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Salarius Pharmaceuticals, Inc.

Salarius Pharmaceuticals, Inc.DCOY财报

Nasdaq · 医疗保健 · 药物制剂

Salarius Pharmaceuticals, Inc. is a clinical-stage biotechnology firm developing targeted therapies for rare, high-unmet-need cancers including Ewing sarcoma and pediatric solid tumors. It advances novel small molecule candidates to improve outcomes for patients with limited existing treatment options.

What changed in Salarius Pharmaceuticals, Inc.'s 10-K — 2021 vs 2022

Top changes in Salarius Pharmaceuticals, Inc.'s 2022 10-K

286 paragraphs added · 275 removed · 196 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

80 edited+39 added−36 removed135 unchanged
We have benefited from several of these incentives, including SP-2577’s orphan status designation and designation as a potential treatment for a “rare pediatric disease.” This means that if proven efficacious with a benefit-risk profile that the FDA judges to be positive and supportive of approval, SP-2577 could qualify for priority review and to receive a priority review voucher ("PRV"), although there can be no assurance that we will be able to do so.
We have benefited from several of these incentives, including SP-2577’s orphan designation and status designation as a potential treatment for a “rare pediatric disease.” This means that if proven efficacious with a benefit-risk profile that the FDA judges to be positive and supportive of approval, SP-2577 could qualify for priority review and to receive a priority review voucher ("PRV"), although there can be no assurance that we will be able to do so.
Pharmacokinetic data indicates that SP-2577 can be given at dose levels that achieve drug exposure levels in patients above where activity was demonstrated in preclinical studies. We believe that SP-2577’s manageable safety profile will allow for more flexible dosing strategies by potentially having a wide therapeutic window. This is being studied and developed in our ongoing clinical program.
Pharmacokinetic data indicates that SP-2577 can be given at dose levels that achieve drug exposure levels in patients above where activity was demonstrated in preclinical studies. We believe that SP-2577’s profile will allow for more flexible dosing strategies by potentially having a wide therapeutic window. This is being studied and developed in our ongoing clinical program.
Overview Salarius Pharmaceuticals, Inc. is a clinical-stage biopharmaceutical company focused on developing effective treatments for cancers with high, unmet medical need . Specifically, we are developing treatments for cancers caused by dysregulated gene expression, i.e., genes which are incorrectly turned on or off. We are developing two classes of drugs that address gene dysregulation: epigenetic drugs and targeted protein degraders.
Overview Salarius Pharmaceuticals, Inc. is a clinical-stage biopharmaceutical company focused on developing effective treatments for cancers with high, unmet medical need . Specifically, we are developing treatments for cancers caused by dysregulated gene expression, i.e., genes which are incorrectly turned on or off. We are developing two classes of drugs that address gene dysregulation: protein inhibitors and targeted protein degraders.
We also announced that we will be combining SP-2577 with a commonly administered 2 nd and 3 rd line regimen, topotecan and cyclophosphamide. We hope that this modification will allow us to treat patients earlier in the continuum of care, increase the potential addressable patient population, and facilitate patient access to SP-2577.
We also announced that we will be combining SP-2577 with a commonly administered 2 nd and 3 rd line regimen, topotecan and cyclophosphamide in Ewing sarcoma. We hope that this modification will allow us to treat patients earlier in the continuum of care, increase the potential addressable patient population, and facilitate patient access to SP-2577.
The Federal Food, Drug, and Cosmetic Act, and other federal and state statutes and regulations, govern, among other things, the research, development, testing, manufacture, quality control, safety, effectiveness, storage, recordkeeping, approval, labeling, promotion and marketing, distribution, post-approval monitoring and reporting, sampling and import and export of pharmaceutical products.
The Federal Food, Drug, and Cosmetic Act, the FDA’s implementing regulations, and other federal and state statutes and regulations, govern, among other things, the research, development, testing, manufacture, quality control, safety, effectiveness, storage, recordkeeping, approval, labeling, promotion and marketing, distribution, post-approval monitoring and reporting, sampling and import and export of pharmaceutical products.
Moreover, the Drug Supply Chain Security Act, imposes new obligations on manufacturers of pharmaceutical products, among others, related to product tracking and tracing, which will be phased in over several years beginning in 2016.
Moreover, the Drug Supply Chain Security Act, enacted in 2013, imposes new obligations on manufacturers of pharmaceutical products, among others, related to product tracking and tracing, which will be phased in over several years beginning in 2016.
Sehrawat, et al. in “LSD1 activates a Lethal Prostate Cancer Gene Network Independently of its Demethylase Function” with SP-2509, an analogue of SP-2577. Compared to LSD1 inhibitors in clinical development, SP-2577 binds to LSD1 in a different manner, which we hypothesizes may grant it therapeutic advantages over the competition.
Sehrawat, et al. in “LSD1 activates 14 Table of Contents a Lethal Prostate Cancer Gene Network Independently of its Demethylase Function” with SP-2509, an analogue of SP-2577. Compared to LSD1 inhibitors in clinical development, SP-2577 binds to LSD1 in a different manner, which we hypothesizes may grant it therapeutic advantages over the competition.
The FDA also may require post-marketing testing, known as Phase 4 testing, REMS or other surveillance to monitor the 18 Table of Contents effects of an approved product, or restrictions on the distribution or use of the product. In addition, quality control, drug manufacture, packaging and labeling procedures must continue to conform to cGMP after approval.
The FDA also may require post-marketing testing, known as Phase 4 testing, REMS or other surveillance to monitor the effects of an approved product, or restrictions on the distribution or use of the product. In addition, quality control, drug manufacture, packaging and labeling procedures must continue to conform to cGMP after approval.
Additionally, a product may be eligible for accelerated approval if it treats a serious or life-threatening disease or condition, provides meaningful advantage over existing treatments, and demonstrates an effect on a surrogate endpoint that is reasonably likely to predict a clinical benefit or on an intermediate clinical endpoint.
Additionally, a product may be eligible for accelerated approval under subpart H if it treats a serious or life-threatening disease or condition, provides meaningful advantage over existing treatments, and demonstrates an effect on a surrogate endpoint that is reasonably likely to predict a clinical benefit or on an intermediate clinical endpoint.
LSD1 induces a cancer phenotype through its enzymatic activity and through its role as a scaffolding protein in epigenetic complexes. LSD1 is over-expressed in 6 Table of Contents various cancers, and higher levels of LSD1 are often associated with poor prognosis in several types of cancer, making LSD1 inhibition an area of interest in cancer research.
LSD1 induces a cancer phenotype through its enzymatic activity and through its role as a scaffolding protein in epigenetic complexes. LSD1 is over-expressed in various cancers, and higher levels of LSD1 are often associated with poor prognosis in several types of cancer, making LSD1 inhibition an area of interest in cancer research.
In addition, certain state laws govern 20 Table of Contents the privacy and security of health information in certain circumstances, some of which are more stringent than HIPAA and many of which differ from each other in significant ways and may not have the same effect, thus complicating compliance efforts.
In addition, certain state laws govern the privacy and security of health information in certain circumstances, some of which are more stringent than HIPAA and many of which differ from each other in significant ways and may not have the same effect, thus complicating compliance efforts.
In addition, state and federal healthcare reform measures have 22 Table of Contents been and will be adopted in the future, any of which could limit the amounts that federal and state governments will pay for healthcare products and services, which could result in reduced demand for our products once approved or additional pricing pressures.
In addition, state and federal healthcare reform measures have been and will be adopted in the future, any of which could limit the amounts that federal and state governments will pay for healthcare products and services, which could result in reduced demand for our products once approved or additional pricing pressures.
If a complete response letter is issued, the applicant may either resubmit the NDA, addressing all of the 16 Table of Contents deficiencies identified in the complete response letter, or withdraw the application. If those deficiencies have been addressed to the FDA’s satisfaction in a resubmission of the NDA, the FDA will issue an approval letter.
If a complete response letter is issued, the applicant may either resubmit the NDA, addressing all of the deficiencies identified in the complete response letter, or withdraw the application. If those deficiencies have been addressed to the FDA’s satisfaction in a resubmission of the NDA, the FDA will issue an approval letter.
All cost related to the transaction will be immediately expensed in 2022 as acquired in-process research and development expenses since SP-3164 has not yet achieved regulatory approval and, absent obtaining such approval, has no alternative future use.
All cost related to the transaction were immediately expensed in 2022 as acquired in-process research and development expenses since SP-3164 has not yet achieved regulatory approval and, absent obtaining such approval, has no alternative future use.
Phase 1, Phase 2 and Phase 3 clinical trials may not be completed successfully within any specified period, if at all. The FDA or the sponsor may suspend a clinical trial at any time on various grounds, including a finding that the research subjects or patients are being exposed to an unacceptable health risk.
Phase 1, Phase 2 and Phase 3 clinical trials may not be completed successfully within any specified period, if at all. The FDA or the 16 Table of Contents sponsor may suspend a clinical trial at any time on various grounds, including a finding that the research subjects or patients are being exposed to an unacceptable health risk.
The conduct of the pre-clinical tests must comply with federal regulations and requirements, including GLP and the Animal Welfare Act. Before commencing the first clinical trial in humans, an IND must be submitted to the FDA, and the IND must become effective.
The conduct of the pre-clinical tests must comply with federal regulations and requirements, including GLP and the Animal Welfare Act. 15 Table of Contents Before commencing the first clinical trial in humans, an IND must be submitted to the FDA, and the IND must become effective.
In particular, the Patient Protection and Affordable Care Act, as amended, (the “ACA”) has had, and is expected to continue to have, a significant impact on the healthcare industry. The ACA was designed to expand coverage for the uninsured while at the same time containing overall healthcare costs, among other objectives.
In particular, the Patient Protection and Affordable Care Act, as amended, (the “ACA”) has had, and is expected to continue to have, a significant impact on the healthcare industry. The ACA was designed to expand coverage for the 22 Table of Contents uninsured while at the same time containing overall healthcare costs, among other objectives.
A REMS could include a medication guide, communication plan or elements to assure safe use, such as required healthcare provider or pharmacy certification, a patient registry and other safe use conditions. After the FDA evaluates the NDA and the manufacturing facilities, it issues either an approval letter or a complete response letter.
A REMS could 17 Table of Contents include a medication guide, communication plan or elements to assure safe use, such as required healthcare provider or pharmacy certification, a patient registry and other safe use conditions. After the FDA evaluates the NDA and the manufacturing facilities, it issues either an approval letter or a complete response letter.
Fast Track is a process designed by the FDA to expedite the development and review of new drugs with the potential to treat serious or life-threatening conditions 7 Table of Contents and fill unmet medical needs.
Fast Track is a process designed by the FDA to expedite the development and review of new drugs with the potential to treat serious or life-threatening conditions and fill unmet medical needs.
The federal Anti-Kickback Statute makes it illegal for any person or entity, including a prescription drug manufacturer or a party acting on its behalf to knowingly and willfully, directly or indirectly, solicit, receive, offer, or pay any remuneration that is intended to induce the referral of business, including the purchase, order, lease of any good, facility, item or service for which payment may be made under a federal healthcare program, such as Medicare or Medicaid.
The federal Anti-Kickback Statute makes it illegal for any person or entity, including a prescription drug manufacturer or a party acting on its behalf to knowingly and willfully, directly or indirectly, solicit, receive, offer, or pay any remuneration in cash or in kind that is intended to induce or reward the referral of business, including the purchase, order, or lease of any, item or service for which payment may be made under a federal healthcare program, such as Medicare or Medicaid.
Myelodysplastic syndromes can progress into Acute Myeloid Leukemia (AML) and data from our ongoing trial intent to inform development of SP-2577 in hematologic cancers (also referred to as “liquid tumors" or "blood cancer”), 8 Table of Contents including AML. The American Cancer Society estimates there were almost 20,000 new cases of AML in the US alone in 2020.
Myelodysplastic syndromes can progress into Acute Myeloid Leukemia (AML) and data from our ongoing trial could inform development of SP-2577 in hematologic cancers (also referred to as “liquid tumors" or "blood cancer”), including AML. The American Cancer Society estimates there were almost 20,000 new cases of AML in the US alone in 2020.
Patients must have histologic confirmation of Ewing sarcoma or Ewing-related sarcoma that is refractory or recurrent and must 9 Table of Contents have received one prior course of therapy for the disease. Among other inclusion criteria, patients must be 12 years or older and have a life expectancy of greater than 4 months.
Patients must have histologic confirmation of Ewing sarcoma that is refractory or recurrent and must have received one prior course of therapy for the disease. Among other inclusion criteria, patients must be 12 years or older and have a life expectancy of greater than 4 months.
The grant contract was for an amount up to $18.7 million to fund the development of LSD-1 inhibitor. The grant was subsequently amended to remove $2.6 million related to a discontinued prostate cancer program. This is a 3-year grant award which originally expired on May 31, 2019. The grant now expires on May 31, 2022.
The grant contract was for an amount up to $18.7 million to fund the development of LSD-1 inhibitor. The grant was subsequently amended to remove $2.6 million related to a discontinued prostate cancer 12 Table of Contents program. This is a 3-year grant award which originally expired on May 31, 2019. The grant now expires on May 31, 2023.
We believe that our leased facility is adequate to meet our current needs and that additional facilities will be available on commercially reasonable terms to meet our future needs. Employees and Human Capital Resources As of March 12, 2022, we had 16 full-time employees.
We believe that our leased facility is adequate to meet our current needs and that additional facilities will be available on commercially reasonable terms to meet our future needs. Employees and Human Capital Resources As of March 8, 2023, we had 12 full-time employees.
In addition to solid tumors, SP-2577 has shown promising preclinical activity in hematologic cancers. In 2021 we announced the initiation of an Investigator Initiated Trial studying SP-2577 in combination with azacitidine for the treatment of patients with myelodysplastic syndromes (MDS) or chronic myelomonocytic leukemia (CMML).
In addition to solid tumors, SP-2577 has shown promising preclinical activity in hematologic cancers. In 2021 we announced the initiation of an MD Anderson Cancer Center sponsored Investigator Initiated Trial studying SP-2577 in combination with azacitidine for the treatment of patients with myelodysplastic syndromes (MDS) or chronic myelomonocytic leukemia (CMML).
Upon commercialization of SP-2577, and if our revenue is above a specified dollar threshold, we will be required to pay 1.0% of such revenue during the revenue term until CPRIT receives an amount equal to a single digit multiple of the total grant award.
Upon commercialization of SP-2577, and if our revenue is above a specified dollar threshold, we will be required to pay up to 3%-5% of such revenue during the revenue term until CPRIT receives an amount equal to a single digit multiple of the total grant award.
If CPRIT terminates the agreement prior to the expiration due to an event of default or if we terminate the agreement, CPRIT may require us to repay some or all of the disbursed grant. DeuteRX, LLC On January 12, 2022, we entered into the ASCA with DeuteRx, LLC, pursuant to which we acquired the Purchased Assets.
If CPRIT terminates the agreement prior to the expiration due to an event of default or if we terminate the agreement, CPRIT may require us to repay some or all of the disbursed grant. DeuteRx, LLC On January 12, 2022, we entered into the ASCA with DeuteRx, LLC, pursuant to which we acquired targeted protein development portfolio.
Other Healthcare Laws Although we currently do not have any products on the market, our current and future business operations may be subject to additional healthcare regulation and enforcement by the federal government and by authorities in the states and foreign jurisdictions in which we conducts our business.
Other Healthcare Laws 20 Table of Contents Although we currently do not have any products on the market, our current and future business operations may be subject to additional healthcare regulation and enforcement by the federal government and by authorities in the states and foreign jurisdictions in which we conduct our business.
Seven of the issued patents acquired in the DeutRx Transaction have claims that cover the composition of matter of SP-3164 with a patent term expiration of January 14, 2034. Thepatents and patent applications related to SP-2577 are owned by the University of Utah Research Foundation and are exclusively licensed to us.
Transaction have claims that cover the composition of matter of SP-3164 with a patent term expiration of January 14, 2034. The patents and patent applications related to SP-2577 are owned by the University of Utah Research Foundation and are exclusively licensed to us.
The Health Insurance Portability and Accountability Act (“HIPAA”) created new federal criminal statutes that prohibit among other actions, knowingly and willfully executing, or attempting to execute, a scheme to defraud any healthcare benefit program, including private third- party payors, knowingly and willfully embezzling or stealing from a healthcare benefit program, willfully obstructing a criminal investigation of a healthcare offense, and knowingly and willfully falsifying, concealing or covering up a material fact or making any materially false, fictitious or fraudulent statement in connection with the delivery of or payment for healthcare benefits, items or services.
The healthcare fraud provisions of the Health Insurance Portability and Accountability Act (“HIPAA”) prohibit knowingly and willfully executing, or attempting to execute, a scheme to defraud any healthcare benefit program, including private third- party payors, knowingly and willfully embezzling or stealing from a healthcare benefit program, willfully obstructing a criminal investigation of a healthcare offense, and knowingly and willfully falsifying, concealing or covering up a material fact or making any materially false, fictitious or fraudulent statement in connection with the delivery of or payment for healthcare benefits, items or services.
Penalties for federal civil False Claims Act violations may include up to three times the actual damages sustained by the government, plus mandatory civil penalties of between $5,500 and $11,000 for each separate false claim, the potential for exclusion from participation in federal healthcare programs, and, although the federal False Claims Act is a civil statute, False Claims Act violations may also implicate various federal criminal statutes.
Penalties for federal civil False Claims Act violations may include up to three times the actual damages sustained by the government, plus mandatory civil penalties of between $13,508 and $27,018 for each separate false claim, the potential for exclusion from participation in federal healthcare programs, and, although the federal False Claims Act is a civil statute, False Claims Act violations may also implicate various federal criminal statutes.
In further consideration of the rights granted by the University of Utah, we agreed to pay all past patent expenses incurred in filing and prosecuting the patent application, and pay all future patent expenses incurred including filing, prosecuting, enforcing and maintaining the patent right. 10 Table of Contents Under the terms of the agreement, we may be obligated to make certain future milestone and royalty payments, including: (i) an earned royalty payment based on a single digit percentage of net sales and a required minimum annual royalty payment commencing with the third full calendar year after the first commercial sale in the U.S., Germany, France, Japan or the U.K. ranging from $10,000 to $40,000 per year which minimum payments are fully creditable towards the earned royalty payment with respect to the relevant calendar year, (ii) a sublicensee fee based on a single digit percentage of revenues received by sublicensees, (iii) milestone payments in agreed dollar amounts upon receiving regulatory approvals allowing the marketing and sale of licensed products or licensed methods relating to the patients’ rights in each of the U.S., the European Union and Japan not exceeding $150,000 in the aggregate and (iv) a milestone payment in an agreed dollar amount upon the two year anniversary of the first commercial sale of a licensed product not exceeding $1.0 million.
Under the terms of the agreement, we may be obligated to make certain future milestone and royalty payments, including: (i) an earned royalty payment based on a single digit percentage of net sales and a required minimum annual royalty payment commencing with the third full calendar year after the first commercial sale in the U.S., Germany, France, Japan or the U.K. ranging from $10,000 to $40,000 per year which minimum payments are fully creditable towards the earned royalty payment with respect to the relevant calendar year, (ii) a sublicensee fee based on a single digit percentage of revenues received by sublicensees, (iii) milestone payments in agreed dollar amounts upon receiving regulatory approvals allowing the marketing and sale of licensed products or licensed methods relating to the patients’ rights in each of the U.S., the European Union and Japan not exceeding $150,000 in the aggregate and (iv) a milestone payment in an agreed dollar amount upon the two year anniversary of the first commercial sale of a licensed product not exceeding $1.0 million.
The two most common types of protein degraders are molecular glues (MGs) and proteolysis-targeting chimeras (PROTACs). SP-3164 is a next-generation CRBN-binding MG. There are currently seven MGs in clinical development (see table below) and a few additional MGs in IND-enabling studies.
The two most common types of protein degraders are molecular glues (MGs) and proteolysis-targeting chimeras (PROTACs). SP-3164 is a next-generation CRBN-binding MG. There are several MGs in clinical development (see table below for select MGs in development) and additional compounds in IND-enabling studies.
Expand SP-2577 Market by Pursuing Large Market Indications As LSD1 can interact with over 60 regulatory proteins other than FET-fusion oncoproteins, we believe that LSD1 may also play a critical role in progression of various other cancer types.
These are the patients that we aim to help. Expand SP-2577 Market by Pursuing Large Market Indications As LSD1 can interact with over 60 regulatory proteins other than FET-fusion oncoproteins, we believe that LSD1 may also play a critical role in progression of various other cancer types.
The Purchased Assets were purchased for an aggregate purchase price of $1,500,000 and the delivery of one million (1,000,000) shares of our common stock. We also agreed to pay to Seller (i) milestone payments upon the occurrence of certain events and (ii) royalty payments.
The portfolio was purchased for an aggregate purchase price of $1,500,000 and the delivery of 40,000 shares of our common stock. We also agreed to pay to Seller (i) milestone payments upon the occurrence of certain events and (ii) royalty payments.
Among other things, HITECH makes HIPAA’s security standards directly applicable to business associates, defined as independent contractors or agents of covered entities that create, receive or obtain protected health information in connection with providing a service for or on behalf of a covered entity.
Among other things, HITECH makes HIPAA’s security standards directly applicable to business associates, defined as certain persons or entities that create, receive, maintain or transmit protected health information in connection with providing a specified service for or on behalf of a covered entity.
Our technologies have the potential to work in both liquid and solid tumors. Our current pipeline consists of two compounds: 1) seclidemstat (SP-2577), a small molecular inhibitor and 2) SP-3164, a small molecular protein degrader.
Our technologies have the potential to work in both liquid and solid tumors. Our current pipeline consists of two primary compounds: 1) SP-3164, a small molecule protein degrader, and 2) seclidemstat (SP-2577), a small molecule inhibitor. Secondary compounds are in early stages of development.
In particular, in the United States, private health insurers and other third-party payors often provide reimbursement for products and services based on the level at which the government (through the Medicare or Medicaid programs) provides reimbursement for such treatments.
Third-party payors generally decide which drugs they will cover and establish certain reimbursement levels for such drugs. In particular, in the United States, private health insurers and other third-party payors often provide reimbursement for products and services based on the level at which the government (through the Medicare or Medicaid programs) provides reimbursement for such treatments.
Targeted Protein Degradation and Competitive Differentiation The field of Targeted Protein Degradation (TPD) is rapidly growing and attracting a lot of interest from the biggest pharmaceutical companies. The two most common types of protein degraders are molecular glues (MGs) and proteolysis-targeting chimeras (PROTACs). SP-3164 is a next-generation CRBN-binding MG.
Focused Programs SP-3164 - A novel targeted protein degrader 8 Table of Contents The field of Targeted Protein Degradation (TPD) is rapidly growing and attracting a lot of interest from the biggest pharmaceutical companies. The two most common types of protein degraders are molecular glues (MGs) and proteolysis-targeting chimeras (PROTACs). SP-3164 is a next-generation cereblon-binding MG.
Under the FDA’s expanded access authority, patients who are not able 15 Table of Contents to participate in a clinical trial may be eligible for accessing investigational products, including through individual compassionate or emergency use in concert with their requesting physician.
In limited circumstances, the FDA also permits the administration of investigational drug products to patients under its expanded access regulatory authorities. Under the FDA’s expanded access authority, patients who are not able to participate in a clinical trial may be eligible for accessing investigational products, including through individual compassionate or emergency use in concert with their requesting physician.
Expedited Development and Review Programs The FDA has a Fast Track program that is intended to expedite or facilitate the process for development and review of new drug products that meet certain criteria.
Failure to do so could result in the withdrawal of marketing exclusivity for the orphan drug. Expedited Development and Review Programs The FDA has a Fast Track program that is intended to expedite or facilitate the process for development and review of new drug products that meet certain criteria.
Contemporaneous with the execution of the ASCA, the Seller and us entered into an R&D Services Agreement(the “R&D Services Agreement”), which sets forth the terms and conditions upon which Seller will provide services to us, including the implementation and performance of a Non-Clinical and Clinical Development Scope of Work.
Simultaneously with our entry into the ASCA, we and DeuteRx entered into the R&D Services Agreement, which sets forth the terms and conditions upon which DeuteRx will provide services to us, including the implementation and performance of a Non-Clinical and Clinical Development Scope of Work.
The dose-escalation stage of the Phase 1/2 trial will enroll patients aged 18 and older with MDS or CMML. Patients will receive 75 mg/m2 of azacitidine, administered intravenously (IV) or subcutaneously (SC), on days one through seven of each 28-day cycle in combination with an escalating, twice-daily dose of seclidemstat administered as an oral tablet.
Patients will receive 75 mg/m2 of azacitidine, administered intravenously (IV) or subcutaneously (SC), on days one through seven of each 28-day cycle in combination with an escalating, twice-daily dose of seclidemstat administered as an oral tablet.
If the FDA has neither commented on nor questioned the IND within this 30-day period, the clinical trial proposed in the IND may begin if all other requirements, including IRB review and approval, have been met.
A 30-day waiting period after the submission of each IND is required prior to the commencement of clinical testing in humans. If the FDA has neither commented on nor questioned the IND within this 30-day period, the clinical trial proposed in the IND may begin if all other requirements, including IRB review and approval, have been met.
In Europe, for example, a CTA must be submitted to each country’s national health authority and an independent ethics committee, much like the FDA and an IRB, respectively. Once the CTA is approved in accordance with a country’s requirements, a clinical trial may proceed in that country.
In Europe, for example, a CTA must be submitted to a single EU portal for harmonized assessment at EU level with additional ethics review on each country’s national level, much like the FDA and an IRB, respectively. Once the CTA is approved in accordance with a country’s requirements, a clinical trial may proceed in that country.
Specifically, new drug products are eligible for Fast Track 17 Table of Contents designation if they are intended to treat a serious or life-threatening disease or condition and demonstrate the potential to address unmet medical needs for the disease or condition.
Specifically, new drug products are eligible for Fast Track designation if they are intended to treat a serious or life-threatening disease or condition and demonstrate the potential to address unmet medical needs for the disease or condition. Fast Track designation applies to the combination of the product and the specific indication for which it is being studied.
Orphan drugs in Europe enjoy economic and marketing benefits, including up to 10 years of market exclusivity for the approved indication unless another applicant can show that its product is safer, more effective or otherwise clinically superior to the orphan designated product.
Orphan drugs in Europe enjoy economic and marketing benefits, including up to 10 years of market exclusivity for the approved indication unless another applicant can show that its product is safer, more effective or otherwise clinically superior to the orphan designated product. 18 Table of Contents The FDA and foreign regulators expect holders of exclusivity for orphan drugs to assure the availability of sufficient quantities of their orphan drugs to meet the needs of patients.
As a condition of accelerated approval, the FDA will require that a sponsor of a drug product subject to accelerated approval perform an adequate and well-controlled post-marketing clinical trial to confirm clinical benefit.
As a condition of accelerated approval, the FDA will require that a sponsor of a drug product subject to accelerated approval perform an adequate and well-controlled post-marketing clinical trial to confirm clinical benefit. If a sponsor fails to conduct any required post-approval trial with “due diligence” FDA may withdraw the drug from the market.
The two other LSD1 inhibitors in clinical development are irreversible inhibitors. SP-2577 has differentiated properties that may allow it to be developed in a broader range of cancer indications and in different combination regimens compared to the other LSD1 inhibitors in clinical development. Thus far, dose escalation data has demonstrated that SP-2577 has a manageable safety profile.
To our knowledge, SP-2577 is one of two reversible LSD1 inhibitors in clinical development. The three other LSD1 inhibitors in clinical development are irreversible inhibitors. SP-2577 has differentiated properties that may allow it to be developed in a broader range of cancer indications and in different combination regimens compared to the other LSD1 inhibitors in clinical development.
These included reductions to Medicare payments to providers of, on average, 2% per fiscal year, which went into effect on April 1, 2013 and, due to subsequent legislative amendments to the statute, will stay in effect through 2030, with the exception of a temporary suspension from May 1, 2020, through May 31, 2022, due to the COVID-19 pandemic.
These included reductions to Medicare payments to providers of, on average, 2% per fiscal year, which went into effect on April 1, 2013 and, due to subsequent legislative amendments to the statute, will stay in effect through 2031.
LSD1 helps drive cancer progression through demethylation of histones and by acting as a scaffolding protein within various activator and repressor complexes. According to clinicaltrials.gov, there are four targeted LSD1 inhibitors and one dual LSD1/HDAC6 inhibitor (JBI-295) in Phase 1/2 clinical development for a variety of cancer types (shown in the table below).
According to clinicaltrials.gov, there are four targeted LSD1 inhibitors and one dual LSD1/HDAC6 inhibitor (JBI-295) in Phase 1/2 clinical development for a variety of cancer types (shown in the table below).
Hematological Cancers In June 2021 we announced the initiation of an Investigator Initiated Trial studying SP-2577 in combination with azacitidine for the treatment of patients with myelodysplastic syndromes (MDS) or chronic myelomonocytic leukemia (CMML). The Phase 1/2 trial will be led by Dr. Guillermo Montalban-Bravo from the Department of Leukemia at The University of Texas MD Anderson Cancer Center.
Hematological Cancers 11 Table of Contents In June 2021 we announced the initiation of an Investigator Initiated Trial studying SP-2577 in combination with azacitidine for the treatment of patients with myelodysplastic syndromes (MDS) or chronic myelomonocytic leukemia (CMML). The Phase 1/2 trial is being led by Dr.
To offset the temporary suspension during the COVID-19 pandemic, in 2030, the sequestration will be 2.25% for the first half of the year, and 3% in the second half of the year. 21 Table of Contents Additionally, in January 2013, the American Taxpayer Relief Act of 2012 was signed into law, which, among other things, further reduced Medicare payments to several providers and increased the statute of limitations period for the government to recover overpayments to providers from three to five years.
Additionally, in January 2013, the American Taxpayer Relief Act of 2012 was signed into law, which, among other things, further reduced Medicare payments to types of several providers and increased the statute of limitations period for the government to recover overpayments to providers from three to five years.
Intellectual Property As of December 31, 2021, we had a worldwide portfolio of 71 patents and patent applications of which 64 were issued or allowed and 7 are pending applications.
Intellectual Property As of December 31, 2022, we had a SP-2577 worldwide portfolio of 71 patents and patent applications of which 64 were issued or allowed and 7 are pending applications. This portfolio includes (i) composition of matter and methods of use patents on our lead candidate, SP-2577.
To achieve this goal, our strategy consists of a two-pronged approach: 1) speed-to-market by developing SP-2577 and SP-3164 in high unmet need indications and 2) expand the market by developing SP-2577 and SP-3164 in larger market indications. Development of SP-2577 in Ewing Sarcoma Patients Ewing sarcoma is a rare pediatric cancer with a lack of treatment options. The U.S.
Program Development Our goal is to develop SP-3164 and SP-2577 for treatment of cancers while attempting to maximize return for investors. To achieve this goal, our strategy consists of a two-pronged approach: 1) speed-to-market by developing SP-3164 and SP-2577 in high unmet need indications and 2) expand the market by developing SP-3164 and SP-2577 in larger market indications.
Fast Track designation applies to the combination of the product and the specific indication for which it is being studied. The sponsor of a new drug may request that the FDA designate the drug as a Fast Track product at any time during the clinical development of the product.
The sponsor of a new drug may request that the FDA designate the drug as a Fast Track product at any time during the clinical development of the product.
Compound Name Company Main Protein Targets Indications (Phase of development) Iberdomide (CC-220) Bristol Myers Squibb (BMS) Ikaros/Aiolos (I/A) MM (Phase 2), NHL (Phase 1/2) CC-90009 BMS GSPT1, I/A MDS and AML (Phase 1*) Mezigdomide (CC-92480) BMS I/A R/R MM and ND MM (Phase 1/2) CC-99282 BMS I/A NHL (Phase 1/1b), CLL (Phase 1) CFT7455 C4 Therapeutics I/A NHL and MM (Phase 1) DKY709 Novartis Helios AST (Phase 1) BTX-1188 BioTheryX GSPT1, I/A AST, NHL and AML (Phase 1) Program Development Our goal is to develop SP-2577 and SP-3164 for treatment of cancers while attempting to maximize return for investors.
Compound Name Company Main Protein Targets Indications (Phase of development) Iberdomide (CC-220) Bristol Myers Squibb (BMS) Ikaros/Aiolos (I/A) MM (Phase 3), NHL (Phase 1/2) Mezigdomide (CC-92480) BMS I/A R/R MM and ND MM (Phase 3) CC-99282 BMS I/A NHL (Phase 1b), CLL (Phase 1b) CFT7455 C4 Therapeutics I/A NHL and MM (Phase 1) BTX-1188 BioTheryX GSPT1, I/A AST, NHL and AML (Phase 1) To the best of our knowledge, SP-3164 will be the first, deuterium- stabilized cereblon-binding drug to enter the clinic.
Practices that involve remuneration that may be alleged to be intended to induce prescribing, purchases or recommendations may be subject to scrutiny if they do not qualify for an exception or safe harbor.
Although there are a number of statutory exceptions and regulatory safe harbors protecting some common activities from prosecution, the exceptions and safe harbors are drawn narrowly. Practices that involve remuneration that may be alleged to be intended to induce prescribing, purchases or recommendations may be subject to scrutiny if they do not qualify for an exception or safe harbor.
We believe that SP-2577 is different from the three other LSD1 inhibitors that have active clinical development programs because in addition to inhibiting LSD1’s enzymatic activity, we also believe it more comprehensively inhibits LSD1’s scaffolding properties. To the best of our knowledge, SP-2577 is one of two reversible LSD1 inhibitors in clinical development.
The molecule was discovered using structure-based computational screening coupled with chemical screening and further optimization with structure-activity relationship studies. We believe that SP-2577 is different from the four other LSD1 inhibitors that have active clinical development programs because in addition to inhibiting LSD1’s enzymatic activity, we also believe it more comprehensively inhibits LSD1’s scaffolding properties.
Ewing sarcoma patients will be treated in combination with topotecan/cyclophosphamide. FET-translocated sarcoma patients will be treated with single-agent SP-2577. We have thirteen active sites enrolling patients across the United States in our Phase 1/2 trial of SP-2577 for treatment of Ewing sarcoma and FET-translocated sarcoma.
Ewing sarcoma patients will be treated in combination with topotecan/cyclophosphamide. We have sixteen sites across the United States in our Phase 1/2 trial of SP-2577 for treatment of Ewing sarcoma. In October 2022, the Company voluntarily paused new patient enrollment in its Phase 1/2 trial of seclidemstat as a treatment for Ewing sarcoma and FET-rearranged sarcomas per protocol design.
In addition, a person or entity does not need to have actual knowledge of the statute or specific intent to violate it in order to have committed a violation. Violations of this law are punishable by up to five years in prison, and can also result in criminal fines, civil money penalties and exclusion from participation in federal healthcare programs.
Violations of this law are punishable by up to ten years in prison, and can also result in criminal fines, civil money penalties and exclusion from participation in federal healthcare programs.
SP-3164 degrades transcription factors IKZF1 and IKZF3, along with other proteins, resulting in both direct anti-cancer activity and immune-modulating properties. SP-3164 has activity in both hematologic and solid tumors and is currently in IND-enabling studies. Targeted Protein Degradation The field of Targeted Protein Degradation (TPD) is rapidly growing and attracting a lot of interest from the biggest pharmaceutical companies.
SP-3164 degrades transcription factors IKZF1 (Ikaros) and IKZF3 (Aiolos), along with other proteins, resulting in both direct anti-cancer activity and immune-modulating properties. SP-3164 has potential in both hematologic and solid tumors and is currently in IND-enabling studies. In preclincial studies, SP-3164 demonstrated more efficient and robust degradation of Ikaros/Aiolos compared to lenalidomide and pomalidomide.
In addition to patent protection, we seek to rely on trade secret protection, trademark protection and know-how to expand our proprietary position around our chemistry, technology and other discoveries and inventions that we consider important to our business.
As of December 31, 2022 the targeted degradation patent portfolio consisted of 5 patent families with 13 granted patents and 4 pending applications acquired in the DeuteRx Transaction. 13 Table of Contents In addition to patent protection, we seek to rely on trade secret protection, trademark protection and know-how to expand our proprietary position around our chemistry, technology and other discoveries and inventions that we consider important to our business.
The principal purposes of our equity incentive plans are to attract, retain and reward personnel through the granting of stock-based compensation awards, in order to increase stockholder value and the success of our company by motivating such individuals to perform to the best of their abilities and achieve our objectives.
The principal purposes of our equity incentive plans are to attract, retain and reward personnel through the granting of stock-based compensation awards, in order to increase stockholder value and the success of our company by motivating such individuals to perform to the best of their abilities and achieve our objectives. 24 Table of Contents Legal Proceedings We are not currently a party to any legal proceedings the outcome of which we believe, if determined adversely to us, would individually or in the aggregate, have a material adverse effect on our business, financial condition, or results of operations.
Several courts have interpreted the statute’s intent requirement to mean that if any one purpose of an arrangement involving remuneration is to induce referrals of federal healthcare covered business, the Anti-Kickback Statute has been violated.
Several courts have found that the Anti-Kickback Statute may be violated if any one purpose of an arrangement involving remuneration is to induce referrals of federal healthcare program business. In addition, liability may be established without actual knowledge of the statute or specific intent to violate it.
Coverage and Reimbursement Sales of our product candidates, once approved, will depend, in part, on the extent to which the costs of our products will be covered by third-party payors, such as government health programs, private health insurers and managed care organizations. Third-party payors generally decide which drugs they will cover and establish certain reimbursement levels for such drugs.
The implementation of cost containment measures or other healthcare reforms may prevent us from being able to generate revenues, attain profitability, or successfully commercialize our products. 23 Table of Contents Coverage and Reimbursement Sales of our product candidates, once approved, will depend, in part, on the extent to which the costs of our products will be covered by third-party payors, such as government health programs, private health insurers and managed care organizations.
Further, we seek trademark protection in the United States and internationally where available and when we deem appropriate. 12 Table of Contents Competition SP-2577: LSD1 Inhibition and Competitive Differentiation LSD1 is a widely published epigenetic target and has attracted interest from several large pharmaceutical companies.
Further, we seek trademark protection in the United States and internationally where available and when we deem appropriate. Competition SP-3164: Targeted Protein Degradation and Competitive Differentiation The field of Targeted Protein Degradation (TPD) is rapidly growing and attracting a lot of interest from the biggest pharmaceutical companies.
Even if we receive Fast Track or Breakthrough designations for its product candidates, the FDA may later decide that its product candidates no longer meet the conditions for qualification. In addition, these designations may not provide us with a material commercial advantage. Post-Approval Requirements Once an NDA is approved, a product is subject to extensive continuing post-approval requirements.
Even if we receive Fast Track or Breakthrough designations for its product candidates, the FDA may later decide that its product candidates no longer meet the conditions for qualification.
To further justify this hypothesis, we compared the ability of SP-2577 and an irreversible LSD1 inhibitor, specifically GSK-LSD1 (analogue to GSK’s former clinical candidate), to affect cancer cell growth in vitro. SP-2577 was able to better inhibit cell growth across 32 cancer cell types compared to GSK-LSD1.
To further justify this hypothesis, we compared the affect of SP-2577, GSK-LSD1 (analogue to GSK's former clinical candidate), CC-90011 (Celgene's reversible, enzymatic inhibiting clinical candidate), and ORY-1001 (Oryzon's irreversible, enzymatic-inhibiting clinical candidate) on cell viability in vitro.
We expect that the ACA, as well as other healthcare reform measures that have been adopted and may be adopted in the future, may result in more rigorous coverage criteria and in additional downward pressure on the price that we may receive for our products, if commercialized, and could seriously harm our future revenues.
It is possible that the ACA, as currently enacted or as may be amended in the future, as well as other healthcare reform measures, may result in more rigorous coverage criteria and less favorable payment methodologies, or other downward pressure on the price that we may receive for any approved product.
SP-3164 SP-3164 is a next-generation cereblon (CRBN) binding molecular glue. Molecular glues are small molecules that commandeer the body’s normal protein degradation processes by causing proteins to stick to one another thereby inducing selective degradation of cancer-causing proteins.
The first generation MGs, lenalidomide (Revlimid®) and pomalidomide (Pomylast®), have had great success in treating hematological malignancies. MGs are small molecules that commandeer the body’s normal protein degradation processes by causing proteins to stick to one another thereby inducing selective degradation of cancer-causing proteins.
Therefore, because SP-3164 is the stabilized S-enantiomer, it has the potential to show improved therapy and safety over avadomide. This was demonstrated in early preclinical mouse models of multiple myeloma. In addition to having a clear development path in hematological cancers, we believe SP-3164 also has potential in solid tumors.
Therefore, because SP-3164 is the stabilized S- 9 Table of Contents enantiomer, it has the potential to show improved therapy and safety over avadomide. SP-3164's potential has been demonstrated in in vitro studies and in preclinical mouse models of lymphoma and multiple myeloma. SP-3164 treatment showed robust anticancer activity in cells and tumored mouse models.
The Anti-Kickback Statute has been interpreted to apply to arrangements between pharmaceutical manufacturers on one hand and prescribers, purchasers, formulary managers and beneficiaries on the other. 19 Table of Contents Although there are a number of statutory exceptions and regulatory safe harbors protecting some common activities from prosecution, the exceptions and safe harbors are drawn narrowly.
The term “remuneration” has been broadly interpreted to include anything of value. The Anti-Kickback Statute has been interpreted to apply to arrangements between pharmaceutical manufacturers on one hand and prescribers, purchasers, formulary managers and beneficiaries on the other.
Clinical Trials Ewing Sarcoma and Ewing-Related Sarcoma We are conducting a multi-site, open-label Phase 1/2 trial of SP-2577 for treatment of patients with relapsed/refractory Ewing sarcoma or Ewing-related sarcoma (also referred to as FET-translocated sarcoma).
These works have sparked interest in combining LSD1 inhibitors with checkpoint inhibitors. 10 Table of Contents The following figure lists our programs and their respective stages of development: Clinical Trials Ewing Sarcoma We are conducting a multi-site, open-label Phase 1/2 trial of SP-2577 for treatment of patients with relapsed/refractory Ewing sarcoma.
Any reduction in reimbursement from Medicare, Medicaid, or other government programs may result in a similar reduction in payments from private payors. The implementation of cost containment measures or other healthcare reforms may prevent us from being able to generate revenues, attain profitability, or successfully commercialize our products.
Any reduction in reimbursement from Medicare, Medicaid, or other government programs may result in a similar reduction or restriction in payments from private payors.
Government Regulation and Product Approvals United States Government Regulation In the United States, pharmaceutical products are subject to extensive regulation by the FDA.
SP-2577 was able to better inhibit cell growth across 32 cancer cell types compared to GSK-LSD1, 20 cell types compared to CC-90011, and 40 cell lines compared to ORY-1001. Government Regulation and Product Approvals United States Government Regulation In the United States, pharmaceutical products are subject to extensive regulation by the FDA.
Furthermore, compared to MGs currently on the market including Revlimid® and Pomalyst®, SP-3164 has potential to show a more robust degradation of Ikaros and Aiolos, improved immunomodulatory effects, and differential profile of proteins degraded, based on avadomide data.
Based on preclinical studies, SP-3164 may have advantageous pharmacokinetic properties that could increase tolerability. Compared to MGs currently on the market including Revlimid® and Pomalyst®, SP-3164 showed more robust degradation of Ikaros and Aiolos and resulted in improved tumor growth inhibition in mouse models.
A member of the Company’s Board of Directors also serves as a consultant to the Seller and is employed by an affiliate of the Seller. 11 Table of Contents Simultaneously with our entry into the ASCA, we and DeuteRX entered into the R&D Services Agreement, which sets forth the terms and conditions upon which DeuteRx will provide services to us, including the implementation and performance of a Non-Clinical and Clinical Development Scope of Work.
A member of the Company’s Board of Directors also serves as a consultant to the Seller and is employed by an affiliate of the Seller.
The federal civil False Claims Act prohibits, among other things, any person or entity from knowingly presenting, or causing to be presented, for payment to, or approval by, federal programs, including Medicare and Medicaid, claims for items or services, including drugs, that are false or fraudulent or not provided as claimed.
The federal civil False Claims Act, prohibits, among other things, individuals or entities from knowingly presenting, or causing to be presented, a false or fraudulent claim for payment of government funds or knowingly making, using or causing to be made or used, a false record or statement material to an obligation to pay money to the government or knowingly concealing or knowingly and improperly avoiding, decreasing or concealing an obligation to pay money to the federal government.
We currently employs internal resources and third-party consultants to manage our manufacturing contractors. Sales and Marketing We have not yet defined our sales, marketing or product distribution strategy for SP-2577 or any of our other product candidates because our product candidates are still in pre-clinical or early-stage clinical development.
Manufacturing, Sales and Marketing The Company currently has no manufacturing facilities, nor does it have a sales and marketing organization because our product candidates are still in preclinical or early-stage clinical development.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Collaborations may pose a number of risks, including: • collaborators often have significant discretion in determining the efforts and resources that they will apply to the collaboration, and may not commit sufficient resources to the development, marketing or commercialization of the product or products that are subject to the collaboration; • collaborators may not perform their obligations as expected; • any such collaboration may significantly limit our share of potential future profits from the associated program, and may require us to relinquish potentially valuable rights to our current product candidates, potential products or proprietary technologies or grant licenses on terms that are not favorable to us; • collaborators may cease to devote resources to the development or commercialization of our product candidates if the collaborators view our product candidates as competitive with their own products or product candidates; 46 Table of Contents • disagreements with collaborators, including disagreements over proprietary rights, contract interpretation or the course of development, might cause delays or termination of the development or commercialization of product candidates, and might result in legal proceedings, which would be time consuming, distracting and expensive; • collaborators may be impacted by changes in their strategic focus or available funding, or business combinations involving them, which could cause them to divert resources away from the collaboration; • collaborators may infringe the intellectual property rights of third parties, which may expose us to litigation and potential liability; • the collaborations may not result in us achieving revenues to justify such transactions; and • collaborations may be terminated and, if terminated, may result in a need for us to raise additional capital to pursue further development or commercialization of the applicable product candidate.
Collaborations may pose a number of risks, including: • collaborators often have significant discretion in determining the efforts and resources that they will apply to the collaboration, and may not commit sufficient resources to the development, marketing or commercialization of the product or products that are subject to the collaboration; • collaborators may not perform their obligations as expected; • any such collaboration may significantly limit our share of potential future profits from the associated program, and may require us to relinquish potentially valuable rights to our current product candidates, potential products or proprietary technologies or grant licenses on terms that are not favorable to us; 48 Table of Contents • collaborators may cease to devote resources to the development or commercialization of our product candidates if the collaborators view our product candidates as competitive with their own products or product candidates; • disagreements with collaborators, including disagreements over proprietary rights, contract interpretation or the course of development, might cause delays or termination of the development or commercialization of product candidates, and might result in legal proceedings, which would be time consuming, distracting and expensive; • collaborators may be impacted by changes in their strategic focus or available funding, or business combinations involving them, which could cause them to divert resources away from the collaboration; • collaborators may infringe the intellectual property rights of third parties, which may expose us to litigation and potential liability; • the collaborations may not result in us achieving revenues to justify such transactions; and • collaborations may be terminated and, if terminated, may result in a need for us to raise additional capital to pursue further development or commercialization of the applicable product candidate.
Any product liability claim brought against us, with or without merit, could result in: • withdrawal of clinical trial volunteers, investigators, patients or trial sites or limitations on approved indications; • the inability to commercialize, or if commercialized, decreased demand for, our product candidates; • if commercialized, product recalls, withdrawals of labeling, marketing or promotional restrictions or the need for product modification; • initiation of investigations by regulators; • loss of revenues; 29 Table of Contents • substantial costs of litigation, including monetary awards to patients or other claimants; • liabilities that substantially exceed our product liability insurance, which we would then be required to pay ourself; • an increase in our product liability insurance rates or the inability to maintain insurance coverage in the future on acceptable terms, if at all; • the diversion of management’s attention from our business; and • damage to our reputation and the reputation of our products and our technology.
Any product liability claim brought against us, with or without merit, could result in: 32 Table of Contents • withdrawal of clinical trial volunteers, investigators, patients or trial sites or limitations on approved indications; • the inability to commercialize, or if commercialized, decreased demand for, our product candidates; • if commercialized, product recalls, withdrawals of labeling, marketing or promotional restrictions or the need for product modification; • initiation of investigations by regulators; • loss of revenues; • substantial costs of litigation, including monetary awards to patients or other claimants; • liabilities that substantially exceed our product liability insurance, which we would then be required to pay ourself; • an increase in our product liability insurance rates or the inability to maintain insurance coverage in the future on acceptable terms, if at all; • the diversion of management’s attention from our business; and • damage to our reputation and the reputation of our products and our technology.
In addition, our reliance on third-party manufacturers exposes us to the following additional risks: • We may be unable to identify manufacturers on acceptable terms or at all; • Our third-party manufacturers might be unable to timely formulate and manufacture our product or produce the quantity and quality required to meet our clinical and commercial needs, if any; • contract manufacturers may not be able to execute our manufacturing procedures appropriately; • Our future third-party manufacturers may not perform as agreed or may not remain in the contract manufacturing business for the time required to supply our clinical trials or to successfully produce, store and distribute our products; • manufacturers are subject to ongoing periodic unannounced inspection by the FDA and corresponding state agencies to ensure strict compliance with cGMPs and other government regulations and corresponding 45 Table of Contents foreign standards.
In addition, our reliance on third-party manufacturers exposes us to the following additional risks: • We may be unable to identify manufacturers on acceptable terms or at all; • Our third-party manufacturers might be unable to timely formulate and manufacture our product or produce the quantity and quality required to meet our clinical and commercial needs, if any; • contract manufacturers may not be able to execute our manufacturing procedures appropriately; • Our future third-party manufacturers may not perform as agreed or may not remain in the contract manufacturing business for the time required to supply our clinical trials or to successfully produce, store and distribute our products; 47 Table of Contents • manufacturers are subject to ongoing periodic unannounced inspection by the FDA and corresponding state agencies to ensure strict compliance with cGMPs and other government regulations and corresponding foreign standards.
Our research programs or licensing efforts may fail to yield additional product candidates for clinical development and commercialization for a number of reasons, including but not limited to the following: • Our research or business development methodology or search criteria and process may be unsuccessful in identifying potential product candidates; • We may not be able or willing to assemble sufficient resources to acquire or discover additional product candidates; • our product candidates may not succeed in pre-clinical or clinical testing; • our potential product candidates may be shown to have harmful side effects or may have other characteristics that may make the products unmarketable or unlikely to receive marketing approval; • competitors may develop alternatives that render our product candidates obsolete or less attractive; • product candidates we develop may be covered by third parties’ patents or other exclusive rights; • the market for a product candidate may change during our program so that such a product may become unreasonable to continue to develop; • a product candidate may not be capable of being produced in commercial quantities at an acceptable cost, or at all; and • a product candidate may not be accepted as safe and effective by patients, the medical community, or third-party payors.
Our research programs or licensing efforts may fail to yield additional product candidates for clinical development and commercialization for a number of reasons, including but not limited to the following: • Our research or business development methodology or search criteria and process may be unsuccessful in identifying potential product candidates; • We may not be able or willing to assemble sufficient resources to acquire or discover additional product candidates; 51 Table of Contents • our product candidates may not succeed in pre-clinical or clinical testing; • our potential product candidates may be shown to have harmful side effects or may have other characteristics that may make the products unmarketable or unlikely to receive marketing approval; • competitors may develop alternatives that render our product candidates obsolete or less attractive; • product candidates we develop may be covered by third parties’ patents or other exclusive rights; • the market for a product candidate may change during our program so that such a product may become unreasonable to continue to develop; • a product candidate may not be capable of being produced in commercial quantities at an acceptable cost, or at all; and • a product candidate may not be accepted as safe and effective by patients, the medical community, or third-party payors.
Our ability to generate future revenue from product sales depends heavily on our success in many areas, including but not limited to: • completing research and development of our product candidates; • obtaining regulatory and marketing approvals for our product candidates; • manufacturing product candidates and establishing and maintaining supply and manufacturing relationships with third parties that are commercially feasible, meet regulatory requirements and our supply needs in sufficient quantities to meet market demand for our product candidates, if approved; • marketing, launching and commercializing product candidates for which we obtain regulatory and marketing approval, either directly or with a collaborator or distributor; • gaining market acceptance of our product candidates as treatment options; • addressing any competing products; • protecting and enforcing our intellectual property rights, including patents, trade secrets, and know-how; • negotiating favorable terms in any collaboration, licensing, or other arrangements into which we may enter; • obtaining reimbursement or pricing for our product candidates that supports profitability; and 31 Table of Contents • attracting, hiring, and retaining qualified personnel.
Our ability to generate future revenue from product sales depends heavily on our success in many areas, including but not limited to: • completing research and development of our product candidates; • obtaining regulatory and marketing approvals for our product candidates; • manufacturing product candidates and establishing and maintaining supply and manufacturing relationships with third parties that are commercially feasible, meet regulatory requirements and our supply needs in sufficient quantities to meet market demand for our product candidates, if approved; • marketing, launching and commercializing product candidates for which we obtain regulatory and marketing approval, either directly or with a collaborator or distributor; • gaining market acceptance of our product candidates as treatment options; • addressing any competing products; • protecting and enforcing our intellectual property rights, including patents, trade secrets, and know-how; • negotiating favorable terms in any collaboration, licensing, or other arrangements into which we may enter; • obtaining reimbursement or pricing for our product candidates that supports profitability; and • attracting, hiring, and retaining qualified personnel.
Factors that may inhibit our efforts to commercialize our products on our own include: • our inability to recruit, train and retain adequate numbers of effective sales and marketing personnel; • the inability of sales personnel to obtain access to physicians; 47 Table of Contents • the lack of adequate numbers of physicians to prescribe any future products; • the lack of complementary products to be offered by sales personnel, which may put us at a competitive disadvantage relative to companies with more extensive product lines; and • unforeseen costs and expenses associated with creating an independent sales and marketing organization If commercialization collaborators do not commit sufficient resources to commercialize our future products and we are unable to develop the necessary marketing and sales capabilities on our own, we will be unable to generate sufficient product revenue to sustain or grow our business.
Factors that may inhibit our efforts to commercialize our products on our own include: • our inability to recruit, train and retain adequate numbers of effective sales and marketing personnel; • the inability of sales personnel to obtain access to physicians; • the lack of adequate numbers of physicians to prescribe any future products; • the lack of complementary products to be offered by sales personnel, which may put us at a competitive disadvantage relative to companies with more extensive product lines; and • unforeseen costs and expenses associated with creating an independent sales and marketing organization If commercialization collaborators do not commit sufficient resources to commercialize our future products and we are unable to develop the necessary marketing and sales capabilities on our own, we will be unable to generate sufficient product revenue to sustain or grow our business.
Arthur employment agreement contains a non-compete provision for a period of one year following the termination of his employment agreement, he could leave our employment at any time, as he is an “at will” employee. Recruiting and retaining other qualified employees, consultants, and advisors for our business, including scientific and technical personnel, will also be critical to our success.
Arthur's employment agreement contains a non-compete provision for a period of one year following the termination of his employment agreement, he could leave our employment at any time, as he is an “at will” employee. Recruiting and retaining other qualified employees, consultants, and advisors for our business, including scientific and technical personnel, will also be critical to our success.
If we fail to comply with applicable regulatory requirements, a regulatory agency or enforcement authority may, among other things: • issue fines, untitled letters or warning letters; • impose civil or criminal penalties; • suspend or withdraw regulatory approval; • suspend any of our ongoing clinical trials; • refuse to approve pending applications or supplements to approved applications submitted by us; • product seizure or detention or refusal to permit the import or export of products; • impose restrictions on our operations, including closing our contract manufacturers’ facilities; or • impose restrictions on the marketing or manufacturing of the product, withdrawal of the product from the market or voluntary or mandatory product recalls.
If we fail to comply with applicable regulatory requirements, a regulatory agency or enforcement authority may, among other things: • issue fines, untitled letters or warning letters; • impose civil or criminal penalties; • suspend or withdraw regulatory approval; 36 Table of Contents • suspend any of our ongoing clinical trials; • refuse to approve pending applications or supplements to approved applications submitted by us; • product seizure or detention or refusal to permit the import or export of products; • impose restrictions on our operations, including closing our contract manufacturers’ facilities; or • impose restrictions on the marketing or manufacturing of the product, withdrawal of the product from the market or voluntary or mandatory product recalls.
Our auditor’s report on our financial statements for the year ended December 31, 2021, includes an explanatory paragraph related to the existence of substantial doubt about our ability to continue as a going concern. We are a clinical development-stage biopharmaceutical company with a limited operating history.
Our auditor’s report on our financial statements for the year ended December 31, 2022, includes an explanatory paragraph related to the existence of substantial doubt about our ability to continue as a going concern. We are a clinical development-stage biopharmaceutical company with a limited operating history.
In addition, other legislative changes have been proposed and adopted in the United States since the ACA was enacted and we expect that additional state and federal healthcare reform measures will be adopted in the future, 35 Table of Contents any of which could result in more rigorous coverage criteria and in additional downward pressure on the price that we receive for our product candidates, if commercialized, and could seriously harm our future revenues.
In addition, other legislative changes have been proposed and adopted in the United States since the ACA was enacted and we expect that additional state and federal healthcare reform measures will be adopted in the future, any of which could result in more rigorous coverage criteria and in additional downward pressure on the price that we receive for our product candidates, if commercialized, and could seriously harm our future revenues.
Risks Related to our Financial Condition and Capital Requirements We have incurred losses since our inception, have a limited operating history on which to assess our business, and anticipate that we will continue to incur significant losses for the foreseeable future which together with our limited working capital, and lack of revenue from product sales, raises substantial doubt about our financial viability and as to whether we will be able to continue as a going concern.
Risks Related to our Ability to Continue as a Going Concern We have incurred losses since our inception, have a limited operating history on which to assess our business, and anticipate that we will continue to incur significant losses for the foreseeable future which together with our limited working capital, and lack of revenue from product sales, raises substantial doubt about our financial viability and as to whether we will be able to continue as a going concern.
Patient enrollment is affected by several factors, including: • severity of the disease under investigation; • design of the trial protocol; • size of the patient population; • perceived risks and benefits of the product candidate being tested; • willingness or availability of patients to participate in our clinical trials (including due to the COVID‑19 pandemic); • proximity and availability of clinical trial sites for prospective patients; • our ability to recruit clinical trial investigators with appropriate competencies and experience; • availability of competing vaccines and/or therapies and related clinical trials; • efforts to facilitate timely enrollment in clinical trials; • our ability to obtain and maintain patient consents; • patient referral practices of physicians; and • ability to monitor patients adequately during and after treatment.
Patient enrollment is affected by several factors, including: • severity of the disease under investigation; • design of the trial protocol; • size of the patient population; • perceived risks and benefits of the product candidate being tested; • willingness or availability of patients to participate in our clinical trials; • proximity and availability of clinical trial sites for prospective patients; • our ability to recruit clinical trial investigators with appropriate competencies and experience; • availability of competing vaccines and/or therapies and related clinical trials; • efforts to facilitate timely enrollment in clinical trials; • our ability to obtain and maintain patient consents; • patient referral practices of physicians; and • ability to monitor patients adequately during and after treatment.
Failure to receive additional government grants in the future may substantially harm our business. 32 Table of Contents Risks Related to Regulatory Approval of our Product Candidates and Other Legal Compliance Matters We may seek breakthrough therapy designation by the FDA for one or more of our product candidates, but it might not receive such designation.
Failure to receive additional government grants in the future may substantially harm our business. Risks Related to Regulatory Approval of our Product Candidates and Other Legal Compliance Matters We may seek breakthrough therapy designation by the FDA for one or more of our product candidates, but it might not receive such designation.
The amount of our future net losses will depend, in part, on the rate of our future expenditures and ability to obtain funding through equity or debt financings, strategic collaborations, or grants. Biopharmaceutical product development is a highly speculative and competitive undertaking and involves a substantial degree of risk.
The amount of our future net losses will depend, in part, on the rate of our future expenditures and ability to obtain funding through equity or debt financings, 25 Table of Contents strategic collaborations, or grants. Biopharmaceutical product development is a highly speculative and competitive undertaking and involves a substantial degree of risk.
If we or any of our CROs or vendors fail to comply with applicable laws, regulations and guidelines, the results generated in our clinical trials may be deemed unreliable and the FDA or comparable foreign regulatory authorities may require us to perform additional clinical trials before approving our marketing applications.
If we or any of our CROs or vendors fail to comply with applicable laws, regulations and guidelines, the results generated in our clinical trials may be deemed unreliable and the FDA or comparable foreign regulatory authorities may require 46 Table of Contents us to perform additional clinical trials before approving our marketing applications.
Sales of a substantial number of our shares of common stock in the public markets, or the perception that such sales could occur, including from the exercise of warrants or sales of common stock issuable thereunder, could cause the market price of our shares of common stock to decline and impair our ability to raise capital through the sale of additional equity securities.
Sales of a substantial number of our shares of common stock in the public markets, or the perception that such sales could occur, including from the exercise of warrants or sales of common stock issuable thereunder, could 53 Table of Contents cause the market price of our shares of common stock to decline and impair our ability to raise capital through the sale of additional equity securities.
We may not be able to identify, recruit, and enroll a sufficient number of patients to complete our clinical trials in a timely manner because of the perceived risks and benefits of the product candidate under study, the availability and efficacy of competing therapies and clinical trials, and the willingness of physicians to participate in our planned clinical trials.
We may not be able to identify, recruit, and enroll a sufficient number of patients to complete our clinical trials in a timely manner because of the perceived risks and benefits of the product candidate under study, the availability and efficacy of competing therapies and clinical trials, 31 Table of Contents and the willingness of physicians to participate in our planned clinical trials.
The process of reviewing and approving a drug is time-consuming, unpredictable, and dependent on a variety of factors outside of our control. The FDA and corresponding regulatory authorities in other jurisdictions have a significant amount of discretion in deciding whether or not to approve a marketing application.
The process of reviewing and approving a drug is time-consuming, unpredictable, and dependent on a variety of factors outside of our control. The FDA and corresponding regulatory authorities in other jurisdictions have a 35 Table of Contents significant amount of discretion in deciding whether or not to approve a marketing application.
Our future financial performance and our ability to commercialize product candidates and compete effectively will depend, in part, on our ability to effectively manage any future growth. 51 Table of Contents Risks Related to Our Common Stock The terms of the warrants could impede our ability to enter into certain transactions or obtain additional financing.
Our future financial performance and our ability to commercialize product candidates and compete effectively will depend, in part, on our ability to effectively manage any future growth. Risks Related to Our Common Stock The terms of the warrants could impede our ability to enter into certain transactions or obtain additional financing.
Even if we obtain adequate market share for our product candidates, because the potential 30 Table of Contents markets in which our product candidates may ultimately receive regulatory approval could be very small, we may never become profitable despite obtaining such market share and acceptance of our products.
Even if we obtain adequate market share for our product candidates, because the potential markets in which our product candidates may ultimately receive regulatory approval could be very small, we may never become profitable despite obtaining such market share and acceptance of our products.
Even if patents covering our product candidates are obtained, once the patent life has expired for a product candidate, we may be open to competition from generic medications. In addition, upon issuance in the United States any patent 39 Table of Contents term can be adjusted based on specified delays caused by the applicant(s) or the U.S.
Even if patents covering our product candidates are obtained, once the patent life has expired for a product candidate, we may be open to competition from generic medications. In addition, upon issuance in the United States any patent term can be adjusted based on specified delays caused by the applicant(s) or the U.S.
General Risks Failure in our information technology and storage systems could significantly disrupt the operation of our business and/or lead to potential large liabilities. 52 Table of Contents Our ability to execute our business plan and maintain operations depends on the continued and uninterrupted performance of our information technology systems.
General Risks Failure in our information technology and storage systems could significantly disrupt the operation of our business and/or lead to potential large liabilities. Our ability to execute our business plan and maintain operations depends on the continued and uninterrupted performance of our information technology systems.
We cannot be assured that our CROs and other vendors will meet these requirements, or that upon inspection by any regulatory authority, such 44 Table of Contents regulatory authority will determine that efforts, including any of our clinical trials, comply with applicable requirements.
We cannot be assured that our CROs and other vendors will meet these requirements, or that upon inspection by any regulatory authority, such regulatory authority will determine that efforts, including any of our clinical trials, comply with applicable requirements.
Patent and Trademark Office (“USPTO”). Patent term extensions under the Hatch-Waxman Act in the United States and under supplementary protection certificates in Europe may be available to extend the patent or data exclusivity terms of our product candidates.
Patent term extensions under the Hatch-Waxman Act in the United States and under supplementary protection certificates in Europe may be available to extend the patent or data exclusivity terms of our product candidates.
Any of these scenarios could materially harm the commercial prospects of a product candidate, and our operations will be adversely effected.
Any of these scenarios could materially harm the commercial prospects of a product candidate, and our operations will be adversely affected.
Private payors tend to follow the coverage reimbursement policies established by CMS 50 Table of Contents to a substantial degree. It is difficult to predict what CMS will decide with respect to reimbursement for novel product candidates such as our and what reimbursement codes our product candidates may receive if approved.
Private payors tend to follow the coverage reimbursement policies established by CMS to a substantial degree. It is difficult to predict what CMS will decide with respect to reimbursement for novel product candidates such as our and what reimbursement codes our product candidates may receive if approved.
Our net losses were $12.8 million and $7.7 million for each of the years ended December 31, 2021 and December 31, 2020. We will continue to require substantial additional capital to continue our clinical development and potential commercialization activities. Accordingly, we will need to raise substantial additional capital to continue to fund our operations.
Our net losses were $31.6 million and $12.8 million for each of the years ended December 31, 2022 and December 31, 2021. We will continue to require substantial additional capital to continue our clinical development and potential commercialization activities. Accordingly, we will need to raise substantial additional capital to continue to fund our operations.
Our resource 49 Table of Contents allocation decisions may cause us to fail to capitalize on viable commercial products or profitable market opportunities. Our spending on current and future discovery and preclinical development programs and product candidates for specific indications may not yield any commercially viable products.
Our resource allocation decisions may cause us to fail to capitalize on viable commercial products or profitable market opportunities. Our spending on current and future discovery and preclinical development programs and product candidates for specific indications may not yield any commercially viable products.
If we obtain FDA approval for any of our product candidates and begins commercializing those products in the United States, our operations may be subject to various federal and state fraud and abuse laws, including, without limitation, the federal Anti-Kickback Statute, the federal False Claims Act, and physician sunshine laws and regulations.
If we obtain FDA approval for any of our product candidates and begin commercializing those products in the United States, our operations may be subject to various federal and state fraud and abuse laws, including, without limitation, the federal Anti-Kickback Statute, the federal False Claims Act, and federal and state transparency laws and regulations.
We may not have the right to prohibit the U.S. government from using specified technologies developed by us, and we may not be able to prohibit third-party companies, including our competitors, from using those technologies in 37 Table of Contents providing products and services to the U.S. government.
We may not have the right to prohibit the U.S. government from using specified technologies developed by us, and we may not be able to prohibit third-party companies, including our competitors, from using those technologies in providing products and services to the U.S. government.
Events that may prevent successful or timely completion of clinical development include but are not limited to: • the inability to generate satisfactory pre-clinical, toxicology, or other in vivo or in vitro data or diagnostics to support the initiation or continuation of our clinical trials; • delays in reaching agreement on acceptable terms with clinical research organizations, (“CROs”), and clinical trial sites, the terms of which can be subject to extensive negotiation and may vary significantly among different CROs and clinical trial sites; • delays in obtaining required IRB approval at each clinical trial site; • failure to permit the conduct of a clinical trial by regulatory authorities, after review of an investigational new drug or equivalent foreign application or amendment; • delays and inability in recruiting qualified patients in our clinical trials; • imposition of a clinical hold by regulatory agencies for any reason, including safety concerns raised by other clinical trials of similar product candidates that may reflect an unacceptable risk with the patient population, technology platform, product stability or after an inspection of clinical operations or trial sites; • failure by clinical sites or CROs or other third parties to adhere to clinical trial requirements; • failure by our clinical sites, CROs or other third parties to perform in accordance with contractual obligations or the regulatory requirements of the FDA, or applicable foreign regulatory guidelines; • patients dropping out of our clinical trials; • the number of patients required for our clinical trials may be larger than we anticipate, enrollment in our clinical trials may be slower than we anticipate or participants may, including as a result of the COVID 19 pandemic, withdraw from our clinical trials, fail to complete dosing or fail to return for post-treatment follow-up at higher rates than we anticipate, any of which could result in significant delay; • withdrawal of clinical trial sites from our clinical trials, including as a result of changing standards of care or the ineligibility of a site to participate; • delays or failure in the testing, validation, manufacturing and delivery of the product candidates to the clinical sites; 24 Table of Contents • adverse events or tolerability or animal toxicology issues significant enough for the FDA or other regulatory agencies to put any or all clinical trials on hold; • occurrence of adverse events associated with our product candidates; • changes in regulatory requirements and guidance that require amending or submitting new clinical protocols; • the cost of the clinical trials of our product candidates; • negative or inconclusive results from our clinical trials which may result in us deciding, or regulators requiring us, to conduct additional clinical trials or abandon development programs in other ongoing or planned indications for a product candidate; • the regulatory requirements for product approval may not be explicit, may evolve over time and may diverge by jurisdiction; • evolution in the standard of care that require amendments to ongoing clinical trials and/or the conduct of additional preclinical studies or clinical trials; • changes in regulatory requirements and guidance that require amending or submitting new clinical protocols; and • delays in reaching agreement on acceptable terms with third-party manufacturers and the time for manufacture of sufficient quantities of our product candidates for use in clinical trials.
Events that may prevent successful or timely completion of clinical development include but are not limited to: • the inability to generate satisfactory pre-clinical, toxicology, or other in vivo or in vitro data or diagnostics to support the initiation or continuation of our clinical trials; • delays in reaching agreement on acceptable terms with clinical research organizations, (“CROs”), and clinical trial sites, the terms of which can be subject to extensive negotiation and may vary significantly among different CROs and clinical trial sites; • delays in obtaining required IRB approval at each clinical trial site; • failure to permit the conduct of a clinical trial by regulatory authorities, after review of an investigational new drug or equivalent foreign application or amendment; • delays and inability in recruiting qualified patients in our clinical trials; • imposition of a clinical hold by regulatory agencies for any reason, including safety concerns raised by other clinical trials of similar product candidates that may reflect an unacceptable risk with the patient population, technology platform, product stability or after an inspection of clinical operations or trial sites; 27 Table of Contents • failure by clinical sites or CROs or other third parties to adhere to clinical trial requirements; • failure by our clinical sites, CROs or other third parties to perform in accordance with contractual obligations or the regulatory requirements of the FDA, or applicable foreign regulatory guidelines; • patients dropping out of our clinical trials; • withdrawal of clinical trial sites from our clinical trials, including as a result of changing standards of care or the ineligibility of a site to participate; • delays or failure in the testing, validation, manufacturing and delivery of the product candidates to the clinical sites; • adverse events or tolerability or animal toxicology issues significant enough for the FDA or other regulatory agencies to put any or all clinical trials on hold; • occurrence of adverse events associated with our product candidates; • changes in regulatory requirements and guidance that require amending or submitting new clinical protocols; • the cost of the clinical trials of our product candidates; • negative or inconclusive results from our clinical trials which may result in us deciding, or regulators requiring us, to conduct additional clinical trials or abandon development programs in other ongoing or planned indications for a product candidate; • the regulatory requirements for product approval may not be explicit, may evolve over time and may diverge by jurisdiction; • evolution in the standard of care that require amendments to ongoing clinical trials and/or the conduct of additional preclinical studies or clinical trials; • changes in regulatory requirements and guidance that require amending or submitting new clinical protocols; and • delays in reaching agreement on acceptable terms with third-party manufacturers and the time for manufacture of sufficient quantities of our product candidates for use in clinical trials.
As such, we and our contract 34 Table of Contents manufacturers will be subject to continual review and inspections to assess compliance with cGMP and adherence to commitments made in any NDA or marketing authorization application.
As such, we and our contract manufacturers will be subject to continual review and inspections to assess compliance with cGMP and adherence to commitments made in any NDA or marketing authorization application.
Currently, only one of our product candidates (seclidemstat) is in Phase 1 clinical development, and the remainder of our product candidates 25 Table of Contents are in pre-clinical development.
Currently, only one of our product candidates (seclidemstat) is in Phase 1 clinical development, and the remainder of our product candidates are in pre-clinical development.
The timing of our clinical trials depends in part on the rate at which we can recruit patients to participate in clinical trials of our product candidates, and we may experience delays in our clinical trials if we encounter difficulties in enrollment.
Identifying and qualifying patients to participate in clinical trials of our product candidates is essential to our success. The timing of our clinical trials depends in part on the rate at which we can recruit patients to participate in clinical trials of our product candidates, and we may experience delays in our clinical trials if we encounter difficulties in enrollment.
We will need to expand our organization and we may experience difficulties in managing this growth, which could disrupt our operations. As of December 31, 2021, we had 15 full-time employees. As our development and commercialization plans and strategies develop, we expect to need additional managerial, operational, sales, marketing, financial, legal, and other resources.
We will need to expand our organization and we may experience difficulties in managing this growth, which could disrupt our operations. As of March 8, 2023, we had 12 full-time employees. As our development and commercialization plans and strategies develop, we expect to need additional managerial, operational, sales, marketing, financial, legal, and other resources.
Failure to raise capital as and when needed, on favorable terms or at all, would have a negative impact on our financial condition and our ability to develop our product candidates.
Failure to raise capital as and when needed, on favorable terms or at all, would have a negative impact on our financial condition and our ability to continue operations.
Risks Related to Commercialization of our Product Candidates We currently have very limited marketing and sales experience. If we are unable to establish sales and marketing capabilities or enter into agreements with third parties to market and sell our product candidates, we may be unable to generate any revenue.
If we are unable to establish sales and marketing capabilities or enter into agreements with third parties to market and sell our product candidates, we may be unable to generate any revenue.
We are highly dependent on David J. Arthur, our president and chief executive officer, and Mark J. Rosenblum, our executive vice president of finance and chief financial officer, the loss of service from either may adversely impact the achievement of our objectives. Although Mr.
We are a small company with a limited number of employees performing multiple tasks each. We are highly dependent on David J. Arthur, our president and chief executive officer, and Mark J. Rosenblum, our executive vice president of finance and chief financial officer, the loss of service from either may adversely impact the achievement of our objectives. Although Mr.
Further, the net losses we incur may fluctuate significantly from quarter to quarter and year to year, such that a period-to-period comparison of our results of operations may not be a good indication of our future performance. We have never generated any revenue from product sales and may never generate revenue or be profitable.
Further, the net losses we incur may fluctuate significantly from quarter to quarter and year to year, such that a period-to-period comparison of our results of operations may not be a good indication of our future performance.
If we do not accurately evaluate the commercial potential or target market for a particular product candidate, we may relinquish valuable rights to that product candidate through strategic collaborations, licensing or other royalty arrangements in cases in which it would have been more advantageous for us to retain sole development and commercialization rights to such product candidate, or we may allocate internal resources to a product candidate in a therapeutic area in which it would have been more advantageous to enter into a partnering arrangement. 27 Table of Contents We may find it difficult to enroll patients in our clinical trials given the limited number of patients who have the diseases for which our product candidates are being studied.
If we do not accurately evaluate the commercial potential or target market for a particular product candidate, we may relinquish valuable rights to that product candidate through strategic collaborations, licensing or other royalty arrangements in cases in which it would have been more advantageous for us to retain sole development and commercialization rights to such product candidate, or we may allocate internal resources to a product candidate in a therapeutic area in which it would have been more advantageous to enter into a partnering arrangement.
Pre-clinical and clinical data and analyses are often able to be interpreted in different ways. Even if we view our results favorably, if a regulatory authority has a different view, we may still fail to obtain regulatory approval of our product candidates. This, in turn, would significantly adversely affect our business prospects.
Even if we view our results favorably, if a regulatory authority has a different view, we may still fail to obtain regulatory approval of our product candidates. This, in turn, would significantly adversely affect our business prospects.
If securities analysts or investors perceive these results to be negative, it could have a material adverse effect on the price of our common stock.
There could also be public announcements of the results of hearings, motions, or other interim proceedings or developments. If securities analysts or investors perceive these results to be negative, it could have a material adverse effect on the price of our common stock.
Even if we obtain the necessary approvals from the FDA and comparable foreign regulatory authorities, the commercial success of our products will depend in part on the health care providers, patients, and third-party payors accepting our product candidates as medically useful, cost-effective, and safe.
The commercial success of any of our current or future product candidates will depend upon the degree of market acceptance by physicians, patients, third-party payors, and others in the medical community. 50 Table of Contents Even if we obtain the necessary approvals from the FDA and comparable foreign regulatory authorities, the commercial success of our products will depend in part on the health care providers, patients, and third-party payors accepting our product candidates as medically useful, cost-effective, and safe.
Risks Related to the Development of our Product Candidates The approach we are taking to discover and develop novel oncology therapeutics using epigenetic enzymes to moderate transcription factors and thereby control abnormal protein expression is unproven and may never lead to marketable products.
The approach we are taking to discover and develop novel oncology therapeutics using epigenetic enzymes to moderate transcription factors and thereby control abnormal protein expression is unproven and may never lead to marketable products. The scientific discoveries that form the basis for our efforts to discover and develop our current product candidates are relatively recent.
Product liability claims may subject us to the foregoing and other risks, which could have a material adverse effect on our business, financial condition or results of operations.
Product liability claims may subject us to the foregoing and other risks, which could have a material adverse effect on our business, financial condition or results of operations. Risks Related to our Financial Condition and Capital Requirements We have never generated any revenue from product sales and may never generate revenue or be profitable.
If we or others identify undesirable side effects caused by our product candidates either before or after receipt of marketing approval, a number of potentially significant negative consequences could result, including but not limited to: • our clinical trials may be put on hold; • we may be unable to obtain regulatory approval for our product candidates; • regulatory authorities may withdraw approvals of such products; • regulatory authorities may require additional warnings on the label; • We may be required to create a REMS plan, which could include a medication guide outlining the risks of such side effects for distribution to patients, a communication plan for healthcare providers, and/or other elements to assure safe use; • We could be sued and held liable for harm caused to patients; and • its reputation may suffer. 26 Table of Contents Any of these events could prevent us from achieving or maintaining market acceptance of a product candidate, even if approved, and could significantly harm or cause the complete failure of our business, results of operations, and prospects.
If we or others identify undesirable side effects caused by our product candidates either before or after receipt of marketing approval, a number of potentially significant negative consequences could result, including but not limited to: 29 Table of Contents • our clinical trials may be put on hold, such as the partial clinical hold that has been placed on our Phase 1/2 trial of seclidemstat as a treatment for Ewing sarcoma and FET-rearranged sarcomas; • we may be unable to obtain regulatory approval for our product candidates; • regulatory authorities may withdraw approvals of such products; • regulatory authorities may require additional warnings on the label; • We may be required to create a REMS plan, which could include a medication guide outlining the risks of such side effects for distribution to patients, a communication plan for healthcare providers, and/or other elements to assure safe use; • We could be sued and held liable for harm caused to patients; and • its reputation may suffer.
We may in the future pursue available proceedings in the U.S. and foreign patent offices to challenge the validity of these patents and patent applications. In addition, or alternatively, we may consider whether to seek to negotiate a license of rights to technology covered by one or more of such patents and patent applications.
In addition, or alternatively, we may consider whether to seek to negotiate a license of rights to technology covered by one or more of such patents and patent applications.
Portions of our current pipeline of product candidates have been in-licensed from third parties, which make the commercial sale of such in-licensed products potentially subject to additional royalty and milestone payments to such third parties. We will also have to develop, contract for or acquire manufacturing capabilities to continue development and potential commercialization of our product candidates.
Portions of our current pipeline of product candidates have been in-licensed from third parties, which make the commercial sale of such in-licensed products potentially subject to additional royalty and milestone payments to such third parties.
We may not be successful in our efforts to establish such a strategic collaboration for any product candidates and programs on terms that are acceptable to us, or at all.
We may face significant competition in seeking appropriate strategic collaborators, and the negotiation process to secure appropriate terms is time consuming and complex. We may not be successful in our efforts to establish such a strategic collaboration for any product candidates and programs on terms that are acceptable to us, or at all.
In addition, government contracts and grants normally contain additional requirements that may increase our costs of doing business, reduce our profits, and expose us to liability for failure to comply with these terms and conditions.
These and other provisions of government grants may also apply to intellectual property we license now or in the future. 39 Table of Contents In addition, government contracts and grants normally contain additional requirements that may increase our costs of doing business, reduce our profits, and expose us to liability for failure to comply with these terms and conditions.
The licensing and acquisition of third-party intellectual property rights is a competitive area, and a number of more established companies are also pursuing strategies to license or acquire third-party intellectual property rights that we may consider attractive.
The licensing and acquisition of third-party intellectual property rights is a competitive area, and a number of more established companies are also pursuing strategies to license or acquire third-party intellectual property rights that we may consider attractive. These established companies may have a competitive advantage over us due to their size, cash resources, and greater clinical development and commercialization capabilities.
We currently have one product candidate in Phase 1/2 clinical trials for advanced solid tumors - seclidemstat. This is only one of the multiple indications for which we plan to develop this product candidate. There can be no assurance that the data that we develop for our product candidates in our planned indications will be sufficient to obtain regulatory approval.
We currently have one product candidate, seclidemstat, in Phase 1/2 clinical trials for Ewing sarcoma and FET-rearranged sarcomas. There can be no assurance that the data that we develop for our product candidates in our planned indications will be sufficient to obtain regulatory approval.
We may use our financial and human resources to pursue a particular research and/or development program or product candidate and fail to capitalize on programs or product candidates that may be more profitable or for which there is a greater likelihood of success.
We may use our financial and human resources to pursue a particular research and/or development program or product candidate and fail to capitalize on programs or product candidates that may be more profitable or for which there is a greater likelihood of success. 30 Table of Contents Because we have limited financial and human resources, we may forego or delay pursuit of opportunities with some programs or product candidates or for other indications that later prove to have greater commercial potential.
Our spending on current and future research and development programs and future product candidates for specific indications may not yield any commercially viable products. We may also enter into additional strategic collaboration agreements to develop and commercialize some of our programs and potential product candidates in indications with potentially large commercial markets.
We may also enter into additional strategic collaboration agreements to develop and commercialize some of our programs and potential product candidates in indications with potentially large commercial markets.
We have not received approval from regulatory authorities to market any product candidate in any jurisdiction, and it is possible that neither our current product candidates nor any product candidates that we may seek to develop in the future will ever obtain the appropriate regulatory approvals necessary for us to commence product sales. 33 Table of Contents Securing marketing approval requires the submission of extensive preclinical and clinical data and supporting information to regulatory authorities for each therapeutic indication of each of our product candidates to establish the product candidates’ safety and efficacy for such indications.
We have not received approval from regulatory authorities to market any product candidate in any jurisdiction, and it is possible that neither our current product candidates nor any product candidates that we may seek to develop in the future will ever obtain the appropriate regulatory approvals necessary for us to commence product sales.
The receipt of a breakthrough therapy designation for a product candidate may not result in a faster development process, review or approval compared to drugs considered for approval under conventional FDA procedures and does not assure ultimate approval by the FDA.
Accordingly, even if we believe one of our product candidates meets the criteria for designation as a breakthrough therapy, the FDA may disagree and instead determine not to make such designation. 34 Table of Contents The receipt of a breakthrough therapy designation for a product candidate may not result in a faster development process, review or approval compared to drugs considered for approval under conventional FDA procedures and does not assure ultimate approval by the FDA.
If we fail to comply with environmental, health and safety laws and regulations, we could become subject to fines or penalties or incur costs and liabilities that could have a material adverse effect on our business, financial condition or results of operations. our research and development activities and our third-party manufacturers’ and suppliers’ activities involve the controlled storage, use, and disposal of hazardous materials, including the components of our product candidates and other hazardous compounds.
If we fail to comply with environmental, health and safety laws and regulations, we could become subject to fines or penalties or incur costs and liabilities that could have a material adverse effect on our business, financial condition or results of operations.
If we are unable to do so, the institution may offer the intellectual property rights to other parties, potentially blocking our ability to pursue a program that we wish to pursue.
Regardless of such option, we may be unable to negotiate a license within the specified timeframe or under terms that are acceptable to us. If we are unable to do so, the institution may offer the intellectual property rights to other parties, potentially blocking our ability to pursue a program that we wish to pursue.
In addition, the uncertainties associated with litigation could have a material adverse effect on our ability to raise the funds necessary to continue our clinical trials, continue our research programs, license necessary technology from third parties, or enter into development partnerships that would help us bring our product candidates to market.
In addition, the uncertainties associated with litigation could have a material adverse effect on our ability to raise the funds necessary to continue our clinical trials, continue our research programs, license necessary technology from third parties, or enter into development partnerships that would help us bring our product candidates to market. 45 Table of Contents Furthermore, because of the substantial amount of discovery required in connection with intellectual property litigation, there is a risk that some of our confidential information could be compromised by disclosure during this type of litigation.
If we have difficulty enrolling and maintaining the enrollment of a sufficient number of patients to conduct our clinical trials as planned, we may need to delay, limit or terminate ongoing or planned clinical trials, any of which would have an adverse effect on our business. 28 Table of Contents If we experience delays in the completion of, or termination of, any clinical trials of our product candidates, the commercial prospects of our product candidates could be harmed, and our ability to generate product revenue from any of these product candidates could be delayed or prevented.
If we have difficulty enrolling and maintaining the enrollment of a sufficient number of patients to conduct our clinical trials as planned, we may need to delay, limit or terminate ongoing or planned clinical trials, any of which would have an adverse effect on our business.
We and our manufacturers and suppliers are subject to laws and regulations governing the use, manufacture, storage, handling, and disposal of these hazardous materials. In some cases, these hazardous materials and various wastes resulting from their use are stored at our and our manufacturers’ facilities pending their use and disposal.
In some cases, these hazardous materials and various wastes resulting from their use are stored at our and our manufacturers’ facilities pending their use and disposal.
The list of companies working on some form of cancer treatment is almost limitless with big and small companies working on every aspect of oncology therapies worldwide. 48 Table of Contents If our competitors obtain marketing approval from the FDA or comparable foreign regulatory authorities for their product candidates more rapidly than us, it could result in our competitors establishing a strong market position before we are able to enter the market.
If our competitors obtain marketing approval from the FDA or comparable foreign regulatory authorities for their product candidates more rapidly than us, it could result in our competitors establishing a strong market position before we are able to enter the market.
However, the Leahy-Smith Act and its implementation could increase the uncertainties and costs surrounding the prosecution of our patent applications and the enforcement or defense of our issued patents, all of which could have a material adverse effect on our business, financial condition or results of operations. 40 Table of Contents An important change introduced by the Leahy-Smith Act is that, as of March 16, 2013, the United States transitioned to a “first-to-file” system for deciding which party should be granted a patent when two or more patent applications are filed by different parties claiming the same invention.
An important change introduced by the Leahy-Smith Act is that, as of March 16, 2013, the United States transitioned to a “first-to-file” system for deciding which party should be granted a patent when two or more patent applications are filed by different parties claiming the same invention.
Even if we are able to license or acquire third-party intellectual property rights that are necessary for our product candidates, there can be no assurance that they will be available on favorable terms. 42 Table of Contents We collaborate with academic institutions worldwide to identify product candidates, accelerate our research and conduct development.
In addition, companies that perceive us to be a competitor may be unwilling to assign or license rights to us. Even if we are able to license 44 Table of Contents or acquire third-party intellectual property rights that are necessary for our product candidates, there can be no assurance that they will be available on favorable terms.
The scientific evidence to support the feasibility of developing drugs based 23 Table of Contents on these discoveries is both preliminary and limited. The Successful development of therapeutic products will require solving a number of issues.
To date, neither we nor any other company has received regulatory approval to market therapeutics using epigenetic enzymes. The scientific evidence to support the feasibility of developing drugs based on these discoveries is both preliminary and limited. The Successful development of therapeutic products will require solving a number of issues.
We rely or will rely upon a combination of patents, trade secret protection, and confidentiality agreements to protect the intellectual property related to our technologies and product candidates.
If we are unable to obtain or maintain exclusivity from the combination of these approaches, we may not be able to compete effectively in our markets. We rely or will rely upon a combination of patents, trade secret protection, and confidentiality agreements to protect the intellectual property related to our technologies and product candidates.
Even if our clinical trials are successfully completed as planned, the results may not support approval of our product candidates under the laws and regulations of the FDA or other regulatory authorities outside the United States. The clinical trial process may fail to demonstrate that our product candidates are both safe and effective for their intended uses.
If we are not able to successfully initiate and complete clinical trials, we will not be able to obtain regulatory approval and will not be able to commercialize our product candidates. 28 Table of Contents Even if our clinical trials are successfully completed as planned, the results may not support approval of our product candidates under the laws and regulations of the FDA or other regulatory authorities outside the United States.
The U.S. government generally takes the position that it has the right to royalty-free use of technologies that are developed under U.S. government contracts. These and other provisions of government grants may also apply to intellectual property we license now or in the future.
The U.S. government generally takes the position that it has the right to royalty-free use of technologies that are developed under U.S. government contracts.
Numerous third-party U.S. and non-U.S. issued patents and pending applications exist in the area of epigenetic enzyme inhibitors and related technologies. We are aware of U.S. and foreign patents and pending patent applications owned by third parties that cover therapeutic uses of epigenetic inhibitors. We are currently monitoring 41 Table of Contents these patents and patent applications.
We are aware of U.S. and foreign patents and pending patent applications owned by third parties that cover therapeutic uses of epigenetic inhibitors. We are currently monitoring these patents and patent applications. We may in the future pursue available proceedings in the U.S. and foreign patent offices to challenge the validity of these patents and patent applications.
If we are unable to do so, the institution may offer the intellectual property rights to other parties, potentially blocking our ability to pursue our program. In addition, companies that perceive us to be a competitor may be unwilling to assign or license rights to us.
Regardless of such right of first negotiation for intellectual property, we may be unable to negotiate a license within the specified time frame or under terms that are acceptable to us. If we are unable to do so, the institution may offer the intellectual property rights to other parties, potentially blocking our ability to pursue our program.
We also may be unable to license or acquire third-party intellectual property rights on terms that would allow us to make an appropriate return on our investment. If we are unable to successfully obtain rights to third-party intellectual property rights, our business, financial condition and prospects for growth could suffer.
In addition, companies that perceive us to be a competitor may be unwilling to assign or license rights to us. We also may be unable to license or acquire third-party intellectual property rights on terms that would allow us to make an appropriate return on our investment.
Difficulty in enrolling patients is a common hurdle faced by early stage biotechnology companies and could, and often does, delay or prevent clinical trials of product candidates. Identifying and qualifying patients to participate in clinical trials of our product candidates is essential to our success.
We may find it difficult to enroll patients in our clinical trials given the limited number of patients who have the diseases for which our product candidates are being studied. Difficulty in enrolling patients is a common hurdle faced by early stage biotechnology companies and could, and often does, delay or prevent clinical trials of product candidates.
We may attempt to form collaborations in the future with respect to our product candidates, but we may not be able to do so, which may cause us to alter our development and commercialization plans.
We may attempt to form collaborations in the future with respect to our product candidates, but we may not be able to do so, which may cause us to alter our development and commercialization plans. 49 Table of Contents We may attempt to form strategic collaborations, create joint ventures or enter into licensing arrangements with third parties with respect to our programs that we believe will complement or augment our existing business.
Raising additional capital may cause dilution to our stockholders, restrict our operations or require us to relinquish rights. We received substantial funding during the year ended December 31, 2021 including reimbursement from CPRIT. Other than the CPRIT funding, these raises caused significant dilution to stockholders who owned our shares of Common Stock prior to these capital raises.
Additionally, if we are not able to generate revenue from the sale of any approved products, we may never become profitable. Raising additional capital may cause dilution to our stockholders, restrict our operations or require us to relinquish rights. We received substantial funding during the year ended December 31, 2022 including reimbursement from CPRIT.
Drugs designated as breakthrough therapies by the FDA could also be eligible for accelerated approval. Designation as a breakthrough therapy is within the discretion of the FDA. Accordingly, even if we believe one of our product candidates meets the criteria for designation as a breakthrough therapy, the FDA may disagree and instead determine not to make such designation.
Drugs designated as breakthrough therapies by the FDA could also be eligible for accelerated approval. Designation as a breakthrough therapy is within the discretion of the FDA.
Typically, these institutions have provided us with an option to negotiate an exclusive license to any of the institution’s rights in the patents or other intellectual property resulting from the collaboration. Regardless of such option, we may be unable to negotiate a license within the specified timeframe or under terms that are acceptable to us.
We collaborate with academic institutions worldwide to identify product candidates, accelerate our research and conduct development. Typically, these institutions have provided us with an option to negotiate an exclusive license to any of the institution’s rights in the patents or other intellectual property resulting from the collaboration.
We may be subject, directly or indirectly, to federal and state healthcare fraud and abuse laws, false claims laws, and health information privacy and security laws. If we are unable to comply, or have not fully complied, with such laws, we could face substantial penalties.
If we are unable to comply, or have not fully complied, with such laws, we could face substantial penalties.
We will likely rely on patent term extensions, and we cannot provide any assurances that any such patent term extensions will be obtained and, if so, for how long.
We will likely rely on patent term extensions, and we cannot provide any assurances that any such patent term extensions will be obtained and, if so, for how long. However, we may not receive an extension if we fail to apply within applicable deadlines, fail to apply prior to expiration of relevant patents or otherwise fail to satisfy applicable requirements.
The laws that may affect our ability to operate include: • the federal Anti-Kickback Statute, which prohibits, among other things, persons from knowingly and willfully soliciting, receiving, offering or paying remuneration, directly or indirectly, to induce, or in return for, the purchase or recommendation of an item or service reimbursable under a federal healthcare program, such as the Medicare and Medicaid programs; • federal civil and criminal false claims laws and civil monetary penalty laws, which prohibit, among other things, individuals or entities from knowingly presenting, or causing to be presented, claims for payment from Medicare, Medicaid, or other third-party payors that are false or fraudulent; • HIPAA, which created new federal criminal statutes that prohibit executing a scheme to defraud any healthcare benefit program and making false statements relating to healthcare matters; • HIPAA, as amended by the Health Information Technology and Clinical Health Act, and its implementing regulations, which imposes specified requirements relating to the privacy, security, and transmission of individually identifiable health information; • the federal physician sunshine requirements under the Health Care Reform Laws requires manufacturers of drugs, devices, biologics, and medical supplies to report annually to the U.S.
These laws, which are described in further detail in Government Regulation and Product Approvals – Other Healthcare Laws include: • the federal Anti-Kickback Statute, which prohibits, among other things, persons from knowingly and willfully soliciting, receiving, offering or paying remuneration, directly or indirectly, to induce, or in return for, the purchase or recommendation of an item or service reimbursable under a federal healthcare program, such as the Medicare and Medicaid programs; • federal civil False Claims Act, which prohibits, among other things, individuals or entities from knowingly presenting, or causing to be presented, a false or fraudulent claim for payment of government funds, or knowingly making, using or causing to be made or used, a false record or statement material to an obligation to pay money to the government or knowingly concealing or knowingly and improperly avoiding, decreasing or concealing an obligation to pay money to the federal government; • HIPAA, which created new federal criminal statutes that prohibit executing a scheme to defraud any healthcare benefit program and making false statements relating to healthcare matters; • HIPAA, as amended by the Health Information Technology and Clinical Health Act, and its implementing regulations, which imposes specified requirements relating to the privacy, security, and transmission of individually identifiable health information; • the U.S. federal Physician Payment Sunshine Act, which requires manufacturers of drugs, devices, biologics, and medical supplies for which payment is available under Medicare, Medicaid or the Children’s Health Insurance Program (with certain exceptions) to report annually to CMS information related to direct or indirect payments and other transfers of value to physicians and teaching hospitals (and certain other practitioners as of 2022), as well as ownership and investment interests held in the company by physicians and their immediate family members; and • state law equivalents of each of the above federal laws, such as anti-kickback and false claims laws that may apply to items or services reimbursed by any third-party payor, including governmental and private payors, laws that require manufacturers to comply with the pharmaceutical industry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government, or otherwise restrict payments that may be made to healthcare providers and other potential referral sources, state laws that require drug manufacturers to report information related to payments and other transfers of value to physicians and other healthcare providers or marketing expenditures, and state laws governing the privacy and security of health information in specified circumstances, many of which differ from each other in significant ways and may not have the same scope or application, thus complicating compliance efforts.
Third-party claims of intellectual property infringement may prevent or delay our development and commercialization efforts. Our commercial success depends in part on our ability to develop, manufacture, market and sell our product candidates and use our proprietary technology without infringing the patent rights of third parties.
Our commercial success depends in part on our ability to develop, manufacture, market and sell our product candidates and use our proprietary technology without infringing the patent rights of third parties. 43 Table of Contents Numerous third-party U.S. and non-U.S. issued patents and pending applications exist in the area of epigenetic enzyme inhibitors and related technologies.

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Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Recent Sales of Unregistered Securities Other than as previously disclosed on our Current Reports on Form 8-K or Quarterly Reports on Form 10-Q filed with the SEC, we did not issue any unregistered equity securities during the twelve months ended December 31, 2021. Purchases of Equity Securities by the Issuer and Affiliated Purchasers None. Item 6. RESERVED
Recent Sales of Unregistered Securities Other than as previously disclosed on our Current Reports on Form 8-K or Quarterly Reports on Form 10-Q filed with the SEC, we did not issue any unregistered equity securities during the twelve months ended December 31, 2022. Purchases of Equity Securities by the Issuer and Affiliated Purchasers None. Item 6. RESERVED
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information Our common stock is on the Nasdaq Capital Market under the symbol “SLRX.” As of March 15, 2022, we had approximately 143 record holders of our common stock.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information Our common stock is on the Nasdaq Capital Market under the symbol “SLRX.” [As of March 20, 2023, we had approximately 151 record holders of our common stock.

Item 6. [Reserved]

Selected Financial Data — reserved (removed by SEC in 2021)

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Item 6. Reserved 54 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations Overview 54 Item 7A. Quantitative and Qualitative Disclosure About Market Risk 59 Item 8.
Item 6. Reserved 55 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations Overview 55 Item 7A. Quantitative and Qualitative Disclosure About Market Risk 61 Item 8.
Financial Statements and Supplementary Data 60 Index to Financial Statements 60 Report of Independent Registered Public Accounting Firm 61 Consolidated Balance Sheets 63 Consolidated Statements of Operations 64 Consolidated Statements of Cash Flows 65 Consolidated Statement of Stockholders' Equity (Deficit) 66 Notes to Consolidated Financial Statements 67
Financial Statements and Supplementary Data 62 Index to Financial Statements 62 Report of Independent Registered Public Accounting Firm 63 Consolidated Balance Sheets 65 Consolidated Statements of Operations 66 Consolidated Statements of Cash Flows 67 Consolidated Statement of Stockholders' Equity (Deficit) 68 Notes to Consolidated Financial Statements 69

Item 7. Management's Discussion & Analysis

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

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In addition, LSD1 can act via its scaffolding properties, independently of its enzymatic function, to alter gene expression and modulate cell fate. In healthy cells, LSD1 is necessary for stem cell maintenance and cell development processes. However, in several cancers LSD1 is highly expressed and acts aberrantly to incorrectly silence or activate genes leading to disease progression.
In addition, LSD1 can act via its scaffolding properties, independently of its enzymatic function, to alter gene expression and modulate cell fate. In healthy cells, LSD1 is necessary for stem cell maintenance and cell development processes. However, in several cancers LSD1 is highly expressed and acts aberrantly to incorrectly silence or activate transcription of genes leading to disease progression.
The effects of material revisions in estimates are reflected in our consolidated financial statements prospectively from the date of the change in estimate. Our significant accounting policies are described in Note 2 to our audited consolidated financial statements for the year ended December 31, 2021 in this Annual Report on Form 10-K.
The effects of material revisions in estimates are reflected in our consolidated financial statements prospectively from the date of the change in estimate. Our significant accounting policies are described in Note 2 to our audited consolidated financial statements for the year ended December 31, 2022 in this Annual Report on Form 10-K.
For more information regarding these policies, you should refer to Note 2 of our audited consolidated financial statements included in this Annual Report on Form 10-K. Off-Balance Sheet Arrangements We have not entered into any off-balance sheet arrangements and does not have any holdings in variable interest entities.
For more information regarding these policies, you should refer to Note 2 of our audited consolidated financial statements included in this Annual Report on Form 10-K. Off-Balance Sheet Arrangements 60 Table of Contents We have not entered into any off-balance sheet arrangements and does not have any holdings in variable interest entities.
If we raise additional funds through 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 grant 58 Table of Contents licenses on terms that may not be favorable to us.
If we raise additional funds through 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 grant licenses on terms that may not be favorable to us.
We do not know when, or if, we will generate any revenue from product sales. We do not expect to generate any revenue from product sales unless and until we obtain regulatory approval for and commercializes any of our product candidates, all of which are in early stages of development.
We do not expect to generate any revenue from product sales unless and until we obtain regulatory approval for and commercializes any of our product candidates, all of which are in early stages of development.
We expect that our operating losses will fluctuate significantly from quarter-to-quarter and year-to-year due to timing of clinical development programs and efforts to achieve regulatory approval. As of December 31, 2021, we had cash and cash equivalents of $29.2 million. We have received $14.5 million since inception of the grant.
We expect that our operating losses will fluctuate significantly from quarter-to-quarter and year-to-year due to timing of clinical development programs and efforts to achieve regulatory approval. As of December 31, 2022, we had cash and cash equivalents of $12.1 million. We have received $16.0 million since inception of the grant.
We are conducting preclinical work with SP-2577 in this area. Our plan is to develop SP-3164 in high unmet need hematological and solid tumor indications. SP-3164's development in hematological indications leverates the clinical safety and efficacy data demonstrated by avadomide in hematological malignancies (e.g., Diffuse Large B cell Lymphoma, Follicular Lymphoma) across several clinical trials.
Our plan is to develop SP-3164 in high unmet need hematological and solid tumor indications. SP-3164's development in hematological indications leverages the clinical safety and efficacy data demonstrated by avadomide in hematological malignancies (e.g., Diffuse Large B cell Lymphoma, Follicular Lymphoma) across several clinical trials.
As of December 31, 2021, we had $28.1 million of working capital and our cash and cash equivalents totaled $29.2 million, which were held in bank accounts and money market account.
As of December 31, 2022, we had $10.3 million of working capital and our cash and cash equivalents totaled $12.1 million, which were held in bank accounts and money market account.
Our future capital requirements are difficult to forecast and will depend on many factors, including but not limited to: • the terms and timing of any strategic alliance, licensing and other arrangements that we may establish; • the initiation and progress of our ongoing pre-clinical studies and clinical trials for our product candidates; • the number of programs we pursue; • the outcome, timing and cost of regulatory approvals; • the cost and timing of hiring new employees to support our continued growth; • the costs involved in patent filing, prosecution, and enforcement; and • the costs and timing of having clinical supplies of our product candidates manufactured.
Our future capital requirements are difficult to forecast and will depend on many factors, including but not limited to: • our ability to have the partial clinical hold that has been placed on our Phase 1/2 trial of seclidemstat as a treatment for Ewing sarcoma and FET-rearranged sarcomas lifted and the timing thereof; 59 Table of Contents • the terms and timing of any strategic alliance, licensing and other arrangements that we may establish; • the initiation and progress of our ongoing pre-clinical studies and clinical trials for our product candidates; • the number of programs we pursue; • the outcome, timing and cost of regulatory approvals; • the cost and timing of hiring new employees to support our continued growth; • the costs involved in patent filing, prosecution, and enforcement; and • the costs and timing of having clinical supplies of our product candidates manufactured.
As LSD1 can associate with over 60 regulatory proteins other than EWS-FLI, we believe that LSD1 may also play a critical role in progression of various other cancer types. These include both solid tumors and hematologic malignancies. In the second quarter of 2019, we initiated a second company-sponsored Phase 1 trial to study SP-2577 in Advanced Solid Tumors.
As LSD1 can associate with over 60 regulatory proteins other than EWS-FLI, we believe that LSD1 may also play a critical role in progression of various other cancer types. These include both solid tumors and hematologic malignancies.
Our lead compound, seclidemstat (“SP-2577”), is a small molecule that inhibits the epigenetic enzyme lysine specific demethylase 1 (“LSD1”). LSD1 is an enzyme that removes mono- and di-methyl marks on histones (core protein of chromatin) to alter gene expression. LSD1’s enzymatic activity can cause genes to turn on or off and thereby affect the cell’s gene expression and overall activity.
LSD1 is an enzyme that removes mono- and di-methyl marks on histones (core protein of chromatin) to alter gene expression. LSD1’s enzymatic activity can cause genes to turn on or off and thereby affect the cell’s gene expression and overall activity.
SP-3164 is the stabilized, active S-enantiomer of avadomide, which exists as a 1:1 ratio of the S and R enantiomers. However, only the S-enantiomer is the active, anti-cancer species. Therefore, because SP-3164 is the stabilized S-enantiomer, it has the potential to show improved therapy and safety over avadomide. This was demonstrated in early preclinical mouse models of multiple myeloma.
SP-3164 is the stabilized, active S-enantiomer of avadomide, which exists as a 1:1 ratio of the S and R enantiomers. However, only the S-enantiomer is the active, anticancer species. Therefore, since SP-3164 is the stabilized S-enantiomer, it has the potential to show improved therapy and safety over avadomide.
Our first indication of interest for SP-2577 is a devastating bone and soft-tissue cancer called Ewing sarcoma. Ewing sarcoma mostly afflicts adolescents and young adults, with the median age of diagnosis being 15. The most commonly expressed fusion oncoprotein in Ewing sarcoma is the EWS-FLI fusion protein, which is present in approximately 85% of Ewing sarcoma cases.
Ewing sarcoma mostly afflicts adolescents and young adults, with the median age of diagnosis being approximately 15 years of age. The most commonly expressed fusion oncoprotein in Ewing sarcoma is the EWS-FLI fusion protein, which is present in approximately 85% of Ewing sarcoma cases.
Our cash and cash equivalents balance increased during the year ended December 31, 2021, primarily due to the capital received from financing activities partially offset by our net loss incurred.
Our cash and cash equivalents balance decreased during the year ended December 31, 2022, primarily due to the cash used in operating and investing activities, partially offset by capital received from financing activities.
These applicable obligations include our lease agreement for our facilities, and our employment contracts. We also plan to deploy cash for other research and development and general and administrative operating expenses. Our ability to continue meeting these contractual obligations will be reliant upon our ability to secure significant additional capital funding.
These applicable obligations include our lease agreement for our facilities, and our employment contracts. We also plan to deploy cash for other research and development and general and administrative operating expenses.
Introduction 54 Table of Contents Our Management's Discussion and Analysis of Financial Condition and Results of Operations, or MD&A, is provided in addition to the accompanying consolidated financial statements and notes to assist readers in understanding our results of operations, financial condition, and cash flows.
These risks could cause our actual results to differ materially from any future performance suggested below. Introduction Our Management's Discussion and Analysis of Financial Condition and Results of Operations, or MD&A, is provided in addition to the accompanying consolidated financial statements and notes to assist readers in understanding our results of operations, financial condition, and cash flows.
We believe that as of December 31, 2021, CPRIT fund matching requirements had been fully met. Additionally, during the twelve months ended December 31, 2021, we received $28.8 million cash from equity offering.
To date, our funding source have been limited to a CPRIT grant and the sale of equity securities. We believe that as of December 31, 2022, CPRIT fund matching requirements had been fully met. Additionally, during the twelve months ended December 31, 2022, we received $2.0 million cash from equity offerings.
We have never been profitable and have incurred operating losses in each year since inception. We had an accumulated deficit of $32.2 million as of December 31, 2021. Substantially all of our operating losses resulted from expenses incurred in connection with our research and development programs and from general and administrative costs associated with our operations.
Substantially all of our operating losses resulted from expenses incurred in connection with our research and development programs and from general and administrative costs associated with our operations.
Liquidity Year Ended December 31 2021 2020 Net cash (used in) provided by: Operating activities $ (10,200,197) $ (10,311,363) Investing activities — (2,600) Financing activities 28,295,963 17,693,677 Net increase in cash and cash equivalents $ 18,095,766 $ 7,379,714 57 Table of Contents Year Ended December 31 2021 2020 Net proceeds from issuance of equity securities 27,287,638 14,798,944 Payments on note payable (477,028) (974,435) Net proceeds from warrants exercised for cash 1,485,353 3,869,168 Net cash provided by financing activities $ 28,295,963 $ 17,693,677 Net cash provided by financing activities was $28.3 million and $17.7 million for the years ended December 31, 2021 and 2020.
Liquidity Year Ended December 31 2022 2021 Net cash (used in) provided by: Operating activities $ (17,595,321) $ (10,200,197) Investing activities (1,500,000) — Financing activities 1,987,376 28,295,963 Net increase (decrease) in cash and cash equivalents $ (17,107,945) $ 18,095,766 Year Ended December 31 2022 2021 Net proceeds from issuance of equity securities 1,987,376 27,287,638 Payments on note payable — (477,028) Net proceeds from warrants exercised for cash — 1,485,353 Net cash provided by financing activities $ 1,987,376 $ 28,295,963 Capital Resources We expect to continue to incur additional costs associated with our ongoing research and development activities and our continued operation as a public company.
The Advanced Solid Tumor (“AST”) trial is a single agent dose escalation, dose expansion study enrolling patients with advanced malignancies, excluding Ewing sarcoma or central nervous system tumors. In addition, recent data from “LSD1 Ablation Stimulates Anti-tumor Immunity and Enables Checkpoint Blockade” by W.
In the second quarter of 2019, we initiated a second company-sponsored Phase 1 trial to study SP-2577 in Advanced Solid Tumors and in the first quarter of 2022 the study was completed. The Advanced Solid Tumor (“AST”) trial was a single agent dose escalation, dose expansion study enrolling patients with advanced malignancies, excluding Ewing sarcoma or central nervous system tumors.
Sheng, et al. and “Inhibition of Histone Lysine-specific Demethylase 1 Elicits Breast Tumor Immunity and Enhances Antitumor Efficacy of Immune Checkpoint Blockade” by Y. Qin, et al. suggests that LSD1 plays a role in tumor immune activity and can sensitize tumors to checkpoint inhibitors. These recent works have sparked interest in combining LSD1 inhibitors with checkpoint inhibitors.
Qin, et al. suggests that LSD1 plays a role in tumor immune activity and can sensitize tumors to checkpoint inhibitors. These recent works have sparked interest in combining LSD1 inhibitors with checkpoint inhibitors. Targeted Protein Degradation (TPD) is rapidly growing and attracting a lot of interest from the biggest pharmaceutical companies. SP-3164 is a novel, differentiated targeted protein degrader.
Overview We are a clinical-stage biotechnology company focused on developing effective epigenetic-based cancer treatments for indications with high unmet medical need. Our lead epigenetic enzyme technology was licensed from the University of Utah Research Foundation in 2011.
Overview 55 Table of Contents We are a clinical-stage biotechnology company focused on developing effective targeted cancer treatments for indications with high unmet medical need. Our technologies correct the dysregulated gene expression of diseased cells and thereby inhibit cancer progression.
During 2021, we reached the maximum amount of the eligible spending that can be reimbursed from CPRIT. Research and Development Expenses 56 Table of Contents Research and development expenses were $8.5 million during the year ended December 31, 2021 compared to $6.9 million during the year ended December 31, 2020.
Research and Development Expenses Research and development expenses were $15.8 million during the year ended December 31, 2022 compared to $8.5 million during the year ended December 31, 2021.
Year ended December 31 Change 2021 2020 $ Grant revenue $ 1,840,216 $ 5,233,301 $ (3,393,085) Research and development expenses 8,548,520 6,913,853 1,634,667 General and administrative expenses 6,104,627 6,105,793 (1,166) Change in fair value of warrant liability 44,693 258,551 (213,858) Government grants and other income — 178,587 (178,587) Net loss $ (12,768,238) $ (7,349,207) $ (5,419,031) Grant Revenue Grant revenue, which was derived solely from the CPRIT grant, was $1.8 million during the year ended December 31, 2021 compared to $5.2 million during the year ended December 31, 2020.
Results of Operations The following table sets forth the consolidated results of our operations for the year ended December 31, 2022 compared to the year ended December 31, 2021. 57 Table of Contents Year ended December 31 Change 2022 2021 $ Grant revenue $ — $ 1,840,216 $ (1,840,216) Research and development expenses 15,836,828 8,548,520 7,288,308 General and administrative expenses 7,138,403 6,104,627 1,033,776 Change in fair value of warrant liability 14,454 44,693 (30,239) Interest income (expense), net 218,730 — 218,730 Loss on impairment of goodwill 8,865,909 — 8,865,909 Net loss $ (31,607,956) $ (12,768,238) $ (18,839,718) Grant Revenue Grant revenue, which was derived solely from the CPRIT grant, was $0 during the year ended December 31, 2022 compared to $1.8 million during the year ended December 31, 2021.
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These risks could cause our actual results to differ materially from any future performance suggested below.
Added
In certain cancers, the proteins that regulate gene expression become dysregulated and incorrectly turn genes “on” or “off,” which can lead to disease development and progression. We are developing two classes of drugs that address gene dysregulation: epigenetic drugs and targeted protein degraders. Our lead epigenetic enzyme technology was licensed from the University of Utah Research Foundation in 2011.
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We also recent acquired DRX-164, subsequently named as SP-3164, which is a next-generation cereblon binding molecular glue and we believe it has a clear development path in hematological cancer and potential in solid tumors. Epigenetics refers to the system that regulates gene expression through conformational changes to the chromatin rather than changes to the DNA sequence itself.
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In January 2022 we acquired our lead targeted protein degrader from DeuteRx. Epigenetics refers to the system that regulates gene expression through conformational changes to the chromatin rather than changes to the DNA sequence itself. Seclidemstat (“SP-2577”), is a small molecule that inhibits the epigenetic enzyme lysine specific demethylase 1 (“LSD1”).
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In addition to having a clear development path 55 Table of Contents in hematological cancers, we believe SP-3164 also has potential in solid tumors. We are conducting preclinical work to identify the most promising indications and combinations for SP-3164's development in solid tumors. We have no products approved for commercial sale and have not generated any revenue from product sales.
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On October 18, 2022, the Company voluntarily paused new patient enrollment in its Phase 1/2 trial of seclidemstat as a treatment for Ewing sarcoma and FET-rearranged sarcomas per protocol design. The pause in new patient enrollment was due to a metastatic FET-rearranged sarcoma patient death that was classified as a suspected unexpected serious adverse reaction (SUSAR).
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Results of Operations The following table sets forth the consolidated results of our operations for the year ended December 31, 2021 compared to the year ended December 31, 2020.
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Upon review of the SUSAR and available information by the Company’s independent Safety Review Committee for the clinical trial, patients currently receiving seclidemstat treatment may continue treatment after consulting with their physician. During a conference call with the U.S.
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This increase of $1.6 million was principally due to higher headcount in 2021, increased clinical trial cost in 2021 directly tied to patients enrollment, more spending on lab material and nonclinical activities, partially offset by decreased manufacturing cost.
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Food and Drug Administration (FDA) on November 1, 2022, the FDA informed the Company that the agency agreed with the voluntary enrollment pause and, as an administrative action, the FDA provided verbal notification that the Ewing sarcoma and FET-rearranged sarcoma trial was on partial clinical hold.
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General and Administrative Expense General and administrative expenses were $6.1 million for the year ended December 31, 2021 compared to $6.1 million for the year ended December 31, 2020, consistent with prior year.
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While on partial clinical hold, the FDA informed the Company that the pause in patient enrollment shall remain in place and patients currently receiving seclidemstat treatment may continue treatment after consulting with their physician.
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Change in Fair Value of Warrant Liability The change in fair value of warrant liability in current year was primarily due to the fluctuation of the price of our common stock which was $0.5 per share on December 31, 2021 compared to $0.9 per share on December 31, 2020 and our common stock price was $3.8 per share on December 31, 2019.
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FDA’s clinical hold procedures provide the Company with an administrative process to work with the FDA to analyze the available data, adjust clinical protocols, and make other changes that may be needed in order to restart patient enrollment. Our first indication of interest for SP-2577 is a devastating bone and soft-tissue cancer called Ewing sarcoma.
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This increase of $10.6 million resulted primarily from higher proceeds from the sale of our common shares during the first and third quarters of 2021, partially offset by lower net proceeds from warrants exercised for cash.
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In addition, data from “LSD1 Ablation Stimulates Anti-tumor Immunity and Enables Checkpoint Blockade” by W. Sheng, et al. and “Inhibition of Histone Lysine-specific Demethylase 1 Elicits Breast Tumor Immunity and Enhances 56 Table of Contents Antitumor Efficacy of Immune Checkpoint Blockade” by Y.
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Principal payments on the insurance financing note were $0.5 million during the year ended December 31, 2021 compared to $1.0 million for the year ended December 31, 2020. Capital Resources We expect to continue to incur additional costs associated with our ongoing research and development activities and our continued operation as a public company.
Added
SP-3164's potential has been demonstrated in in vitro studies and in preclinical mouse models of lymphoma and multiple myeloma. SP-3164 treatment showed robust anticancer activity in cells and tumored mouse models. Encouragingly, in lymphoma preclinical mouse models, treatment with SP-3164 combined with a standard of care agent resulted in complete tumor regressions.
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We have no products approved for commercial sale and have not generated any revenue from product sales. We have never been profitable and have incurred operating losses in each year since inception. We had an accumulated deficit of $63.8 million as of December 31, 2022.
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We reached the maximum amount of the eligible spending that can be reimbursed from CPRIT in 2021. In February 2023, we received $1.5 million from CPRIT, a collection of an outstanding receivable at December 31, 2022.
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This increase of $7.3 million principally resulted from the purchase of the DeuteRx assets in January 2022, and the development of those assets (the most advanced of which is known as SP-3164) during 2022, that was partially offset by lower cost related to SP-2577.
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SP - 3164 SP- 2577 Research and development costs by candidates and by categories: 2022 2021 2022 2021 Outsourced research and development costs $ 3,832,805 $ — $ 4,797,053 $ 4,980,444 Employee-related costs 182,109 — 2,157,338 1,604,505 Manufacturing and laboratory costs 2,170,682 — 708,941 1,963,571 Purchased in process research and development costs 1,987,900 — — — Total research and development costs $ 8,173,496 $ — $ 7,663,332 $ 8,548,520 General and Administrative Expense General and administrative expenses were $7.1 million for the year ended December 31, 2022 compared to $6.1 million for the year ended December 31, 2021, the increase is mainly driven by higher legal cost, public company cost and personnel costs.
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Our ability to continue meeting these contractual obligations will be reliant upon our ability to secure significant additional capital funding. 58 Table of Contents We do not know when, or if, we will generate any revenue from product sales.
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We believe that our cash and cash equivalents on hand as of December 31, 2022 is sufficient to fund our anticipated operations through the third quarter of 2023.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk The market risk inherent in our financial instruments and in our financial position represents the potential loss arising from adverse changes in interest rates. As of December 31, 2021, our cash was primarily held in money market account.
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Item 7A. Quantitative and Qualitative Disclosures About Market Risk We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934, as amended, and are not required to provide the information under this item. 61 Table of Contents
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Therefore, we have minimal market risk related to the fair market value of our portfolio. 59 Table of Contents