Item 1A. Risk Factors.
Investing in our common
stock involves a high degree of risk. Before you decide to invest in our common stock, you should consider carefully the risks described
below, together with the other information contained in this Report, including “Management’s Discussion and Analysis of Financial
Condition and Results of Operations” and our consolidated financial statements and related notes. We believe the risks described
below are the risks that are material to us as of the date of this Report. The occurrence of any of the events or developments discussed
in the risk factors below could have a material and adverse impact on our business, financial condition, results of operations and cash
flows and, in such case, our future prospects would likely be materially and adversely affected. In these circumstances, the market price
of our common stock could decline, and you may lose all or part of your investment.
Risks Related to Our Limited Operating History, Financial Condition
and Capital Requirements
We have a limited operating history, have
incurred significant operating losses since our inception and expect to incur significant operating losses for the foreseeable future.
We may never generate revenue or achieve profitability, and if we do achieve profitability, it may not be sustained.
Biopharmaceutical product
development is a highly speculative undertaking and involves a substantial degree of risk. We are a clinical-stage biopharmaceutical company
with a relatively limited operating history upon which you can evaluate our business and prospects. We commenced operations in January
2015 and have not generated revenue from the sale of our products. Therefore, there is limited historical financial or operational information
upon which to evaluate our performance. Our prospects must be considered in light of the uncertainties, risks, expenses, and difficulties
frequently encountered by companies in their early stages of operations. Many if not most companies in our industry at our stage of development
never become profitable and are acquired or go out of business before successfully developing any product that generates revenue from
commercial sales or enables profitability.
We have incurred losses since
our inception and our accumulated deficit was approximately $154.6 million at December 31, 2025. Substantially all of our losses have
resulted from expenses incurred in connection with our research and development activities and from general and administrative costs associated
with our operations. We expect to continue to incur substantial and increasing operating losses over the next several years as we continue
the clinical development of, seek regulatory approval for and potentially commercialize elraglusib and any future product candidates,
as well as operate as a public company.
The magnitude of our future
losses and when, if ever, we will become profitable are uncertain. We do not have any products that have generated any revenues from commercial
sales, and do not expect to generate revenues from the commercial sale of products in the near future, if ever. If we are unable to successfully
develop, obtain requisite approval for and commercialize elraglusib or any future product candidates, we may never generate revenue. Our
ability to generate revenue and achieve profitability will depend on, among other things:
· successful completion of the development of our product candidates;
· obtaining adequate reimbursement by third-party payers; and
· raising sufficient funds to finance our activities.
There can be no assurance
we will be successful in all or any of these undertakings. If we are unsuccessful at some or all of these undertakings, our business,
financial condition, and results of operations are expected to be materially and adversely affected.
To become and remain profitable,
we must succeed in developing, obtaining regulatory approvals for, and eventually commercializing products that generate significant revenue.
This will require us to be successful in a range of challenging activities, including completing clinical trials and preclinical studies
of elraglusib and any future product candidates, acquiring or developing additional product candidates, obtaining regulatory approval
for elraglusib and any future product candidates and manufacturing, marketing, and selling any products for which we may obtain regulatory
approval. We are only in the preliminary stages of most of these activities. We may never succeed in these activities and, even if we
do, may never generate revenue that is significant enough to achieve profitability. In addition, we have not yet demonstrated an ability
to successfully overcome many of the risks and uncertainties frequently encountered by companies in new and rapidly evolving fields, particularly
in the biopharmaceutical industry. Because of the numerous risks and uncertainties associated with biopharmaceutical product development,
we are unable to accurately predict the timing or amount of increased expenses or when, or if, we will be able to achieve profitability.
Even if we do achieve profitability, we may not be able to sustain or increase profitability on a quarterly or annual basis. Our failure
to become and remain profitable may have an adverse effect on the value of our company and could impair our ability to raise capital,
expand our business, maintain our research and development efforts, diversify our product candidates, achieve our strategic objectives
or even continue our operations. A decline in the value of our company could also cause you to lose all or part of your investment.
We will require substantial additional capital
to finance our operations, and a failure to obtain this necessary capital when needed on acceptable terms, or at all, could force us to
delay, limit, reduce or terminate our development programs, commercialization efforts or our operations.
As of December 31, 2025,
we had approximately $13.2 million in cash and cash equivalents and working capital of approximately $7.9 million. Based on our current
operating plan, we estimate that our existing cash and cash equivalents as of the date of this Report will not satisfy the Company’s
operational and capital requirements beyond July 2026. Our estimates and assumptions regarding our operating costs may prove to be wrong,
and we could use our capital resources sooner than we currently expect. Our operating plans and other demands on our cash resources may
change as a result of many factors currently unknown to us, and we may need to seek additional funds sooner than planned.
We have incurred and expect
to continue to incur significant costs in the development of our sole drug candidate, elraglusib. Accordingly, in the near term, we intend
to seek and will need to continue to rely on additional financing to achieve our business objectives. Adequate additional financing may
not be available to us on acceptable terms, or at all, including as a result of financial and credit market deterioration or instability,
market-wide liquidity shortages, geopolitical events or otherwise. If we are unable to raise capital in the near term or on attractive
terms, we could be forced to delay, reduce or eliminate our research and development programs or any future commercialization efforts,
or even curtail or cease operations. Even if we secure necessary financing in the near term, we expect to continue to require substantial
funding as the timing for and ability to generate sufficient funds from operations will remain uncertain until such time as we are able
to progress elraglusib through development and potential commercialization.
We expect to finance our cash
needs through public or private equity or debt financings or other capital sources, including potential collaborations, licenses, and
other similar arrangements. However, as of the date of this Report, we have no agreements or understandings in place concerning our receipt
of additional financing.
The foregoing conditions raise
substantial doubt about our ability to continue as a going concern. Our independent registered public accounting firm included in its
audit opinion for the year ended December 31, 2025 an explanatory paragraph that there is substantial doubt as to our ability to continue
as a going concern.
Raising additional capital or acquiring
or licensing assets by issuing equity or debt securities may cause dilution to our stockholders, and raising funds through lending and
licensing arrangements may restrict our operations or require us to relinquish proprietary rights.
We may seek additional capital
through a combination of public and private equity offerings, debt financings, strategic partnerships and alliances and licensing arrangements.
To the extent that we raise additional capital through the sale of equity or convertible debt securities, your ownership interest will
be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect your rights as a stockholder.
The incurrence of indebtedness would result in increased fixed payment obligations and could involve certain restrictive covenants, such
as limitations on our ability to incur additional debt, limitations on our ability to acquire or license intellectual property rights
and other operating restrictions that could adversely impact our ability to conduct our business. If we raise additional capital through
future collaborations, strategic alliances or third-party licensing arrangements, we may have to relinquish valuable rights to our intellectual
property, future revenue streams, research programs or product candidates, or grant licenses on terms that may not be favorable to us.
If we are unable to raise
additional capital when needed, we may be required to delay, reduce or eliminate our research and development programs or any future commercialization
efforts, or even curtail or cease operations.
Risks Related to the Development and Commercialization of Our Product Candidates
We currently depend entirely on the success
of elraglusib, which is our only product candidate. If we are unable to advance elraglusib in clinical development, obtain regulatory
approval and ultimately commercialize elraglusib in a timely manner, our business will be materially harmed.
We currently only have one
product candidate, elraglusib, which is in Phase 2 clinical development for the treatment of mPDAC as its lead indication. Our business
presently depends entirely on our ability to successfully develop, obtain regulatory approval for, and commercialize elraglusib in a timely
manner. This may make an investment in our company riskier than similar companies that have multiple product candidates in active development
and may be able to better sustain the delay or failure of a lead product candidate. The success of elraglusib will depend on several factors,
including the following:
If we are unable to develop,
obtain regulatory approval for, or if approved, successfully manufacture and commercialize elraglusib, or if we experience delays as a
result of any of the above factors or otherwise, our business would be materially harmed.
We do not have and may never have any approved
products on the market. Our business is highly dependent upon receiving approvals from various governmental agencies and will be severely
harmed if we are not granted approval to manufacture and sell our product candidates.
In order for us to commercialize
elraglusib for the treatment of mPDAC or for any other disease indication, or any other product candidate, we must obtain regulatory approvals
of such treatment for the applicable indication. Satisfying regulatory requirements is an expensive process that typically takes many
years and involves extensive compliance with requirements covering research and development, testing, manufacturing, quality control,
labeling, and promotion of drugs for human use. To obtain necessary regulatory approvals, we must, among other requirements, complete
clinical trials demonstrating that our products are safe and effective for a particular indication. In addition, before we can initiate
clinical development for any future preclinical product candidates, we must submit the results of preclinical studies to the FDA or comparable
foreign regulatory authorities along with other information, including information about product candidate chemistry, manufacturing and
controls and our proposed clinical trial protocol, as part of an IND or similar regulatory submission, and we are also required to submit
comparable applications to foreign regulatory authorities for clinical trials outside of the United States. The FDA or comparable foreign
regulatory authorities may require us to conduct additional preclinical studies for any future product candidates before it allows us
to initiate clinical trials under any IND or similar regulatory submission, which may lead to delays or increase the costs of developing
future product candidates. There can be no assurance that our products will prove to be safe and effective, that our preclinical or clinical
trials will demonstrate the necessary safety and effectiveness of our product candidates, or that we will succeed in obtaining regulatory
approval for any treatment we develop even if such safety and effectiveness are demonstrated.
Any delays or difficulties
we encounter in our clinical trials may delay or preclude regulatory approval from the FDA or from international regulatory organizations.
Any delay or preclusion of regulatory approval would be expected to delay or preclude the commercialization of our products. Examples
of delays or difficulties that we may encounter in our clinical trials include without limitation the following:
Any success we may achieve
at a given stage of our clinical trials does not guarantee that we will achieve success at any subsequent stage, including without limitation
final FDA approval.
We may encounter delays or
rejections in the regulatory approval process because of additional government regulation resulting from future legislation or administrative
action, or from changes in the policies of the FDA or other regulatory bodies during the period of product development, clinical trials,
or regulatory review. In addition, legislative and regulatory agendas, as they relate to healthcare and pharmaceutical industries and
the economy as a whole, of the Trump administration and the U.S. Congress currently remain uncertain. Failure to comply with any current
or future applicable regulatory requirements may result in criminal prosecution, civil penalties, recall or seizure of products, total
or partial suspension of production, or an injunction preventing certain activity, as well as other regulatory action against our product
candidates or us. As a company, we have no experience in successfully obtaining regulatory approval for a product and thus may be poorly
equipped to gauge, and may prove unable to manage, risks relating to obtaining such approval.
Outside the United States,
our ability to market a product is contingent upon receiving clearances from appropriate non-U.S. regulatory authorities. Non-U.S. regulatory
approval typically includes all of the risks associated with FDA clearance discussed above as well as geopolitical uncertainties and the
additional uncertainties and potential prejudices faced by U.S. pharmaceutical companies conducting business abroad. In certain cases,
pricing restrictions and practices can make achieving even limited profitability very difficult.
Clinical and preclinical drug development
involves a lengthy and expensive process with uncertain timelines and outcomes, and the results of preclinical studies and early clinical
trials are not necessarily predictive of future results. Elraglusib or any future product candidates may not achieve favorable results
or receive regulatory approval on a timely basis, if at all.
Drug development is expensive
and can take many years to complete, and its outcome is inherently uncertain. We cannot guarantee that any clinical trials or preclinical
studies will be conducted as planned, including whether we are able to meet expected timeframes for data readouts, or completed on schedule,
if at all, and failure can occur at any time during the trial or study process, including due to factors that are beyond our control.
Despite promising preclinical or clinical results, elraglusib or any other future product candidate can unexpectedly fail at any stage
of clinical or preclinical development. The historical failure rate for product candidates in our industry is high.
The results from preclinical
studies or clinical trials of elraglusib, any future product candidate, or a competitor’s product candidate in the same class may
not predict the results of later clinical trials of elraglusib or any future product candidate, and interim, topline or preliminary results
of a clinical trial are not necessarily indicative of final results. Elraglusib or any future product candidate in later stages of clinical
trials may fail to show the desired characteristics despite having progressed through preclinical studies and initial clinical trials.
It is not uncommon to observe results in clinical trials that are unexpected based on preclinical studies and early clinical trials, and
many product candidates fail in clinical trials despite very promising early results.
Moreover, preclinical and
clinical data may be susceptible to varying interpretations and analyses. A number of companies in the biopharmaceutical and biotechnology
industries have suffered significant setbacks in clinical development even after achieving promising results in earlier studies. Such
setbacks have occurred and may occur for many reasons, including, but not limited to:
There can be no assurance
that we will not suffer similar setbacks despite the data we observed in earlier or ongoing studies. Based upon negative or inconclusive
results, we or any current or any future collaborator may decide, or regulators may require us, to conduct additional preclinical studies
or clinical trials, which would cause us to incur additional operating expenses and delays and may not be sufficient to support regulatory
approval on a timely basis or at all.
We may not be successful in our efforts
to advance elraglusib in additional indications. We may expend our limited resources to pursue a new product candidate or a particular
indication for elraglusib and fail to capitalize on more profitable or successful alternatives.
Because we have limited financial
and managerial resources, we focus on the development of elraglusib for specific indications. We may fail to generate additional clinical
development opportunities for elraglusib for a number of reasons, including that elraglusib may, in indications we are seeking or may
seek in the future, be shown to have harmful side effects, limited to no efficacy or other characteristics that suggest it is unlikely
to receive marketing approval and/or achieve market acceptance in such potential indications. Our resource allocation and other decisions
may cause us to fail to identify and capitalize on viable potential product candidates or additional indications for elraglusib. Our spending
on current and future research and development programs for new product candidates or additional indications for elraglusib may not yield
any commercially viable product candidates or indications. If we do not accurately evaluate the commercial potential or target market
for a particular indication or product candidate, we may fail to develop such product candidate or indication, or relinquish valuable
rights to that product candidate through collaborations, license agreements and other similar arrangements in cases where it would have
been more advantageous for us to retain sole development and commercialization rights to such indication or product candidate, or negotiate
less advantageous terms for any such arrangements than is optimal.
Additionally, we may pursue
additional in-licenses or acquisitions of development-stage assets or programs, which entails additional risk to us. Identifying, selecting
and acquiring promising product candidates requires substantial technical, financial and human resources expertise. Efforts to do so may
not result in the actual acquisition or license of a particular product candidate, potentially resulting in a diversion of our management’s
time and the expenditure of our resources with no resulting benefit. For example, if we are unable to identify programs that ultimately
result in approved products, we may spend material amounts of our capital and other resources evaluating, acquiring and developing products
that ultimately do not provide a return on our investment.
If we experience delays or difficulties
enrolling subjects to our clinical trials, our receipt of necessary regulatory approvals could be delayed or otherwise adversely affected.
Identifying, screening and
enrolling patients to participate in clinical trials of our product candidates is critical to our success, and we may not be able to identify,
recruit, enroll and dose a sufficient number of patients with the required or desired characteristics to complete our clinical trials
in a timely manner. We may not be able to initiate or continue certain clinical trials for elraglusib or any future product candidates
if we are unable to identify and enroll a sufficient number of eligible patients to participate in these trials as required by the FDA
or similar regulatory authorities outside the United States. The timing of our clinical trials depends on our ability to recruit patients
to participate as well as to subsequently dose these patients and complete required follow-up periods. Patient enrollment, a significant
factor in the timing of clinical trials, is affected by many factors, including:
· the size and characteristics of the patient population;
· the proximity of patients to clinical sites;
· the eligibility and exclusion criteria for the trial;
· the design of the clinical trial;
· the risk that enrolled patients will not complete a clinical trial;
We will be required to identify
and enroll a sufficient number of patients for each of our clinical trials and monitor such patients adequately during and after treatment.
Potential patients for any planned clinical trials may not be adequately diagnosed or identified with the diseases which we are targeting,
which could adversely impact the outcomes of our trials and could have safety concerns for the potential patients. Potential patients
for any planned clinical trials may also not meet the entry criteria for such trials. In particular, because our planned clinical trials
of elraglusib are focused on indications with relatively small patient populations, our ability to enroll eligible patients may be limited
or may result in slower enrollment than we anticipate.
In addition, we may experience
enrollment delays related to increased or unforeseen regulatory, legal and logistical requirements at certain clinical trial sites. These
delays could be caused by reviews by regulatory authorities and contractual discussions with individual clinical trial sites. Any delays
in enrolling and/or dosing patients in our planned clinical trials could result in increased costs, delays in advancing our product candidates,
delays in testing the effectiveness of our product candidates or in termination of the clinical trials altogether.
If patients are unwilling
or unable to participate in our trials for any reason, including the existence of concurrent clinical trials for similar target populations,
the availability of approved therapies, or the fact that enrolling in our trials may prevent patients from taking a different product,
or we otherwise have difficulty enrolling a sufficient number of patients, the timeline for recruiting patients, conducting trials and
obtaining regulatory approval of elraglusib or any future product candidates may be delayed. Our inability to enroll a sufficient number
of patients for clinical trials would result in significant delays and could require us to abandon one or more clinical trials altogether.
Enrollment delays in these
clinical trials may result in increased time and development costs for our product candidates, which could materially affect our financial
condition.
As a company, we have not yet initiated
nor completed a Phase 3 clinical trial and have limited experience in completing regulatory filings, and any delays in regulatory filings
could materially affect our financial condition.
We will need to successfully
complete clinical trials in order to obtain FDA or comparable foreign regulatory approval to market elraglusib or any future product candidates.
Carrying out clinical trials and the submission of a successful NDA or other comparable foreign regulatory submission is a complicated
process. As a company, we have not yet initiated nor completed a Phase 3 clinical trial of our product candidates, nor have we demonstrated
the ability to obtain marketing approvals, manufacture product candidates at a commercial scale, or conduct sales and marketing activities
necessary for the successful commercialization of a product. We may also choose to conduct a number of additional clinical trials of elraglusib
in parallel over the next several years, which may be a difficult process to manage with our limited resources and which may divert attention
of management. FDA or other regulatory authority could also require us to conduct additional trials which may further delay approval of
our product. Consequently, we have no historical basis as a company by which you can evaluate or predict reliably our future success or
viability.
As a result, we cannot be
certain that our ongoing and planned clinical trials or preclinical studies will be successful. Any safety concerns observed in any one
of our clinical trials in our targeted indications could limit the prospects for regulatory approval of elraglusib in those and other
indications, which could have a material adverse effect on our business, financial condition, results of operations and prospects.
Interim, topline, and preliminary data from
our clinical trials that we announce or publish from time to time may change as more patient data become available and are subject to
audit and verification procedures that could result in material changes in the final data.
From time to time, we may
publicly disclose interim, topline, or preliminary data from our clinical trials, based on a preliminary analysis of then-available data,
and the results and related findings and conclusions are subject to change following a more comprehensive review of the data related to
the particular study or trial. We also make assumptions, estimations, calculations, and conclusions as part of our analyses of data, and
we may not have received or had the opportunity to fully and carefully evaluate all data. As a result, the interim, topline, or preliminary
results that we report may differ from future results of the same studies, or different conclusions or considerations may qualify such
results once additional data have been received and fully evaluated. Interim, topline, and preliminary data also remain subject to audit
and verification procedures that may result in the final data being materially different from the preliminary data we previously published.
As a result, such data should be viewed with caution until the final data are available. Interim, topline, and preliminary data from clinical
trials that we may complete are subject to the risk that one or more of the clinical outcomes may materially change as patient enrollment
continues and more patient data become available. Adverse differences between preliminary, interim or topline data and final data could
significantly harm our business prospects.
In addition, the information
we choose to publicly disclose regarding a particular study or clinical trial is based on what is typically extensive information, and
you or others may not agree with what we determine is the material or otherwise appropriate information to include in our disclosure,
and any information we determine not to disclose may ultimately be deemed significant with respect to future decisions, conclusions, views,
activities or otherwise regarding a particular product, product candidate, or our business. If the interim, topline, or preliminary data
that we report differ from actual results, or if others, including regulatory authorities, disagree with the conclusions reached, our
ability to obtain approval for, and commercialize elraglusib and any future product candidates may be harmed, which could harm our business,
operating results, prospects, or financial condition.
We anticipate that many of our product candidates
may be tested and, if approved, used in combination with third-party drugs and/or devices, some of which may still be in development,
and we have limited or no control over the supply, regulatory status or regulatory approval of such drugs and/or devices.
We anticipate developing our
product candidates for use in combination with other oncology pharmaceuticals, including chemotherapies and cellular and targeted therapies
(e.g., immune checkpoint inhibitors). We cannot be certain that current or potential future commercial relationships will provide us with
a steady supply of such drugs or devices on commercially reasonable terms or at all.
Any failure to maintain or
enter into new successful commercial relationships, or the expense of purchasing platinum-based and other chemotherapies, or any other
combination products, or any devices in the market, may delay our development timelines, increase our costs and jeopardize our ability
to develop our product candidates as commercially viable therapies. If any of these occur, our business, financial condition, results
of operations, stock price and prospects may be materially harmed. Moreover, the development of product candidates for use in combination
with another product or product candidate may present challenges that are not faced for single agent product candidates. For our product
candidates that may be used in combination with other chemotherapies, or any other combination products or any devices, the FDA may require
us to use more complex clinical trial designs in order to evaluate the contribution of each product and product candidate to any observed
effects. It is possible that the results of these trials could show that there are adverse events tied to the interaction of elraglusib
with any of the other therapies, or that any positive previous trial results are attributable to the combination therapy and not our product
candidates. Moreover, following product approval, the FDA may require that products or devices used in conjunction with each other be
cross labeled for combined use. To the extent that we do not have rights to the other product or device, this may require us to work with
a third party to satisfy such a requirement. The ability to obtain cooperation from the third party may impact our ability to respond
to the FDA’s requests which could impact our ability to achieve regulatory approval. Moreover, developments related to the other
product or device may impact our clinical trials as well as our commercial prospects should we receive marketing approval. Such developments
may include changes to the safety or efficacy profile of the other product or device, changes to the availability of the approved product
or device, and changes to the standard of care.
In the event that any future
collaborator or supplier of other chemotherapies, or any other products administered in combination, or any devices used, with our product
candidates does not supply their products on commercially reasonable terms or in a timely fashion, we would need to identify alternatives
for accessing these products. This could cause our clinical trials to be delayed and limit the commercial opportunities for our product
candidates, in which case our business, financial condition, results of operations, stock price and prospects may be materially harmed.
We may seek additional Orphan Drug, Fast
Track (“FTD”), Breakthrough (“BTD”) or orphan and priority (“PRIME”) designations for one or more
of our current and future product candidates, but we might not receive any such designation, and even if we do, such designation may not
actually lead to a faster development or regulatory review or approval process.
Our lead product candidate,
elraglusib, has been given FTD from the FDA for development in the treatment of pancreatic cancer, and we may seek FTD for other indications
or future product candidates. The FTD program is intended to expedite or facilitate the process for reviewing product candidates that
meet certain criteria. Specifically, biologics are eligible for Fast Track designation if they are intended, alone or in combination with
one or more drugs or biologics, 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 candidate and the specific
indication for which it is being studied. The sponsor of a Fast Track product candidate has opportunities for more frequent interactions
with the applicable FDA review team during product development and, once an NDA is submitted, the application may be eligible for priority
review. An NDA submitted for a Fast Track product candidate may also be eligible for rolling review, where the FDA may consider for review
sections of the NDA on a rolling basis before the complete application is submitted, if the sponsor provides a schedule for the submission
of the sections of the NDA, the FDA agrees to accept sections of the NDA and determines that the schedule is acceptable, and the sponsor
pays any required user fees upon submission of the first section of the NDA. Fast Track designation does not ensure that we will receive
marketing approval or that approval will be granted within any particular timeframe or at all. We may not experience a faster development,
regulatory review or approval process with Fast Track designation compared to conventional FDA procedures. Additionally, the FDA may withdraw
Fast Track designation, for reasons such as it comes to believe a drug candidate no longer adequately addresses an unmet medical need
or that the designation is no longer supported by data from our clinical development program. Fast Track designation alone does not guarantee
qualification for the FDA’s priority review procedures. If we seek Fast Track designation for other indications, or if we pursue
breakthrough or PRIME designations from FDA or EMA, respectively, we may not receive such designations. Many product candidates that have
received Fast Track designation have ultimately failed to obtain approval.
We, or any future collaborators, may not
be able to obtain and maintain orphan drug exclusivity for our product candidates in the United States and Europe.
Elraglusib has been granted
orphan drug designation (“ODD”) for the treatment of pancreatic cancer, glioblastomas, neuroblastoma and soft tissue sarcomas
in the United States. We may seek additional ODD or regulatory incentives for other indications, for the oral dosage form of elraglusib,
or for future product candidates in the United States, EU, Japan or Australia. We may not be able to obtain such designations.
While elraglusib currently
has been granted ODD from the FDA for limited indications, we may not be able to maintain this orphan drug exclusivity. Further, even
if we obtain ODD for a future product candidate or for elraglusib with respect to a different indication, we may not be able to maintain
orphan drug exclusivity for that drug or indication. For example, ODD may be removed if the prevalence of an indication increases beyond
the patient number limit required to maintain designation. Generally, if a drug with an ODD subsequently receives the first marketing
approval for the indication for which it has such designation, the drug is entitled to a period of marketing exclusivity, which precludes
the EMA or the FDA from approving another marketing application for the same product in the same indication for that time period. Orphan
drug exclusivity may be lost if the FDA or EMA determines that the request for designation was materially defective or if the manufacturer
is unable to assure sufficient quantity of the product to meet the needs of patients with the rare disease or condition. Moreover, even
after an orphan drug is approved, the FDA can subsequently approve a different drug for the same condition if the FDA concludes that the
later drug is clinically superior in that it is shown to be safer, more effective or makes a major contribution to patient care compared
to our product.
The FDA may reevaluate the
Orphan Drug Act and its regulations and policies, and similarly the EMA may reevaluate its policies and regulations. We do not know if,
when, or how the FDA or EMA may change their orphan drug regulations and policies in the future, and it is uncertain how any changes might
affect our business. Depending on what changes the FDA and/or EMA may make to their orphan drug regulations and policies, our business
could be adversely impacted.
It is uncertain whether product liability
insurance will be adequate to address product liability claims, or that insurance against such claims will be affordable or available
on acceptable terms in the future.
Clinical research involves
the testing of new drugs on human volunteers pursuant to a clinical trial protocol. Such testing involves a risk of liability for personal
injury to or death of patients due to, among other causes, adverse side effects, improper administration of the new drug, or improper
volunteer behavior. Claims may arise from patients, clinical trial volunteers, consumers, physicians, hospitals, companies, institutions,
researchers, or others using, selling, or buying our products, as well as from governmental bodies. In addition, product liability and
related risks are likely to increase over time, in particular upon the commercialization or marketing of any products by us or parties
with which we enter into development, marketing, or distribution collaborations. While we do have liability insurance coverage, regardless
of their merit or eventual outcome, product liability claims may result in:
· withdrawal of clinical trial volunteers;
· decreased demand for our products when approved;
· injury to our reputation and significant, adverse media attention; and
There can be no assurance
that suitable product liability insurance (at the clinical stage and/or commercial stage) will continue to be available on terms acceptable
to us or at all, or that, if obtained, the insurance coverage will be appropriate and sufficient to cover any potential claims or liabilities.
If the market opportunities for our current
and potential future drug candidates are smaller than we believe they are, our ability to generate product revenues may be adversely affected
and our business may suffer.
The potential market opportunities
for our product candidates are difficult to estimate and will depend in large part on the drugs with which our product candidates are
co-administered and the success of competing therapies and therapeutic approaches. Our projections of both the number of people who have
the cancers we are targeting, as well as the subset of people with these cancers in a position to receive therapy and who have the potential
to benefit from treatment with elraglusib or any future product candidate are predicated on many assumptions, which may include industry
knowledge and publications, third-party research reports, and other surveys. Although we believe that our internal assumptions are reasonable,
these assumptions involve the exercise of significant judgment on the part of our management, are inherently uncertain, and their reasonableness
has not been assessed by an independent source. These estimates may prove to be incorrect and new studies may change the estimated incidence
or prevalence of these diseases. The number of patients in the United States, Europe, and elsewhere may turn out to be lower than expected,
and patients may not be amenable to treatment with our product, or new patients may become increasingly difficult to identify or gain
access to, all of which would adversely affect our business, financial condition, results of operations and prospects. If any of the assumptions
prove to be inaccurate, the actual markets for our product candidates could be smaller than our estimates of the potential market opportunities.
Further, even if we obtain significant market share for elraglusib or any future product candidate, because some of our potential target
populations are very small, we may never achieve profitability despite obtaining such significant market share.
Our product development efforts are at
an early stage. We have not yet undertaken any marketing efforts, and there can be no assurance that future anticipated market testing
and analyses will validate our marketing strategy. We may need to modify the products, or we may not be successful in either developing
or marketing those products.
As a company, we have not
completed the development or clinical trials of any product candidate and, accordingly, have not yet begun to market or generate revenue
from the commercialization of any products. Obtaining approvals of these product candidates will require substantial additional research
and development as well as costly clinical trials. There can be no assurance that we will successfully complete the development of our
product candidates or successfully market them. We may encounter problems and delays relating to research and development, regulatory
approval, intellectual property rights of product candidates, or other factors. There can be no assurance that our development programs
will be successful, that our product candidates will prove to be safe and effective in or after clinical trials, that the necessary regulatory
approvals for any product candidates will be obtained, or, even if obtained, will be as broad as sought or will be maintained for any
period thereafter, that patents will issue on our patent applications, that any intellectual property protections we secure will be adequate,
or that our collaboration arrangements will not diminish the value of our intellectual property through licensing or other arrangements.
Furthermore, elraglusib and
any future product candidates may not be commercially successful. Even if elraglusib or any future product candidates receive regulatory
approval, they may not gain market acceptance among physicians, patients, healthcare payors, or the medical community. The commercial
success of elraglusib or any future product candidates will depend significantly on the broad adoption and use of the resulting product
by these individuals and organizations for approved indications, and there can be no assurance that competitive products will not perform
better and/or be marketed more successfully. Additionally, there can be no assurances that any future market testing and analyses will
validate our marketing strategies. We may need to seek to modify the product labels through additional studies in order to be able to
market them successfully to reach their commercial potential. If elraglusib or any future product candidates is approved but does not
achieve an adequate level of acceptance by physicians, hospitals, healthcare payors or patients, we may not generate sufficient revenue
from that product and may not become or remain profitable. Our efforts to educate the medical community and third-party payors regarding
the benefits of our products may require significant resources and may never be successful.
We currently have no marketing and sales
organization and have no experience as a company in commercializing products, and we may need to invest significant resources to develop
these capabilities. If we are unable to establish marketing and sales capabilities or enter into agreements with third parties to market,
sell and distribute our products, we may not be able to generate product revenue.
We have no internal sales,
marketing or distribution capabilities, nor have we ever commercialized a product. If elraglusib or any future product candidate ultimately
receives regulatory approval, we must build a marketing and sales organization with technical expertise and supporting distribution capabilities
to commercialize each such product in major markets, which will be expensive and time consuming, or collaborate with third parties that
have direct sales forces and established distribution systems, either to augment our own sales force and distribution systems or in lieu
of our own sales force and distribution systems. For example, if elraglusib is approved, we will need to scale up a cost-effective and
reliable cold chain distribution and logistics network, which we may be unable to accomplish and which will require us to rely on third-party
distributors. Failure to scale up our cold chain supply logistics, by us or third parties, could in the future lead to additional manufacturing
costs and delays in our ability to supply required quantities for commercial supply.
We have no prior experience
as a company with the marketing, sale or distribution of biopharmaceutical products and there are significant risks involved in the building
and managing of a sales organization, including our ability to hire, retain and incentivize qualified individuals, generate sufficient
sales leads, provide adequate training to and develop appropriate compliance programs for sales and marketing personnel and effectively
manage a geographically dispersed sales and marketing team. Any failure or delay in the development of our internal sales, marketing and
distribution capabilities would adversely impact the commercialization of these products. We may not be able to enter into collaborations
or hire consultants or external service providers to assist us in sales, marketing and distribution functions on acceptable financial
terms, or at all. In addition, our product revenue and our profitability, if any, may be lower if we rely on third parties for these functions
than if we were to market, sell and distribute any products that we develop ourselves. We likely will have little control over such third
parties, and any of them may fail to devote the necessary resources and attention to sell and market our products effectively. If we are
not successful in commercializing our products, either on our own or through arrangements with one or more third parties, we may not be
able to generate any future product revenue and we would incur significant additional losses.
If we are unable to establish relationships
with licensees or collaborators to carry out sales, marketing, and distribution functions or to create effective marketing, sales, and
distribution capabilities, we will be unable to market our products successfully.
Our business strategy may
include selling product candidates, out-licensing product candidates to or collaborating with larger firms with experience in marketing
and selling pharmaceutical products. There can be no assurance that we will successfully be able to establish marketing, sales, or distribution
relationships with any third-party, that such relationships, if established, will be successful, or that we will be successful in gaining
market acceptance for any products we might develop. To the extent that we enter into any marketing, sales, or distribution arrangements
with third parties, our product revenues per unit sold are expected to be lower than if we marketed, sold, and distributed our products
directly, and any revenues we receive will depend upon the efforts of such third parties.
The successful commercialization of elraglusib
or any future product candidates, if approved, will depend in part on the extent to which governmental authorities and health insurers
establish coverage, adequate reimbursement levels and favorable pricing policies. Failure to obtain or maintain coverage and adequate
reimbursement for our products could limit our ability to market those products and decrease our ability to generate revenue.
The availability of coverage
and the adequacy of reimbursement by governmental healthcare programs such as Medicare and Medicaid, private health insurers and other
third-party payors are essential for most patients to be able to afford prescription medications such as elraglusib or any future product
candidates, if approved. Our ability to achieve coverage and acceptable levels of reimbursement for our products by third-party payors
will have an effect on our ability to successfully commercialize those products. Accordingly, we will need to successfully implement a
coverage and reimbursement strategy for any approved product candidate. Even if we obtain coverage for a given product by a third-party
payor, the resulting reimbursement payment rates may not be adequate or may require co-payments that patients find unacceptably high.
If we participate in the Medicaid
Drug Rebate Program or other governmental pricing programs, in certain circumstances, our products would be subject to ceiling prices
set by such programs, which could reduce the revenue we may generate from any such products. Participation in such programs would also
expose us to the risk of significant civil monetary penalties, sanctions and fines should we be found to be in violation of any applicable
obligations thereunder.
Third-party payors increasingly
are challenging prices charged for biopharmaceutical products and services, and many third-party payors may refuse to provide coverage
and reimbursement for particular drugs when an equivalent generic drug or a less expensive therapy is available. It is possible that a
third-party payor may consider our products as substitutable and offer to reimburse patients only for the less expensive product. Even
if we are successful in demonstrating improved efficacy or improved convenience of administration with our products, pricing of existing
drugs may limit the amount we will be able to charge for our products. These payors may deny or revoke the reimbursement status of a given
product or establish prices for new or existing marketed products at levels that are too low to enable us to realize an appropriate return
on our investment in product development. If reimbursement is not available or is available only at limited levels, we may not be able
to successfully commercialize our products and may not be able to obtain a satisfactory financial return on products that we may develop.
There is significant uncertainty
related to third-party payor coverage and reimbursement of newly approved products. In the United States, third-party payors, including
private and governmental payors, such as the Medicare and Medicaid programs, play an important role in determining the extent to which
new drugs will be covered. Some third-party payors may require pre-approval of coverage for new or innovative devices or drug therapies
before they will reimburse healthcare providers who use such therapies. It is difficult to predict at this time what third-party payors
will decide with respect to the coverage and reimbursement for elraglusib or any future product candidates.
Risks Related to Our Reliance on Third Parties
The termination of third-party licenses
could adversely affect our rights to important technologies.
In connection with our efforts
to expand our pipeline of product candidates, we may enter into certain licenses or other collaboration agreements in the future pertaining
to the in-license of rights to additional candidates. Such agreements may impose various diligence, milestone payment, royalty, insurance
or other obligations on us. If we fail to comply with these obligations, our licensor or collaboration partners may have the right to
terminate the relevant agreement, in which event we would not be able to develop or market the products covered by such licensed intellectual
property. Our existing licensing agreements with UIC and NU contain diligence obligations to maintain each license agreement.
Moreover, disputes may arise
regarding intellectual property subject to a licensing agreement, including:
· the priority of invention of patented technology.
In addition, the agreements under which
we currently license intellectual property or technology from third parties are complex, and certain provisions in such agreements may
be susceptible to multiple interpretations. The resolution of any contract interpretation disagreement that may arise could narrow what
we believe to be the scope of our rights to the relevant intellectual property or technology or increase what we believe to be our consolidated
financial or other obligations under the relevant agreement, either of which could have a material adverse effect on our business, financial
condition, results of operations and prospects. Moreover, if disputes over intellectual property that we have licensed prevent or impair
our ability to maintain our current licensing arrangements on commercially acceptable terms, we may be unable to successfully develop
and commercialize the affected product candidates, which could have a material adverse effect on our business, financial conditions,
results of operations and prospects.
We may also have limited control
over the maintenance and prosecution of these in-licensed patents and patent applications, or any other intellectual property that may
be related to our in-licensed intellectual property. For example, we cannot be certain that such activities by any future licensors have
been or will be conducted in compliance with applicable laws and regulations or will result in valid and enforceable patents and other
intellectual property rights. We have limited control over the manner in which our licensors initiate an infringement proceeding against
a third-party infringer of the intellectual property rights or defend certain of the intellectual property that is licensed to us. It
is possible that the licensors’ infringement proceeding or defense activities may be less vigorous than had we conducted them ourselves.
Our current drug substance (“DS”) manufacturer of
elraglusib is in China, and it is unknown how current or future geopolitical relationships with China may affect our ability to obtain
DS, increase our costs, delay clinical trials and potential regulatory approval, and adversely impact our financial condition.
We rely upon a single company
located in China to manufacture the DS for our sole product candidate, elraglusib. This company manufactures DS under cGMP that is suitable
for formulating into a therapeutic used in humans, which drug product manufacturing process is substantially completed in the United States.
We do not have any exclusive contractual commitments for this company to manufacture for us in the future or to ever become a sole provider
of DS and thus, we do have the ability to seek out other GMP manufacturers if needed. However, if we do not maintain this manufacturing
and service relationship that is important to us and are not able to identify replacement suppliers, vendors and laboratories, our ability
to obtain elraglusib for clinical trials and potential regulatory approval could be impaired or delayed and our costs could substantially
increase, adversely impacting our financial condition.
We may be unable to identify
additional manufacturers with whom we might establish appropriate arrangements on acceptable terms, if at all. Even if we are able to
find replacement manufacturers, suppliers, vendors and service providers when needed, we may not be able to enter into agreements with
them on terms and conditions favorable to us or there could be a substantial delay before such manufacturer, vendor or supplier, or a
related new facility is properly qualified and registered with the FDA or other foreign regulatory authorities. A new manufacturer currently
not qualified with the FDA would have to be educated in, or develop substantially equivalent processes for, production of our approved
products after receipt of FDA approval. To qualify and receive regulatory approval for a new manufacturer could take as long as two years.
The process of changing a supplier could have an adverse impact on our current clinical development programs if supplies of DS or materials
on hand are insufficient to satisfy demand. Such delays could have a material adverse effect on our development activities and our business.
Adverse changes in the political and economic policies of the Chinese government could have a material adverse effect on the overall economic
growth of China, which could adversely affect our ability to conduct business in China. We are unable to predict the frequency and scope
of such policy changes, any of which could materially and adversely affect our liquidity, access to capital and our ability to conduct
business in China. Any failure on our part to comply with changing government regulations and policies could result in the loss of our
ability to manufacture and develop our product candidates in China.
We rely on third parties for the manufacture
and shipping of elraglusib for clinical development and expect to continue to do so for the foreseeable future. If we or our licensees,
development collaborators, or suppliers are unable to manufacture our products in sufficient quantities or at defined quality specifications,
or are unable to obtain regulatory approvals for the manufacturing facility, we may be unable to develop and/or meet demand for our products
and lose time to market and potential revenues.
Completion of our clinical
trials and commercialization of our product candidates require access to, or development of, facilities to manufacture a sufficient supply
of our product candidates. We do not own or operate manufacturing facilities and have no plans to develop our own clinical or commercial-scale
manufacturing capabilities. We rely on a third-party manufacturer for the production of elraglusib and expect to continue to rely on third-party
manufacturers for commercial manufacture if elraglusib or any future product candidates receive regulatory approval. The facilities used
by third-party manufacturers to manufacture elraglusib or any future product candidate must be approved for the manufacture of such product
candidate by the FDA and any comparable foreign regulatory authority pursuant to inspections that will be conducted after we submit an
NDA to the FDA or any comparable submission to a foreign regulatory authority. We do not control the manufacturing process of, and are
completely dependent on, third-party manufacturers for compliance with cGMP requirements for the manufacture of products. In addition,
we have no control over the ability of third-party manufacturers to maintain adequate quality control, quality assurance and qualified
personnel.
If the FDA or any comparable
foreign regulatory authority does not approve these facilities for the manufacture of elraglusib or any future product candidates or if
it withdraws any such approval in the future, we may need to find alternative manufacturing facilities, which would significantly impact
our ability to develop, obtain regulatory approval for or market elraglusib or any future product candidates, if approved. Our failure,
or the failure of our third-party manufacturers, to comply with applicable regulations could result in sanctions being imposed on us,
including clinical holds, fines, injunctions, civil penalties, delays, suspension or withdrawal of approvals, seizures or recalls of elraglusib
or any future product candidates, operating restrictions and criminal prosecutions, any of which could significantly and adversely affect
supplies of elraglusib or any future product candidates. We may not be successful in identifying additional or replacement third-party
manufacturers, or in negotiating acceptable terms with any we do identify. We may face competition for access to these manufacturers’
facilities and may be subject to manufacturing delays if the manufacturers give other clients higher priority than they give to us. Even
if we are able to identify an additional or replacement third-party manufacturer, the delays and costs associated with establishing and
maintaining a relationship with such manufacturer may have a material adverse effect on us.
We depend on a third-party manufacturer
for certain drug substances, drug products, raw materials, samples, components, and other materials used in our product candidates. We
obtain our supplies on a purchase order basis and do not have any long-term supply agreements in place. If we are unable to source these
supplies on a timely basis, or establish longer-term contracts with suppliers, we will not be able to complete our clinical trials or
studies on time and the development of our product candidates may be delayed.
We depend on a third-party
manufacturer for certain drug substances, drug products, raw materials, samples, components and other materials used in our product candidates.
We obtain our supplies on a purchase order basis and do not currently have long-term supply contracts with our supplier, and our supplier
is not obligated to supply drug products to us for any period, in any specified quantity or at any certain price beyond the delivery contemplated
by the relevant purchase orders. As a result, our supplier could stop selling to us at commercially reasonable prices, or at all. While
we intend to enter into long-term supply agreements in the future as we advance our clinical trials or commercialization plans, we may
not be successful in negotiating such agreements on favorable terms, or at all. If we do enter into such long-term supply agreements,
we could be subject to binding long-term purchase obligations that are less favorable than purchasing on a purchase order basis, and which
may be harmful to our business, including in the event that we do not conduct our trials on planned timelines or utilize the drug products
that we are required to purchase. Any change in our relationship with our supplier or changes to our arrangement with our supplier could
adversely affect our business, financial condition, results of operations and prospects.
Furthermore, our supplier
could stop producing our supplies, cease operations or be acquired by, or enter into exclusive arrangements with, our competitors. Establishing
additional or replacement suppliers for these supplies, and obtaining regulatory clearance or approvals that may result from adding or
replacing suppliers, could take a substantial amount of time, result in increased costs and impair our ability to produce our products
or conduct timely trials, which would adversely impact our business, financial condition, results of operations and prospects. Any such
interruption or delay may force us to seek similar supplies from alternative sources, which may not be available at reasonable prices,
or at all. Any interruption in the supply of source components for our product candidates would adversely affect our ability to meet scheduled
timelines and budget for the development and commercialization of our product candidates, which could result in higher expenses and would
harm our business. Although we have not experienced any significant disruption as a result of our reliance on our supplier, we have a
limited operating history and cannot assure you that we will not experience disruptions in our supply chain in the future as a result
of such reliance or otherwise.
We rely on third parties to conduct our
non-clinical studies and clinical trials. If these parties do not successfully carry out their duties or meet deadlines, we may be unable
to obtain regulatory approval for or commercialize our product candidates and adversely affect our financial condition.
We do not have the ability
to independently conduct non-clinical studies and clinical trials. We rely on medical institutions, clinical investigators, contract laboratories,
collaborative partners and other third parties, such as contract research organizations or clinical research organizations, to conduct
non-clinical studies and clinical trials on our product candidates. The third parties with whom we contract for execution of our non-clinical
studies and clinical trials play a significant role in the conduct of these studies and trials and the subsequent collection and analysis
of data. However, these third parties are not our employees, and except for contractual duties and obligations, we have limited ability
to control the amount or timing of resources that they devote to our programs.
Although we rely on third
parties to conduct our non-clinical studies and clinical trials, we remain responsible for ensuring that each of our non-clinical studies
and clinical trials is conducted in accordance with its investigational plan and protocol. Moreover, the FDA, EMA and other foreign regulatory
authorities require us to comply with regulations and standards, including regulations commonly referred to as GCPs, for conducting, monitoring,
recording and reporting the results of clinical trials to ensure that the data and results are scientifically credible and accurate, and
that the trial subjects are adequately informed of the potential risks of participating in clinical trials.
In addition, the execution
of non-clinical studies and clinical trials, and the subsequent compilation and analyses of the data produced, requires coordination among
various parties. In order for these functions to be carried out effectively and efficiently, it is imperative that these parties communicate
and coordinate with one another. Moreover, these third parties may also have relationships with other commercial entities, some of which
may compete with us. Under certain circumstances, these third parties may be able to terminate their agreements with us upon short notice.
If the third parties conducting our clinical trials do not perform their contractual duties or obligations, experience work stoppages,