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What changed in AIxCrypto Holdings, Inc.'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of AIxCrypto Holdings, 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.

+286 added−418 removedSource: 10-K (2024-04-08) vs 10-K (2023-05-02)

Top changes in AIxCrypto Holdings, Inc.'s 2023 10-K

286 paragraphs added · 418 removed · 176 edited across 4 sections

Item 1. Business

Business — how the company describes what it does

32 edited+19 added−76 removed32 unchanged
Biggest changeIntellectual Property Information regarding the issued patents and pending patent applications, as of December 31, 2022, is as follows: Subject Matter Issued Pending Geographic Scope Patent Term Qualigen Patents and Trademarks FastPack 1.0, IP, and PRO 2 0 U.S., Japan 2024-2032 FastPack 2.0 23 0 U.S., Europe, China, Japan 2032-2042 STARS 9 6 U.S., Europe, Canada, China, Japan, Korea 2030-2045 Qualigen Trademarks 13 9 U.S., Europe, Canada, China, Japan, Korea N/A Qualigen + Gen-Probe (Joint) 24 0 U.S., Austrialia, Canada, China, Japan 2028 Total Qualigen 71 15 In-Licensed Patents FastPack 1.0, IP, and PRO 1 0 Europe 2030 Univ College London (UCL) QN-302 2 11 U.S., Europe, Australia, Canada, China, Hong Kong, India, Japan, Korea, Russia 2030-2040 Univ of Louisville (ULRF) RAS 0 12 U.S, Europe, Australia, Canada, China, Hong Kong, India, Israel, Japan, Korea, Mexico, Russia, South Africa 2039* QN-247 44 3 U.S., Europe, Canada, China, Hong Kong, Japan 2032-2038 DiaSource Total In-Licensed 47 26 TOTAL 118 41 * Anticipated patent term Human Capital Management As of March 31, 2023, we had 38 employees, 31 of whom were full-time employees.
Biggest changeSubject Matter Issued Pending Geographic Scope Patent Term In-Licensed Patents University College London (UCL) QN-302 3 10 U.S., Europe, Australia, Canada, China, Hong Kong, India, Japan, Korea, Russia 2030-2040 University of Louisville (ULRF) Pan-RAS 0 12 U.S., Europe, Australia, Canada, China, Hong Kong, India, Israel, Japan, Korea, Mexico, Russia, South Africa 2039* TOTAL 3 22 * Anticipated patent term Human Capital Management As of March 25, 2024, we had 4 employees, all of whom were full-time.
Early safety indicators suggest no significant adverse toxic effects at proposed therapeutic doses in pancreatic cancer mouse in-vivo models. On January 9, 2023, the U.S. Food and Drug Administration (“FDA”) granted Orphan Drug Designation (“ODD”) to QN-302 for the indication of pancreatic cancer.
Early safety indicators in pancreatic cancer mouse in-vivo models suggest no significant adverse toxic effects at proposed therapeutic doses. On January 9, 2023, the U.S. Food and Drug Administration (“FDA”) granted Orphan Drug Designation (“ODD”) to QN-302 for the indication of pancreatic cancer.
The FDA may also refer the application to an appropriate advisory committee, typically a panel of clinicians, for review, evaluation and a recommendation as to whether the application should be approved, but is not bound by the recommendations of the advisory committee. 11 Before approving an NDA, the FDA usually will inspect the facility or the facilities at which the drug is manufactured and determine whether the manufacturing and production and testing facilities are in compliance with cGMP regulations.
The FDA may also refer the application to an appropriate advisory committee, typically a panel of clinicians, for review, evaluation and a recommendation as to whether the application should be approved, but is not bound by the recommendations of the advisory committee. 8 Before approving an NDA, the FDA usually will inspect the facility or the facilities at which the drug is manufactured and determine whether the manufacturing and production and testing facilities are in compliance with cGMP regulations.
We cannot be certain that submission of an IND application will result in the FDA allowing clinical trials to begin. 10 Clinical trials necessary for product approval are typically conducted in three sequential phases, but the Phases may overlap or be combined.
We cannot be certain that submission of an IND application will result in the FDA allowing clinical trials to begin. 7 Clinical trials necessary for product approval are typically conducted in three sequential phases, but the phases may overlap or be combined.
In the United States, the FDA regulates drugs under the FDCA and its implementing regulations. 9 The steps required to be completed before a drug may be marketed in the United States include, among others: ● preclinical laboratory tests, animal studies, and formulation studies, all performed in accordance with the FDA’s Good Laboratory Practice (“GLP”) regulations; ● submission to the FDA of an IND application for human clinical testing, which must become effective before human clinical trials may begin and for which progress reports must be submitted annually to the FDA; ● approval by an independent institutional review board (“IRB”) or Ethics Committee (“EC”) at each clinical trial site before each trial may be initiated; ● adequate and well-controlled human clinical trials, conducted in accordance with applicable IND regulations, Good Clinical Practices (“GCP”), and other clinical trial related regulations, to establish the safety and efficacy of the drug for each proposed indication to the FDA’s satisfaction; ● submission to the FDA of a New Drug Application (“NDA”) and payment of user fees for FDA review of the NDA (unless a fee waiver applies); ● satisfactory completion of an FDA pre-approval inspection of one or more clinical trial site(s) at which the drug was studied in a clinical trial(s) and/or of us as a clinical trial sponsor to assess compliance with GCP regulations; ● satisfactory completion of an FDA pre-approval inspection of the manufacturing facility or facilities at which the drug is produced to assess compliance with current GMPs regulations; ● agreement with the FDA on the final labeling for the product and the design and implementation of any required Risk Evaluation and Mitigation Strategy (“REMS”); and ● FDA review and approval of the NDA, including satisfactory completion of an FDA advisory committee review, if applicable, based on a determination that the drug is safe and effective for the proposed indication(s).
The steps required to be completed before a drug may be marketed in the United States include, among others: ● preclinical laboratory tests, animal studies, and formulation studies, all performed in accordance with the FDA’s Good Laboratory Practice (“GLP”) regulations; ● submission to the FDA of an IND application for human clinical testing, which must become effective before human clinical trials may begin and for which progress reports must be submitted annually to the FDA; ● approval by an independent institutional review board (“IRB”) or Ethics Committee (“EC”) at each clinical trial site before each trial may be initiated; ● adequate and well-controlled human clinical trials, conducted in accordance with applicable IND regulations, Good Clinical Practices (“GCP”), and other clinical trial related regulations, to establish the safety and efficacy of the drug for each proposed indication to the FDA’s satisfaction; ● submission to the FDA of a New Drug Application (“NDA”) and payment of user fees for FDA review of the NDA (unless a fee waiver applies); ● satisfactory completion of an FDA pre-approval inspection of one or more clinical trial site(s) at which the drug was studied in a clinical trial(s) and/or of us as a clinical trial sponsor to assess compliance with GCP regulations; ● satisfactory completion of an FDA pre-approval inspection of the manufacturing facility or facilities at which the drug is produced to assess compliance with current GMPs regulations; ● agreement with the FDA on the final labeling for the product and the design and implementation of any required Risk Evaluation and Mitigation Strategy; and ● FDA review and approval of the NDA, including satisfactory completion of an FDA advisory committee review, if applicable, based on a determination that the drug is safe and effective for the proposed indication(s).
Activating mutations in one of the three human RAS gene isoforms (KRAS, HRAS or NRAS) are present in about one-fourth to one-third of all cancers. For example, mutant KRAS is found in 98% of pancreatic ductal adenocarcinomas, 52% of colon cancers, and 32% of lung adenocarcinomas.
RAS is the most common oncogene in human cancer. Activating mutations in one of the three human RAS gene isoforms (KRAS, HRAS or NRAS) are present in about one-fourth to one-third of all cancers. For example, mutant KRAS is found in 98% of pancreatic ductal adenocarcinomas, 52% of colon cancers, and 32% of lung adenocarcinomas.
All such reports are also available free of charge via EDGAR through the SEC website at www.sec.gov . 12
All such reports are also available free of charge via EDGAR through the SEC website at www.sec.gov . 9
The FDA could also require, as a condition of NDA approval, post-marketing testing and surveillance to monitor the drug’s safety or efficacy or impose other conditions, or a REMS that may include both special labeling and controls, known as Elements to Assure Safe Use, on the distribution, prescribing, dispensing and use of a drug product.
The FDA could also require, as a condition of NDA approval, post-marketing testing and surveillance to monitor the drug’s safety or efficacy or impose other conditions, or a Risk Evaluation and Mitigation Strategy that may include both special labeling and controls, known as Elements to Assure Safe Use, on the distribution, prescribing, dispensing and use of a drug product.
Similarly, in in-vivo studies, QN-302 showed a longer survival duration in a KPC genetic mouse model for pancreatic cancer than Gemcitabine has historically shown. Additional preclinical in-vivo studies suggest activity in gemcitabine-resistant PDAC. Data further demonstrated that QN-302 had significant anti-tumor activity in three patient-derived PDAC xenograft models.
Similarly, in in-vivo studies, QN-302 showed a longer survival duration in a KPC genetic mouse model for pancreatic cancer than gemcitabine (the current standard of care for PDAC) has historically shown. Additional preclinical in-vivo studies suggest activity in gemcitabine-resistant PDAC. Data further demonstrated that QN-302 had significant anti-tumor activity in three patient-derived PDAC xenograft models.
Stephen Neidle and his group at UCL, the G-Quadruplex (G4) binding concept is derived from over 30 years in nucleic acid research, including research on G4s, which are higher order DNA and RNA structures formed by sequences containing guanine-rich repeats.
Stephen Neidle and his group at UCL, the G4 binding concept is derived from nucleic acid research conducted over more than over 30 years, including research on G4s, which are higher order DNA and RNA structures formed by sequences containing guanine-rich repeats.
Our lead oncology therapeutics program, QN-302, is an investigational small molecule G-quadruplexes (G4)-selective transcription inhibitor with strong binding affinity to G4s prevalent in cancer cells. Such binding could, by stabilizing the G4s against DNA “unwinding,” help inhibit cancer cell proliferation. QN-302 is currently undergoing Good Laboratory Practice (GLP) toxicology studies.
Our lead program, QN-302, is an investigational small molecule G-quadruplexes (G4)-selective transcription inhibitor with strong binding affinity to G4s prevalent in cancer cells (such as pancreatic cancer). Such binding could, by stabilizing the G4s against DNA “unwinding,” help inhibit cancer cell proliferation.
(“NanoSynex”). NanoSynex is a micro-biologics diagnostic company domiciled in Israel. NanoSynex’s technology is an Antimicrobial Susceptibility Testing (AST) that aims to enable better targeting of antibiotics for their most suitable uses to ultimately result in faster and more efficacious treatment, hence reducing hospitals mortality and morbidity rates.
We own a minority interest in NanoSynex, Ltd. (“NanoSynex”), a privately-held microbiologics diagnostic company domiciled in Israel. NanoSynex’s technology is for Antimicrobial Susceptibility Testing that aims to enable better targeting of antibiotics for their most suitable uses to ultimately result in faster and more efficacious treatment, hence reducing hospitals’ mortality and morbidity rates.
In-vitro and in-vivo studies have shown that G4 stabilization by QN-302 resulted in inhibition of target gene expression and cessation of cell growth in various cancers, including PDAC, which represents 98% of pancreatic cancers. In in-vitro studies, QN-302 was potent in inhibiting the growth of several PDAC cell lines at low nanomolar concentrations.
It has one of the lowest rates of survival of all cancer types. In-vitro and in-vivo studies have shown that G4 stabilization by QN-302 resulted in inhibition of target gene expression and cessation of cell growth in various cancers, including PDAC. In in-vitro studies, QN-302 was potent in inhibiting the growth of several PDAC cell lines at low nanomolar concentrations.
(not to be confused with the Company); pursuant to which our merger subsidiary merged with and into Qualigen, Inc. with Qualigen, Inc. surviving as a wholly owned subsidiary of the Company.
On May 22, 2020, we completed a “reverse recapitalization” transaction with Qualigen, Inc. (not to be confused with the Company); pursuant to which our merger subsidiary merged with and into Qualigen, Inc. with Qualigen, Inc. surviving as a wholly owned subsidiary of the Company.
These clinical trials are intended to establish the overall risk/benefit ratio of the study drug and to provide an adequate basis for product approval. Generally, two adequate and well-controlled Phase 3 clinical trials are required by the FDA for approval of an NDA.
These clinical trials are intended to establish the overall risk/benefit ratio of the study drug and to provide an adequate basis for product approval. Generally, adequate and well-controlled Phase 3 clinical trials are required by the FDA for approval of an NDA. Post-approval trials, sometimes referred to as Phase 4 clinical trials, may be conducted after receiving initial marketing approval.
ODD provides advantages to pharmaceutical companies that are developing investigational drugs or biological products that show promise in treating rare diseases or conditions that affect fewer than 200,000 people in the United States, including seven-year marketing exclusivity and eligibility to receive regulatory support and guidance from the FDA in the design of an overall drug development plan. 5 There are also economic advantages to receiving ODD, including a 25% federal tax credit for expenses incurred in conducting clinical research on the orphan designated product within the United States.
ODD provides advantages to pharmaceutical companies that are developing investigational drugs or biological products that show promise in treating rare diseases or conditions that affect fewer than 200,000 people in the United States, including seven-year marketing exclusivity and eligibility to receive regulatory support and guidance from the FDA in the design of an overall drug development plan.
Pursuant to the license agreement, we in-licensed the “RAS” compound family of drug candidates and will seek to identify and develop a lead drug candidate from the compound family and, upon commercialization, will pay UofL royalties in the low-to-mid-single-digit percentages on net sales of RAS inhibitor licensed products. RAS is the most common oncogene in human cancer.
Pursuant to the license agreement, we will seek to identify and develop a lead drug candidate from the compound family and, upon commercialization, will pay UofL royalties in the low-to-mid-single-digit percentages on net sales of Pan-RAS inhibitor licensed products. The license agreement with UofL for Pan-RAS was amended in March 2021 and June 2023.
RAS (formerly RAS-F) In July 2020, we entered into an exclusive worldwide license agreement with University of Louisville (“UofL”) for the intellectual property covering the “RAS” family of pan RAS inhibitor small molecule drug candidates, which are believed to work by blocking RAS mutations directly, thereby inhibiting tumor formation (especially in pancreatic, colorectal and lung cancers).
We will require additional cash resources to be able to continue and complete this Phase 1a clinical trial. 5 Pan-RAS (formerly referred to as RAS or RAS-F) In July 2020 we entered into an exclusive worldwide in-license agreement with the University of Louisville’s Research Foundation (“UofL” or “ULRF”) for the intellectual property covering the “RAS” family of pan-RAS inhibitor small molecule drug candidates, which are believed to work by blocking RAS mutations directly, thereby inhibiting tumor formation (especially in pancreatic, colorectal and lung cancers).
Post-approval trials, sometimes referred to as Phase 4 clinical trials, may be conducted after receiving initial marketing approval. These trials are used to gain additional experience from the treatment of patients in the intended therapeutic indication and are commonly intended to generate additional safety data regarding use of the product in a clinical setting.
These trials are used to gain additional experience from the treatment of patients in the intended therapeutic indication and are commonly intended to generate additional safety data regarding use of the product in a clinical setting.
Ritter/Qualigen Therapeutics common stock, which was previously traded on the Nasdaq Capital Market under the ticker symbol “RTTR,” commenced trading on Nasdaq, on a post-reverse-stock-split adjusted basis, under the ticker symbol “QLGN” on May 26, 2020.
Ritter/Qualigen Therapeutics common stock, which was previously traded on the Nasdaq Capital Market under the ticker symbol “RTTR,” commenced trading on Nasdaq, on a post-reverse-stock-split adjusted basis, under the ticker symbol “QLGN” on May 26, 2020. We are no longer pursuing the gastrointestinal disease treatment business on which Ritter Pharmaceuticals, Inc. had focused before the reverse recapitalization transaction.
Our deprioritized programs (and thus not featured in the chart above) include QN-165 (formerly referred to as AS1411), a drug candidate for the potential broad-spectrum treatment of infectious diseases such as COVID-19, and our Selective Target Antigen Removal System (STARS), a therapeutic device product concept, currently in discovery stage, designed to remove circulating tumor cells, viruses, inflammation factors and immune checkpoints.
QN-165 (formerly referred to as AS1411) – an oligonucleotide aptamer-based drug candidate for the potential broad-spectrum treatment of infectious diseases such as COVID-19. 3. Selective Target Antigen Removal System (STARS) – a therapeutic blood-filtering device product concept, which would be designed to remove circulating tumor cells, viruses, inflammation factors and immune checkpoints.
All reports of inappropriate behavior are promptly investigated with appropriate action taken to stop such behavior. Additional Information Ritter Pharmaceuticals, Inc. (our predecessor) was formed as a Nevada limited liability company on March 29, 2004 under the name Ritter Natural Sciences, LLC. In September 2008, this company converted into a Delaware corporation under the name Ritter Pharmaceuticals, Inc.
(our predecessor) was formed as a Nevada limited liability company on March 29, 2004 under the name Ritter Natural Sciences, LLC. In September 2008, this company converted into a Delaware corporation under the name Ritter Pharmaceuticals, Inc.
QN-302 (formerly referred to as SOP1812) We exclusively in-licensed the global rights to the G4 selective transcription inhibitor platform from University College London (“UCL”) in January 2022. The licensed technology comprises lead compound QN-302 (formerly SOP1812) and back-up compounds that target regulatory regions of cancer genes that down-regulate gene expression in multiple cancer pathways. Developed by Dr.
The licensed technology comprises lead compound QN-302 (formerly known as SOP1812) and back-up compounds that target regulatory regions of cancer genes that down-regulate gene expression in multiple cancer pathways. Developed by Dr.
Research and Development For research and development of our drug candidates, we are leveraging the scientific and technical resources and laboratory facilities of UofL and UCL, through technology licensing, sponsored research, and other consulting agreements, which are focused on aptamer technology and applications. We would engage contract research organizations (“CROs”) for any clinical trials of our drug candidates.
Research and Development For research and development of our drug candidates, we have historically leveraged the scientific and technical resources and laboratory facilities of UofL and UCL, through technology licensing, sponsored research, and other consulting agreements. We have engaged contract research organizations (“CROs”) and clinical sites for the Phase 1a clinical trial of QN-302.
We believe that QN-302 has the potential to demonstrate superior efficacy and activity against pancreatic ductal adenocarcinoma (“PDAC”) compared to existing agents, with a distinct mechanism of action and promising preclinical target profile.
We believe that QN-302 has the potential to demonstrate superior efficacy and activity against pancreatic ductal adenocarcinoma (“PDAC”), which represents 98% of pancreatic cancers.
On May 22, 2020, upon completing the “reverse recapitalization” transaction with Qualigen, Inc., Ritter Pharmaceuticals, Inc. was renamed Qualigen Therapeutics, Inc. Qualisys Diagnostics, Inc. was formed as a Minnesota corporation in 1996, reincorporated to become a Delaware corporation in 1999, and then changed its name to Qualigen, Inc. in 2000. Qualigen, Inc. is now a wholly-owned subsidiary of the Company.
On May 22, 2020, upon completing the “reverse recapitalization” transaction with Qualigen, Inc., Ritter Pharmaceuticals, Inc. was renamed Qualigen Therapeutics, Inc. and Qualigen, Inc. became a wholly-owned subsidiary of the Company. On July 20, 2023 we sold Qualigen Inc. to ChemBio Diagnostics, Inc., an American subsidiary of French diagnostics provider Biosynex S.A. Our website address is www.qlgntx.com .
This certification can be obtained only after a complete audit of a company’s quality system by an independent outside auditor, and maintenance of the certification requires that these facilities undergo periodic re-examination. United States—FDA Drug Approval Process The research, development, testing, and manufacture of product candidates are extensively regulated by governmental authorities in the United States and other countries.
We have not obtained FDA or other regulatory approval for any other drug candidate. 6 United States—FDA Drug Approval Process The research, development, testing, and manufacture of product candidates are extensively regulated by governmental authorities in the United States and other countries.
Our RAS portfolio consists of a family of RAS oncogene protein-protein interaction inhibitor small molecules believed to inhibit or block mutated RAS genes’ proteins from binding to their effector proteins. Preventing this binding could stop tumor growth, especially in RAS-driven tumors such as pancreatic, colorectal and lung cancers.
Our Pan-RAS program, which is currently at the preclinical stage, consists of a family of RAS oncogene protein-protein interaction inhibitor small molecules believed to inhibit or block mutated RAS genes’ proteins from binding to their effector proteins thereby leaving the proteins from the mutated RAS unable to cause further harm.
Item 1. Business Overview We are a diversified life sciences company focused on developing treatments for adult and pediatric cancers with potential for Orphan Drug designation, while also commercializing diagnostics. Our cancer therapeutics pipeline includes QN-302, RAS (formerly RAS-F) and QN-247.
Item 1. Business Overview We are an early-clinical-stage therapeutics company focused on developing treatments for adult and pediatric cancer. Our business now consists of one early-clinical-stage therapeutic program (QN-302) and one preclinical therapeutic program (Pan-RAS).
Tax credits may be applied to the prior year or applied to up to 20 years of future taxes.
There are also economic advantages to receiving ODD, including a 25% federal tax credit for expenses incurred in conducting clinical research on the orphan designated product within the United States. Tax credits may be applied to the prior year or applied to up to 20 years of future taxes.
The investigational compounds within our RAS portfolio are designed to suppress the interaction of endogenous RAS with c-RAF, upstream of the KRAS, HRAS and NRAS effector pathways. Our anticancer drug candidate, QN-247 (formerly referred to as ALAN or AS1411-GNP) is aptamer-based and currently in development to treat a variety of cancer types, including liquid and solid tumors.
In theory, such mechanism of action may be effective in the treatment of about one quarter of all cancers, including certain forms of pancreatic, colorectal, and lung cancers . The investigational compounds within our Pan-RAS portfolio are designed to suppress the interaction of endogenous RAS with c-RAF, upstream of the KRAS, HRAS and NRAS effector pathways.
We intend to focus our internal research and development on oversight of these organizations and continuing support of the FastPack diagnostic line. Regulatory Matters We have obtained 17 FDA clearances/approvals and 28 CE Marks for our diagnostic products (FastPack analyzers, immunoassays, control kits, calibration kits and verifications kits) to date.
We intend to focus our internal research and development on oversight of these CROs. We currently have no internal research and development facilities. Regulatory Matters We have obtained FDA clearance/approval for our QN-302 Phase 1a clinical trial.
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Our investigational QN-247 compound binds nucleolin, a key multi-functional regulatory phosphoprotein that is overexpressed in cancer cells. Such binding could inhibit the cancer cells’ proliferation. The foundational aptamer of QN-247 is QN-165 (formerly referred to as AS1411), which the Company has deprioritized as a drug candidate for treating COVID-19 and other viral-based infectious diseases.
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QN-302 is currently undergoing a Phase 1a clinical trial at START Midwest in Grand Rapids, Michigan, and HonorHealth in Scottsdale, Arizona.
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In addition to our oncology drug pipeline, we have an established diagnostics business. Our revenue driver is our FastPack proprietary blood-based diagnostics platform which includes diagnostic instruments and test kits that are sold commercially primarily in the United States, as well as certain European countries.
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O n July 20, 2023, we sold our Qualigen, Inc. subsidiary, which contained our former FastPack ® diagnostics business to Chembio Diagnostics, Inc., an American subsidiary of French diagnostics provider Biosynex, S.A. Accordingly, our former FastPack ® diagnostics business is reported as Discontinued Operations in this Annual Report.
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The FastPack System menu includes a rapid, highly accurate immunoassay diagnostic testing system for cancer, men’s health, hormone function, and vitamin D status. We provide analyzers to our customers (physician offices, clinics and small hospitals) at low cost in order to increase sales volumes of higher-margin test kits. On May 26, 2022, we acquired a 52.8% interest in NanoSynex, Ltd.
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The aggregate net purchase price for Qualigen, Inc. was $5.4 million in cash, of which $450,000 is being held in escrow to satisfy certain Company indemnification obligations. Any amounts remaining in the escrow that have not been offset or reserved for claims will be released to us within five business days following January 20, 2025.
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See Part II, Item 7 “ Management’s Discussion and Analysis of Financial Condition and Results of Operations ” for additional details. Completion of Reverse Recapitalization Transaction with Ritter Pharmaceuticals, Inc. On May 22, 2020, we completed a “reverse recapitalization” transaction with Qualigen, Inc.
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On May 26, 2022, we acquired a 52.8% interest in NanoSynex from our related party Alpha Capital Anstalt (“Alpha”) and NanoSynex, and entered into a Master Agreement for the Operational and Technological Funding of NanoSynex with NanoSynex (the “NanoSynex Funding Agreement”).
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We are no longer pursuing the gastrointestinal disease treatment business on which Ritter Pharmaceuticals, Inc. had focused before the reverse recapitalization transaction. 4 Cancer Drug Pipeline and Diagnostic Products Therapeutics Pipeline Our lead drug compound QN-302 (formerly SOP1812) is being developed to target regulatory regions of cancer genes that down-regulate gene expression in multiple cancer pathways for potential treatment of G4-targeted tumors ( e.g. , pancreatic cancer).
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On July 20, 2023, we entered into an Amendment and Settlement Agreement with NanoSynex (the “NanoSynex Amendment”), pursuant to which we agreed to, in exchange for eliminating all future Funding Agreement obligations for us to invest further cash in NanoSynex (except for obligations to lend NanoSynex $560,000 on or before November 30, 2023, and $670,000 on or before March 31, 2024), surrender 281,000 Series B Preferred Shares of NanoSynex held by us, resulting in our ownership in NanoSynex being reduced from approximately 52.8% to approximately 49.97% of the voting equity of NanoSynex; in addition, we agreed to surrender approximately $3.0 million of promissory notes which NanoSynex had issued to us under the Funding Agreement.
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Pancreatic cancer is the tenth most common cancer and third deadliest cancer in the United States and has one of the lowest rates of survival of all cancer types, with 91% of those diagnosed dying from the disease and one in four dying within the first month of diagnosis.
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On November 22, 2023 we further agreed to eliminate our obligations to lend NanoSynex $560,000 on or before November 30, 2023, and $670,000 on or before March 31, 2024, by instead surrendering shares of Series A-1 Preferred Stock of NanoSynex in an amount that reduced our ownership in NanoSynex voting equity from approximately 49.97% to 39.90%.
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The chemotherapy drug Gemcitabine has been standard of care for patients with metastatic pancreatic cancer for more than 15 years. Numerous clinical trials have tested new drugs, either alone or in combination, with Gemcitabine.
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NanoSynex was deconsolidated from our financial statements as of July 20, 2023, and is reported as Discontinued Operations in this Annual Report.
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In March 2022 and October 2022, we signed amendments to our sponsored research agreement with UofL to extend our partnership. Under the amended agreement, the collaboration extends until the third quarter of 2023 and commits additional resources to support ongoing discovery and preclinical efforts for the RAS platform.
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Our investment in NanoSynex will be accounted for in the future as an equity method investment. 4 Product Pipeline QN-302 We exclusively in-licensed the global rights to the G-Quadruplex (“G4”) selective transcription inhibitor platform from University College London (“UCL”) in January 2022.
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QN-247 (formerly referred to as ALAN or AS1411-GNP) QN-247 is an oligonucleotide-based drug candidate that is designed to treat different types of nucleolin-expressing cancers, including liquid and solid tumors. QN-247 inhibits nucleolin, a key multi-functional regulatory phosphoprotein that is overexpressed in cancer cells, and may thereby be able to inhibit the cells’ proliferation.
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Pancreatic cancer is the tenth most common cancer in men and the seventh most common in women, but it is the fourth leading cause of cancer deaths in men and the third leading cause in women; it accounts for about 3% of all cancers in the United States but is responsible for about 8% of all cancer-related deaths.
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QN-247 has shown promise in preclinical studies for the treatment of acute myeloid leukemia (“AML”). This novel technology may have several other potential applications, including enhancement of radiation therapy, enhancement of tumor imaging, and delivery of other anti-cancer compounds directly to tumor cells.
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On August 1, 2023 we announced that the FDA had cleared our investigational new drug (“IND”) application for QN-302, and on November 1, 2023 the first patient in our Phase 1a clinical trial for QN-302 was dosed at START Midwest in Grand Rapids, Michigan.
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QN-247 is an enhanced version of QN-165 (which in turn was formerly referred to as AS1411), where the DNA oligonucleotide aptamer is conjugated. A key component of QN-247, DNA oligonucleotide aptamer QN-165, has been shown, primarily on a preclinical basis, to have the potential to target and destroy cancer cells.
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We also had a sponsored research agreement with UofL for Pan-RAS research; that agreement expired in December 2023. We currently do not have the resources to advance our Pan-RAS program, and so we are seeking to out-license it.
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This component has been administered in Phase 1 and Phase 2 clinical trials to over 100 AML or renal cell carcinoma cancer patients and appears to be well tolerated with no evidence of severe adverse events in such trials, with at least seven patients appearing to have clinical responses.
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On February 15, 2024, we entered into a License and Sublicense Agreement with Pan-RAS Holdings, Inc., a New York corporation (“Pan-RAS Holdings”), which contemplated an exclusive out-license of our Pan-RAS drug development program, including our rights under the ULRF license agreement, Pan-RAS Holdings.
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An in vivo efficacy study with a triple negative breast cancer (TNBC) MDA-MB-231 xenograft mouse model was performed with 12 daily doses (1 mg/kg) of QN-247. This study showed statistically significant reductions in mean tumor volumes for all QN-247 formulations compared to baseline and to vehicle control.
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Although the License and Sublicense Agreement called for a closing by March 16, 2024, the License and Sublicense Agreement was in essence structured as a 30-day option in favor of Pan-RAS Holdings. At the contemplated closing, Pan-RAS Holdings would have paid us an upfront fee of $1,000,000 in cash.
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QN-247 formulations with higher oligonucleotide loading appeared to reduce tumor volumes more than lower oligonucleotide loading. No evidence of adverse toxicity was observed. We entered into a sponsored research agreement with UofL in August 2018 which was subsequently amended in October 2020, pursuant to which UofL performed various animal studies to assess antitumor efficacy and safety of different QN-247 compositions.
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In addition, Pan-RAS Holdings would have become responsible to pay on our behalf our in-license royalty obligations to ULRF, as and when required. Finally, if the contemplated closing had occurred, Pan-RAS Holdings would have required to pay to us for our own account, on a semiannual basis, royalties equal to 1.0% of net sales of any RAS products.
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The sponsored research agreement with UofL for QN-247 expired on August 31, 2022, and the license agreement with UofL for QN-247 was amended on January 9, 2023. 6 QN-165 (formerly referred to as AS1411) In June 2020, we entered into an exclusive royalty-bearing license agreement with UofL for UofL’s intellectual property for the use of QN-165 as a drug candidate for the treatment of COVID-19.
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We would have owed certain amounts to ULRF under our in-license agreement from them, if, as and when we received any Non-Royalty Sublicensing Income from Pan-RAS Holdings. Pan-RAS Holdings did not effectuate the closing by March 16, 2024, and we and they voluntarily terminated the License and Sublicense Agreement effective as of March 16, 2024.
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In September 2020 we and UofL jointly filed a U.S. provisional patent application, entitled “Methods of inhibiting or treating coronavirus infection, and methods for delivering an anti-nucleolin agent.” The application was filed in conjunction with Drs. Paula J. Bates and Kenneth E.
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Previous Programs We have discontinued all of our efforts the following programs, and we do not plan to resume them: 1. QN-247(formerly referred to as ALAN or AS1411-GNP) – an oligonucleotide aptamer-based, nucleolin-inhibiting anticancer drug candidate, consisting of QN-165 conjugated with gold nanoparticles. 2.
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Palmer from UofL, and covers methods for using QN-165 as an antiviral drug candidate to prevent SARS-CoV-2 from entering the body through mucous membranes in the nose, mouth and eyes.
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In the United States, the FDA regulates drugs under the Food, Drug and Cosmetics Act and its implementing regulations.
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As stated in the patent application, we believe that QN-165 could be administered by means of inhalers, nose spray or eye drops to individuals who have recently come in contact with SARS-CoV-2, or are at high risk of contracting the virus.
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Intellectual Property Information regarding our (in-licensed) issued patents and pending patent applications, as of December 31, 2023, is as follows (excluding patents and pending patent applications which pertain to programs which we have discontinued). As of that date we did not have any directly-owned issued patents and pending patent applications.
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We believe that the mechanism by which QN-165 is believed to work, by blocking the ability of viruses to replicate in the body, may also make the drug candidate effective against future mutations in COVID-19 as well as against other dangerous viruses including seasonal influenza.
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None of our employees is represented by a labor union or covered by a collective bargaining agreement. Diversity & Inclusion . With respect to our employees overall, fifty percent (50%) are women and 0% are people of color. Additional Information Ritter Pharmaceuticals, Inc.
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Moreover, we believe that in addition to its proposed use as a therapeutic, QN-165 might be able to be used as a protective defense or prophylaxis against COVID-19 and/or other viral-based diseases such as seasonal influenza.
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On July 13, 2021, we submitted an Investigational New Drug (“IND”) application with the FDA seeking approval to commence Phase 1b/2a clinical studies of QN-165 in hospitalized COVID-19 patients. On August 11, 2021, the FDA informed us that additional preclinical studies would be required for the IND application to be cleared to proceed into the clinic with QN-165.
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We then decided to allocate our resources to focus on our oncology pipeline, and deprioritized the development of QN-165 program. Qualigen is seeking to out-license QN-165 to a partner that has interest and expertise in antiviral development, such as dengue, influenza, RSV and other infectious diseases.
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Due to its mechanism and in vivo potency, we believe that QN-165 could potentially be developed as a first-line treatment against emerging viruses and biothreats. FastPack ® The FastPack System is a patent-protected rapid, onsite immunoassay testing system consisting of the FastPack Analyzer and the FastPack test pouch, a single-use, disposable, foil packet which includes the FastPack reagent chemistry.
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Since the initial conception of the system, we have developed successive versions of the analyzer and test pouch, known as “1.0,” “IP” and “PRO”, and have expanded our assay menu to nine tests, including tests for prostate cancer, thyroid function, metabolic disorders, and research applications.
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We have sold FastPack products in the United States and overseas for over 20 years, and since inception, our sales of FastPack products have exceeded $127 million. We manufacture the FastPack products at our FDA and International Standards Organization (“ISO”) certified Carlsbad, California facility.
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As of April 2022 most FastPack sales are distributed through various distribution partners in North America as well as in Europe (primarily Axon Labs in Germany and Switzerland). We also sell direct to clinics and physician offices located throughout North America.
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In July 2020, we submitted an official notification to the FDA to commence sales in the United States of our FastPack SARS-CoV-2 IgG test for COVID-19 antibodies, which was designed for use with our new FastPack PRO. The test was previously submitted to the FDA for Emergency Use Authorization (“EUA”). In April 2021, we withdrew this EUA.
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During the nine months during which the EUA was with the FDA, alternative tests and testing practices became widespread and we determined that there was no longer a viable business case for scale-up of the test.
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Strategic Partners In January 2022, we entered into a royalty-bearing license agreement with UCL, with respect to intellectual property and know-how covering lead and backup compounds for our G4 selective transcription inhibitor program, QN-302. We are party to a royalty-bearing license agreement with UofL for the development of RAS and the QN-247 program.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeOur investment in NanoSynex, our majority owned indirect subsidiary domiciled in Israel, has a number of risks associated with it, including, among others, the following: ● a history of operating losses, with no assurance of future revenues or operating profits; ● risks associated with the development of medical devices and NanoSynex’s ability to obtain the necessary regulatory approvals for the development and commercialization of its antimicrobial susceptibility test platform; ● very limited manufacturing, marketing, distribution and sales capabilities; ● competition from both public and private companies and academic collaborators, many of which have significantly greater experience and financial resources; ● acceptance by life sciences research and diagnostic communities is not assured; ● commercial development of its antimicrobial susceptibility test platform is not assured; ● an inability to manufacture, market or sell its proposed products if it is unsuccessful in entering into strategic alliances or joint ventures with third parties; and ● risks related to the political, economic and military conditions in Israel. 25 In addition, as a condition to our acquisition of NanoSynex, we agreed to provide NanoSynex with up to $10.4 million of future funding in the form of promissory notes to us based on NanoSynex’s achievement of certain future development milestones and subject to other terms and conditions described in the funding agreement.
Biggest changeOur investment in NanoSynex has been reduced to a 39% equity interest and has a number of risks associated with it, including, among others, the following: ● a history of operating losses, with no assurance of future revenues or operating profits; ● uncertainty as to the availability to NanoSynex of the cash resources it needs to execute its plans; ● technological risk; ● our inability, now that we are no longer a majority shareholder of NanoSynex, to control or veto NanoSynex’s decisions; ● risks associated with the development of medical devices and NanoSynex’s ability to obtain the necessary regulatory approvals for the development and commercialization of its antimicrobial susceptibility test platform; ● very limited manufacturing, marketing, distribution and sales capabilities; ● competition from both public and private companies and academic collaborators, many of which have significantly greater experience and financial resources; ● acceptance by life sciences research and diagnostic communities is not assured; ● commercial development of its antimicrobial susceptibility test platform is not assured; ● an inability to manufacture, market or sell its proposed products if it is unsuccessful in entering into strategic alliances or joint ventures with third parties; and ● risks related to the political, economic and military conditions in Israel.
There is no guarantee that any such CROs, clinical trial investigators or other third parties on which we rely will devote adequate time and resources to our development activities or perform as contractually required.
There is no guarantee that any such CROs, clinical trial investigators and/or other third parties on which we rely will devote adequate time and resources to our development activities or perform as contractually required.
Such challenges may result in loss of exclusivity or in our patent claims being narrowed, invalidated or held unenforceable, in whole or in part, which could limit our ability to stop others from using or commercializing similar or identical products and technologies or limit the duration of the patent protection of our products and technologies.
Such challenges may result in loss of exclusivity or in the patent claims being narrowed, invalidated or held unenforceable, in whole or in part, which could limit our ability to stop others from using or commercializing similar or identical products and technologies or limit the duration of the patent protection of our products and technologies.
Our reported financial condition and results of operations may fluctuate significantly from quarter to quarter and year to year, which makes them difficult to predict or understand. We expect our financial condition and results of operations to fluctuate from quarter to quarter and year to year due to a variety of factors, many of which are beyond our control.
Our reported financial condition may fluctuate significantly from quarter to quarter and year to year, which makes them difficult to predict or understand. We expect our financial condition and results of operations to fluctuate from quarter to quarter and year to year due to a variety of factors, many of which are beyond our control.
Commencing June 1, 2023 and continuing on the first day of each month thereafter until the earlier of (i) December 22, 2025 and (ii) the full redemption of the Debenture (each such date, a “Monthly Redemption Date”), we must redeem $110,000 plus accrued but unpaid interest, liquidated damages and any amounts then owing under the Debenture (the “Monthly Redemption Amount”).
Commencing June 1, 2023 and continuing on the first day of each month thereafter until the earlier of (i) December 22, 2025 and (ii) the full redemption of the 2022 Debenture (each such date, a “Monthly Redemption Date”), we must redeem $110,000 plus accrued but unpaid interest, liquidated damages and any amounts then owing under the 2022 Debenture (the “Monthly Redemption Amount”).
Any debt financing, if available, may include financial and other covenants that could restrict our use of the proceeds from such financing or impose other business and financial restrictions on us. In addition, we may consider alternative approaches such as licensing, joint venture, or partnership arrangements to provide long term capital.
Any debt financing, if available, may include financial and other covenants that could restrict our use of the proceeds from such financing or impose other business and financial restrictions on us. In addition, we may consider alternative approaches such as licensing, joint venture, or partnership arrangements to provide short term or long term capital.
In these circumstances, we may need to defend or assert our patents, or both, including by filing lawsuits alleging patent infringement. In any of these types of proceedings, a court or other agency with jurisdiction may find our patents invalid or unenforceable, or that our competitors are competing in a non-infringing manner.
In these circumstances, we may need to defend or assert our licensors’ patents, or both, including by filing lawsuits alleging patent infringement. In any of these types of proceedings, a court or other agency with jurisdiction may find our licensors’ patents invalid or unenforceable, or that our competitors are competing in a non-infringing manner.
As to any clinical trials, we expect to rely on CROs, sponsored academic researchers, clinical investigators and consultants to play a significant role in the conduct of these trials and the subsequent collection and analysis of data. However, we will not be able to control all aspects of their activities.
As to any clinical trials, we expect to rely on CROs, sponsored academic researchers, clinical investigators and/or consultants to play a significant role in the conduct of these trials and the subsequent collection and analysis of data. However, we will not be able to control all aspects of their activities.
Any failure to develop or maintain effective internal controls over financial reporting or difficulties encountered in implementing or improving our internal controls over financial reporting could harm our operating results and prevent us from meeting our reporting obligations. Moreover, effective internal controls, particularly those related to financial reporting, are necessary for us to produce reliable financial reports.
Any failure to develop or maintain effective internal controls over financial reporting or difficulties encountered in implementing or improving our internal controls over financial reporting could harm our operating results and prevent us from meeting our reporting obligations. Effective internal controls, particularly those related to financial reporting, are necessary for us to produce reliable financial reports.
Before we can initiate clinical trials of a drug candidate, we must submit the results of preclinical studies to the FDA along with other information as part of an IND or IDE application or similar regulatory filing, and the FDA (or corresponding foreign regulatory body) must approve the application.
Before we can initiate clinical trials of a drug candidate, we must submit the results of preclinical studies to the FDA along with other information as part of an IND application or similar regulatory filing, and the FDA (or corresponding foreign regulatory body) must approve the application.
Moreover, depending on the terms of any future license agreements to which we may become a party, we may not have the right to control the preparation, filing, and prosecution of patent applications, or to maintain or defend the patents, covering technology licensed from third parties.
Moreover, depending on the terms of any license agreements to which we may become a party, we may not have the right to control the preparation, filing, and prosecution of patent applications, or to maintain or defend the patents, covering technology licensed from third parties.
Results of our planned clinical trials could reveal a high and unacceptable severity and prevalence of side effects or unexpected characteristics. Undesirable side effects caused by our products could result in the delay, suspension or termination of clinical trials by us or the FDA for a number of reasons.
Results of our current and planned clinical trials could reveal a high and unacceptable severity and prevalence of side effects or unexpected characteristics. Undesirable side effects caused by our products could result in the delay, suspension or termination of clinical trials by us or the FDA for a number of reasons.
Moreover, because the issuance of a patent, although presumptive, is not conclusive as to its inventorship, scope, validity or enforceability, our patents or pending patent applications may be challenged in the courts or patent offices in the United States and abroad.
Moreover, because the issuance of a patent, although presumptive, is not conclusive as to its inventorship, scope, validity or enforceability, our licensors’ patents or pending patent applications may be challenged in the courts or patent offices in the United States and abroad.
Our competitors and other third parties may be able to circumvent our patents by developing similar or alternative products or technologies in a non-infringing manner. Our competitors and other third parties may also seek approval to market their own products and technologies similar to or otherwise competitive with our products and technologies.
Our competitors and other third parties may be able to circumvent our licensors’ patents by developing similar or alternative products or technologies in a non-infringing manner. Our competitors and other third parties may also seek approval to market their own products and technologies similar to or otherwise competitive with our products and technologies.
We rely, and expect to continue to rely, on third parties for the manufacture of our products for preclinical and any clinical testing, as well as for commercial manufacture if any of our product candidates obtain regulatory approval.
We rely, and expect to continue to rely, on third parties for the manufacture of our products for preclinical and any clinical testing, as well as for future commercial manufacture if any of our product candidates obtain regulatory approval.
Risks Related to our Intellectual Property If we are unable to obtain and maintain sufficient patent protection for our therapeutic product candidates and diagnostic technologies, or if the scope of the patent protection is not sufficiently broad, third parties, including our competitors, could develop and commercialize products similar or identical to ours, and our ability to commercialize our product candidates successfully may be adversely affected.
Risks Related to our Intellectual Property If we are unable to obtain and maintain sufficient patent protection for our therapeutic product candidates, or if the scope of the patent protection is not sufficiently broad, third parties, including our competitors, could develop and commercialize products similar or identical to ours, and our ability to commercialize our product candidates successfully may be adversely affected.
On April 20, 2023, we received a notification letter from the Listing Qualifications Department of Nasdaq indicating that, as a result of our delay in filing this Annual Report, we were not in compliance with the timely filing requirements for continued listing under Nasdaq Listing Rule 5250(c)(1).
On April 20, 2023, we received a notification letter from the Listing Qualifications Department of Nasdaq indicating that, as a result of our delay in filing the 2022 Annual Report, we were not in compliance with the timely filing requirements for continued listing under Nasdaq Listing Rule 5250(c)(1).
Generic competition usually results in serious price erosion for the original drug brand. Risks Related to Employee Matters, Managing Growth, Potential Dilution, Stock Price Variability and Other Risks Related to Our Business Our future success depends on our ability to retain key employees and to attract, retain and motivate qualified personnel.
Generic competition usually results in serious price erosion for the original drug brand. Risks Related to Employee Matters, Potential Dilution, Stock Price Variability and Other Risks Related to Our Business Our future success depends on our ability to retain key employees and to attract, retain and motivate qualified personnel.
These trans actions may entail numerous operational and financial risks, including: ● exposure to unknown liabilities; ● disruption of business and diversion of management’s time and attention in order to develop acquired products, drug candidates or technologies; ● incurrence of substantial debt or dilutive issuances of equity securities to pay for acquisitions; ● higher than expected acquisition and integration costs; ● write-downs of assets or impairment charges; ● increased amortization expenses; ● difficulty and cost in combining the operations, systems and personnel of any acquired businesses with our operations, systems and personnel; ● impairment of relationships with key suppliers or customers of any acquired businesses due to changes in management and ownership; and ● inability to retain key employees of any acquired businesses.
These transactions may entail numerous operational and financial risks, including: ● exposure to unknown liabilities; ● disruption of business and diversion of management’s time and attention in order to develop acquired products, drug candidates or technologies; 18 ● incurrence of substantial debt or dilutive issuances of equity securities to pay for acquisitions; ● higher than expected acquisition and integration costs; ● write-downs of assets or impairment charges; ● increased amortization expenses; ● difficulty and cost in combining the operations, systems and personnel of any acquired businesses with our operations, systems and personnel; ● impairment of relationships with key suppliers or customers of any acquired businesses due to changes in management and ownership; and ● inability to retain key employees of any acquired businesses.
In addition, some of our competitors may have ongoing clinical trials for products that would treat the same patients as QN-302, RAS or QN-247, and patients who would otherwise be eligible for our clinical trials may instead enroll in clinical trials of our competitors’ products.
In addition, some of our competitors may have ongoing clinical trials for products that would treat the same patients as QN-302 or Pan-RAS, and patients who would otherwise be eligible for our clinical trials may instead enroll in clinical trials of our competitors’ products.
Even if our patent applications issue as patents, they may not issue in a form that will provide us with any meaningful protection, prevent competitors or other third parties from competing with us or otherwise provide us with any competitive advantage.
Even if the patent applications issue as patents, they may not issue in a form that will provide us with any meaningful protection, prevent competitors or other third parties from competing with us or otherwise provide us with any competitive advantage.
Any delays in the commencement or completion, or termination or suspension, of our future clinical trials, if any, could result in increased costs to us, delay or limit our ability to generate revenue and adversely affect our commercial prospects.
Any delays in the commencement or completion, or termination or suspension, of our current clinical trial or our future clinical trials, if any, could result in increased costs to us, delay or limit our ability to generate revenue and adversely affect our commercial prospects.
For additional information, see the section of this Annual Report under the caption “Cautionary Note Regarding Forward-Looking Statements.” Risks Related to Our Business Generally Our business strategy is high-risk We are focusing our resources and efforts primarily on development of therapeutic product candidates, which requires extensive cash needs for research and development activities.
For additional information, see the section of this Annual Report under the caption “Cautionary Note Regarding Forward-Looking Statements.” Risks Related to Our Business Generally Our business strategy is high-risk We are focusing our resources and efforts on development of drug product candidates, which requires extensive cash needs for research and development activities.
The issuance of shares upon the exercise or conversion of outstanding stock options, warrants and the Debenture (or our election to pay amounts owed under the Debenture in shares of our common stock) could result in significant dilution to the holders of our existing outstanding common stock.
The issuance of shares upon the exercise or conversion of outstanding stock options, warrants and the Debentures (or our election to pay amounts owed under the Debentures in shares of our common stock) could result in significant dilution to the holders of our existing outstanding common stock.
The risk of cyber incidents could also be increased by cyberwarfare in connection with the ongoing war in Ukraine, including potential proliferation of malware from the conflict into systems unrelated to the conflict.
The risk o f cyber incidents could also be increased by cyberwarfare in connection with the ongoing war in Ukraine, including potential proliferation of malware from the conflict into systems unrelated to the conflict.
We utilize complex IT systems to transmit and store information, including sensitive personal information and proprietary or confidential information, and otherwise to support our business and process. In the future, our systems may prove inadequate to our business needs and necessary upgrades may not operate as designed, which could result in excessive costs or disruptions in portions of our business.
We utilize information technology systems to transmit and store information, including sensitive personal information and proprietary or confidential information, and otherwise to support our business and process. In the future, our systems may prove inadequate to our business needs and necessary upgrades may not operate as designed, which could result in excessive costs or disruptions in portions of our business.
We may experience numerous unforeseen events that could delay or prevent our ability to obtain marketing approval or commercialize our drug candidates, including: ● regulators or IRBs or ECs may not authorize us or our investigators to commence a clinical trial or conduct a clinical trial at a prospective trial site; ● we may experience delays in reaching, or fail to reach, agreement on acceptable clinical trial contracts or clinical trial protocols with prospective trial sites; ● clinical trials for our drug candidates may produce negative or inconclusive results, and we may decide, or regulators may require us, to conduct additional clinical trials, delay clinical trials or abandon product development programs; ● the number of patients required for clinical trials for our drug candidates may be larger than we anticipate, enrollment in these clinical trials may be slower than we anticipate, participants may drop out of these clinical trials at a higher rate than we anticipate or the duration of these clinical trials may be longer than we anticipate; ● competition for clinical trial participants from investigational and approved therapies may make it more difficult to enroll patients in our clinical trials; ● our third-party contractors may fail to meet their contractual obligations to us in a timely manner, or at all, or may fail to comply with regulatory requirements; ● we may have to suspend or terminate clinical trials for our drug candidates for various reasons, including a finding that the participants are being exposed to unacceptable health risks; ● our drug candidates may have undesirable or unexpected side effects or other unexpected characteristics, causing us or our investigators, regulators or IRBs/ECs to suspend or terminate the trials; ● the cost of clinical trials for our drug candidates may be greater than we anticipate; and ● the supply or quality of our drug candidates, or other materials necessary to conduct clinical trials may be insufficient or inadequate and result in delays or suspension of our clinical trials.
We may experience numerous unforeseen events that could delay or prevent our ability to obtain marketing approval or commercialize our drug candidates, including: ● we may not be able to obtain enough capital to begin clinical trials ort to complete any already-begun clinical trials, or to complete any necessary preclinical studies; ● regulators or IRBs or ECs may not authorize us or our investigators to commence a clinical trial or conduct a clinical trial at a prospective trial site; ● we may experience delays in reaching, or fail to reach, agreement on acceptable clinical trial contracts or clinical trial protocols with prospective trial sites; ● clinical trials for our drug candidates may produce negative or inconclusive results, and we may decide, or regulators may require us, to conduct additional clinical trials, delay clinical trials or abandon product development programs; ● the number of patients required for clinical trials for our drug candidates may be larger than we anticipate, enrollment in these clinical trials may be slower than we anticipate, participants may drop out of these clinical trials at a higher rate than we anticipate or the duration of these clinical trials may be longer than we anticipate; ● competition for clinical trial participants from investigational and approved therapies may make it more difficult to enroll patients in our clinical trials; ● our third-party contractors may fail to meet their contractual obligations to us in a timely manner, or at all, or may fail to comply with regulatory requirements; ● we may have to suspend or terminate clinical trials for our drug candidates for various reasons, including a finding that the participants are being exposed to unacceptable health risks; ● our drug candidates may have undesirable or unexpected side effects or other unexpected characteristics, causing us or our investigators, regulators or IRBs/ECs to suspend or terminate the trials; ● the cost of clinical trials for our drug candidates may be greater than we anticipate; and ● the supply or quality of our drug candidates, or other materials necessary to conduct clinical trials may be insufficient or inadequate and result in delays or suspension of our clinical trials.
Thus, even if we have valid and enforceable patents, these patents still may not provide protection against competing products or processes sufficient to achieve our business objectives. The term of our patents may be inadequate to protect our competitive position on our products.
Thus, even if we have in-licensed valid and enforceable patents, these patents still may not provide protection against competing products or processes sufficient to achieve our business objectives. 17 The term of our in-licensed patents may be inadequate to protect our competitive position on our products.
The commencement and completion of clinical trials can be delayed for a number of reasons, including delays related to: ● the FDA disagreeing as to the design or implementation of our clinical trials or with our recommended dose for any of our pipeline programs; ● obtaining FDA authorization to commence a trial or reaching a consensus with the FDA on trial design; ● obtaining approval from one or more IRBs/ECs; ● IRBs/ECs refusing to approve, suspending or terminating the trial at an investigational site, precluding enrollment of additional subjects, or withdrawing their approval of the trial; ● changes to clinical trial protocol; ● clinical sites deviating from trial protocol or dropping out of a trial; ● failing to manufacture or obtain sufficient quantities of drug candidate, or, if applicable, combination therapies for use in clinical trials; ● patients failing to enroll or remain in our trial at the rate we expect, or failing to return for post-treatment follow-up; ● patients choosing an alternative treatment, or participating in competing clinical trials; ● lack of adequate funding to continue the clinical trial; ● patients experiencing severe or unexpected drug-related adverse effects; ● occurrence of serious adverse events in trials of the same class of agents conducted by other companies; ● selecting or being required to use clinical end points that require prolonged periods of clinical observation or analysis of the resulting data; ● a facility manufacturing our drug candidates, or any of their components, including without limitation, our own facilities being ordered by the FDA to temporarily or permanently shut down due to violations of cGMP, regulations or other applicable requirements, or infections or cross-contaminations in the manufacturing process; ● lack of stability of our clinical trial material or any quality issues that arise with the clinical trial material; ● any changes to our manufacturing process that may be necessary or desired; ● Our, or our third-party contractors, not performing data collection or analysis in a timely or accurate manner or improperly disclosing data prematurely or otherwise in violation of a clinical trial protocol; or ● any third-party contractors becoming debarred or suspended or otherwise penalized by the FDA or other government or regulatory authorities for violations of regulatory requirements, in which case we may need to find a substitute contractor, and we may not be able to use some or all of the data produced by such contractors in support of our marketing applications. 16 We could also encounter delays if a clinical trial is suspended or terminated by us, by the IRBs/ECs of the institutions in which such trials are being conducted, by a Data Safety Monitoring Board for such trial or by the FDA.
The commencement and completion of clinical trials can be delayed for a number of reasons, including delays related to: ● our ability to pay for the costs and expenses for the clinical trials; ● the FDA disagreeing as to the design or implementation of our clinical trials or with our recommended dose for any of our pipeline programs; ● obtaining FDA authorization to commence a trial or reaching a consensus with the FDA on trial design; ● obtaining approval from one or more IRBs/ECs; ● IRBs/ECs refusing to approve, suspending or terminating the trial at an investigational site, precluding enrollment of additional subjects, or withdrawing their approval of the trial; ● changes to clinical trial protocol; ● clinical sites deviating from trial protocol or dropping out of a trial; ● failing to manufacture or obtain sufficient quantities of drug candidate, or, if applicable, combination therapies for use in clinical trials; ● patients failing to enroll or remain in our trial at the rate we expect, or failing to return for post-treatment follow-up; ● patients choosing an alternative treatment, or participating in competing clinical trials; ● lack of adequate funding to continue the clinical trial; ● patients experiencing severe or unexpected drug-related adverse effects; ● occurrence of serious adverse events in trials of the same class of agents conducted by other companies; ● selecting or being required to use clinical end points that require prolonged periods of clinical observation or analysis of the resulting data; ● a facility manufacturing our drug candidates, or any of their components, including without limitation, our own facilities being ordered by the FDA to temporarily or permanently shut down due to violations of cGMP, regulations or other applicable requirements, or infections or cross-contaminations in the manufacturing process; ● lack of stability of our clinical trial material or any quality issues that arise with the clinical trial material; 14 ● any changes to our manufacturing process that may be necessary or desired; ● Our, or our third-party contractors, not performing data collection or analysis in a timely or accurate manner or improperly disclosing data prematurely or otherwise in violation of a clinical trial protocol; or ● any third-party contractors becoming debarred or suspended or otherwise penalized by the FDA or other government or regulatory authorities for violations of regulatory requirements, in which case we may need to find a substitute contractor, and we may not be able to use some or all of the data produced by such contractors in support of our marketing applications.
Our ability to make payments to Alpha of principal or interest on our indebtedness or to make any potential prepayments for the Debenture, to the extent applicable, depends on our future performance, which is subject to economic, financial, competitive and other factors beyond our control.
Our ability to make payments to Alpha of principal or interest on the Debentures or to make any potential prepayments for the Debentures, to the extent applicable, depends on our future performance, which is subject to economic, financial, competitive and other factors beyond our control.
In the event of a delisting, we would take action to restore our compliance with Nasdaq’s listing requirements, but we can provide no assurance that any such action taken by us would allow our common stock to become listed again, stabilize the market price or improve the liquidity of our common stock, prevent our common stock from dropping below the Nasdaq minimum bid price requirement or prevent future non-compliance with Nasdaq’s other listing requirements.
If we are unable to maintain compliance with Nasdaq’s continued listing requirements, and in the event of a delisting, we would take action to restore our compliance with Nasdaq’s listing requirements, but we can provide no assurance that any such action taken by us would allow our common stock to become listed again, stabilize the market price or improve the liquidity of our common stock, prevent our common stock from dropping below the Nasdaq minimum bid price requirement or prevent future non-compliance with Nasdaq’s other listing requirements.
Given the amount of time required for the development, testing and regulatory review of drug candidates, patents protecting such candidates might expire before or shortly after such candidates are commercialized.
Given the amount of time required for the development, testing and regulatory review of drug candidates, our in-licensed patents protecting such candidates might expire before or shortly after such candidates are commercialized.
We cannot assure that the services of such third-party contract research organizations, sponsored academic researchers, advisors and consultants will continue to be available to us on a timely basis when needed, or that we can find qualified replacements.
We cannot assure that the services of such third-party contract research organizations and consultants will continue to be available to us on a timely basis when needed, or that we can find qualified replacements.
See Part II, Item 7 “ Management’s Discussion and Analysis of Financial Condition and Results of Operations ” for additional details regarding the Debenture. Servicing our debt will require a significant amount of cash, and we may not have sufficient cash flow from our business to pay this debt.
See Part II, Item 7 “ Management’s Discussion and Analysis of Financial Condition and Results of Operations ” for additional details regarding the Debentures. Servicing our debt will require a significant amount of cash, and we do not expect to have sufficient cash flow from our business to pay this debt.
In particular, any disruptions, delays or deficiencies from our enterprise resource planning systems could adversely affect our ability to, among other matters, process orders, procure supplies, manufacture and ship products, track inventory, provide services and customer support, send invoices and track payments, fulfill contractual obligations or otherwise operate our business.
In particular, any disruptions, delays or deficiencies from our enterprise resource planning systems could adversely affect our ability to, among other matters, process orders, procure supplies, manufacture and ship products, send invoices and track payments, fulfill contractual obligations or otherwise operate our business.
However, in connection with the audit of our financial statements as of and for the year ended December 31, 2022 (the “2022 audit”), our management determined that that the material weakness identified in connection with the 2021 audit has not been fully remediated and has resulted in adjustments to the accounting treatment related to convertible debt, the business combination and goodwill impairment during the 2022 audit, which resulted in the late filing of this Annual Report (see Item 9A.
In connection with the audit of our financial statements as of and for the year ended December 31, 2022 (the “2022 audit”), our management determined that the material weakness identified in connection with the 2021 audit had not been fully remediated and resulted in adjustments to the accounting treatment related to convertible debt, the business combination and goodwill impairment during the 2022 audit, which resulted in the late filing of the 2022 Annual Report.
Adverse side effects or other safety risks associated with QN-302, RAS, and/or QN-247 product candidates could delay or preclude approval, cause us to suspend or discontinue any clinical trials or abandon further development, limit the commercial profile of an approved label, or result in significant negative consequences following regulatory approval, if any.
Adverse side effects or other safety risks associated with our drug product candidates could delay or preclude approval, cause us to suspend or discontinue any clinical trials or abandon further development, limit the commercial profile of an approved label, or result in significant negative consequences following regulatory approval, if any.
The development and commercialization of pharmaceutical and device products are subject to extensive regulation, and we may not obtain regulatory approvals for QN-302, RAS, QN-247 or any other product candidates, on a timely basis or at all.
The development and commercialization of pharmaceutical and device products are subject to extensive regulation, and we may not obtain regulatory approvals for any product candidates, on a timely basis or at all.
We have not filed patent applications in every jurisdiction, and some filings are only pending in the United States.
Our licensors have not filed patent applications in every jurisdiction, and some filings are only pending in the United States.
We are dependent on third parties to conduct our planned preclinical studies and clinical trials of QN-302, RAS and QN-247. The timing of the initiation and completion of these trials will therefore be partially controlled by such third parties and may result in delays to our development programs.
We are dependent on third parties to conduct our planned preclinical studies and clinical trials of our drug product candidates. The timing of the initiation and completion of these trials will therefore be partially controlled by such third parties and may result in delays to our development programs.
The success of these products will depend on several factors, including the following: ● successful completion of preclinical studies and clinical trials; ● acceptance of an IND application by the FDA or other clinical trial or similar applications from foreign regulatory authorities for our future clinical trials for our pipeline; ● timely and successful enrollment of patients in, and completion of, clinical trials with favorable results; ● demonstration of safety, efficacy and acceptable risk-benefit profiles of our products to the satisfaction of the FDA and foreign regulatory agencies; ● receipt and related terms of marketing approvals from applicable regulatory authorities, including the completion of any required post-marketing studies or trials; ● obtaining and maintaining patent, trade secret and other intellectual property protection and regulatory exclusivity for our products; ● developing and implementing marketing and reimbursement strategies; ● establishing sales, marketing and distribution capabilities and launching commercial sales of our products, if and when approved, whether alone or in collaboration with others; ● acceptance of our drugs, if and when approved, by patients, the medical community and third-party payors; ● effectively competing with other therapies; ● obtaining and maintaining third-party payor coverage and adequate reimbursement; and ● maintaining a continued acceptable safety profile of the products following approval.
The success of these products will depend on several factors, including the following: ● successful completion of preclinical studies and clinical trials; ● acceptance of an IND application by the FDA or other clinical trial or similar applications from foreign regulatory authorities for our future clinical trials for our pipeline; ● timely and successful enrollment of patients in, and completion of, clinical trials with favorable results; ● demonstration of safety, efficacy and acceptable risk-benefit profiles of our products to the satisfaction of the FDA and foreign regulatory agencies; ● receipt and related terms of marketing approvals from applicable regulatory authorities, including the completion of any required post-marketing studies or trials; ● obtaining and maintaining patent, trade secret and other intellectual property protection and regulatory exclusivity for our products; ● developing and implementing marketing and reimbursement strategies; ● establishing sales, marketing and distribution capabilities and launching commercial sales of our products, if and when approved, whether alone or in collaboration with others; ● acceptance of our drugs, if and when approved, by patients, the medical community and third-party payors; ● effectively competing with other therapies; ● obtaining and maintaining third-party payor coverage and adequate reimbursement; and ● maintaining a continued acceptable safety profile of the products following approval. 12 Many of these factors are beyond our control, and it is possible that none of our drug candidates will ever obtain regulatory approval even if we expend substantial time and resources seeking such approval.
We may, in the short and long-term, seek to raise capital through the issuance of equity securities or through other financing sources. To the extent that we seek to raise additional funds by issuing equity securities, our stockholders may experience significant dilution.
We may, in the short and long-term, seek to raise capital through the issuance of equity securities or through other financing sources. To the extent that we seek to raise additional funds by issuing equity or equity-linked securities, our stockholders may (as has already occurred several times) experience significant dilution.
Furthermore, subject to our receipt of the necessary stockholder approvals and other terms and conditions described in the Debenture, we may elect to pay all or a portion of the Monthly Redemption Amount and/or interest required by the Debenture in shares of our common stock.
Furthermore, subject to certain terms and conditions described in the 2022 Debenture, we may elect to pay all or a portion of the Monthly Redemption Amount and/or interest required by the 2022 Debenture in shares of our common stock.
Clinical testing is expensive, time consuming and uncertain as to outcome. The FDA may require us to conduct additional preclinical studies for any drug candidate before it allows us to initiate clinical trials under any IND application, which may lead to additional delays and increase the costs of our preclinical development programs.
The FDA may require us to conduct additional preclinical studies for any drug candidate before it allows us to initiate clinical trials under any IND application, which may lead to additional delays and increase the costs of our preclinical development programs.
To the extent that any disruption or security breach results in a loss of, or damage to, our data or applications, or inappropriate public disclosure of confidential or proprietary information, we may incur liabilities and the further development of our product candidates may be delayed. 26 The number and complexity of these security threats continue to increase over time.
To the extent that any disruption or security breach results in a loss of, or damage to, our data or applications, or inappropriate public disclosure of confidential or proprietary information, we may incur liabilities and the further development of our product candidates may be delayed.
We believe that future financings will be necessary in order for us to properly execute our strategic plan. However, there can be no assurance that such future financings will be available to us (or, if they are, that they can be consummated on desirable terms).
Future financings will be necessary in order for us to survive as a going concern and to properly execute our strategic plan. However, there can be no assurance that such future financings will be available to us (or, if they are, that they can be consummated on desirable terms).
If a natural disaster, power outage or other event occurred that prevented Qualigen from using all or a significant portion of our headquarters, that damaged critical infrastructure, such as the manufacturing facilities of our third-party contract manufacturers, or that otherwise disrupted operations, it may be difficult or, in certain cases, impossible for Qualigen to continue our business for a substantial period of time.
If a natural disaster, power outage or other event occurred that damaged critical infrastructure, such as the facilities of our third-party clinical sites or contract manufacturers, or that otherwise disrupted operations, it may be difficult or, in certain cases, impossible for us to continue our business for a substantial period of time.
We are still early in our development efforts and have not yet begun enrollment in any clinical trials evaluating QN-302, RAS, or QN-247. There can be no assurance that QN-302, RAS, and/or QN-247 will achieve success in their clinical trials or obtain regulatory approval.
We are still early in our Pan-RAS development efforts and have not yet sought approval for, or begun enrollment, in any clinical trials evaluating Pan-RAS. There can be no assurance that any of our drug product candidates will achieve success in their clinical trials or obtain regulatory approval.
Our ability to generate revenues from QN-302, RAS, and/or QN-247 will depend on the successful development and eventual commercialization of such drug candidates.
Our ability to generate revenues from our drug product candidates will depend on the successful development and eventual commercialization of such drug candidates.
We have relied heavily, and expect to continue to rely, on UofL for preclinical studies related to RAS, and we expect to rely heavily on CROs and sponsored academic researchers for preclinical studies related to QN-302.
We have relied heavily on UofL for preclinical studies related to Pan-RAS, and we expect to rely heavily on CROs and sponsored academic researchers for any further preclinical studies.
A failure of one or more clinical trials can occur at any stage of testing. The outcome of preclinical testing and early clinical trials may not be predictive of the success of later clinical trials, and interim or preliminary results of a clinical trial do not necessarily predict final results.
The outcome of preclinical testing and early clinical trials may not be predictive of the success of later clinical trials, and interim or preliminary results of a clinical trial do not necessarily predict final results.
In addition, any future financing (depending on the terms and conditions) may be subject to the approval of Alpha Capital Anstalt (“Alpha”), a related party and the holder of our 8% Senior Convertible Debenture (the “Debenture”), and/or trigger certain adjustments to the Debenture or warrants held by Alpha.
In addition, any future financing (depending on the terms and conditions) may be subject to the approval of Alpha, a related party and the holder of our 8% Senior Convertible Debenture and of our 8% Convertible Debenture (together, the “Debentures”), and/or trigger certain adjustments to the conversion prices of the Debentures or to the exercise prices of warrants held by Alpha and/or by other persons.
If we are unable to generate cash flow sufficient to service our indebtedness and make necessary capital expenditures, we may be required to adopt one or more alternatives, such as selling assets, restructuring debt or issuing additional equity, equity-linked or debt instruments on terms that may be onerous or highly dilutive.
If we continue to lack cash resources sufficient to service our indebtedness, we may be required to adopt one or more alternatives, such as selling assets, restructuring debt or issuing additional equity, equity-linked or debt instruments on terms that may be onerous or highly dilutive.
Any or all of these competing factors may limit our ability to continue to attract and retain high quality personnel, which could negatively affect our ability to successfully develop and commercialize our product candidates and to grow our business and operations as currently contemplated.
Any or all of these competing factors (as well as our own limited resources) may limit our ability to attract and retain high quality personnel, which could negatively affect our ability to successfully develop and commercialize our product candidates and to grow our business and operations as currently contemplated. We will need to rebuild our development and regulatory teams.
If these third parties do not successfully carry out their contractual duties, meet expected deadlines or conduct clinical trials in accordance with regulatory requirements or our stated protocols, we will not be able to obtain, or may be delayed in obtaining, regulatory approvals for QN-302, RAS and/or QN-247 and will not be able to, or may be delayed in our efforts to, successfully commercialize our products. 19 Manufacturing pharmaceutical products is complex and subject to product loss for a variety of reasons.
If these third parties do not successfully carry out their contractual duties, meet expected deadlines or conduct clinical trials in accordance with regulatory requirements or our stated protocols, we will not be able to obtain, or may be delayed in obtaining, regulatory approvals for our drug product candidates and will not be able to, or may be delayed in our efforts to, successfully commercialize our products.
Significant preclinical or clinical trial delays also could shorten any periods during which we may have the exclusive right to commercialize our drug candidates or allow our competitors to bring products to market before we do and impair our ability to successfully commercialize our drug candidates.
For example, the FDA may place a partial or full clinical hold on any of our clinical trials for a variety of reasons. 13 Significant preclinical or clinical trial delays also could shorten any periods during which we may have the exclusive right to commercialize our drug candidates or allow our competitors to bring products to market before we do and impair our ability to successfully commercialize our drug candidates.
We contract with third parties for the manufacture of our product candidates for preclinical testing and clinical trials and expect to continue to do so for commercialization.
Manufacturing pharmaceutical products is complex and subject to product loss for a variety of reasons. We contract with third parties for the manufacture of our product candidates for preclinical testing and clinical trials and expect to continue to do so for commercialization.
Our ability to refinance our indebtedness will depend on the capital markets and our financial condition at such time. If we are unable to engage in any of these activities or engage in these activities on desirable terms, we may be unable to meet our debt obligations, which would materially and adversely impact our business, financial condition and operating results.
If we are unable to engage in any of these activities or engage in these activities on desirable terms, we may be unable to meet our debt obligations, which would materially and adversely impact our business, financial condition and operating results or even put us out of business.
In addition, if we are unable to effectively manage our outsourced activities or if the quality or accuracy of the services provided by our vendors or consultants is compromised for any reason, our clinical trials may be extended, delayed or terminated, and we may not be able to obtain regulatory approval of QN-302, RAS and/or QN-247 or any of future product candidates or otherwise advance our business.
In addition, if we are unable to effectively manage our outsourced activities or if the quality or accuracy of the services provided by our vendors or consultants is compromised for any reason, our clinical trials may be extended, delayed or terminated.
The Monthly Redemption Amount must be paid in cash; provided that after the first two monthly redemptions, we may elect to pay all or a portion of a Monthly Redemption Amount in shares of our common stock, based on a conversion price equal to the lesser of (i) the then applicable conversion price of the Debenture and (ii) 85% of the average of the VWAPs (as defined in the Debenture) for the five consecutive trading days ending on the trading day that is immediately prior to the applicable Monthly Redemption Date.
The Monthly Redemption Amount must be paid in cash; provided that after the first two monthly redemptions, we may (if the Equity Conditions, as defined in the 2022 Debenture, are then satisfied or have been waived) elect to pay all or a portion of a Monthly Redemption Amount in shares of our common stock, based on a conversion price equal to the lesser of (i) the then applicable conversion price of the 2022 Debenture and (ii) 85% of the average of the VWAPs (as defined in the 2022 Debenture) for the five consecutive trading days ending on the trading day that is immediately prior to the applicable Monthly Redemption Date. 10 The 2022 Debenture accrues interest at the rate of 8% per annum, which began accruing on December 1, 2023, and will be payable on a quarterly basis.
Risks Related to Our Therapeutics and Diagnostics Pipeline Our product candidates are still in the early stages of development. We have not begun clinical trials or obtained regulatory approval for any drug candidate. We may never obtain approval for any of our drug candidates.
Risks Related to Our Product Pipeline Our product candidates are still in the early stages of development. Although we have begun Phase 1a clinical trials for QN-302, we might be unable to obtain further regulatory approval for QN-302 or any other drug candidate. We may never obtain marketing approval for any of our drug candidates.
As previously described in our annual report on Form 10-K for the year ended December 31, 2021, in connection with the audit of our financial statements as of and for the year ended December 31, 2021 (the “2021 audit”), our management identified a material weakness in our internal control over financial reporting related to the lack of accounting department resources and/or policies and procedures to ensure recording and disclosure of items in compliance with U.S.
In addition, investors relying upon this misinformation could make an uninformed investment decision, and we could be subject to sanctions or investigations by the SEC or other regulatory authorities or to stockholder class action securities litigation. 20 As previously described in our annual report on Form 10-K for the year ended December 31, 2021, in connection with the audit of our financial statements as of and for the year ended December 31, 2021 (the “2021 audit”), our management identified a material weakness in our internal control over financial reporting related to the lack of accounting department resources and/or policies and procedures to ensure recording and disclosure of items in compliance with U.S.
Our likely collaborators for any collaboration arrangements include large and mid-size pharmaceutical companies, regional and national pharmaceutical companies and biotechnology companies. We face significant competition in seeking appropriate collaborators.
We expect that we will need third-party out-licensees or collaborators for the development and commercialization of our products. Our likely collaborators for any collaboration arrangements include large and mid-size pharmaceutical companies, regional and national pharmaceutical companies and biotechnology companies. We face significant competition in seeking appropriate collaborators.
We do not currently have arrangements in place for redundant supply or a second source for bulk drug substance for QN-302, RAS or QN-247. We may enter into collaborations with third parties for the development and commercialization of our products. If those collaborations are not successful, we may not be able to capitalize on the market potential of these products.
We do not currently have arrangements in place for redundant supply or a second source for bulk drug substance for QN-302 or Pan-RAS. 16 We will need to seek and enter into out-licenses or collaborations with third parties for the development and commercialization of our products, resulting in a limitation of our upside potential.
If we do not achieve one or more of these factors in a timely manner or at all, we could experience significant delays or an inability to successfully commercialize our drug candidates.
If we do not achieve one or more of these factors in a timely manner or at all, we could experience significant delays or an inability to successfully commercialize our drug candidates. For example, our business could be harmed if results of the clinical trials of QN-302, Pan-RAS or any other drug candidates vary adversely from our expectations.
Such challenges also may result in substantial cost and require significant time from our scientists and management, even if the eventual outcome is favorable to us. 23 Our and our licensors’ pending and future patent applications may not result in patents being issued that protect our product candidates and technologies, in whole or in part, or that effectively prevent others from commercializing competitive products and technologies.
Our licensors’ pending and future patent applications may not result in patents being issued that protect our product candidates and technologies, in whole or in part, or that effectively prevent others from commercializing competitive products and technologies.
This may make our stock an unsuitable investment for many investors. We do not currently have enough working capital to fully execute our strategic plan . We have suffered recurring losses from operations, and we will need capital to support our intended development of our therapeutics business.
We do not currently have enough working capital to execute our strategic plan . We have suffered recurring losses from operations, and we are now essentially a non-revenue company. We will need capital to maintain our operations and to support our intended development of our therapeutics business.
The expansion of our operations may lead to significant costs and may divert management and business development resources. 24 We currently rely, and for the foreseeable future will continue to rely, in substantial part, on certain third-party contract research organizations, sponsored academic researchers, advisors and consultants to provide certain services, including assuming substantial responsibilities for the conduct of our clinical trials and the manufacture of QN-302, RAS and QN-247 or any future product candidates.
We currently rely, and for the foreseeable future will continue to rely, in substantial part, on certain third-party contract research organizations and consultants to provide certain services, including assuming substantial responsibilities for the conduct of our clinical trials.
We are located in southern California, and are subject to risks posed by natural disasters, including wildfires, earthquakes and severe weather that may interfere with our operations. Extreme weather events and other natural disasters could severely disrupt our operations, and have a material adverse effect on our business, results of operations, financial condition and prospects.
Extreme weather events and other natural disasters could severely disrupt our operations, and have a material adverse effect on our business, results of operations, financial condition and prospects.
The clinical development, manufacturing, labeling, packaging, storage, recordkeeping, advertising, promotion, export, import, marketing, distribution, adverse event reporting, including the submission of safety and other post-marketing information and reports, and other possible activities relating to QN-302, RAS and QN-247, as well as any other product candidate that we may develop in the future, are subject to extensive regulation.
The clinical development, manufacturing, labeling, packaging, storage, recordkeeping, advertising, promotion, export, import, marketing, distribution, adverse event reporting, including the submission of safety and other post-marketing information and reports, and other possible activities relating to drug product candidates such as ours are subject to extensive regulation. 15 We rely, and intend to continue to rely, on third parties to conduct our preclinical studies and clinical trials and perform some of our research and preclinical studies.
Before obtaining marketing approval from regulatory authorities for the sale of these products, we must complete preclinical development and then conduct extensive clinical trials to demonstrate the safety and efficacy of these products for humans. Clinical testing is expensive, difficult to design and implement, can take many years to complete and is uncertain as to the outcome.
We are unable to predict when or if our drug candidates, will prove effective or safe in humans or will obtain marketing approval. Before obtaining marketing approval from regulatory authorities for the sale of these products, we must complete preclinical development and then conduct extensive clinical trials to demonstrate the safety and efficacy of these products for humans.
For example, our business could be harmed if results of the clinical trials of QN-302, RAS, QN-247, any other drug candidates vary adversely from our expectations. 14 Drug development involves a lengthy and expensive process. We may incur additional costs or experience delays in completing, or ultimately be unable to complete, the development and commercialization of QN-302, RAS, and/or QN-247.
Drug development involves a lengthy and expensive process. We may incur additional costs or experience delays in completing, or ultimately be unable to complete, the development and commercialization of our drug product candidates. Most drug candidates fail, and taking a drug candidate from concept through clinical trials and regulatory approval is not easy or guaranteed.
Such challenges have caused, and may continue to cause, uncertainty and instability in local economies and in global financial markets, which may adversely affect our business. We or the third parties upon whom we depend may be adversely affected by natural disasters and our business continuity and disaster recovery plans may not adequately protect us from a serious disaster.
We or the third parties upon whom we depend may be adversely affected by natural disasters and our business continuity and disaster recovery plans may not adequately protect us from a serious disaster. We are located in southern California and are subject to risks posed by natural disasters, including wildfires, earthquakes and severe weather that may interfere with our operations.
Our ability to generate revenues from these arrangements will depend on our collaborators’ abilities and efforts to successfully perform the functions assigned to them in these arrangements.
Our ability to generate revenues from these arrangements will depend on our collaborators’ abilities and efforts to successfully perform the functions assigned to them in these arrangements. Any out-license or collaboration will necessarily result in a sharing of economics with the out licensee or collaborator, which might otherwise have been captured by us directly.
In particular, the warrant liabilities (and change in the fair value of warrant liabilities, over a reporting period) may result in distortions and sharp variability in reported periodic results. Accordingly, you should not blindly rely upon the results of any quarterly or annual periods as indications of future operating performance.
Accordingly, you should not blindly rely upon the results of any quarterly or annual periods as indications of future financial status or operating performance.
Although we outsource many drug development functions and may choose to continue to do so in the future, we expect to experience growth in the number of employees and the scope of our operations, particularly in the areas of clinical development, clinical operations, manufacturing, and regulatory affairs as we progress QN-302, RAS and QN-247 through the clinic and develop additional product candidates.
Although we outsource many drug development functions and may choose to continue to do so in the future, we expect that (resources allowing) to recruit and retain more employees in all areas, and particularly in the areas of clinical development, clinical operations, and regulatory affairs (and maybe, longer-term, in areas such as manufacturing, sales, marketing and distribution).
Interest may be paid in cash or shares of common stock or a combination thereof at our option; provided that interest may only be paid in shares if the Equity Conditions have been satisfied, including the stockholder approval condition as described above.
Interest may be paid in cash or shares of common stock or a combination thereof at our option; provided that the Equity Conditions have been satisfied. Alpha has waived the Equity Conditions for certain Monthly Redemption Amounts, but Alpha is not required to continue such waivers beyond May 2024.
While we expect to submit the IND application during the first half of 2023, we cannot guarantee the timing for submitting the IND application for QN-302, and we do not know when this IND application (or any other IND application) would be approved, if ever. 15 Before obtaining marketing approval from the FDA for the sale of QN-302, RAS, QN-247, or any other future drug candidate, we must conduct extensive clinical studies to demonstrate safety and efficacy.
Before obtaining marketing approval from the FDA for the sale of QN-302, Pan-RAS or any other future drug candidate, we must conduct extensive clinical studies to demonstrate safety and efficacy. Clinical testing is expensive, time consuming and uncertain as to outcome.
Controls and Procedures). If we are unable to remediate the material weakness and achieve and maintain effective internal control over financial reporting and effective disclosure controls, our business could be adversely affected. Certain customers and/or suppliers may choose not to do business with us and the price of our common stock could be adversely impacted.
If we are unable to remediate the material weaknesses and achieve and maintain effective internal control over financial reporting and effective disclosure controls, our business could be adversely affected. Our right to use our “shelf” Form S-3 registration statement is sharply limited.
For example, on November 23, 2022, we effected a 1-for-10 reverse stock split of our outstanding common stock to cure our noncompliance, for a period of more than 30 consecutive business days, with Nasdaq Listing Rule 5550(a)(2), which requires listed securities to maintain a minimum bid price of $1.00 per share.
Nasdaq Listing Rule 5550(a)(2) requires listed securities to maintain a minimum bid price of $1.00 per share (the “Minimum Bid Price Requirement”), and Listing Rule 5810(c)(3)(A) provides that a failure to meet the Minimum Bid Price Requirement exists if the deficiency continues for a period of 30 consecutive business days.

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Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

3 edited+0 added−0 removed0 unchanged
Biggest changePurchases of Equity Securities by the Issuer and Affiliated Purchasers None.
Biggest changeRecent Sales of Unregistered Securities No further disclosure is required in response to this Item. Purchases of Equity Securities by the Issuer and Affiliated Purchasers None.
This figure does not reflect the beneficial ownership of shares held in nominee name. Securities Authorized for Issuance Under Equity Compensation Plans See Part III, Item 12 “Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters” for information relating to our equity compensation plans. Recent Sales of Unregistered Securities None.
This figure does not reflect the beneficial ownership of shares held in nominee name. Securities Authorized for Issuance Under Equity Compensation Plans See Part III, Item 12 “Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters” for information relating to our equity compensation plans.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. Our common stock has been listed and traded on the Nasdaq Capital Market under the symbol “QLGN” since May 26, 2020. Holders As of April 11, 2023, there were 627 registered holders of record of our common stock.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. Our common stock has been listed and traded on the Nasdaq Capital Market under the symbol “QLGN” since May 26, 2020. Holders As of March 25, 2024, there were 287 registered holders of record of our common stock.

Item 7. Management's Discussion & Analysis

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

56 edited+47 added−63 removed11 unchanged
Biggest changeThe decrease in therapeutics research and development costs was primarily due to a decrease of $6.4 million in expenses related to the potential application of QN-165 for the treatment of COVID-19 ($4.6 million in drug compound manufacturing costs, and $1.8 million in other pre-clinical research costs), as well as pre-clinical research and development cost decreases of $0.2 million for QN-247, a decrease in legal expenses of $0.3 million, a decrease of $0.3 million in payroll-related expenses, offset by an increase in QN-302 spending of $1.1 million and an increase in RAS expenses of $0.3 million.
Biggest changeThis increase in research and development expenses for the year ended December 31, 2023 compared to for the year ended December 31, 2022 was primarily due to a $2.1 million increase in pre-clinical and clinical research costs for QN-302, offset by a $1.0 million decrease in pre-clinical research costs for QN-247 a $0.3 million decrease in preclinical research costs for Pan-RAS, and a $0.1 million decrease in preclinical research costs for QN-165.
Net Cash Used in Investing Activities During the year ended December 31, 2022, net cash used in investing activities was approximately $0.2 million, due to capital expenditures offset by cash acquired in the NanoSynex acquisition.
During the year ended December 31, 2022, net cash used in investing activities was approximately $0.2 million, due to capital expenditures offset by cash acquired in the NanoSynex acquisition.
If we raise additional funds through government or other third-party funding, commercialization, marketing and distribution arrangements or other collaborations, strategic alliances or licensing arrangements with third parties, we may have to relinquish valuable rights to our technologies, future revenue streams, research programs or product candidates or to grant licenses on terms that may not be favorable to us.
If we raise additional funds through third-party funding, commercialization, marketing and distribution arrangements or other collaborations, strategic alliances or licensing arrangements with third parties, we may have to relinquish valuable rights to our technologies, future revenue streams, research programs or product candidates or to grant licenses on terms that may not be favorable to us.
Commencing June 1, 2023 and continuing on the first day of each month thereafter until the earlier of (i) December 22, 2025 and (ii) the full redemption of the Debenture, we must redeem $110,000 plus accrued but unpaid interest, liquidated damages and any amounts then owing under the Debenture.
Commencing June 1, 2023 and continuing on the first day of each month thereafter until the earlier of (i) December 22, 2025 and (ii) the full redemption of the 2022 Debenture, we must redeem $110,000 plus accrued but unpaid interest, liquidated damages and any amounts then owing under the 2022 Debenture.
Actual results may differ from these estimates under different assumptions or conditions. 30 While our significant accounting policies are more fully described in Note 1 to our consolidated financial statements appearing in “Item 8.
Actual results may differ from these estimates under different assumptions or conditions. While our significant accounting policies are more fully described in Note 1 to our consolidated financial statements appearing in “Item 8.
Because the fair value of the above liability classified warrants will be determined each quarter on a “mark-to-market” basis , it could result in significant variability in our future quarterly and annual Consolidated Statement of Operations and Consolidated Balance Sheets based on changes in our public market common stock price. Pursuant to U.S.
Because the fair value of the above liability classified warrants will be determined each quarter on a “mark-to-market” basis , significant variability in our future quarterly and annual Consolidated Statement of Operations and Consolidated Balance Sheets could occur based on changes in our public market common stock price. Pursuant to U.S.
These warrants contain a provision that if Qualigen, Inc. issues shares (except in certain defined scenarios) at a price below the warrants’ exercise price, the exercise price will be re-set to such new price and the number of shares underlying the warrants will be increased in the same proportion as the exercise price decrease.
These warrants contain a provision that if the Company issues shares (except in certain defined scenarios) at a price below the warrants’ exercise price, the exercise price will be re-set to such new price and the number of shares underlying the warrants will be increased in the same proportion as the exercise price decrease.
Because the fair value of the warrant liabilities will be determined each quarter on a “mark-to-market” basis, this item is likely to continue to result in significant variability in our future quarterly and annual Consolidated Statements of Operations based on unpredictable changes in our public market common stock price and the number of warrants outstanding at the end of each quarter.
Because the fair value of the warrant liabilities will be determined each quarter on a “mark-to-market” basis, this item is likely to, until then, continue to result in variability in our future quarterly Consolidated Statements of Operations based on unpredictable changes in our public market common stock price and the number of warrants outstanding at the end of each quarter.
During the year ended December 31, 2022 a total of approximately $2.4 million was funded and in February 2023 and additional $0.5 million was funded to NanoSynex under the Funding Agreement.
During the year ended December 31, 2022, we funded a total of approximately $2.4 million and in February 2023 we funded an additional $0.5 million to NanoSynex under the Funding Agreement.
The Reverse Stock Split reduced our shares of outstanding common stock, stock options, and warrants to purchase shares of our common stock. Fractional shares of common stock that would have otherwise resulted from the Reverse Stock Split were rounded down to the nearest whole share and cash in lieu of payments were made to stockholders.
The Reverse Stock Split reduced our shares of outstanding common stock, stock options, and warrants to purchase shares of our common stock. Fractional shares of common stock that would have otherwise resulted from the Reverse Stock Split were rounded down to the nearest whole share and cash in lieu of fractional shares was paid to stockholders.
The Monthly Redemption Amount must be paid in cash; provided that after the first two monthly redemptions, we may elect to pay all or a portion of a Monthly Redemption Amount in shares of our common stock, based on a conversion price equal to the lesser of (i) the then applicable conversion price of the Debenture and (ii) 85% of the average of the VWAPs (as defined in the Debenture) for the five consecutive trading days ending on the trading day that is immediately prior to the applicable Monthly Redemption Date.
The Monthly Redemption Amount must be paid in cash; provided that after the first two monthly redemptions, we may (if the Equity Conditions, as defined in the 2022 Debenture, are then satisfied or have been waived) elect to pay all or a portion of a Monthly Redemption Amount in shares of our common stock, based on a conversion price equal to the lesser of (i) the then applicable conversion price of the 2022 Debenture and (ii) 85% of the average of the VWAPs (as defined in the 2022 Debenture) for the five consecutive trading days ending on the trading day that is immediately prior to the applicable Monthly Redemption Date.
Historically, our principal sources of cash have, in addition to revenue from FastPack product sales and license revenues, included proceeds from the issuance of common and preferred equity and proceeds from the issuance of debt.
Historically, our principal sources of cash have, in addition to revenue from FastPack product sales and license revenues (see Note 5 - Discontinued Operations), included proceeds from the issuance of common and preferred equity and proceeds from the issuance of debt.
We have not included these commitments on our balance sheet because the achievement and timing of these events is not determinable. Certain milestones are in advance of receipt of revenue from the sale of products and, therefore, we may require additional debt or equity capital to make such payments.
We have not included these commitments on our balance sheet because the achievement and timing of these events is not determinable. Certain milestones are in advance of receipt of revenue from the sale of products and, therefore, we may require additional debt or equity capital to make such payments. 28 We have multiple license and sponsored research agreements with ULRF.
For the year ended December 31, 2021, the gain on change in fair value of warrant liabilities was $4.7 million due to an associated decrease in the market price of our common stock.
For the year ended December 31, 2022, the gain on change in fair value of warrant liabilities was $0.9 million due to an associated decrease in the market price of our common stock.
Financial Statements and Supplementary Data,” we believe that the following accounting policies are the most critical to aid you in fully understanding and evaluating our financial condition and results of operations: ● Convertible debt ● Research and development ● Revenue recognition ● Allowance for doubtful accounts and returns ● Inventory ● Impairment of long-lived assets ● Business combination ● Goodwill ● In Process R&D ● Derivative financial instruments and warrant liabilities ● Stock-based compensation ● Income taxes Warrant Liabilities In 2004, Qualigen, Inc. issued Series C preferred stock warrants to investors and brokers in connection with a private placement.
Financial Statements and Supplementary Data,” we believe that the following accounting policies are the most critical to aid you in fully understanding and evaluating our financial condition and results of operations: ● Research and development ● Discontinued operations ● Impairment of long-lived assets ● Business combinations ● Derivative financial instruments and warrant liabilities ● Stock-based compensation ● Income taxes Warrant Liabilities In 2004, Qualigen, Inc. issued Series C preferred stock warrants to investors and brokers in connection with a private placement.
The financial statements do not include any adjustments that would be necessary should the Company be unable to continue as a going concern, and therefore, be required to liquidate its assets and discharge its liabilities in other than the normal course of business and at amounts that may differ from those reflected in the accompanying financial statements. 34 Our consolidated balance sheet at December 31, 2022 includes $3.6 million of current warrant liabilities.
The financial statements do not include any adjustments that would be necessary should the Company be unable to continue as a going concern, and therefore, be required to liquidate its assets and discharge its liabilities in other than the normal course of business and at amounts that may differ from those reflected in the accompanying financial statements.
If we are unable to obtain funding, we could be required to delay, reduce or eliminate research and development programs, product portfolio expansion or future commercialization efforts, which could adversely affect our business prospects.
If we are unable to obtain funding, we could be required to delay, reduce or eliminate research and development programs, product portfolio expansion or future commercialization efforts, and we could be unable to continue operations.
In order to fully execute our business plan, we will require significant additional financing for planned research and development activities, capital expenditures, clinical and pre-clinical testing for QN-302 clinical trials, to continue preclinical development of RAS, and to continue funding the NanoSynex operations (See Note 3-Acquisition), as well as commercialization activities.
In order to fully execute our business plan, we will require significant additional financing for planned research and development activities, capital expenditures, QN-302 clinical trials, and preclinical development of Pan-RAS, as well as commercialization activities.
On an ongoing basis, we evaluate our estimates and judgments, including those related to impairment of goodwill and other intangible assets, fair value of warrant liabilities, stock-based compensation, amortization and depreciation, inventory reserves, allowances for doubtful accounts and returns, and warranty costs.
On an ongoing basis, we evaluate our estimates and judgments, including those related to impairment of goodwill and other intangible assets, fair value of warrant liabilities, and stock-based compensation.
Typically, a decline in our stock price would result in a decline in the fair value of our warrant liabilities, generating a gain, while an increase in our stock price would result in an increase in the fair value of our warrant liabilities, generating a loss.
Typically, a decline in our stock price would result in a decline in the fair value of our warrant liabilities, generating a gain, while an increase in our stock price would result in an increase in the fair value of our warrant liabilities, generating a loss. The remaining liability classified warrants expire on June 26, 2024.
We expect to continue to incur losses subsequent to the consolidated balance sheet date of December 31, 2022. For the years ended December 31, 2022 and 2021, we used cash of $13.2 million and $14.7 million, respectively, in operations. We currently expect our cash balances to fund operations into the third quarter of 2023.
We expect to continue to incur losses subsequent to the consolidated balance sheet date of December 31, 2023. For the years ended December 31, 2023 and 2022, we used cash of $10.3 million and $13.2 million, respectively, in operations. We sold our Qualigen, Inc.
In December 2021, we raised $8.8 million from the issuance of common stock to several institutional investors, and in December 2022 we raised approximately $3.0 million from the sale of a convertible debenture to Alpha. There can be no assurance that further financing can be obtained on favorable terms, or at all.
In December 2022 and February 2024 we raised approximately $3.0 million and $0.5 million, respectively from the sale of convertible debentures to Alpha. There can be no assurance that further financing can be obtained on favorable terms, or at all.
During the year ended December 31, 2021, net cash used in investing activities was approximately $0.1 million, primarily related to the purchase of property and equipment. Net Cash Provided by Financing Activities Net cash provided by financing activities for the year ended December 31, 2022, was approximately $2.9 million, due to the issuance of convertible debt to Alpha.
Net cash provided by financing activities for the year ended December 31, 2022, was approximately $2.9 million, due to the issuance of convertible debt to Alpha.
In addition, any future financing (depending on the terms and conditions) may be subject to the approval of Alpha under the terms of the Debenture and/or trigger certain adjustments to the Debenture or warrants held by Alpha.
In addition, any future financing (depending on the terms and conditions) may be subject to the approval of Alpha under the terms of the Debentures and/or trigger certain adjustments to the Debentures or warrants held by Alpha. The accompanying financial statements have been prepared assuming that the Company will continue as a going concern.
Interest (Income) Expense, Net There was $27,000 in net interest expense during the year ended December 31, 2022 compared to net interest income of $43,000 during the year ended December 31, 2021.
Interest (Income) Expense, Net There was $1.5 million in net interest expense during the year ended December 31, 2023 compared to net interest income of $34,000 during the year ended December 31, 2022. The increase was due to the interest on the 2022 Debenture.
We have multiple license and sponsored research agreements with UofL Research Foundation (“ULRF”). Under these agreements, we have taken over development, regulatory approval and commercialization of various drug compounds from ULRF and are responsible for maintenance of the related intellectual property portfolio.
Under these agreements, we have taken over development, regulatory approval and commercialization of various drug compounds from ULRF and are responsible for maintenance of the related intellectual property portfolio. We agreed to reimburse ULRF for sponsored research expenses of up to $2.7 million and prior patent costs of up to $112,000 for Pan-RAS.
Contractual Obligations and Commitments We have no material contractual obligations that are not fully recorded on our consolidated balance sheets or fully disclosed in the notes to the financial statements. Lease Agreement with Bond Ranch LP On December 15, 2021, our wholly-owned subsidiary Qualigen, Inc. entered into a Second Amendment to Lease with Bond Ranch LP.
Contractual Obligations and Commitments We have no material contractual obligations that are not fully recorded on our consolidated balance sheets or fully disclosed in the notes to the financial statements.
This decrease was due to a $0.3 million decrease in professional fees, a $0.3 million decrease in payroll-related expenses, a $0.3 million decrease in insurance expenses, and a $0.3 million decrease in investor relations expenses, offset by increases of $0.2 million in legal expenses and $0.1 million in rent.
This decrease was due to a $3.8 million decrease in stock-based compensation expense, a $0.4 million decrease in payroll related expenses, a $0.3 million decrease in insurance expenses, and a $0.2 million decrease in license fees, offset by an increase of $0.5 million in professional fees.
Nanosynex Funding Agreement As a condition to the NanoSynex acquisition, we entered into a Master Agreement for the Operational and Technological Funding of NanoSynex (the “Funding Agreement”), on May 26, 2022, pursuant to which we have agreed to fund NanoSynex up to an aggregate of approximately $10.4 million over the next three years, subject to NanoSynex’s achievement of certain performance milestones specified in the Funding Agreement and the satisfaction of other terms and conditions described in the Funding Agreement. 36 We will receive in exchange for any payment made to NanoSynex under the Funding Agreement one or more promissory notes (which may contain convertible features) with a face value equal to the amount paid by the Company to NanoSynex upon satisfaction of the applicable performance milestones.
NanoSynex Funding Agreement As a condition to our acquisition of a majority voting equity interest in NanoSynex from Alpha and NanoSynex, we entered into a Master Agreement for the Operational and Technological Funding of NanoSynex (the “Funding Agreement”), on May 26, 2022, pursuant to which we agreed to fund NanoSynex up to an aggregate of approximately $10.4 million, subject to NanoSynex’s achievement of certain performance milestones specified in the Funding Agreement and the satisfaction of other terms and conditions described in the Funding Agreement.
Our current liabilities at December 31, 2022 also include $0.9 million of accounts payable, $0.5 million of accrued vacation pay, $1.5 million of accrued expenses and other current liabilities, a $0.8 million R&D grant liability, $0.2 million in operating lease liabilities, $0.1 million of notes payable (convertible debt to a related party), and $1.0 million in short term debt to a related party.
Our current liabilities at December 31, 2023 include $2.2 million of accounts payable, $0.6 million of accrued expenses and other current liabilities, $0.1 million in warrant liabilities, and $1.3 million of convertible debt to a related party.
Cash Flows The following table sets forth the significant sources and uses of cash for the periods set forth below: For the Years Ended December 31, 2022 2021 Net cash (used in) provided by: Operating activities $ (13,247,540 ) $ (14,730,742 ) Investing activities (183,763 ) (141,364 ) Financing activities 2,910,515 8,433,808 Effect of exchange rate on cash 22,639 — Net decrease in cash and restricted cash $ (10,498,149 ) $ (6,438,298 ) Net Cash Used in Operating Activities During the year ended December 31, 2022, operating activities used $13.2 million of cash, primarily resulting from a net loss of $21.0 million.
These contracts generally provide for termination on notice, and therefore are cancelable contracts. 30 Cash Flows The following table sets forth the significant sources and uses of cash for the periods set forth below: For the Twelve Months Ended December 31, 2023 2022 Net cash (used in) provided by: Operating activities $ (10,304,263 ) $ (13,247,541 ) Investing activities 4,215,943 (183,763 ) Financing activities (550,000 ) 2,910,515 Effect of exchange rate on cash — 22,639 Net decrease in cash and restricted cash $ (6,638,320 ) $ (10,498,150 ) Net Cash Used in Operating Activities During the year ended December 31, 2023, operating activities used $10.3 million of cash, primarily resulting from a loss from continuing operations of $12.5 million.
The Agreement requires (if and when applicable) tiered royalty payments in the low to mid-single digits, clinical/regulatory/sales milestone payments, and a percentage of any non-royalty sublicensing consideration paid to Qualigen.
(UCL Business Limited is the commercialization company for University College London.) We are further developing the program’s lead compound under the name QN-302. The License Agreement requires (if and when applicable) tiered royalty payments in the low to mid-single digits, clinical/regulatory/sales milestone payments, and sharing of a percentage of any non-royalty sublicensing consideration paid to the Company.
We will also be required to pay a royalty on net sales of products covered by the in-licensed intellectual property in the low single digits. The royalty is subject to reduction for any third-party payments required to be made, with a minimum floor in the low single digits.
The maximum aggregate milestone payments we may be obligated to make per product are $5 million. We will also be required to pay a royalty on net sales of products covered by the in-licensed intellectual property in the low single digits.
Under the terms of these agreements, we are required to make patent maintenance payments and payments based upon development, regulatory and commercial milestones for any products covered by the in-licensed intellectual property. The maximum aggregate milestone payments we may be obligated to make per product are $5 million.
As of December 31, 2023, there were no remaining un-expensed amounts under this sponsored research agreement for Pan-RAS. Under the terms of these agreements, we are required to make patent maintenance payments and payments based upon development, regulatory and commercial milestones for any products covered by the in-licensed intellectual property.
Cash flows from operating activities (as opposed to net loss) for the year ended December 31, 2022 were positively impacted by adjustments for $5.4 million in non cash stock-based compensation expense, a $4.2 million non cash goodwill impairment charge related to the acquisition of Nanosynex, $0.1 million in depreciation and amortization, as well as $0.4 million decrease in accounts receivable.
Cash flows from operating activities for the year ended December 31, 2023 were positively impacted by adjustments for a $1.1 million non cash loss on voluntary conversion of convertible debt, a $0.6 million non cash loss on convertible debt extinguishment, accretion of discount of $1.5 million on convertible debt, a $1.6 million increase in accounts payable, and $1.1 million in non cash stock-based compensation expense.
Cash flows from operating activities (as opposed to net loss) for the year ended December 31, 2022 were negatively impacted by a $1.0 million gain on change in fair value of warrant liabilities (as described above), a $0.6 million increase in inventory and equipment held for lease, a $0.5 million decrease in R&D grant liability which was offset against NanoSynex R&D expenses, a $0.3 million decrease in deferred tax liability, a $0.1 million increase in prepaid expenses and other assets, and a $0.1 million decrease in accounts payable and accrued expenses.
Cash flows from operating activities for the year ended December 31, 2022 were negatively impacted by cash used in discontinued operations of $2.6 million, a $0.9 million decrease in fair value of warrant liabilities, a $0.5 million decrease in accrued expenses and other current liabilities, and a $0.1 million increase in prepaid expenses.
The Debenture is convertible, at any time, and from time to time, at Alpha’s option, into shares of our common stock (the “Conversion Shares”), at a price equal to $1.32 per share, subject to adjustment as described in the Debenture (the “Conversion Price”) and other terms and conditions described in the Debenture, including the Company’s receipt of the requisite stockholder approvals.
The 2024 Debenture has a maturity date of December 31, 2024 and is convertible, at any time, and from time to time, at Alpha’s option, into shares of common stock of the Company, at $0.6111 per share, subject to adjustment as described in the 2024 Debenture.
On December 22, 2022, as part of the convertible debenture financing, the Company issued to Alpha a common stock warrant to purchase a number of shares of the common stock of the Company equal to the number of Conversion Shares issuable upon conversion of the Debenture as of the closing date.
On December 22, 2022, as part of the 2022 Debenture financing, we issued to Alpha a common stock warrant (exercisable from June 22, 2023 through June 22, 2028) to purchase 2,500,000 shares of our common stock.
For more information, refer to Note 1 - Organization and Summary of Significant Accounting Policies and Estimates and Note 7 - Goodwill, IPR&D and other Intangibles of the consolidated financial statements. 33 Other Expense (Income) Change in Fair Value of Warrant Liabilities During the year ended December 31, 2022 we experienced (primarily due to a decrease in our stock price during the period) a $0.9 million gain in other income because of the change in fair value of the warrant liabilities arising from our liability classified warrants described above.
Other Expense (Income) Change in Fair Value of Warrant Liabilities During the year ended December 31, 2023 we experienced a $2.0 million gain in other income because of the change in fair value of the warrant liabilities arising from our liability classified warrants described above.
GAAP”) require us to recognize the fair value of these warrants as warrant liabilities on our Consolidated Balance Sheets and to reflect period-to-period changes in the fair value of the warrant liabilities on our Consolidated Statements of Operations. The estimated fair value of these warrant liabilities was $0.8 million and $1.7 million at December 31, 2022 and 2021, respectively.
For accounting purposes, such warrants give rise to warrant liabilities. Accounting principles gene rally accepted in the United States of America (“U.S. GAAP”) require us to recognize the fair value of these warrants as warrant liabilities on our Consolidated Balance Sheets and to reflect period-to-period changes in the fair value of the warrant liabilities on our Consolidated Statements of Operations.
The Debenture accrues interest at the rate of 8% per annum, which does not begin accruing until December 1, 2023, and will be payable on a quarterly basis.
The 2022 Debenture accrues interest at the rate of 8% per annum, which began accruing on December 1, 2023, and will be payable on a quarterly basis. Interest may be paid in cash or shares of common stock or a combination thereof at our option; provided that the Equity Conditions have been satisfied.
Alpha Convertible Debt On December 22, 2022, we issued an 8% Senior Convertible Debenture in the aggregate principal amount of $3,300,000 to Alpha for a purchase price of $3,000,000 pursuant to the terms of a Securities Purchase Agreement, dated December 21, 2022 (the “Alpha Purchase Agreement”).
Alpha Convertible Debt On December 22, 2022, pursuant to the terms of a Securities Purchase Agreement, dated December 21, 2022 (the “Alpha Purchase Agreement”), we issued to Alpha, in exchange for $3,000,000 in cash (less $50,000 for expense reimbursement), the 2022 Debenture with an original face amount of $3,300,000 due on December 22, 2025, plus 2,500,000 common stock warrants exercisable (from June 22, 2023 through June 22, 2028) at $1.65 per share.
Other Income, Net Other income was immaterial during the years ended December 31, 2022 and 2021. Liquidity and Going Concern As of December 31, 2022, we had approximately $7.0 million in cash. We have incurred recurring losses from operations and have an accumulated deficit of $103.4 million at December 31, 2022.
As of December 31, 2023, we had approximately $0.4 million in cash and net accounts payable of over $2.2 million. We are in arrears on accounts payable to important partners. We have incurred recurring losses from operations and have an accumulated deficit of $116.8 million at December 31, 2023.
We have the right to sublicense our rights under these agreements, and we will be required to pay a percentage of any sublicense income.
The royalty is subject to reduction for any third-party payments required to be made, with a minimum floor in the low single digits. We have the right to sublicense our rights under these agreements, but we will be required to pay ULRF a percentage of any sublicense income. We previously had sponsored research agreements with ULRF for QN-247 and QN-165.
Cash flows from operating activities (as opposed to net loss) for the twelve months ended December 31, 2021 were positively impacted by adjustments for $5.6 million in non cash stock-based compensation expenses, a $1.3 million decrease in prepaid expenses and other assets, a $1.0 million increase in accrued expenses and other current liabilities and a $0.4 million increase in accounts payable, due to higher costs related to therapeutics research and development.
Cash flows from operating activities for the year ended December 31, 2023 were negatively impacted by adjustments for a $2.0 million decrease in fair value of warrant liabilities, a $0.3 million increase in prepaid expenses and other assets, a $0.2 million decrease in accrued expenses and other current liabilities, and cash used in discontinued operations of $1.2 million.
There is no assurance that we will ever achieve profitable operations, or, if achieved, could be sustained on a continuing basis.
These factors raise substantial doubt regarding our ability to continue as a going concern for the one-year period following the date that the financial statements in this Annual Report were issued. There is no assurance that we will ever achieve profitable operations, or, if achieved, could be sustained on a continuing basis.
We also agreed to reimburse ULRF for sponsored research expenses of up to $830,000 and prior patent costs of up to $200,000 for QN-247. As of December 31, 2022, there were no remaining un-expensed amounts under this sponsored research agreement for QN-247 and the agreement was terminated effective August 31, 2022.
As of December 31, 2023, there were no remaining un-expensed amounts under these sponsored research agreements and the agreements were terminated effective August 31, 2022, and November 30, 2021 respectively.
There were 1,349,571 of these warrants outstanding at December 31, 2022 and 248,162 of these warrants outstanding at December 31, 2021.
The estimated fair value of these warrant liabilities was approximately $0.1 million and $3.6 million at December 31, 2023 and 2022, respectively. There were 455,623 of these warrants outstanding at December 31, 2023 and 1,349,571 of these warrants outstanding at December 31, 2022.
Our RAS portfolio consists of a family of RAS oncogene protein-protein interaction inhibitor small molecules believed to inhibit or block mutated RAS genes’ proteins from binding to their effector proteins. Preventing this binding could stop tumor growth, especially in RAS-driven tumors such as pancreatic, colorectal and lung cancers.
Our Pan-RAS program, which is currently at the preclinical stage, consists of a family of RAS oncogene protein-protein interaction inhibitor small molecules believed to inhibit or block mutated RAS genes’ proteins from binding to their effector proteins thereby leaving the proteins from the mutated RAS unable to cause further harm.
During the year ended December 31, 2021, operating activities used $14.7 million of cash, primarily resulting from a net loss of $17.9 million.
During the year ended December 31, 2022, operating activities used $13.2 million of cash, primarily resulting from a loss from continuing operations of $13.9 million. Cash flows from operating activities for the year ended December 31, 2022 were positively impacted by an adjustment for $4.8 million in non cash stock-based compensation expense.
The estimated fair value of these warrants increased to $3.6 million as of December 31, 2022 from $1.7 million as of December 31, 2021 primarily due to the issuance of a new warrant as part of the convertible debt-related party financing transaction, offset by a reduction in fair value of the other liability classified warrants.
The estimated fair value of these warrant liabilities decreased to $0.1 million as of December 31, 2023 from $3.6 million as of December 31, 2022 due to a reduction in fair value of the warrant liabilities resulting from an associated decrease in the market price of our common stock, and the reclassification at fair value of a liability classified warrant to equity of $1.6 million.
Although to date all of our reported revenue is diagnostics-related, our reported expenses represent the total of our diagnostics-related and therapeutics-related expenses Reverse Stock Split On November 23, 2022, we effected a 1-for-10, as determined by our board of directors, reverse stock split of our outstanding shares of common stock (the “Reverse Stock Split”).
The investigational compounds within our Pan-RAS portfolio are designed to suppress the interaction of endogenous RAS with c-RAF, upstream of the KRAS, HRAS and NRAS effector pathways. 23 On November 23, 2022, we effected a 1-for-10, reverse stock split of our outstanding shares of common stock (the “Reverse Stock Split”).
All share and per share data for all periods presented in this section and the accompanying financial statements and related disclosures have been adjusted retrospectively to reflect the Reverse Stock Split.
All share and per share data for all periods presented in this Annual Report on Form 10-K have been adjusted retrospectively to reflect the Reverse Stock Split. The number of authorized shares of common stock and the par value per share remains unchanged. We do not expect to be profitable before products from our therapeutics pipeline are commercialized.
We do not expect to be profitable before products from our therapeutics pipeline are commercialized, because we foresee that research and development expenses on the therapeutics programs will significantly exceed the profits, if any, that we will generate from our diagnostics products. To experience losses while therapeutic products are still under development is, of course, typical for biotechnology companies.
To experience losses while therapeutic products are still under development is, of course, typical for biotechnology companies. Recent Developments Phase 1 Clinical Trial of QN-302 On August 1, 2023, we announced that the FDA has cleared our IND application for QN-302.
Net cash provided by financing activities for the year ended December 31, 2021 was approximately $8.4 million, due to $8.8 million of proceeds from sales of equity securities in a registered-direct offering to several institutional investors, and $0.5 million of net proceeds from warrant exercises, offset by $0.7 million in payments for offering costs related to the registered-direct offering and $0.1 million of principal payments on notes payable.
Net Cash Provided by Financing Activities Net cash provided by financing activities for the year ended December 31, 2023, was approximately $0.6 million, due to monthly redemption payments which we made in the form of stock (rather than in the form of cash) on the 2022 Debenture.
Our cancer therapeutics pipeline includes QN-302, RAS and QN-247. 28 Our lead oncology therapeutics program, QN-302, is an investigational small molecule G4-selective transcription inhibitor with strong binding affinity to G4s prevalent in cancer cells. Such binding could, by stabilizing the G4s against DNA “unwinding,” help inhibit cancer cell proliferation. QN-302 is currently undergoing Good Laboratory Practice (GLP) toxicology studies.
Overview We are an early-clinical-stage therapeutics company focused on developing treatments for adult and pediatric cancer. Our business now consists of one early-clinical-stage therapeutic program (QN-302) and one preclinical therapeutic program (Pan-RAS). Our lead program, QN-302, is an investigational small molecule G-quadruplexes (G4)-selective transcription inhibitor with strong binding affinity to G4s prevalent in cancer cells (such as pancreatic cancer).
Removed
Overview We are a diversified life sciences company focused on developing treatments for adult and pediatric cancers with potential for Orphan Drug designation, while also commercializing diagnostics.
Added
Such binding could, by stabilizing the G4s against DNA “unwinding,” help inhibit cancer cell proliferation. QN-302 is currently undergoing a Phase 1a clinical trial at START Midwest in Grand Rapids, Michigan, and HonorHealth in Scottsdale, Arizona.
Removed
Our investigational QN-247 compound binds nucleolin, a key multi-functional regulatory phosphoprotein that is overexpressed in cancer cells. Such binding could inhibit the cancer cells’ proliferation. The foundational aptamer of QN-247 is QN-165 (formerly referred to as AS1411), which the Company has deprioritized as a drug candidate for treating COVID-19 and other viral-based infectious diseases.
Added
In theory, such mechanism of action may be effective in the treatment of about one quarter of all cancers, including certain forms of pancreatic, colorectal, and lung cancers .
Removed
On May 26, 2022, we acquired 2,232,861 shares of Series A-1 Preferred Stock of NanoSynex from Alpha in exchange for 3,500,000 shares of our common stock and a prefunded warrant to purchase 3,314,641 shares of our common stock at an exercise price of $0.001 per share.
Added
Based on this clearance, we chose Translational Drug Development, LLC (“TD2”) to serve as our contract research organization to conduct a Phase 1 clinical trial in patients with advanced or metastatic solid tumors.
Removed
These warrants were subsequently exercised on September 13, 2022 and the shares of our common stock were subsequently subject to a 1 for 10 reverse split on November 23, 2022. Concurrently with this transaction, we also purchased 381,786 shares of Series B preferred stock from NanoSynex for a total purchase price of $600,000.
Added
The Phase 1 trial (NCT06086522) is designed as a multicenter, open-label, dose escalation, safety, pharmacokinetic, and pharmacodynamic study with dose expansion to evaluate safety, tolerability, and antitumor activity of QN-302 in patients with advanced solid tumors that have not responded to or that have recurred following treatment with available therapies.
Removed
The transactions resulted in our acquiring a 52.8% interest in NanoSynex. NanoSynex is a micro-biologics diagnostics company domiciled in Israel. Because our therapeutic candidates are all still in the pre-clinical development stage, our only products that are currently commercially available are the for sale FastPack System diagnostic instruments and test kits.
Added
On November 7, 2023, we announced that the first patient had been enrolled and dosed in the dose escalation (Phase 1a) portion of the study. Subject to available funding (which is, however, not all currently in hand), we anticipate that Phase 1a of the trial can be completed by the end of 2024.
Removed
Our FastPack System diagnostic instruments and test kits are sold commercially primarily in the United States, as well as certain European countries. The FastPack System menu includes a rapid, highly accurate immunoassay diagnostic testing system for cancer, men’s health, hormone function, and vitamin D status.
Added
The exact number of patients to be enrolled in the trial will depend on the observed safety profile, which will determine the number of patients per dose level, as well as the number of dose escalations required to meet the Maximum Tolerated Dose (“MTD”). Once the MTD has been established in dose escalation, dose expansion will begin.
Removed
We provide analyzers to our customers (physician offices, clinics and small hospitals) at low cost in order to increase sales volumes of higher-margin test kits. We have always utilized a “razor and blades” pricing strategy, providing analyzers to our customers (physician offices, clinics and small hospitals) at low cost in order to increase sales volumes of higher-margin test kits.
Added
Sale of Diagnostics Business On July 20, 2023, we sold all of the issued and outstanding shares of common stock of Qualigen, Inc., a wholly-owned subsidiary and the legal entity operating our FastPack™ diagnostic business, to Chembio Diagnostics, Inc. (“Chembio”), a subsidiary of Biosynex, S.A.
Removed
Through the first quarter of 2022, we relied on our diagnostics distribution partner, Sekisui, for most FastPack distribution worldwide pursuant to a distribution agreement. We maintained direct distribution for certain house accounts, including selling our total testosterone test kits to Low T, the largest men’s health group in the United States, with 40 locations.
Added
As consideration for the shares of Qualigen, Inc., we received cash payments of approximately $4.9 million, which payment is subject to post-closing adjustments. An additional $450,000 was delivered by Chembio to an escrow account to satisfy our indemnification obligations.
Removed
The Distribution Agreement with Sekisui expired on March 31, 2022, and after that date the activities previously provided by Sekisui have reverted back to us and we have recognized 100% of the revenue from the sales of our FastPack diagnostic instruments and test kits.
Added
Any amounts remaining in the escrow account that have not been offset or reserved for claims will be released to us within five business days following January 20, 2025. Following the consummation of the transaction, Qualigen, Inc. became a wholly-owned subsidiary of Chembio. Amendment and Settlement Agreement with NanoSynex Ltd.
Removed
We have licensed and technology-transferred our FastPack System technology to Yi Xin Zhen Duan Jishu (Suzhou) Ltd. for the China diagnostics market.
Added
On July 20, 2023, we entered into and effectuated the NanoSynex Amendment, by which we agreed to, among other things, forfeit 281,000 Series B Preferred Shares of NanoSynex held by us, resulting in our ownership in NanoSynex being reduced from approximately 52.8% to approximately 49.97% of the voting equity of NanoSynex.
Removed
Our consolidated financial statements do not separate our diagnostics-related activities from our therapeutics-related activities.
Added
In addition, we agreed to cancel approximately $3.0 million of promissory notes which NanoSynex had issued to us under the NanoSynex Funding Agreement, relieving NanoSynex of any repayment obligations to us with respect to such notes.
Removed
The number of authorized shares of common stock and the par value per share remains unchanged. 29 Impact of COVID-19 Pandemic The COVID-19 pandemic had, and it or similar pandemics, epidemics or infectious disease outbreaks may, in the future, have, adverse impacts on the U.S. and world economy, health care systems, personnel availability, supply chains, social and political assumptions, and capital markets.
Added
The NanoSynex Amendment superseded any NanoSynex Funding Agreement obligations to provide funding to NanoSynex, except we agreed to provide future loans as follows: (i) $560,000 on or before November 30, 2023, and (ii) $670,000 on or before March 31, 2024.

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