirements or follow trial protocols; ● clinical sites deviating from trial protocol, committing fraud or other violations of regulatory requirements, or dropping out of a trial, which can render data from that site unusable in support of regulatory approval; ● addressing patient safety concerns that arise during the course of a trial; ● adding a sufficient number of clinical trial sites; or ● manufacturing sufficient quantities of IMC-1 or IMC-2 for use in clinical trials.
If we are unable to obtain regulatory approval for IMC-1 in one or more jurisdictions, or any approval we receive contains significant limitations or requirements, we may not be able to obtain sufficient funding or generate sufficient revenue to continue the development of any other candidate that we may in-license, develop or acquire in the future.
If we are unable to obtain regulatory approval for IMC-1 in one or more jurisdictions, or any approval we receive contains significant limitations or requirements, we may not be able to obtain sufficient funding or generate sufficient revenue to continue the development of any other product candidate that we may in-license, develop or acquire in the future.
Potential product liability lawsuits against us could cause us to incur substantial liabilities and limit commercialization of any products that we may develop. The use of IMC-1 or any other candidates we may develop in clinical trials and the sale of any products for which we obtain marketing approval exposes us to the risk of product liability claims.
Potential product liability lawsuits against us could cause us to incur substantial liabilities and limit commercialization of any products that we may develop. The use of IMC-1, IMC-2 or any other product candidates we may develop in clinical trials and the sale of any products for which we obtain marketing approval exposes us to the risk of product liability claims.
The FDA or any foreign regulatory bodies can delay, limit or deny approval of our candidates or require us to conduct additional preclinical or clinical testing or abandon a program for many reasons, including: ● the FDA or comparable foreign regulatory authorities may disagree with the adequacy of the design or implementation of our clinical trials; ● the FDA or comparable foreign regulatory authorities may disagree with our safety interpretation of our drug; ● the FDA or comparable foreign regulatory authorities may disagree with our efficacy interpretation of our drug; or ● the FDA or comparable foreign regulatory authorities may regard our CMC package as inadequate, and more particularly: ● if our NDA does not include adequate tests by all methods reasonably applicable to show whether or not such drug is safe for use under the conditions prescribed, recommended, or suggested in the proposed labeling thereof; ● if the results of such tests show that such drug is unsafe for use under such conditions or do not show that such drug is safe for use under such conditions; 47 ● if the methods used in, and the facilities and controls used for, the manufacture, processing, and packing of such drug are inadequate to preserve its identity, strength, quality, and purity; ● if FDA determines that it has insufficient information to determine whether such drug is safe for use under such conditions; ● if based on information we submit and any other information before the FDA, the FDA determines there is a lack of substantial evidence that the drug will have the effect it purports or is represented to have under the conditions of use prescribed, recommended, or suggested in the proposed labeling thereof; or ● if FDA determines that our labeling is false or misleading in any particular way.
The FDA or comparable foreign regulatory bodies can delay, limit or deny approval of our product candidates or require us to conduct additional preclinical or clinical testing or abandon a program for many reasons, including: ● the FDA or comparable foreign regulatory authorities may disagree with the adequacy of the design or implementation of our clinical trials; ● the FDA or comparable foreign regulatory authorities may disagree with our safety interpretation of our drug; ● the FDA or comparable foreign regulatory authorities may disagree with our efficacy interpretation of our drug; or ● the FDA or comparable foreign regulatory authorities may regard our CMC package as inadequate, and more particularly: ● if our NDA does not include adequate tests by all methods reasonably applicable to show whether or not such drug is safe for use under the conditions prescribed, recommended, or suggested in the proposed labeling thereof; 35 ● if the results of such tests show that such drug is unsafe for use under such conditions or do not show that such drug is safe for use under such conditions; ● if the methods used in, and the facilities and controls used for, the manufacture, processing, and packing of such drug are inadequate to preserve its identity, strength, quality, and purity; ● if FDA determines that it has insufficient information to determine whether such drug is safe for use under such conditions; ● if based on information we submit and any other information before the FDA, the FDA determines there is a lack of substantial evidence that the drug will have the effect it purports or is represented to have under the conditions of use prescribed, recommended, or suggested in the proposed labeling thereof; or ● if FDA determines that our labeling is false or misleading in any particular way.
Reliance on CMOs may expose us to more risk than if we were to manufacture our product candidates ourselves. We intend to have manufactured a sufficient clinical supply of IMC-1 drug substance to enable us to complete our clinical trials, and we have also engaged a CMO to provide clinical and commercial supply of the drug product.
Reliance on CMOs may expose us to more risk than if we were to manufacture our product candidates ourselves. We intend to have manufactured a sufficient clinical supply of IMC-1 and IMC-2 drug substance to enable us to complete our clinical trials, and we have also engaged a CMO to provide clinical and commercial supply of the drug product.
Even if we receive Breakthrough Therapy designation, the receipt of such designation for a product candidate may not result in a faster development or 52 regulatory review or approval process compared to drugs considered for approval under conventional FDA procedures and does not assure ultimate approval by the FDA.
Even if we receive Breakthrough Therapy designation, the receipt of such designation for a product candidate may not result in a faster development or regulatory review or approval process compared to drugs considered for approval under conventional FDA procedures and does not assure ultimate approval by the FDA.
It is difficult to predict at this time what third-party payors will decide with respect to the coverage and reimbursement for our product candidates. 55 No uniform policy for coverage and reimbursement for products exists among third-party payors in the United States. Therefore, coverage and reimbursement for products can differ significantly from payor to payor.
It is difficult to predict at this time what third-party payors will decide with respect to the coverage and reimbursement for our product candidates. No uniform policy for coverage and reimbursement for products exists among third-party payors in the United States. Therefore, coverage and reimbursement for products can differ significantly from payor to payor.
We currently rely on third-party contract manufacturing organizations, or CMOs, for the production of clinical supply of IMC-1 and intend to rely on CMOs for the production of commercial supply of IMC-1, if approved. Our dependence on CMOs may impair the development and commercialization of the drug, which would adversely impact our business and financial position.
We currently rely on third-party contract manufacturing organizations, or CMOs, for the production of clinical supply of IMC-1 and IMC-2 and intend to rely on CMOs for the production of commercial supply of IMC-1 and IMC-2, if approved. Our dependence on CMOs may impair the development and commercialization of the drug, which would adversely impact our business and financial position.
If we are unable to obtain patent term extension or the term of any such extension is less than we request, the period during which we can enforce our patent rights for that product will be shortened and our competitors may obtain approval to market competing products sooner.
If we are unable to obtain patent term extension or the term of any such extension is less than we request, the period during which we can enforce our patent rights for that product will be shortened and our competitors may 59 obtain approval to market competing products sooner.
In addition, we rely on consultants and advisors, including scientific and clinical advisors, to assist us in formulating our research and development and commercialization strategy. Our consultants and advisors may be engaged by entities other than us and may have commitments under consulting or advisory contracts with other entities that may limit their availability to us.
In addition, we rely on consultants and advisors, including scientific and 62 clinical advisors, to assist us in formulating our research and development and commercialization strategy. Our consultants and advisors may be engaged by entities other than us and may have commitments under consulting or advisory contracts with other entities that may limit their availability to us.
We expect to have to train medical personnel using our development candidates to understand the side effect profiles for our clinical trials and upon any commercialization of any of our product candidates. Inadequate training in recognizing or managing the potential side effects of our product candidates could result in patient injury or death.
We expect to have to train medical personnel using our product candidates to understand the side effect profiles for our clinical trials and upon any commercialization of any of our product candidates. Inadequate training in recognizing or managing the potential side effects of our product candidates could result in patient injury or death.
The expansion of our operations may lead to significant costs and may divert our management and business development resources. Any inability to manage growth could delay the execution of our business plans or disrupt our operations. 74 We may engage in acquisitions that could disrupt our business, cause dilution to our stockholders or reduce our financial resources.
The expansion of our operations may lead to significant costs and may divert our management and business development resources. Any inability to manage growth could delay the execution of our business plans or disrupt our operations. We may engage in acquisitions that could disrupt our business, cause dilution to our stockholders or reduce our financial resources.
The market price of our common stock is highly volatile and is subject to wide fluctuations in response to a variety of factors, including the following: ● any delay in submitting an NDA and any adverse development or perceived adverse development with respect to the FDA’s review of that NDA; ● failure to successfully develop and commercialize IMC-1 or any future candidate; 75 ● inability to obtain additional funding; ● regulatory or legal developments in the United States and other countries applicable to IMC-1 or any other candidate; ● adverse regulatory decisions; ● changes in the structure of healthcare payment systems; ● inability to obtain adequate product supply for IMC-1 or any other candidate, or the inability to do so at acceptable prices; ● introduction of new products, services or technologies by our competitors; ● failure to meet or exceed financial projections we provide to the public; ● failure to meet or exceed the estimates and projections of the investment community; ● changes in the market valuations of companies similar to ours; ● market conditions in the pharmaceutical and biotechnology sectors, and the issuance of new or changed securities analysts’ reports or recommendations; ● announcements of significant acquisitions, strategic collaborations, joint ventures or capital commitments by us or our competitors; ● significant lawsuits, including patent or shareholder litigation, and disputes or other developments relating to our proprietary rights, including patents, litigation matters and our ability to obtain patent protection for our technologies; ● additions or departures of key scientific or management personnel; ● sales of our common stock by us or our shareholders in the future; ● trading volume of our common stock; ● general economic, industry and market conditions; and ● the other factors described in this “Risk Factors” section.
The market price of our common stock is highly volatile and is subject to wide fluctuations in response to a variety of factors, including the following: ● any delay in submitting an NDA and any adverse development or perceived adverse development with respect to the FDA’s review of that NDA; ● failure to successfully develop and commercialize IMC-1, IMC-2 or any future product candidates; ● inability to obtain additional funding; ● regulatory or legal developments in the United States and other countries applicable to IMC-1, IMC-2 or any other product candidates; ● adverse regulatory decisions; ● changes in the structure of healthcare payment systems; ● inability to obtain adequate product supply for IMC-1, IMC-2 or any other product candidate, or the inability to do so at acceptable prices; ● introduction of new products, services or technologies by our competitors; ● failure to meet or exceed financial projections we provide to the public; 64 ● failure to meet or exceed the estimates and projections of the investment community; ● changes in the market valuations of companies similar to ours; ● market conditions in the pharmaceutical and biotechnology sectors, and the issuance of new or changed securities analysts’ reports or recommendations; ● announcements of significant acquisitions, strategic collaborations, joint ventures or capital commitments by us or our competitors; ● significant lawsuits, including patent or shareholder litigation, and disputes or other developments relating to our proprietary rights, including patents, litigation matters and our ability to obtain patent protection for our technologies; ● additions or departures of key scientific or management personnel; ● sales of our common stock by us or our shareholders in the future; ● trading volume of our common stock; ● general economic, industry and market conditions; and ● the other factors described in this “Risk Factors” section.
The scope of a patent claim is determined by an interpretation of the law, the written disclosure in a patent and the patent’s prosecution history. Our interpretation of the relevance or the scope of a patent or a pending application may be incorrect, which may negatively impact our ability to market our 68 product candidates.
The scope of a patent claim is determined by an interpretation of the law, the written disclosure in a patent and the patent’s prosecution history. Our interpretation of the relevance or the scope of a patent or a pending application may be incorrect, which may negatively impact our ability to market our product candidates.
Furthermore, we rely on CROs and clinical trial sites to ensure the proper and timely conduct of our clinical trials and, while we have agreements governing their committed activities, we have limited influence over their actual performance, as described in “Risks Related to Our Dependence on Third Parties.” The regulatory approval processes of the FDA and comparable foreign authorities are lengthy, time consuming, expensive, and inherently unpredictable, and if we are ultimately unable to obtain regulatory approval for IMC-1 or any other candidates, our business will be substantially harmed.
Furthermore, we rely on CROs and clinical trial sites to ensure the proper and timely conduct of our clinical trials and, while we have agreements governing their committed activities, we have limited influence over their actual performance, as described in “Risks Related to Our Dependence on Third Parties.” The regulatory approval processes of the FDA and comparable foreign authorities are lengthy, time consuming, expensive, and inherently unpredictable, and if we are ultimately unable to obtain regulatory approval for IMC-1, IMC-2 or any other product candidates, our business will be substantially harmed.
In addition, if the breadth or strength of protection 67 provided the patents and patent applications we own or in-license is threatened, it could dissuade companies from collaborating with us to license, develop or commercialize current or future product candidates.
In addition, if the breadth or strength of protection provided the patents and patent applications we own or in-license is threatened, it could dissuade companies from collaborating with us to license, develop or commercialize current or future product candidates.
Obtaining and enforcing patents in the biopharmaceutical and pharmaceutical industries involve both technological complexity and legal complexity. Therefore, obtaining and enforcing biopharmaceutical and pharmaceutical patents is costly, time-consuming and inherently uncertain. The U.S. has in recent years enacted and implemented wide ranging patent reform legislation. Additionally, the U.S.
Obtaining and enforcing patents in the biopharmaceutical and pharmaceutical industries involve both technological complexity and legal complexity. Therefore, obtaining and enforcing biopharmaceutical and pharmaceutical patents is costly, time-consuming and inherently uncertain. 57 The U.S. has in recent years enacted and implemented wide ranging patent reform legislation. Additionally, the U.S.
Even if patents do successfully issue and even if such patents further cover IMC-1 or any future product candidate, third parties may challenge their validity, enforceability or scope, which may result in such patents being narrowed, invalidated, or held unenforceable.
Even if patents do successfully issue and even if such patents further cover IMC-1, IMC-2 or any future product candidate, third parties may challenge their validity, enforceability or scope, which may result in such patents being narrowed, invalidated, or held unenforceable.
However, the failure to obtain approval in one jurisdiction may negatively impact our ability to obtain approval elsewhere. In addition, clinical trials conducted in one country may not be accepted 50 by regulatory authorities in other countries, and regulatory approval in one country does not guarantee regulatory approval in any other country.
However, the failure to obtain approval in one jurisdiction may negatively impact our ability to obtain approval elsewhere. In addition, clinical trials conducted in one country may not be accepted by regulatory authorities in other countries, and regulatory approval in one country does not guarantee regulatory approval in any other country.
We do not have any infrastructure for the sales, marketing or distribution of IMC-1, or compliance functions related to such activities, and the cost of establishing and maintaining such an organization may exceed the cost-effectiveness of doing so.
We do not have any infrastructure for the sales, marketing or distribution of IMC-1 or IMC-2, or compliance functions related to such activities, and the cost of establishing and maintaining such an organization may exceed the cost-effectiveness of doing so.
We consider proprietary trade secrets or confidential know-how and unpatented know-how to be important to our business. We may rely on trade secrets or confidential know-how to protect our technology, especially where patent protection is believed by us to be of limited value.
We consider proprietary trade secrets or confidential know-how and unpatented know-how to be important to our business. We may rely on trade secrets or confidential know-how to protect our technology, 60 especially where patent protection is believed by us to be of limited value.
Enforcing a claim that a third party obtained illegally and is using trade secrets or confidential know-how is expensive, 72 time consuming and unpredictable. The enforceability of confidentiality agreements may vary from jurisdiction to jurisdiction.
Enforcing a claim that a third party obtained illegally and is using trade secrets or confidential know-how is expensive, time consuming and unpredictable. The enforceability of confidentiality agreements may vary from jurisdiction to jurisdiction.
Because the results of preclinical studies and early clinical trials are not necessarily predictive of future results, IMC-1 and our other compounds may not have favorable results in later preclinical and clinical studies or receive regulatory approval.
Because the results of preclinical studies and early clinical trials are not necessarily predictive of future results, IMC-1, IMC-2 and our other compounds may not have favorable results in later preclinical and clinical studies or receive regulatory approval.
Accordingly, even if we believe that one of our candidates meets the criteria for designation as a Breakthrough Therapy, the FDA may disagree and instead determine not to make such designation.
Accordingly, even if we believe that one of our product candidates meets the criteria for designation as a Breakthrough Therapy, the FDA may disagree and instead determine not to make such designation.
If we are unable to establish sales, marketing and distribution capabilities either on our own or in collaboration with third parties, we may not be successful in commercializing IMC-1, if approved.
If we are unable to establish sales, marketing and distribution capabilities either on our own or in collaboration with third parties, we may not be successful in commercializing IMC-1 or IMC-2, if approved.
Because we expect to rely on third parties to manufacture IMC-1 and any future product candidates, and we expect to collaborate with third parties on the development of IMC-1 and any future product candidates, we must, at times, share trade secrets with them.
Because we expect to rely on third parties to manufacture IMC-1, IMC-2 and any future product candidates, and we expect to collaborate with third parties on the development of IMC-1, IMC-2 and any future product candidates, we must, at times, share trade secrets with them.
Even if we are successful, litigation could result in substantial cost and be a distraction to our management and other employees. 73 Our proprietary information may be lost, or we may suffer security breaches.
Even if we are successful, litigation could result in substantial cost and be a distraction to our management and other employees. Our proprietary information may be lost, or we may suffer security breaches.
Foreign Corrupt Practices Act, its books and records provisions, or its anti-bribery provisions. 58 Any of these factors could significantly harm any future international expansion and operations and, consequently, our results of operations.
Foreign Corrupt Practices Act, its books and records provisions, or its anti-bribery provisions. Any of these factors could significantly harm any future international expansion and operations and, consequently, our results of operations.
We currently anticipate that we will retain future earnings for the development, operation and expansion of our business and do not anticipate declaring or paying any cash dividends for the foreseeable future.
We currently anticipate that we will retain future earnings for the development, operation and expansion of our business and do not 65 anticipate declaring or paying any cash dividends for the foreseeable future.
Our expenses will also increase substantially if and as we: ● conduct our Phase 3 FM studies or conduct clinical trials for any other indications or other candidates; ● establish sales, marketing, distribution, and compliance infrastructures to commercialize IMC-1, if approved, and for any other candidates for which we may obtain marketing approval; ● maintain, expand and protect our intellectual property portfolio; ● hire additional clinical, scientific and commercial personnel; ● add operational, financial and management information systems and personnel, including personnel to support our development and planned future commercialization efforts, as well as to support our transition to a public reporting company; and ● acquire or in-license or invent other candidates or assets.
Our expenses will also increase substantially if and as we: ● conduct our Phase 3 FM studies or conduct clinical trials for any other indications or other product candidates; ● establish sales, marketing, distribution, and compliance infrastructures to commercialize IMC-1 or IMC-2, if approved, and for any other product candidates for which we may obtain marketing approval; ● maintain, expand and protect our intellectual property portfolio; 29 ● hire additional clinical, scientific and commercial personnel; ● add operational, financial and management information systems and personnel, including personnel to support our development and planned future commercialization efforts, as well as to support our transition to a public reporting company; and ● acquire or in-license or invent other product candidates or assets.
We have never obtained marketing approval for a development candidate and we may be unable to obtain, or may be delayed in obtaining, marketing approval for any of our development candidates. We have never obtained marketing approval for a product candidate.
We have never obtained marketing approval for a product candidate and we may be unable to obtain, or may be delayed in obtaining, marketing approval for any of our product candidates. We have never obtained marketing approval for a product candidate.
As a result, increasingly high barriers are being erected to the entry of new products. Even if IMC-1 or any other candidate we develop receives marketing approval, it may fail to achieve market acceptance by physicians, patients, third-party payors or others in the medical community necessary for commercial success.
As a result, increasingly high barriers are being erected to the entry of new products. Even if IMC-1, IMC-2 or any other product candidate we develop receives marketing approval, it may fail to achieve market acceptance by physicians, patients, third-party payors or others in the medical community necessary for commercial success.
Failure to obtain or maintain coverage and adequate reimbursement for our candidates, if approved, could limit our ability to market those products and decrease our ability to generate revenue.
Failure to obtain or maintain coverage and adequate reimbursement for our product candidates, if approved, could limit our ability to market those products and decrease our ability to generate revenue.
If IMC-1 or any other candidate we develop receives marketing approval, it may nonetheless fail to gain sufficient market acceptance by physicians, patients, third-party payors and others in the medical community. If it does not achieve an adequate level of acceptance, we may not generate significant product revenues or become profitable.
If IMC-1, IMC-2 or any other product candidate we develop receives marketing approval, it may nonetheless fail to gain sufficient market acceptance by physicians, patients, third-party payors and others in the medical community. If it does not achieve an adequate level of acceptance, we may not generate 44 significant product revenues or become profitable.
Before obtaining regulatory approvals for the commercial sale of IMC-1 for a target indication, we must demonstrate with substantial evidence gathered in preclinical studies and clinical trials and, with respect to approval in the United States, to the satisfaction of the FDA, that IMC-1 is safe and effective for use for that target indication and that the manufacturing facilities, processes and controls are adequate.
Before obtaining regulatory approvals for the commercial sale of IMC-1 or IMC-2 for a target indication, we must demonstrate with substantial evidence gathered in preclinical studies and clinical trials and, with respect to approval in the United States, to the satisfaction of the FDA, that IMC-1 or IMC-2 is safe and effective for use for that target indication and that the manufacturing facilities, processes and controls are adequate.
Furthermore, even if we obtain regulatory approval for IMC-1, we will still need to develop a commercial organization, establish commercially viable pricing and obtain approval for adequate reimbursement from third-party and government payors. If we are unable to successfully commercialize IMC-1, we may not be able to earn sufficient revenue to continue our business.
Furthermore, even if we obtain regulatory approval for IMC-1, we will still need to develop a commercial organization, establish commercially viable pricing and obtain approval for adequate reimbursement from third-party and government payors. If we are unable to successfully commercialize IMC-1 or IMC-2, we may not be able to earn sufficient revenue to continue our business.
Even if IMC-1 were to successfully obtain approval from the FDA and comparable foreign regulatory authorities, any approval might contain significant limitations related to use restrictions for specified 44 age groups, warnings, precautions or contraindications, or may be subject to burdensome post-approval study or risk management requirements.
Even if IMC-1 were to successfully obtain approval from the 32 FDA and comparable foreign regulatory authorities, any approval might contain significant limitations related to use restrictions for specified age groups, warnings, precautions or contraindications, or may be subject to burdensome post-approval study or risk management requirements.
Results of any clinical trial we conduct could reveal a high and unacceptable severity and prevalence of side effects or unexpected characteristics. Patients treated with IMC-1 in our Phase 2a and Phase 2b studies discontinued due to adverse events at a rate lower than patients treated with placebo.
Results of any clinical trial we conduct could reveal a high and unacceptable severity and prevalence of side effects or unexpected characteristics. Patients treated with IMC-1 in our Phase 2a and Phase 2b studies discontinued their participation due to adverse events at a rate lower than patients treated with placebo.
Serious adverse events or undesirable side effects caused by IMC-1 or any other candidates could cause us or regulatory authorities to interrupt, delay or halt clinical trials and could result in a more restrictive label or the delay or denial of regulatory approval by the FDA or other comparable foreign authorities.
Serious adverse events or undesirable side effects caused by IMC-1, IMC-2 or any other product candidates could cause us or regulatory authorities to interrupt, delay or halt clinical trials and could result in a more restrictive label or the delay or denial of regulatory approval by the FDA or other comparable foreign authorities.
We have limited personnel with experience in manufacturing, and we do not own facilities for manufacturing. Instead, we rely on and expect to continue to rely on CMOs for the supply of cGMP grade clinical trial materials and commercial quantities of IMC-1 and any candidates we develop, if approved.
We have limited personnel with experience in manufacturing, and we do not own facilities for manufacturing. Instead, we rely on and expect to continue to rely on CMOs for the supply of cGMP grade clinical trial materials and commercial quantities of IMC-1, IMC-2 and any product candidates we develop, if approved.
In order to market any products in any particular jurisdiction, we must establish and comply with numerous and varying regulatory requirements on a country-by-country basis regarding safety and efficacy. Approval by the FDA in the United States does not ensure approval by regulatory authorities in other countries or jurisdictions.
In order to market any products in any particular jurisdiction, we must establish and comply with numerous and varying regulatory requirements on a country-by-country basis regarding safety and efficacy. Approval by the FDA in the United States does not ensure approval by regulatory authorities in other jurisdictions.
We may seek a Breakthrough Therapy designation for IMC-1 from the FDA. However, we might not receive such designation, and even if we do, such designation may not lead to a faster development or regulatory review or approval process. We may seek a Breakthrough Therapy designation for IMC-1 or one or more of our other candidates.
We may seek a Breakthrough Therapy designation for IMC-1 or IMC-2 from the FDA. However, we might not receive such designation, and even if we do, such designation may not lead to a faster development or regulatory review or approval process. We may seek a Breakthrough Therapy designation for IMC-1, IMC-2 or one or more of our other product candidates.
The availability and adequacy of coverage and reimbursement by governmental healthcare programs such as Medicare and Medicaid, private health insurers and other third-party payors are essential for most patients to be able to afford prescription medications such as IMC-1, if approved.
The availability and adequacy of coverage and reimbursement by governmental healthcare programs such as Medicare and Medicaid, private health insurers and other third-party payors are essential for most patients to be able to afford prescription medications such as IMC-1 or IMC-2, if approved.
We expect to incur significant additional operating losses for the next several years, at least, as we advance IMC-1 and any other candidates through clinical development, complete clinical trials, seek regulatory approval and commercialize the drug or any other candidates, if approved.
We expect to incur significant additional operating losses for the next several years, at least, as we advance IMC-1, IMC-2 and any other product candidates through clinical development, complete clinical trials, seek regulatory approval and commercialize the drug or any other product candidates, if approved.
This lengthy approval process, as well as the unpredictability of future clinical trial results, may result in our failing to obtain regulatory approval to market IMC-1 or another candidate, which would significantly harm our business, results of operations and prospects.
This lengthy approval process, as well as the unpredictability of future clinical trial results, may result in our failing to obtain regulatory approval to market IMC-1, IMC-2 or another product candidate, which would significantly harm our business, results of operations and prospects.
Risks Related to Healthcare Laws and Other Legal Compliance Matters Enacted and future healthcare legislation may increase the difficulty and cost for us to obtain marketing approval of and commercialize our development candidates, if approved, and may affect the prices we may set.
Risks Related to Healthcare Laws and Other Legal Compliance Matters Enacted and future healthcare legislation may increase the difficulty and cost for us to obtain marketing approval of and commercialize our product candidates, if approved, and may affect the prices we may set.

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Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeRegardless of the outcome, litigation can be costly and time consuming, and it can divert management’s attention from important business matters and initiatives, negatively impacting our overall operations. we do not currently have any pending litigation to which we are a party or to which our property is subject that we believe to be material.
Biggest changeWe do not currently have any pending litigation to which we are a party or to which our property is subject that we believe to be material. Regardless of the outcome, litigation can be costly and time consuming, and it can divert management’s attention from important business matters and initiatives, negatively impacting our overall operations. ​
Regardless of the outcome, litigation can be costly and time consuming, and it can divert management’s attention from important business matters and initiatives, negatively impacting our overall operations. ​
Item 3. Legal Proceedings From time to time, we may be involved in claims that arise during the ordinary course of business. Regardless of the outcome, litigation can be costly and time consuming, and it can divert management’s attention from important business matters and initiatives, negatively impacting our overall operations.
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Item 3. Legal Proceedings From time to time, we may be involved in claims that arise during the ordinary course of business.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeIssuer Purchases of Equity Securities We did not repurchase any of our equity securities during the year ended December 31, 2022.
Biggest changeIssuer Purchases of Equity Securities We did not repurchase any of our equity securities during the year ended December 31, 2023. For the year ended December 31, 2023, there were 478,625 underwriters warrants exercised. As a result, 192,951 shares of common stock were surrendered at fair value to satisfy the exercise price and 285,674 shares of common stock were issued.
(the “Company”) received a letter (the “Notice”) from the Listing Qualifications Department (the “Staff”) of The Nasdaq Stock Market LLC (“Nasdaq”) notifying the Company that, for the previous 30 consecutive business days, the bid price for the Company’s common stock 80 had closed below the minimum $1.00 per share requirement for continued listing on The Nasdaq Capital Market under Nasdaq Listing Rule 5550(a)(2) (the “Bid Price Requirement”).
(the “Company”) received a letter (the “Notice”) from the Listing Qualifications Department (the “Staff”) of The Nasdaq Stock Market LLC (“Nasdaq”) notifying the Company that, for the previous 30 consecutive business days, the bid price for the Company’s common stock 70 had closed below the minimum $1.00 per share requirement for continued listing on The Nasdaq Capital Market under Nasdaq Listing Rule 5550(a)(2) (the “Bid Price Requirement”).
In accordance with Nasdaq Listing Rule 5810(c)(3)(A), the Company has been provided an initial period of 180 calendar days, or until May 1, 2023 (the “Compliance Date”), to regain compliance with the Bid Price Requirement.
In accordance with Nasdaq Listing Rule 5810(c)(3)(A), the Company has been provided an initial period of 180 calendar days, or until May 1, 2024 (the “Compliance Date”), to regain compliance with the Bid Price Requirement.
Recent Sales of Unregistered Securities We did not issue any equity securities during the year ended December 31, 2022 that were not registered under the Securities Act and that have not otherwise been described in a Quarterly Report on Form 10-Q or a Periodic Report on Form 8-K. ​
Recent Sales of Unregistered Securities We did not issue any equity securities during the year ended December 31, 2023 that were not registered under the Securities Act and that have not otherwise been described in a Quarterly Report on Form 10-Q or a Periodic Report on Form 8-K. ​ 71
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information Our common stock has been listed on The Nasdaq Capital Market (“Nasdaq”) under the symbol “VIRI” since our initial public offering on December 16, 2020. On November 1, 2022, Virios Therapeutics, Inc.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information Our common stock has been listed on The Nasdaq Capital Market (“Nasdaq”) under the symbol “VIRI” since our initial public offering on December 16, 2020. On November 2, 2023, Virios Therapeutics, Inc.
Holders of Record ​ As of February 28, 2023, there were approximately 139 holders of record of shares of our common stock.
Holders of Record ​ As of February 26, 2024, there were approximately 131 holders of record of shares of our common stock.
Added
The surrendered shares are shown as treasury stock at a cost of $299,110 in stockholders’ equity. For a full discussion of underwriters warrants see Note 8 to the Financial Statements included in this Annual Report on Form 10-K.

Item 7. Management's Discussion & Analysis

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

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Biggest changeResults of Operations Operating expenses and other (expense) income were comprised of the following: ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ December 31, ​ 2022 2021 Operating expenses: ​ ​ ​ ​ ​ ​ Research and development ​ $ 8,069,628 ​ $ 10,795,688 General and administrative ​ 4,245,681 ​ 4,845,252 Total operating expenses ​ ​ 12,315,309 ​ ​ 15,640,940 ​ ​ ​ ​ ​ ​ ​ Other income (expense): ​ ​ ​ ​ ​ ​ Interest income ​ ​ 67,475 ​ ​ 5,672 Other expense ​ ​ — ​ ​ (325,000) Total other income (expense) ​ ​ 67,475 ​ ​ (319,328) Net loss before income taxes ​ $ (12,247,834) ​ $ (15,960,268) ​ Years Ended December 31, 2022 and 2021 Research and Development Expenses Research and development expenses decreased by $2.7 million to $8.1 million for the year ended December 31, 2022 from $10.8 million for the year ended December 31, 2021.
Biggest changeThe Company estimates the fair value of options and warrants granted using an options pricing model. 77 Results of Operations Operating expenses and other (expense) income were comprised of the following: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ December 31, ​ 2023 2022 Operating expenses: ​ ​ ​ ​ ​ ​ ​ Research and development ​ $ 1,728,078 ​ $ 8,069,628 ​ General and administrative ​ 3,718,841 ​ 4,245,681 ​ Total operating expenses ​ $ 5,446,919 ​ $ 12,315,309 ​ ​ ​ ​ ​ ​ ​ ​ ​ Other income: ​ ​ ​ ​ ​ ​ ​ Interest income ​ ​ 150,904 ​ ​ 67,475 ​ Total other income ​ ​ 150,904 ​ ​ 67,475 ​ Loss before income taxes ​ $ (5,296,015) ​ $ (12,247,834) ​ ​ Years Ended December 31, 2023 and 2022 Research and Development Expenses Research and development expenses decreased by $6.4 million to $1.7 million for the year ended December 31, 2023 from $8.1 million for the year ended December 31, 2022.
Subject to certain conditions set forth in the JOBS Act, as an “emerging growth company,” we are not required to, among other things, (i) provide an auditor’s attestation report on our system of internal controls over financial reporting pursuant to Section 404, (ii) provide all of the compensation disclosure that may be required of non-emerging growth public companies under the Dodd-Frank Wall Street Reform and Consumer Protection Act, (iii) comply with any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements (auditor discussion and analysis), and (iv) disclose certain executive compensation-related items such as the correlation between executive compensation and performance and comparisons of the chief executive officer’s compensation to median employee compensation.
Subject to certain conditions set forth in the JOBS Act, as an “emerging growth company,” we are not required to, among other things, (i) provide an auditor’s attestation report on our system of internal controls over financial reporting pursuant to Section 404, (ii) provide all of the compensation disclosure that may be required of non-emerging growth public companies under the Dodd-Frank Wall Street Reform and Consumer Protection Act, (iii) comply with any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements (auditor discussion and analysis), and (iv) disclose certain executive compensation-related items such as the correlation between executive 80 compensation and performance and comparisons of the chief executive officer’s compensation to median employee compensation.
The Company arranges and contracts with third-party contract research organizations (“CROs”), contract development and manufacturing organizations 85 (“CMOs”), contractor laboratories and independent consultants. As part of the process of preparing its financial statements, the Company may be required to estimate some of its expenses resulting from its obligations under these arrangements and contracts.
The Company arranges and contracts with third-party contract research organizations (“CROs”), contract development and manufacturing organizations (“CMOs”), contractor laboratories and independent consultants. As part of the process of preparing its financial statements, the Company may be required to estimate some of its expenses resulting from its obligations under these arrangements and contracts.
Because of the 83 numerous risks and uncertainties associated with product development, we cannot determine with certainty the duration and completion costs of the current or future studies and clinical trials or if, when, or to what extent we will generate revenues from the commercialization and sale of our product candidates.
Because of the numerous risks and uncertainties associated with product development, we cannot determine with certainty the duration and completion costs of the current or future studies and clinical trials or if, when, or to what extent we will generate revenues from the commercialization and sale of our product candidates.
Research and Development Expenses Our research and development expenses consist of expenses incurred in development and clinical studies relating to our product candidates, including: ● payments to third-party contract research organizations, or CROs; ● payments to third-party contract development and manufacturing organizations, or CMOs; ● personnel-related expenses, such as salaries, benefits and stock compensation; and ● payments to contract laboratories and independent consultants.
Research and Development Expenses Our research and development expenses consist of expenses incurred in development and clinical studies relating to our product candidates, including: ● payments to third-party contract research organizations, or CROs; ● payments to third-party contract development and manufacturing organizations, or CMOs; ● personnel-related expenses, such as salaries, benefits and stock compensation; and 74 ● payments to contract laboratories and independent consultants.
The duration, costs and timing of clinical trials and development of our product candidates will depend on a variety of factors, including: ● successful enrollment in, and completion of, clinical trials; ● successful completion of Investigational New Drug-enabling activities, including for IMC-1 for indications other than FM; ● receipt of marketing approvals from applicable regulatory authorities; ● making arrangements with third-party manufacturers or establishing our own commercial manufacturing capabilities; ● obtaining and maintaining patent and trade secret protection and non-patent exclusivity; ● launching commercial sales of IMC-1, if approved, whether alone or in collaboration with others; ● acceptance of IMC-1, if approved, by patients, the medical community and third-party payors; ● effectively competing with other therapies and treatment options; ● a continued acceptable safety profile following approval; ● enforcing and defending intellectual property and proprietary rights and claims; and ● achieving desirable medicinal properties for the intended indications.
The duration, costs and timing of clinical trials and development of our product candidates will depend on a variety of factors, including: ● successful enrollment in, and completion of, clinical trials; ● successful completion of Investigational New Drug-enabling activities; ● receipt of marketing approvals from applicable regulatory authorities; ● making arrangements with third-party manufacturers or establishing our own commercial manufacturing capabilities; ● obtaining and maintaining patent and trade secret protection and non-patent exclusivity; ● launching commercial sales of IMC-1 or IMC-2, if approved, whether alone or in collaboration with others; ● acceptance of IMC-1 or IMC-2, if approved, by patients, the medical community and third-party payors; ● effectively competing with other therapies and treatment options; ● a continued acceptable safety profile following approval; ● enforcing and defending intellectual property and proprietary rights and claims; and 75 ● achieving desirable medicinal properties for the intended indications.
The Company has and will continue to contract the services of the CMO’s spouse through Gendreau to perform certain activities in connection with the Company’s clinical programs. For a full discussion of related party transactions see Note 7 to the Financial Statements included in this Annual Report on Form 10-K.
The Company has and may continue to contract the services of the CMO’s spouse through Gendreau to perform certain activities in connection with the Company’s clinical programs. For a full discussion of related party transactions see Note 7 to the Financial Statements included in this Annual Report on Form 10-K.
The Company has recorded a full valuation allowance against its net deferred tax assets as of December 31, 2022 and 2021 because the Company has determined that it is more likely than not that these assets will not be fully realized due to historic net operating losses incurred.
The Company has recorded a full valuation allowance against its net deferred tax assets as of December 31, 2023 and 2022 because the Company has determined that it is more likely than not that these assets will not be fully realized due to historic net operating losses incurred.
Overview We are a development-stage biotechnology company focused on advancing novel antiviral therapies to treat diseases associated with a viral triggered abnormal immune response such as FM.
Overview We are a development-stage biotechnology company focused on advancing novel antiviral therapies to treat diseases associated with a viral triggered abnormal immune response such as FM and LC.
We expect our research and development expenses to increase for the foreseeable future as we continue the development of IMC-1 and other potential product candidates. General and Administrative Expenses General and administrative expenses consist primarily of salaries, benefits and other related personnel costs, including equity and stock-based compensation, for personnel serving in our executive, finance and administrative functions.
We expect our research and development expenses to increase for the foreseeable future as we continue the development of our product candidates. General and Administrative Expenses General and administrative expenses consist primarily of salaries, benefits and other related personnel costs, including equity and stock-based compensation, for personnel serving in our executive, finance and administrative functions.
These increases will likely include increased costs related to the hiring of additional personnel and fees to outside consultants, lawyers and accountants, among other expenses. 84 Other Income (Expense), Net In 2022, other income (expense), net consists of interest income earned on cash in a money market account.
These increases will likely include increased costs related to the hiring of additional personnel and fees to outside consultants, lawyers and accountants, among other expenses. Other Income Other income consists of interest income earned on cash in a money market account.
We have incurred losses and generated negative cash flows from operations since inception. As of December 31, 2022, our principal source of liquidity was our cash, which totaled $7.0 million.
We have incurred losses and generated negative cash flows from operations since inception. As of December 31, 2023, our principal source of liquidity was our cash, which totaled $3.3 million.
Once we initiate our Phase 3 program in FM, we expect our research and development expenses to increase. These expenditures are subject to numerous uncertainties regarding timing and cost to completion. Completion of our clinical development and clinical trials may take several years or more.
As we initiate our proposed Phase 2 program in LC and when and if we initiate our Phase 3 program in FM, we expect our research and development expenses to increase. These expenditures are subject to numerous uncertainties regarding timing and cost to completion. Completion of our clinical development and clinical trials may take several years or more.
IMC-1 combines two specific mechanisms of action purposely designed to inhibit herpes virus activation and replication, thereby keeping the herpes virus in a latent (dormant) state or “down-regulating” the herpes virus from a lytic (active) state back to latency. The famciclovir component of IMC-1 inhibits viral DNA replication.
IMC-1 and IMC-2 combine two specific mechanisms of action purposely designed to inhibit herpesvirus activation and replication, thereby keeping the herpesvirus in a latent (dormant) state or “down-regulating” the herpesvirus from a lytic (active) state back to latency. The famciclovir component of IMC-1 and the valacyclovir component of IMC-2 inhibit viral DNA replication.
We will need to finance our cash needs through public or private equity offerings, debt financings, collaboration and licensing arrangements or other financing alternatives. To the extent that we raise additional funds by issuing equity or equity-linked securities, our shareholders will experience dilution.
We expect to raise additional capital to complete clinical development of and to commercially develop our product candidates. We will need to finance our cash needs through public or private equity offerings, debt financings, collaboration and licensing arrangements or other financing alternatives. To the extent that we raise additional funds by issuing equity securities, our shareholders will experience dilution.
Overactive immune response related to activation of tissue resident herpes virus has been postulated to be a potential root cause of chronic illnesses such as FM, IBS, chronic fatigue syndrome and functional somatic syndrome, all of which are characterized by a waxing and waning manifestation of disease.
Overactive immune response related to activation of tissue resident herpesvirus has been postulated to be a potential root cause of chronic illnesses such as FM, IBS, LC, chronic fatigue syndrome and other functional somatic syndromes, all of which are characterized by a waxing and waning manifestation of disease, often triggered by events which compromise the immune system.
If the equity and credit markets deteriorate, including as a result of political unrest or war, it may make any necessary debt or equity financing more difficult to obtain in a timely manner or on favorable terms, if at all.
Any such volatility and disruptions may have adverse consequences on us or the third parties on whom we rely. If the equity and credit markets deteriorate, including as a result of political unrest or war, it may make any necessary debt or equity financing more difficult to obtain in a timely manner or on favorable terms, if at all.
Cash Flows The following table summarizes our cash flows from operating, investing and financing activities. ​ ​ ​ ​ ​ ​ ​ ​ ​ Years Ended ​ December 31, ​ 2022 2021 Statement of Cash Flows Data: ​ ​ Total net cash (used in) provided by: ​ ​ Operating activities ​ $ (11,467,797) ​ $ (15,689,578) Financing activities ​ 4,490,605 ​ (97,604) Decrease in cash ​ $ (6,977,192) ​ $ (15,787,182) ​ ​ ​ ​ ​ ​ ​ ​ Years ended December 31, 2022 and 2021 Operating Activities For the year ended December 31, 2022, net cash used in operations was $11.5 million and consisted of a net loss of $12.3 million offset by a net change in operating assets and liabilities of $0.2 million attributable to a decrease in prepaid expenses of $0.4 million and an increase in accounts payable of $0.2 million offset by a decrease in accrued expenses of $0.4 million and non-cash items of $0.6 million attributable to share-based compensation.
Cash Flows The following table summarizes our cash flows from operating, investing and financing activities. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years Ended ​ December 31, ​ 2023 2022 ​ ​ ​ ​ ​ ​ Statement of Cash Flows Data: ​ ​ Net cash (used in) provided by: ​ ​ Operating activities ​ $ (4,870,489) ​ $ (11,467,797) ​ Financing activities ​ 1,156,443 ​ 4,490,605 ​ Decrease in cash ​ $ (3,714,046) ​ $ (6,977,192) ​ ​ 79 Years ended December 31, 2023 and 2022 Operating Activities For the year ended December 31, 2023, net cash used in operations was $4.9 million and consisted of a net loss of $5.3 million and a net change in operating assets and liabilities of $0.2 million attributable to a decrease in accounts payable of $0.5 million and a decrease in accrued expenses of $0.2 million offset by a decrease in prepaid expenses of $0.5 million and non-cash items of $0.6 million attributable to share-based compensation.
Food and Drug Administration (“FDA”) designating IMC-1 for fast-track review status for the treatment of FM. IMC-1 has also been granted a synergy patent based on the fact that neither of the individual components has proven effective in the management of FM, yet the combination therapy generated a result that is greater than the sum of its parts.
IMC-1 has also been granted a synergy patent based on the fact that neither of the individual components has proven effective in the management of FM, yet the combination therapy generated a result that is greater than the sum of its parts.
For the year ended December 31, 2021, net cash used in operations was $15.7 million and consisted of a net loss of $15.9 million and a net change in operating assets and liabilities of $0.1 million attributable to an increase in prepaid expenses offset by non-cash items of $0.3 million attributable to share-based compensation.
For the year ended December 31, 2022, net cash used in operations was $11.5 million and consisted of a net loss of $12.3 million offset by a net change in operating assets and liabilities of $0.2 million attributable to a decrease in prepaid expenses of $0.4 million and an increase in accounts payable of $0.2 million offset by a decrease in accrued expenses of $0.4 million and non-cash items of $0.6 million attributable to share-based compensation.
The decrease was primarily due to decreases in expenses for clinical trials of $1.5 million, toxicology studies of $1.1 million and drug 86 development and manufacturing costs of $0.4 million partially offset by increases in salaries and related personnel costs of $0.2 million and amortization of research grant of $0.1 million.
The decrease was primarily due to decreases in expenses for clinical trials of $5.5 million, toxicology studies of $0.6 million, drug development and manufacturing costs of $0.1 million and salaries and related personnel costs of $0.3 million partially offset by an increase in regulatory consulting of $0.1 million.
For awards to non-employees, the Company recognizes compensation expense in the same manner as if the Company had paid cash for the goods or services. The Company estimates the fair value of options and warrants granted using an options pricing model. Expense is recognized within general and administrative expenses and forfeitures are recognized as they are incurred.
Expense is recognized within both research and development and general and administrative expenses and forfeitures are recognized as they are incurred. For awards to non-employees, the Company recognizes compensation expense in the same manner as if the Company had paid cash for the goods or services.
While not completely understood, there is general agreement in the medical community that activation of the herpes virus is triggered by some form of environmental and/or health stressor. Our lead product candidate, which we have named IMC-1, is a novel, proprietary, fixed dose combination of famciclovir and celecoxib.
While not completely understood, there is general agreement in the medical community that activation of the herpesvirus is triggered by some form of environmental and/or health stressor. Our lead product candidates, IMC-1 and IMC-2, are novel, proprietary, fixed dose combinations of anti-herpes antivirals and celecoxib.
Other Income (Expense) Other income (expense) increased by $0.4 million to $0.1 million in income for the year ended December 31, 2022 from an expense of $0.3 million for the year ended December 31, 2021.
Other Income Other income increased by $0.1 million to $0.2 million in income for the year ended December 31, 2023 from $0.1 million for the year ended December 31, 2022.
We have not generated revenues and have incurred losses since inception. Our net losses were $12,247,834 and $15,960,268 for the years ended December 31, 2022 and 2021, respectively, and our accumulated deficit at December 31, 2022 was $56,173,207.
We have not generated revenues and have incurred losses since inception. Our net losses were $5,296,015 and $12,247,834 for the years ended December 31, 2023 and 2022, respectively, and our accumulated deficit at December 31, 2023 was $61,469,222.
Equity Financings On September 22, 2022, we closed an underwritten public offering raising gross proceeds of $5.0 million and net proceeds of approximately $4.5 million, after deducting underwriting discounts, commissions and offering expenses. There were no equity financings during the year ended December 31, 2021.
In August 2023, we terminated the Sales Agreement. As of December 31, 2023, there was no ATM program in place. On September 22, 2022, we closed an underwritten public offering raising gross proceeds of $5.0 million and net proceeds of approximately $4.5 million, after deducting underwriting discounts, commissions and offering expenses.
The celecoxib component of IMC-1 inhibits cyclooxegenase-2 (“COX-2”) and to a lesser degree cyclooxegenase-1 (“COX-1”), enzymes used by the herpes virus to amplify or accelerate its own replication. We are unaware of any other antivirals in development for the treatment of FM. We believe this novel approach was a germane consideration in the U.S.
The celecoxib component of IMC-1 and IMC-2 inhibits cyclooxegenase-2 (COX-2) and to a lesser degree cyclooxegenase-1 (COX-1) enzymes which are, used by the herpesvirus to amplify or accelerate its own replication. We are unaware of any other antivirals currently in development for the treatment of FM or related conditions.
Financing Activities Net cash provided by financing activities during the year ended December 31, 2022 was $4.5 million and was attributable to cash proceeds from our public offering in September 2022, net of costs.
As a result, 192,951 shares of common stock were surrendered at fair value to satisfy the exercise price and 285,674 shares of common stock were issued. Net cash provided by financing activities during the year ended December 31, 2022 was $4.5 million and was attributable to cash proceeds from our public offering in September 2022, net of costs.
Critical Accounting Policies and Use of Estimates Our management’s discussion and analysis of our financial condition and results of operations is based on our financial statements, which we have prepared in accordance with U.S. generally accepted accounting principles. We believe that several accounting policies are important to understanding our historical and future performance.
The ultimate realization of the deferred tax assets is dependent upon the generation of future taxable income during the periods in which these temporary differences become deductible. 76 Critical Accounting Policies and Use of Estimates Our management’s discussion and analysis of our financial condition and results of operations is based on our financial statements, which we have prepared in accordance with U.S. generally accepted accounting principles.
As the Company was incorporated in December 2020, all tax years of the Company remain open to examination by tax authorities.
These net operating losses can be carried forward and applied against future taxable income, if any. As the Company was incorporated in December 2020, all tax years of the Company remain open to examination by tax authorities.
For example, the current conflict between Ukraine and Russia has created extreme volatility in the global capital markets and is expected to have further global economic consequences, including disruptions of the global supply chain and energy markets. Any such volatility and disruptions may have adverse consequences on us or the third parties on whom we rely.
For example, the recent Israel-Hamas conflict and the ongoing conflict between Ukraine and Russia, the effect of the wars and the resulting sanctions by the U.S. and European governments, has created extreme volatility in the global capital markets and is expected to have further global economic consequences, including disruptions of the global supply chain and energy markets.
IMC-1 represents a novel combination antiviral therapy designed to synergistically suppress herpes virus activation and replication, with the end goal of reducing viral mediated disease burden.
IMC-1 is a novel combination of famciclovir and celecoxib intended to synergistically suppress herpesvirus activation and replication, with the end goal of reducing viral mediated disease burden. IMC-2 is a combination of valacyclovir and celecoxib that like IMC-1, is intended to synergistically suppress herpesvirus activation and replication with a more specific activity against the Epstein-Barr virus (herpesvirus HHV-4).
This decrease was primarily due to decreases in expenses for salaries and related costs of $0.2 million, costs associated with being a public company of $0.2 million and accounting and legal fees of $0.2 million.
General and Administrative Expenses General and administrative expenses decreased by $0.5 million to $3.7 million for the year ended December 31, 2023 from $4.2 million for the year ended December 31, 2022. This decrease was primarily due to a decrease in costs associated with being a public company of $0.5 million.
Future Capital Requirements We estimate our current cash of $7.0 million at December 31, 2022 is sufficient to fund operations and capital requirements for at least the next 12 months subsequent to the filing date of the Company’s Annual Report on Form 10-K.
Debt Financings There were no debt financings during the years ended December 31, 2023 and 2022. There was no debt outstanding at December 31, 2023 and 2022. Future Capital Requirements We estimate our current cash of $3.3 million at December 31, 2023 is not sufficient to fund operating expenses and capital requirements for at least the next 12 months.
Off-Balance Sheet Arrangements We do not have any off-balance sheet arrangements or relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities. 88 Recent Accounting Pronouncements See Note 2 – Summary of Significant Accounting Policies in the accompanying notes to the financial statements elsewhere in this report for details of recently issued accounting pronouncements and their expected impact on our financial statements.
Off-Balance Sheet Arrangements We do not have any off-balance sheet arrangements or relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities.
JOBS Act On April 5, 2012, the Jumpstart Our Business Startups Act of 2012 (“JOBS Act”), was signed into law.
Recent Accounting Pronouncements See Note 2 – Summary of Significant Accounting Policies in the accompanying notes to the financial statements elsewhere in this report for details of recently issued accounting pronouncements and their expected impact on our financial statements. JOBS Act On April 5, 2012, the Jumpstart Our Business Startups Act of 2012 (“JOBS Act”), was signed into law.
Net cash used by financing activities for the year ended December 31, 2021 was $0.1 million and was attributable to $0.2 million in proceeds received from the exercise of warrants offset by the payment of $0.3 million in carryover offering costs from the Company’s IPO in December 2020.
Financing Activities Net cash provided by financing activities during the year ended December 31, 2023 was $1.2 million and was attributable to proceeds from the issuance and sale of common stock under the ATM program, net of commissions and other related expenses. In addition, there were 478,625 warrants cashless exercised.
The increase in other income was mainly due to an increase in interest income of $0.1 million from 2021 to 2022 and a decrease in expense of $0.3 million related to the Release and Settlement Agreement with Torreya Capital LLC in 2021.
The increase in other income was due to an increase in interest income of $0.1 million as a result of higher interest rates paid on our money market account in 2023 versus 2022.
Removed
IMC-1 was the focus of our Phase 2b FORTRESS study. In September 2022, we announced the top line results from our FORTRESS study in FM.
Added
We believe this novel approach was a germane consideration in the FDA designating IMC-1 for fast-track review status for the treatment of FM.
Removed
Overall, the FORTRESS study did not achieve statistical significance on the prespecified primary efficacy endpoint of change from baseline to Week 14 in the weekly average of daily self-reported average pain severity scores comparing IMC-1 to placebo (p=0.302).
Added
Our novel combination antiviral approach (combining a viral DNA polymerase inhibitor + a COX-2 inhibitor) delivers clinical benefits for patients suffering from diseases with a suspected viral mediated catalyst, including FM and LC. We have received FDA feedback on our proposal to advance IMC-1 into Phase 3 development for the treatment of FM.
Removed
However, based on the analysis of the FORTRESS data, community based patients who have not participated in prior FM clinical trials demonstrated statistically significant improvement on the primary endpoint of reduction in FM related pain versus placebo, irrespective of when they enrolled in the study.
Added
In July 2023, the Company received positive data from an exploratory, open-label, proof of concept study in LC funded by an unrestricted grant provided to the BHC. BHC enrolled female patients diagnosed with LC illness, otherwise known as PASC.
Removed
We believe focusing the forward development of IMC-1 on these “new” patients represents a viable and manageable path forward. The Company is scheduled to meet with the FDA in March 2023 to discuss the most appropriate next steps in advancing IMC-1 development as a treatment for FM and hopefully agree on a Phase 3 program.
Added
Patients treated with a combination of Val/Cel exhibited clinically and statistically significant improvements in fatigue, pain, and symptoms of autonomic dysfunction as well as ratings of general well-being related to LC when treated open-label for 14 weeks, as compared to a control cohort of female LC patients matched by age and length of illness and treated with routine care.
Removed
If alignment can be reached, management will consider raising additional capital to fund future research and/or seek a partner to develop or co-develop IMC-1 as a treatment for FM. For the Phase 3 program, we intend to run two qualifying pivotal trials demonstrating the safety and efficacy of IMC-1 treating patients with FM.
Added
The statistically significant improvements in PASC symptoms and general health status were particularly encouraging given that the mean duration of LC illness was two years for both the treated and control cohort prior to enrollment in this study.
Removed
The first Phase 3 study is planned to be a four-arm, multifactorial design to demonstrate the relative safety and efficacy of IMC- 1 as compared to celecoxib alone, famciclovir alone and placebo.
Added
Based on these data, the Company met with the FDA to discuss opening an investigational new 73 drug application to formally assess treatment of symptoms associated with PASC using IMC-2.
Removed
The second Phase 3 study is planned to be a two-arm study comparing IMC-1 to placebo. 82 All patients from the Phase 3 program will be offered the opportunity to enroll into an open label safety follow-on extension study with all on IMC-1, which is the third key component of the Phase 3 program proposal.
Added
In December 2023, we received FDA feedback on our proposed Phase 2b study and project to commence this trial in the second half of 2024, contingent upon securing funding for the program.
Removed
Our research and development expenses in 2022 primarily related to our FORTRESS study which completed in August 2022 and two long-term animal toxicology studies, a 26-week study in rats, which completed in the first quarter of 2022 and a 39-week study in dogs, which completed in the second quarter of 2022.
Added
In July 2023, we entered into a Capital on Demand TM Sales Agreement, (the “Sales Agreement”), with JonesTrading Institutional Services LLC, (“JonesTrading”), relating to our shares of common stock, par value $0.0001 per share.
Removed
In 2021, other income (expense), net primarily consists of the cost associated with the Release and Settlement Agreement with Torreya Capital LLC. See Note 8 to the Financial Statements included in this Annual Report on Form 10-K.
Added
In accordance with the terms of the Sales Agreement, we could offer and sell our shares of common stock having an aggregate offering price of up to $6.7 million from time to time through JonesTrading, acting as sales agent or principal. In August, we halted sales under the Sales Agreement and in September the Sales Agreement was terminated.
Removed
Income Taxes As of December 31, 2022, the Company has U.S. federal and state net operating loss carryforwards of approximately $22,168,000. These net operating losses can be carried forward and applied against future taxable income, if any. These losses currently have no expiration date and may be carried forward indefinitely.
Added
Before sales were halted and the Sales Agreement was terminated, we raised proceeds, net of issuance costs, of approximately $1.2 million. In August 2023, we signed an unrestricted grant research agreement with BHC to conduct a second, investigator-initiated, randomized, double-blinded, placebo-controlled study of LC with IMC-2.
Removed
The ultimate realization of the deferred tax assets is dependent upon the generation of future taxable income during the periods in which these temporary differences become deductible.
Added
Patient enrollment for this study began in the fourth quarter of 2023 with results projected to be available in the second half of 2024. BHC is a non-profit, interdisciplinary Center of Excellence advancing the diagnosis and treatment of chronic fatigue disorders including myalgic encephalomyelitis/chronic fatigue syndrome, FM, post-viral syndromes, and related comorbidities.
Removed
General and Administrative Expenses General and administrative expenses decreased by $0.6 million to $4.2 million for the year ended December 31, 2022 from $4.8 million for the year ended December 31, 2021.
Added
Our research and development expenses in 2023 primarily related to carryover costs associated with completing the final reports for the Company’s FORTRESS (Fibromyalgia Outcome Research Trial Evaluating Synergistic Suppression of HSV-1) study for the treatment of FM and the chronic toxicology program; regulatory consulting for an investigational new drug application to formally access IMC-2 as a treatment for symptoms associated with LC; continued salaries and benefits; grants to the Bateman Horne Center for investigator-sponsored studies in LC; the manufacturing and development of an updated IMC-1 formulation for a proposed pharmacokinetic/food effect study and the manufacturing and development of an IMC-2 formulation for a proposed Phase 2b study in LC.
Removed
Debt Financings There were no debt financings during the years ended December 31, 2022 and 2021. There was no debt outstanding at December 31, 2022 and 2021.
Added
Income Taxes As of December 31, 2023, the Company has U.S. federal net operating loss carryforwards of approximately $26,496,000, which have an indefinite carryforward and Georgia and Florida state net operating loss carryforwards of approximately $33,700,000 and $851,086, respectively, which have a twenty-year carryforward and begin expiring in 2037.
Removed
Currently, there are no planned research and development activities for 2023 other than minimal carryover costs associated with completing the final reports the FORTRESS study and the chronic toxicology program, regulatory consulting to prepare for the FDA meeting, the on-going grant to BHC for the fully funded investigator-sponsored study in Long-COVID and purchase of API to support the start of a potential Phase 3 study for IMC-1.
Added
We believe that several accounting policies are important to understanding our historical and future performance.
Removed
Additional capital will need to be raised before initiating additional research and development activities. We completed our FORTRESS study in August 2022 and are scheduled to meet with the FDA in March 2023 to discuss the most appropriate next steps in advancing IMC-1 development as a treatment for FM.
Added
Equity Financings In July 2023, we entered into a Capital on Demand TM Sales Agreement (the “Sales Agreement”) with JonesTrading Institutional Services LLC (“JonesTrading”) under which we could issue and sale shares of our 78 common stock, from time to time, through JonesTrading, acting as sales agent or principal, up to an aggregate offering price of up to $6,700,000 in which is commonly referred to as an “at-the-market” (“ATM”) program.
Removed
If alignment on a Phase 3 program can be reached, management will consider raising additional capital to fund future research and/or seek a partner to develop or co-develop IMC-1 as a treatment for FM.
Added
During the three months ended September 30, 2023, we sold 641,873 shares of our common stock under the ATM program at a weighted-average gross sales price of approximately $2.11 per share and raised $1,355,090 of gross proceeds. The total commissions and related legal and accounting fees were approximately $198,650, and we received net proceeds of approximately $1,156,440.
Removed
We will need to raise additional capital before we exhaust our current cash in order to continue to fund our research and development, including, subject to consultation with the FDA, any plans for a Phase 3 trial 87 and any new product development, as well as to fund operations generally.
Added
The Company will need to raise additional capital within the next six to eight months to remain a going concern and to further advance clinical development and to commercially develop its product candidates.
Added
Currently, the planned research and development activities for the next year include a potential submission of an investigational new drug (“IND”) application to formally access IMC-2 as a treatment for the symptoms associated with Long-COVID; purchase of API; continued prototype development of IMC-2 to be used for the Phase 2 Long-COVID study; continued salaries and benefits; and ongoing provision of the grant to the BHC to execute their double-blinded, placebo controlled investigator-sponsored study of Long-COVID with the combination of Val/Cel which is expected to read out in mid-2024.
Added
As a result, substantial doubt exists regarding our ability to continue as a going concern 12 months from the filing of this Annual Report on Form 10-K.