ITEM 1A. RISK FACTORS
In analyzing our company,
you should consider carefully the following risk factors, together with all of the other information included in this Annual Report
on Form 10-K. Factors that could cause or contribute to differences in our actual results include those discussed in the following
subsection, as well as those discussed above in “Management’s Discussion and Analysis of Financial Condition and Results
of Operations” and elsewhere throughout this Annual Report on Form 10-K. Each of the following risk factors, either
alone or taken together, could adversely affect our business, operating results and financial condition, as well as adversely affect
the value of an investment in our company. The risks and uncertainties described below are not the only ones we face. Additional
risks not currently known to us or other factors not perceived by us to present significant risks to our business at this time
also may impair our business operations.
Summary of Risk Factors
We are providing the following summary of the risk factors contained
in this Annual Report on Form 10-K to enhance the readability and accessibility of our risk factor disclosures. We encourage you
to carefully review the full risk factors contained in this Annual Report on Form 10-K in their entirety for additional information
regarding the material factors that make an investment in our securities speculative or risky. These risks and uncertainties include,
but are not limited to, the following:
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Risks Related to Our Business
We are a clinical-stage company and have generated no revenue
from commercial sales to date.
We are a clinical-stage
biopharmaceutical company with a limited operating history. We have no products approved for commercial sale and have not generated
any revenue from product sales to date. We will encounter risks and difficulties frequently experienced by early-stage companies
in rapidly evolving fields. If we do not address these risks successfully, our business will suffer.
We have incurred net losses in every year since our inception
and anticipate that we will continue to incur net losses in the future.
We are not profitable and
have incurred losses in each period since our inception. As of December 31, 2020 and December 31, 2019, we had an accumulated deficit
of $231.0 million and $208.8 million, respectively. We reported a net loss of $22.2 million and $21.9 million for the years ended
December 31, 2020 and 2019, respectively. We expect to continue to operate at a net loss as we continue our research and development
efforts, continue to conduct clinical trials and develop manufacturing, sales, marketing and distribution capabilities. There can
be no assurance that the products under development by us will be approved for sale in the United States or elsewhere. Furthermore,
there can be no assurance that if such products are approved, they will be successfully commercialized, which would have an adverse
effect on our business prospects, financial condition and results of operation.
If we fail to obtain additional financing,
we will be unable to continue or complete our product development and you will likely lose your entire investment.
On April 24, 2020, we issued
and sold 4.3 million shares of common stock and pre-funded warrants to purchase 2.8 million shares of common stock. Gross proceeds
from this offering to us were $31.6 million, before deducting underwriting discounts and commissions and other offering expenses
payable by us. On June 19, 2020, we issued and sold 1.9 million shares of common stock and 0.7 million pre-funded warrants to purchase
shares of common stock. Gross proceeds from this offering to us were $25.0 million, before deducting underwriting discounts and
commissions and other offering expenses payable us. In August 2020, we entered into the Capital on DemandTM Sales Agreement
with JonesTrading, pursuant to which we may sell, from time to time, through or to JonesTrading Institutional Services LLC (“JonesTrading”),
up to an aggregate of $200 million of our common stock. Shares of common stock are offered pursuant to our shelf registration statement
filed with the United States Securities and Exchange Commission (“SEC”) on August 7, 2020. As of December 31, 2020,
we sold 2.1 million shares of common stock, resulting in gross proceeds of $22.6 million and net proceeds of $21.7 million. As
of the date of filing this report, we expect that our existing resources will be more than sufficient to fund our planned operations
for more than 12 months following the date of this report.
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Our business or operations
may change in a manner that would consume available funds more rapidly than anticipated and substantial additional funding may
be required to maintain operations, fund expansion, develop new or enhanced products, acquire complementary products, business
or technologies or otherwise respond to competitive pressures and opportunities, such as a change in the regulatory environment
or a change in preferred cancer treatment modalities. However, we may not be able to secure funding when we need it or on favorable
terms or indeed on any terms. In addition, from time to time, we may not be able to secure enough capital in a timely enough manner
which may cause the generation of a going-concern opinion from our auditors which can and may impair our stock market valuation
and also our ability to finance on favorable terms or indeed on any terms.
To raise additional capital,
we may in the future offer additional shares of our common stock or other securities convertible into or exchangeable for our common
stock. We cannot assure you that we will be able to sell shares or other securities in any other offering at a price per share
that is equal to or greater than the price per share paid by investors, and investors purchasing shares or other securities in
the future could have rights superior to existing stockholders.
If we cannot raise adequate
funds to satisfy our capital requirements, we will have to delay, scale back or eliminate our research and development activities,
clinical studies or future operations. We may also be required to obtain funds through arrangements with collaborators, which arrangements
may require us to relinquish rights to certain technologies or products that we otherwise would not consider relinquishing, including
rights to future product candidates or certain major geographic markets. We may further have to license our technology to others.
This could result in sharing revenues which we might otherwise have retained for ourselves. Any of these actions may harm our business,
financial condition and results of operations.
The amount of funding we
will need depends on many factors, including the progress, timing and scope of our product development programs; the progress,
timing and scope of our preclinical studies and clinical trials; the time and cost necessary to obtain regulatory approvals; the
time and cost necessary to further develop manufacturing processes and arrange for contract manufacturing; our ability to enter
into and maintain collaborative, licensing and other commercial relationships; and our partners’ commitment of time and resources
to the development and commercialization of our products.
We have limited access to the capital
markets and even if we can raise additional funding, we may be required to do so on terms that are dilutive to you.
We have limited access
to the capital markets to raise funds. The capital markets have been unpredictable in the recent past for radioisotope and other
oncology companies and unprofitable companies such as ours. In addition, it is generally difficult for development-stage companies
to raise capital under current market conditions. The amount of capital that a company such as ours is able to raise often depends
on variables that are beyond our control. As a result, we may not be able to secure financing on terms attractive to us, or at
all. If we are able to consummate a financing arrangement, the amount raised may not be sufficient to meet our future needs. If
adequate funds are not available on acceptable terms, or at all, our business, including our technology licenses, results of operations,
financial condition and our continued viability will be materially adversely affected.
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We are highly dependent on the success
of Iomab-B and the SIERRA trial and we may not able to complete the necessary clinical development or our development efforts may
not result in the data necessary to receive regulatory approval.
Iomab-B, which we licensed
from the Fred Hutchinson Cancer Research Center (“FHCRC”) in June 2012 is our lead program to which we allocate a significant
portion of our resources. We are currently enrolling patients in the pivotal Phase 3 SIERRA trial (Study of Iomab-B in Elderly
Relapsed or Refractory AML), a 150-patient multi-center randomized trial that will compare outcomes of patients who receive Iomab-B
and a BMT to those patients receiving physician’s choice of salvage chemotherapy, defined as conventional care, as no standard
of care exists for this patient population. The SIERRA trial may be unsuccessful and fail to demonstrate a safety and efficacy
profile that is necessary to receive favorable regulatory approval. The trials DMC may recommend that the trial be stopped early
for safety or efficacy concerns, which could prevent us from completing the SIERRA trial. Even if Iomab-B receives favorable regulatory
approval, we may not be successful in securing adequate reimbursement or establishing successful commercial operations. Any or
all of these factors could have a material adverse impact on our business and ability to continue operations.
We may be unable to establish sales,
marketing and commercial supply capabilities.
We do not currently have,
nor have we ever had, commercial sales and marketing capabilities. If any of our product candidates become approved, we would have
to build and establish these capabilities in order to commercialize our approved product candidates. The process of establishing
commercial capabilities will be expensive and time consuming. Even if we are successful in building sales and marketing capabilities,
we may not be successful in commercializing any of our product candidates. Any delays in commercialization or failure to successfully
commercialize any product candidate may have material adverse impacts on our business and ability to continue operations.
Our business could be adversely affected by the effects of
health epidemics, including the global COVID-19 pandemic.
In December 2019, a novel
strain of coronavirus was reported in China. Since then, COVID-19 has spread globally. The spread of COVID-19 from China to other
countries resulted in the World Health Organization (WHO) declaring the outbreak of COVID-19 as a “pandemic,” or a
worldwide spread of a new disease, on March 11, 2020. Many countries around the world have imposed quarantines and restrictions
on travel and mass gatherings to slow the spread of the virus and have closed non-essential businesses, and many domestic jurisdictions
continue to have such restrictions in place.
As many domestic jurisdictions
continue to maintain such restrictions in place, our ability to continue to operate our business may also be limited. These restrictions
may result in a period of business, supply and drug product manufacturing disruption, and in reduced operations, any of which could
materially affect our business, financial condition and results of operations. In response to COVID-19, we implemented remote working
and thus far have not experienced a significant disruption or delay in our operations as it relates to the clinical development
of our drug candidates. Such government-imposed precautionary measures may have been relaxed in certain countries or states, but
there is no assurance that more strict measures will be put in place again due to a resurgence in COVID-19 cases, including those
involving new variants of the coronavirus, which may be more contagious and deadly than prior strains. Therefore, the COVID-19
pandemic may continue to affect our operation, may further divert the attention and efforts of the medical community to coping
with COVID-19 and disrupt the marketplace in which we operate and may have a material adverse effect on our operations.
The spread of COVID-19,
which has caused a broad impact globally, may materially affect us economically. While the ultimate economic impact brought by,
and the duration of, the COVID-19 pandemic may be difficult to assess or predict, including new information which may emerge concerning
the severity of COVID-19 and the actions to contain COVID-19 or treat its impact, among others, the pandemic has resulted in significant
disruptions in the general commercial activity and the global economy and caused financial market volatility and uncertainty in
significant and unforeseen ways in the recent months. A continuation or worsening of the levels of market disruption and volatility
seen in the recent past could have an adverse effect on our ability to access capital, which could in the future negatively affect
our liquidity. In addition, a recession or market correction resulting from the spread of COVID-19 could materially affect our
business and the value of our common stock.
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Currently, the Phase 3
SIERRA trial for our lead program, Iomab-B, continues to remain active at a majority of our clinical trial sites, with investigators
providing feedback that recruitment and enrollment will remain active because of the acute nature of the disease, the high unmet
needs of patients with relapsed or refractory AML, the potentially curative nature of BMT and the differentiated profile of Iomab-B.
Certain sites that had not been actively enrolling due to COVID-19 at the initial outbreak of the pandemic resumed recruitment
and enrollment in mid-2020, and we currently do not have any sites that are not recruiting and enrolling due to COVID-19. We also
believe our earlier stage clinical trials for our CD33 program will also continue to recruit and enroll patients given the acute
nature of relapsed or refractory AML. The continuation of the pandemic globally could adversely affect our planned clinical trial
operations, including our ability to conduct the trials on the expected timelines and recruit and retain patients and principal
investigators and site staff who, as healthcare providers, may have heightened exposure to COVID-19 if their geography is impacted
by the pandemic. Further, the continuation and/or resurgence of the COVID-19 pandemic could result in delays in our clinical trials
due to prioritization of hospital resources toward the pandemic, restrictions in travel, potential unwillingness of patients to
enroll in trials at this time, or the inability of patients to comply with clinical trial protocols if quarantines or travel restrictions
impede patient movement or interrupt healthcare services. In addition, we rely on independent clinical investigators, contract
research organizations and other third-party service providers to assist us in managing, monitoring and otherwise carrying out
our preclinical studies and clinical trials, and the pandemic may affect their ability to devote sufficient time and resources
to our programs or to travel to sites to perform work for us.
Additionally, COVID-19
may result in delays in receiving approvals from domestic and foreign regulatory authorities, delays in necessary interactions
with Institutional Review Boards (“IRBs”), domestic and foreign regulators, ethics committees and other important agencies
and contractors due to limitations in employee resources or forced furlough of government employees.
COVID-19 has caused severe
disruptions in transportation and limited access to our facility, resulting in limited support from our staff and professional
advisors.
We continue to monitor
the impacts of COVID-19 on the global economy and on our business operations. However, the ultimate impact from COVID-19 on our
business operations and financial results during 2021 will depend on, among other things, the ultimate severity and scope of the
pandemic, the pace at which governmental and private travel restrictions and public concerns about public gatherings will ease,
the rate at which historically large increases in unemployment rates will decrease, if at all, and whether, and the speed with
which the economy recovers. We are not able to fully quantify the impact that these factors will have on our financial results
during 2021 and beyond, but developments related to COVID-19 may materially affect us in 2021.
Our business is subject to cybersecurity risks.
Our operations are increasingly
dependent on information technologies and services. Threats to information technology systems associated with cybersecurity risks
and cyber incidents or attacks continue to grow, and include, among other things, storms and natural disasters, terrorist attacks,
utility outages, theft, viruses, phishing, malware, design defects, human error, and complications encountered as existing systems
are maintained, repaired, replaced, or upgraded. Risks associated with these threats include, among other things:
● theft or misappropriation of funds;
● damage to our reputation with our potential partners, patients and the market;
● exposure to litigation;
● increased costs to prevent, respond to or mitigate cybersecurity events.
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Although we utilize various
procedures and controls to mitigate our exposure to such risk, cybersecurity attacks and other cyber events are evolving and unpredictable.
Moreover, we have no control over the information technology systems of third parties conducting our clinical trials, our suppliers,
and others with which our systems may connect and communicate. As a result, the occurrence of a cyber incident could go unnoticed
for a period time.
We recently secured cybersecurity
insurance coverage to protect against cybersecurity risks. However, we cannot ensure that it will be sufficient to cover any particular
losses we may experience as a result of such cyberattacks. Any cyber incident could have a material adverse effect on our business,
financial condition and results of operations.
Risks Related to Regulation
The FDA or comparable foreign regulatory
authorities may disagree with our regulatory plans and we may fail to obtain regulatory approval of our product candidates.
Our products are subject
to rigorous regulation by the FDA and numerous other federal, state and foreign governmental authorities. The process of seeking
regulatory approval to market an antibody radiation-conjugate product is expensive and time-consuming, and, notwithstanding the
effort and expense incurred, approval is never guaranteed. If we are not successful in obtaining timely approval of our products
from the FDA, we may never be able to generate significant revenue and may be forced to cease operations. In particular, the FDA
permits commercial distribution of a new antibody radiation-conjugate product only after a BLA for the product has received FDA
approval. The BLA process is costly, lengthy and inherently uncertain. Any BLA filed by us will have to be supported by extensive
data, including, but not limited to, technical, preclinical, clinical trial, chemistry, manufacturing and controls (“CMC”)
and labeling data, to demonstrate to the FDA’s satisfaction the safety and efficacy of the product for its intended use.
The lengthy approval process as well as the unpredictability of future clinical trial results may result in our failing to obtain
regulatory approval to market our product candidates, which would significantly harm our business, results of operations and prospects.
In addition, even if we were to obtain approval, regulatory authorities may approve any of our product candidates for fewer or
more limited indications than we request, may not approve the price we intend to charge for our products, may grant approval contingent
on the performance of costly post-marketing clinical trials, or may approve a product candidate with a label that does not include
the labeling claims necessary or desirable for the successful commercialization of that product candidate. Any of the foregoing
scenarios could materially harm the commercial prospects for our product candidates.
The approval process in
the United States and in other countries could result in unexpected and significant costs for us and consume management’s
time and other resources. The FDA and other foreign regulatory agencies could ask us to supplement our submissions, collect non-clinical
data, conduct additional clinical trials or engage in other time-consuming actions, or it could simply deny our applications. In
addition, even if we obtain approval to market our products in the United States or in other countries, the approval could be revoked,
or other restrictions imposed if post-market data demonstrates safety issues or lack of effectiveness. We cannot predict with certainty
how, or when, the FDA or other regulatory authorities will act. If we are unable to obtain the necessary regulatory approvals,
our financial condition and cash flow may be materially adversely affected, and our ability to grow domestically and internationally
may be limited. Additionally, even if we obtain approval, regulatory authorities may approve any of our product candidates for
fewer or more limited indications that we request. The Company’s products may not be approved for the specific indications
that are most necessary or desirable for successful commercialization or profitability.
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We have not demonstrated that any of
our products are safe and effective for any indication and will continue to expend substantial time and resources on clinical development
before any of our current or future product candidates will be eligible for FDA approval, if ever.
We expect that a substantial
portion of our efforts and expenditures over the next few years will be devoted to development of our existing and contemplated
biological product candidates. Accordingly, our business currently depends heavily on the successful development, FDA approval,
and commercialization of such candidates, which may never receive FDA approval or be successfully commercialized even if FDA approval
is received. The research, testing, manufacturing, labeling, approval, sale, marketing, and distribution of our biological product
candidates are, and will remain, subject to extensive regulation by the FDA and other regulatory authorities in the United States
and other countries, as applicable. We are currently not permitted to market any of our current or future product candidates in
the United States until we receive FDA approval (of each) via the BLA process. To date, we have two product candidates in clinical
development and have not-yet submitted a BLA for any of our candidates and, for many such candidates, do not expect to be in a
position to do so for the foreseeable future, as there are numerous developmental steps that must be completed before we can prepare
and submit a BLA.
In the United States, the FDA regulates pharmaceutical
and biological product candidates under the FDCA and the Public Health Service Act (“PHSA”), as well as their respective
implementing regulations. Such products and product candidates are also subject to other federal, state, and local statutes and
regulations. The process of obtaining regulatory approvals and the subsequent compliance with appropriate federal, state, local,
and foreign statutes and regulations requires the expenditure of substantial time and financial resources. The process required
by the FDA before a drug or biological product may be marketed in the United States generally involves the following:
● FDA review and approval, or denial, of the BLA.
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Before testing any biological
product candidate in humans, the product candidate enters the preclinical testing stage. Preclinical tests include laboratory evaluations
of product chemistry, toxicity and formulation, as well as animal studies to assess the potential safety and activity of the product
candidate. The conduct of the preclinical tests must comply with federal regulations and requirements including GLPs. The clinical
trial sponsor must submit the results of the preclinical tests, together with manufacturing information, analytical data, any available
clinical data or literature and a proposed clinical protocol, to the FDA as part of the IND. Some preclinical testing may continue
even after the IND is submitted. The IND automatically becomes effective 30 days after receipt by the FDA, unless the FDA raises
concerns or questions regarding the proposed clinical trials and places the trial on a clinical hold within that 30-day time period.
In such a case, the IND sponsor and the FDA must resolve any outstanding concerns before the clinical trial can begin. The FDA
may also impose clinical holds on a biological product candidate at any time before or during clinical trials due to safety concerns
or non-compliance. If the FDA imposes a clinical hold, trials may not recommence without FDA authorization and then only under
terms authorized by the FDA. Accordingly, we cannot be sure that submission of an IND will result in the FDA allowing clinical
trials to begin or that, for those that have already commenced under an active IND, that issues will not arise that suspend or
terminate such trials.
Clinical trials involve
the administration of the biological product candidate to healthy volunteers or patients under the supervision of qualified investigators,
generally physicians not employed by or under the trial sponsor’s control. Clinical trials are conducted under protocols
detailing, among other things, the objectives of the clinical trial, dosing procedures, subject selection and exclusion criteria,
and the parameters to be used to monitor subject safety, including stopping rules that assure a clinical trial will be stopped
if certain adverse events should occur. Each protocol and any amendments to the protocol must be submitted to the FDA as part of
the IND. Clinical trials must be conducted and monitored in accordance with the FDA’s regulations composing the GCP requirements,
including the requirement that all research subjects provide informed consent. Further, each clinical trial must be reviewed and
approved by an independent institutional review board, or IRB, at or servicing each institution at which the clinical trial will
be conducted. An IRB is charged with protecting the welfare and rights of trial participants and considers such items as whether
the risks to individuals participating in the clinical trials are minimized and are reasonable in relation to anticipated benefits.
The IRB also approves the form and content of the informed consent that must be signed by each clinical trial subject or his or
her legal representative and must monitor the clinical trial until completed. Human clinical trials are typically conducted in
three sequential phases that may overlap or be combined:
Post-approval clinical
trials, sometimes referred to as Phase 4 clinical trials, may be conducted after initial marketing approval. These clinical trials
are used to gain additional experience from the treatment of patients in the intended therapeutic indication, particularly for
long-term safety follow-up.
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After the completion of
clinical trials of a biological product, FDA approval of a BLA must be obtained before commercial marketing of the biological product.
The BLA must include results of product development, laboratory and animal studies, human trials, information on the manufacture
and composition of the product, proposed labeling and other relevant information. The FDA may grant deferrals for submission of
data, or full or partial waivers. The testing and approval processes require substantial time and effort and there can be no assurance
that the FDA will accept the BLA for filing and, even if filed, that any approval will be granted on a timely basis, if at all.
Before approving a BLA, the FDA will inspect the facilities at which the product is manufactured. The FDA will not approve the
product unless it determines that the manufacturing processes and facilities are in compliance with cGMP requirements and adequate
to assure consistent production of the product within required specifications. Additionally, before approving a BLA, the FDA will
typically inspect one or more clinical sites to assure that the clinical trials were conducted in compliance with IND trial requirements
and GCP requirements. To assure cGMP and GCP compliance, an applicant must incur significant expenditure of time, money and effort
in the areas of training, record keeping, production, and quality control.
Notwithstanding the submission
of relevant data and information, the FDA may ultimately decide that the BLA does not satisfy its regulatory criteria for approval
and deny approval. Data obtained from clinical trials are not always conclusive and the FDA may interpret data differently than
we interpret the same data. Our product candidates are in the earliest stages of clinical development and, therefore, a long way
from BLA submission. We cannot predict with any certainty if or when we might submit a BLA for regulatory approval for our product
candidates or whether any such BLA will be approved by the FDA. Human clinical trials are very expensive and difficult to design
and implement, in part because they are subject to rigorous regulatory requirements. For example, the FDA may not agree with our
proposed endpoints for any clinical trial we propose, which may delay the commencement of our clinical trials. The clinical trial
process is also lengthy and requires substantial time and effort.
In December 2015, the FDA
cleared our IND filing for Iomab-B (for acute myeloid leukemia or AML), and we are currently enrolling patients in a randomized,
controlled, pivotal Phase 3 clinical trial under such IND to study Iomab-B in patients 55 years of age or older with relapsed or
refractory AML. Assuming the Phase 3 trial meets its endpoints and there are no unexpected issues or delays, it will form the basis
for a BLA in the reasonably near future for Iomab-B for use in preparing and conditioning AML patients for BMTs. Additionally,
there are physician IND trials at the FHCRC that have been conducted or are currently ongoing at FHCRC with Iomab-B (for other
target indications) and the BC8 antibody we licensed. And, we have multiple Phase 1 and Phase 2 clinical trials ongoing and others
that we have planned but not-yet commenced, for our other drug candidates under our own sponsorship and multiple investigator-initiated
trials ongoing. Except for Iomab-B (for patients with AML), we expect that the clinical trials we need to conduct to be in a position
to submit BLAs for our product candidates currently in-development will take, at least, several years to complete. Moreover, failure
can occur at any stage of the trials, and we could encounter problems that cause us to abandon or repeat clinical trials. Also,
the results of early preclinical and clinical testing may not be predictive of the results of subsequent clinical trials. A number
of companies in the biopharmaceutical industry have suffered significant setbacks in advanced clinical trials due to lack of efficacy
or adverse safety profiles, notwithstanding promising results in earlier studies. And, preclinical and clinical data are often
susceptible to multiple interpretations and analyses. Many companies that have believed their product candidates performed satisfactorily
in preclinical studies and clinical trials have, nonetheless, failed to obtain marketing approval of their products. Success in
preclinical testing and early clinical trials does not ensure that later clinical trials, which involve many more subjects, and
the results of later clinical trials may not replicate the results of prior clinical trials and preclinical testing. Any failure
or substantial delay in our product development plans may have a material adverse effect on our business.
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We may encounter substantial delays in
our clinical trials or may not be able to conduct our trials on the timelines we expect.
We cannot predict whether
we will encounter problems with any of our ongoing or planned clinical trials that will cause us or regulatory authorities to delay,
suspend, or discontinue clinical trials or to delay the analysis of data from ongoing clinical trials. Any of the following could
delay or disrupt the clinical development of our product candidates and potentially cause our product candidates to fail to receive
regulatory approval:
● delays in enrolling patients into clinical trials;
● a lower than anticipated retention rate of patients in clinical trials;
We may suspend, or the
FDA or other applicable regulatory authorities may require us to suspend, clinical trials of a product candidate at any time if
we or they believe the patients participating in such clinical trials, or in independent third-party clinical trials for drugs
based on similar technologies, are being exposed to unacceptable health risks including but not limited to unacceptable or suboptimal
factors related to toxicity, clinical efficacy, imbalances in safety and efficacy profiles or for other reasons.
Further, individuals involved
with our clinical trials may serve as consultants to us from time to time and receive stock options or cash compensation in connection
with such services. If these relationships and any related compensation to the clinical investigator carrying out the study result
in perceived or actual conflicts of interest, or the FDA concludes that the financial relationship may have affected interpretation
of the study, the integrity of the data generated at the applicable clinical trial site may be questioned and the utility of the
clinical trial itself may be jeopardized. The delay, suspension or discontinuation of any of our clinical trials, or a delay in
the analysis of clinical data for our product candidates, for any of the foregoing reasons, could adversely affect our efforts
to obtain regulatory approval for and to commercialize our product candidates, increase our operating expenses and have a material
adverse effect on our financial results.
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Clinical trials may also
be delayed or terminated as a result of ambiguous or negative interim results. In addition, a clinical trial may be suspended or
terminated by us, the FDA, the IRBs at the sites where the IRBs are overseeing a trial, or a data safety monitoring board, or DSMB
(Data Safety Monitoring Board)/DMC (Data Monitoring Committee), overseeing the clinical trial at issue, or other regulatory authorities
due to a number of factors, including:
● unforeseen safety issues; or
● lack of adequate funding to continue the clinical trial.
Modifications to our product candidates may require federal
approvals.
The BLA application is
the vehicle through which the company may formally propose that the FDA approve a new pharmaceutical for sale and marketing in
the United States. Once a particular product candidate receives FDA approval, expanded uses or uses in new indications of our products
may require additional human clinical trials and new regulatory approvals, including additional IND and BLA submissions and premarket
approvals before we can begin clinical development, and/or prior to marketing and sales. If the FDA requires new approvals for
a particular use or indication, we may be required to conduct additional clinical studies, which would require additional expenditures
and harm our operating results. If the products are already being used for these new indications, we may also be subject to significant
enforcement actions.
Conducting clinical trials
and obtaining approvals is a time-consuming process, and delays in obtaining required future approvals could adversely affect our
ability to introduce new or enhanced products in a timely manner, which in turn would have an adverse effect on our business prospects,
financial condition and results of operation.
The FDA or comparable foreign regulatory
authorities may disagree with our regulatory plans, and we may fail to obtain regulatory approval of our product candidates.
In June 2012, we acquired
rights to BC8 (Iomab), a clinical stage monoclonal antibody with safety and efficacy data in more than 300 patients in need of
a BMT. Iomab-B is our product candidate that links I-131 to the BC8 antibody that is being studied in an ongoing Phase 3 pivotal
trial. Product candidates utilizing this antibody would require BLA approval before they can be marketed in the United States.
We are also evaluating a lower dose of the BC8 antibody and I-131 for lymphodepletion prior to CAR-T or adoptive cell therapy.
We are currently evaluating clinical trials that would use our construct for lymphodepletion. Our lintuzumab-Ac-225 product candidate
is also being studied in several Phase 1 trials under our sponsorship and investigator-initiated trials in patients with AML, myelodysplastic
syndrome and multiple myeloma. Product candidates utilizing the lintuzumab antibody would require BLA approval before they can
be marketed in the United States. We are in the early stages of evaluating other product candidates consisting of conjugates of
Ac-225 with human or humanized antibodies for pre-clinical and clinical development in other types of cancer. The FDA may not approve
these products for the indications that are necessary or desirable for successful commercialization. The FDA may fail to approve
any BLA we submit for new product candidates or for new intended uses or indications for approved products or future product candidates.
Failure to obtain FDA approval for our products in the proposed indications would have a material adverse effect on our business
prospects, financial condition and results of operations.
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Clinical trials necessary to support
approval of our product candidates are time-consuming and expensive.
Initiating and completing
clinical trials necessary to support FDA approval of a BLA for Iomab-B, CD33 program candidates, and other product candidates,
is a time-consuming and expensive process, and the outcome is inherently uncertain. Moreover, the results of early clinical trials
are not necessarily predictive of future results, and any product candidate we advance into clinical trials may not have favorable
results in later clinical trials. We have worked with the FDA to develop a clinical trial designed to test the safety and efficacy
of Iomab-B in patients with relapsed or refractory AML who are age 55 and above prior to a BMT. This trial is designed to support
a BLA filing for marketing approval by the FDA, pending results from the trial. In addition to clinical data, a BLA filing encompasses
preclinical, CMC, labeling and other information. Even if the clinical data from the SIERRA trial is positive, there can be no
assurances that the BLA filing we produce will meet all of the FDA’s requirements or that they will not request additional
information or studies, which may delay the FDA’s review or we may not be able to produce. We have also worked with the FDA
to develop a regulatory pathway for our Actimab-MDS trial that consists of a dose-confirming Phase 1 trial that can be followed
by a randomized, controlled pivotal trial that could support a BLA filing. There can be no assurance that the data generated during
the trial will meet our chosen safety and effectiveness endpoints or otherwise produce results that will eventually support the
filing or approval of a BLA. Even if the data from this trial are favorable, the data may not be predictive of the results of any
future clinical trials.
Our clinical trials may fail to demonstrate
adequately the efficacy and safety of our product candidates, which would prevent or delay regulatory approval and commercialization.
Even if our clinical trials
are completed as planned, we cannot be certain that their results will support our product candidate claims or that the FDA or
foreign authorities will agree with our conclusions regarding them. Success in pre-clinical studies and early clinical trials does
not ensure that later clinical trials will be successful, and we cannot be sure that the later trials will replicate the results
of prior trials and pre-clinical studies. The clinical trial process may fail to demonstrate that our product candidates are safe
and effective for the proposed indicated uses. If FDA concludes that the clinical trials for Iomab-B, lintzumab-Ac-225, or any
other product candidate for which we might seek approval, have failed to demonstrate safety and effectiveness, we would not receive
FDA approval to market that product candidate in the United States for the indications sought. In addition, such an outcome could
cause us to abandon the product candidate and might delay development of others. Any delay or termination of our clinical trials
will delay or preclude the filing of any submissions with the FDA and, ultimately, our ability to commercialize our product candidates
and generate revenues. It is also possible that patients enrolled in clinical trials will experience adverse side effects that
are not currently part of a product candidate’s profile.
The intellectual property related to
antibodies we have licensed has expired or likely expired.
The key patents related
to the humanized antibody, lintuzumab, which we use in our CD33 program product candidates have expired. It is generally possible
that others may be eventually able to use an antibody with the same sequence, and we will then need to rely on additional patent
protection covering alpha particle drug products comprising Ac-225. Our final drug construct consists of the lintuzumab antibody
labeled with the isotope Ac-225. We have licensed issued patents that relate to the linker technology we use to conjugate the isotope
to the antibody. Further, we own issued and pending patents related to methods for drug conjugation and isotope labeling and for
methods of isotope production. In addition, we possess trade secrets and know how related to the manufacturing and use of isotopes.
Any competing product based on the lintuzumab antibody is likely to require several years of development before achieving our product
candidate’s current status and may be subject to significant regulatory hurdles but is nevertheless a possibility that could
negatively impact our business in the future. We own an issued patent in the US relating to composition of the Iomab-B product
candidate. Five related patents are also pending in the US and internationally. We have and may continue to file patents related
to Iomab-B that can provide barriers to entry but there is no certainty that these patents will be granted or such granting thereof
will adequately prevent others from seeking to replicate and use the BC8 antibody or the construct. We have pending patents related
to radioimmunoconjugate composition, formulation administration, and methods of use in solid or liquid cancers. This matter includes
composition, administration, and methods of treatment for our products Actimab-A and Iomab-B. Any competing product based on the
antibody used in Iomab-B is likely to require several years of development before achieving our product candidate’s current
status and may be subject to significant regulatory hurdles but is nevertheless a possibility that could negatively impact our
business in the future.
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Our CD33 program clinical trials are
testing the same drug construct.
Our CD33 program is comprised
of several clinical trials including investigator-initiated trials in AML that are studying the same drug construct consisting
of lintuzumab-Ac-225. Negative results from any of these trials could negatively impact our ability to enroll or complete our other
trials studying lintzumab-Ac-225. Additionally, negative outcomes including safety concerns, may result in the FDA discontinuing
other trials utilizing lintuzumab-Ac-225.
We may be unable to obtain a sufficient
supply of isotopes to support clinical development or at commercial scale.
Iodine-131 is a key component
of our Iomab-B drug candidate. We currently source medical grade I-131 from three suppliers including two leading global manufacturers.
Currently, there is sufficient supply of I-131 to advance our ongoing SIERRA clinical trial, support additional trials we may undertake
utilizing I-131 and for commercialization of Iomab-B. We continually evaluate I-131 manufacturers and suppliers and intend to have
multiple qualified suppliers prior to the commercial launch of Iomab-B. While we consider I-131 to be commoditized and obtainable
through several suppliers, there can be no guarantee that we will be able to secure I-131 or obtain I-131 on terms that are acceptable
to us.
Actinium-225 is a key component
of our CD33 ARC program, AWE platform and other drug candidates that we might consider for development with the Ac-225 payload.
There are adequate quantities of Ac-225 available today to meet our current needs via our present supplier, the Department of Energy
(“DOE”). The current Ac-225 currently supplied to Actinium’s clinical trials from the DOE is derived from the
natural decay of thorium-229 from so-called ‘thorium-cows’ and is able to produce sufficient quantities that are several
multiples of the amount of Ac-225 we require to supply our clinical programs through to early commercialization phase. The DOE
is also producing Ac-225 from a recently developed alternative route for Ac-225 production via a linear accelerator that is currently
being evaluated by Actinium. Initial preclinical and modelling results have indicated that the linear accelerator sourced Ac-225
does not impact labelling efficiency and expected distribution. Per representations made by the DOE, the capacity of Ac-225 from
this route is expected to be sufficient to supply all of Actinium’s pipeline and commercial Ac-225 needs and support new
program expansion by not just Actinium but also other companies that are developing Ac-225 based products. Additional routes of
Ac-225 production are being pursued by the DOE including the generation of new thorium cows and production via a cyclotron. The
cyclotron production method for Ac-225 production leverages Actinium’s proprietary technology and know-how and presents an
additional path towards production of high-quality Ac-225 that would be able to satisfy commercial needs. In addition, we are aware
of at least six other government and non-government entities globally including the U.S., Canada, Russia, Belgium, France and Japan
that have, or expect to have ability to supply Ac-225 or equipment for its production within the timeframes relevant to first commercial
approval of our Ac-225 ARC.
Our contract for supply
of this isotope from the DOE must be renewed yearly, and the current contract extends through the end of 2021. While we expect
this contract will be renewed at the end of its term as it has since 2009, there can be no assurance that the DOE will renew the
contract or that change its policies that allow for the sale of isotope to us. Failure to acquire sufficient quantities of medical
grade Ac-225 would make it impossible to effectively complete clinical trials and to commercialize any Ac-225 based drug candidates
that we may develop and would materially harm our business.
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Our ability to conduct
clinical trials to advance our ARC drug candidates is dependent on our ability to obtain the radioisotopes I-131, Ac-225 and other
isotopes we may choose to utilize in the future. Currently, we are dependent on third party manufacturers and suppliers for our
isotopes. These suppliers may not perform their contracted services or may breach or terminate their agreements with us. Our suppliers
are subject to regulations and standards that are overseen by regulatory and government agencies and we have no control over our
suppliers’ compliance to these standards. Failure to comply with regulations and standards may result in their inability
to supply isotope could result in delays in our clinical trials, which could have a negative impact on our business. We have developed
intellectual property, know-how and trade secrets related to the manufacturing process of Ac-225. While we have manufactured medical
grade Ac-225 of a purity compared to the cyclotron sourced material in the past, this activity was terminated due to operating
cost reasons and we currently do not have experience in manufacturing medical grade Ac-225 and may not obtain the resources necessary
to establish our own manufacturing capabilities in future. Our inability to build out and establish our own manufacturing facilities
would require us to continue to rely on third party suppliers as we currently do. However, based on our current third-party suppliers
and potential future suppliers of Ac-225 we expect to have adequate isotope supply to support our current ongoing clinical trials,
current AWE program activities and commercialization should our drug candidates receive approval.
If we encounter difficulties enrolling
patients in our clinical trials, our clinical development activities could be delayed or otherwise adversely affected.
The timely completion of
clinical trials in accordance with their protocols depends on our ability to enroll a sufficient number of patients who remain
in the trial until its conclusion. We may experience difficulties in patient enrollment in our clinical trials for a variety of
reasons, including:
● the size and nature of the patient population;
● the patient eligibility criteria defined in the protocol;
● the proximity of patients to trial sites;
● the design of the trial;
● competing clinical trials for similar or alternate therapeutic treatments;
● our ability to obtain and maintain patient consents; and
In addition, refractory
patients, which several of our trials are enrolling, participating in clinical trials are seriously and often terminally ill and
therefore may not complete the clinical trial due to reasons including comorbid conditions or occurrence of adverse medical events
related or unrelated to the investigational products, or death. Even if we are able to enroll a sufficient number of patients in
our clinical trials, delays in patient enrollment will result in increased costs or affect the timing of our planned trials, which
could adversely affect our ability to advance the development of our product candidates.
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FDA may take actions that would prolong,
delay, suspend, or terminate clinical trials of our product candidates, which may delay or prevent us from commercializing our
product candidates on a timely basis.
There can be no assurance
that the data generated in our clinical trials will be acceptable to FDA or that if future modifications during the trial are necessary,
that any such modifications will be acceptable to FDA. Certain modifications to a clinical trial protocol made during the course
of the clinical trial have to be submitted to the FDA. This could result in the delay or halt of a clinical trial while the modification
is evaluated. In addition, depending on the quantity and nature of the changes made, FDA could take the position that some or all
of the data generated by the clinical trial is not usable because the same protocol was not used throughout the trial. This might
require the enrollment of additional subjects, which could result in the extension of the clinical trial and the FDA delaying approval
of a product candidate. If the FDA believes that its prior approval is required for a particular modification, it can delay or
halt a clinical trial while it evaluates additional information regarding the change.
Any delay or termination
of our current or future clinical trials as a result of the risks summarized above, including delays in obtaining or maintaining
required approvals from IRBs, delays in patient enrollment, the failure of patients to continue to participate in a clinical trial,
and delays or termination of clinical trials as a result of protocol modifications or adverse events during the trials, may cause
an increase in costs and delays in the filing of any submissions with the FDA, delay the approval and commercialization of our
product candidates or result in the failure of the clinical trial, which could adversely affect our business, operating results
and prospects. Lengthy delays in the completion of our Iomab-B clinical trials would adversely affect our business and prospects
and could cause us to cease operations.
We have obtained orphan drug designation
from FDA for two of our current product candidates and intend to pursue such designation for other candidates and indications in
the future, but we may be unable to obtain such designations or to maintain the benefits associated with any orphan drug designations
we have received or may receive in the future.
We have received orphan
drug designation for Iomab-B and lintuzumab-CD33 ARC for treatment of AML in both the United States and the EU. Under the Orphan
Drug Act, the FDA may grant orphan designation to a drug or biologic intended to treat a rare disease or condition, which is a
disease or condition that affects fewer than 200,000 individuals in the United States, or if it affects more than 200,000 individuals
in the United States, there is no reasonable expectation that the cost of developing and making available a drug or biologic for
this type of disease or condition will be recovered from sales in the United States for that drug or biologic. Similarly, the EMA
grants orphan drug designation to promote the development of products that are intended for the diagnosis, prevention, or treatment
of a life-threatening or chronically debilitating condition affecting not more than five in 10,000 persons in the EU.
Orphan drug designation
neither shortens the development time or regulatory review time of a drug or biologic nor gives the drug or biologic any advantage
in the regulatory review or approval process. In the United States, orphan drug designation entitles a party to financial incentives,
such as opportunities for grant funding towards clinical trial costs, tax advantages, and application fee waivers. In addition,
if a product candidate receives the first FDA approval for the indication for which it has orphan designation, such product is
entitled, upon approval, to seven years of orphan-drug exclusivity, during which the FDA may not approve any other application
to market the same drug for the same indication, unless a subsequently approved product is clinically superior to orphan drug or
where the manufacturer is unable to assure sufficient product quantity in the applicable patient population. In the EU, orphan
drug designation entitles a party to financial incentives such as reduction of fees or fee waivers and ten years of market exclusivity
following drug or biological product approval. This period may be reduced to six years if the orphan drug designation criteria
are no longer met, including where it is shown that the product is sufficiently profitable not to justify maintenance of market
exclusivity.
Even if we obtain (or have
obtained) orphan drug designation for certain product candidates, we may not be the first to obtain marketing approval for such
candidates for the applicable indications due to the uncertainties inherent in the development of novel biologic products. And,
an orphan drug candidate may not receive orphan-drug exclusivity upon approval if such candidate is approved for a use that is
broader than the indication for which it received orphan designation. In addition, exclusive marketing rights in the United States
may be lost if the FDA later determines that the request for designation was materially defective or if the manufacturer is unable
to assure sufficient quantities of the product to meet the needs of patients with the rare disease or condition.
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Finally, even if we successfully
obtain orphan-drug exclusivity for an orphan drug candidate upon approval, such exclusivity may not effectively protect the product
from competition because (i) different drugs with different active moieties can be approved for the same condition; and (ii) the
FDA or EMA can also subsequently approve a subsequent product with the same active moiety and for the same indication as the orphan
drug if the later-approved drug if deemed clinically superior to the orphan drug.
Even if we receive regulatory approval
of our product candidates, we will be subject to ongoing regulatory obligations and continued regulatory review.
Any regulatory approvals
that we receive for our product candidates will require surveillance to monitor the safety and efficacy of the product candidate.
The FDA may also require a REMS in order to approve our product candidates, which could entail requirements for a medication guide,
physician communication plans or additional elements to ensure safe use, such as restricted distribution methods, patient registries
and other risk minimization tools. In addition, if the FDA or a comparable foreign regulatory authority approves our product candidates,
the manufacturing processes, labeling, packaging, distribution, adverse event reporting, storage, advertising, promotion, import,
export and recordkeeping for our product candidates will be subject to extensive and ongoing regulatory requirements. These requirements
include submissions of safety and other post-marketing information and reports, registration, as well as continued compliance with
cGMPs and GCPs for any clinical trials that we conduct post-approval. In addition, the FDA could require us to conduct another
study to obtain additional safety or biomarker information. Later discovery of previously unknown problems with our product candidates,
including adverse events of unanticipated severity or frequency, or with our third-party suppliers or manufacturing processes,
or failure to comply with regulatory requirements, may result in, among other things:
● fines, warning letters or holds on clinical trials;
● injunctions or the imposition of civil or criminal penalties.
The FDA’s and other
regulatory authorities’ policies may change, and additional government regulations may be enacted that could prevent, limit
or delay regulatory approval of our product candidates. We cannot predict the likelihood, nature or extent of government regulation
that may arise from future legislation or administrative action, either in the United States or abroad. If we are slow or unable
to adapt to changes in existing requirements or the adoption of new requirements or policies, or if we are not able to maintain
regulatory compliance, we may lose any marketing approval that we may have obtained, and we may not achieve or sustain profitability.
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Coverage and reimbursement may be limited
or unavailable in certain market segments for our product candidates which could limit our sales of our product candidates, if
approved.
The commercial success
of our product candidates in both domestic and international markets will be substantially dependent on whether third-party coverage
and reimbursement is available for patients that use our products. However, the availability of insurance coverage and reimbursement
for newly approved cancer therapies is uncertain, and therefore, third-party coverage may be particularly difficult to obtain even
if our products are approved by the FDA as safe and efficacious. Patients using existing approved therapies are generally reimbursed
all or part of the product cost by Medicare or other third-party payors. Medicare, Medicaid, health maintenance organizations and
other third-party payors are increasingly attempting to contain healthcare costs by limiting both coverage and the level of reimbursement
of new drugs, and, as a result, they may not cover or provide adequate payment for these products. Submission of applications for
reimbursement approval generally does not occur prior to the filing of a BLA for that product and may not be granted until many
months after BLA approval. In order to obtain coverage and reimbursement for these products, we or our commercialization partners
may have to agree to a net sales price lower than the net sales price we might charge in other sales channels. The continuing efforts
of government and third-party payors to contain or reduce the costs of healthcare may limit our revenue. Initial dependence on
the commercial success of our products may make our revenues particularly susceptible to any cost containment or reduction efforts.
Healthcare legislative reform measures
intended to increase pressure to reduce prices of pharmaceutical products paid for by Medicare or, otherwise, affect the federal
regulation of the U.S. healthcare system could have a material adverse effect our business, future revenue, if any, and results
of operations.