ITEM 1A. RISK FACTORS
Risk Factor Summary
We are providing the following summary of the risk factors
disclosed in this Annual Report on Form 10-K to enhance the readability and accessibility of our risk factor disclosures.
We encourage our stockholders to carefully review the risk factors disclosed in this Form 10-K in their entirety for additional
information regarding the material factors that make an investment in the Company speculative or risky.
Risks Related to Our Business
The COVID-19 pandemic could adversely impact our business,
including our clinical trials.
In December 2019, a novel strain of
coronavirus, COVID-19, was reported to have surfaced in Wuhan, China. Since then, COVID-19 has evolved into a global pandemic,
spreading to many countries, including the United States. Depending upon the severity of the COVID-19 outbreak, we may experience
disruptions that could severely impact our business.
For instance, our clinical trials may be
affected by the pandemic. Site initiation, participant recruitment and enrollment, participant dosing, distribution of clinical
trial materials, study monitoring and data analysis may be paused or delayed due to changes in hospital or university policies,
federal, state or local regulations, prioritization of hospital resources toward pandemic efforts, or other reasons related to
the pandemic. If COVID-19 continues to spread, some participants and clinical investigators may not be able to comply with clinical
trial protocols. For example, quarantines or other travel limitations (whether voluntary or required) may impede participant movement,
affect sponsor access to study sites, or interrupt healthcare services, and we may be unable to conduct our clinical trials. Additionally,
infections and deaths related to the pandemic may disrupt the United States’ healthcare and healthcare regulatory systems.
Such disruptions could divert healthcare resources away from, or materially delay FDA review and/or approval of, our clinical trials.
It is unknown how long these disruptions could continue, were they to occur. Any elongation or de-prioritization of our clinical
trials or delay in regulatory review resulting from such disruptions could materially affect the development and study of our product
candidates.
To date, COVID-19’s impact on our
operations has been limited to the inability to travel to clinical trial sites, clinical trial sites not allowing nonessential
personnel on site for the purpose of monitoring activity and delays in the manufacture of our drug requirements by contracted
third-party manufacturers. We anticipate COVID-19 may have an effect on patient recruiting in the near term as social distancing
mandates are in effect. We believe these operational issues can be managed through remote monitoring capabilities currently being
developed and deployed.
The global outbreak of COVID-19 continues
to rapidly evolve. The extent to which COVID-19 may impact our business, including our clinical trials, will depend on future developments,
which are highly uncertain and cannot be predicted with confidence, such as the duration of the outbreak, travel restrictions and
social distancing in the United States and other countries, business closures or business disruptions and the effectiveness of
actions taken in the United States and other countries to contain and treat the disease. We will continue to monitor the situation
closely.
We are a clinical stage biotechnology company with no
significant revenue. We have incurred significant operating losses since our inception, and we expect to incur losses for the foreseeable
future and may never achieve profitability.
We have incurred significant operating losses
since our inception. As of December 31, 2020, we had an accumulated deficit of $67.2 million. To date, we have not generated
any revenue from the sale of our drug candidates and we do not expect to generate any revenue from sales of our drug candidates
for the foreseeable future. We expect to continue to incur significant operating losses and we anticipate that our losses may increase
substantially as we expand our drug development programs and commercialization efforts.
To achieve profitability, we must successfully
develop and obtain regulatory approval for one or more of our drug candidates and effectively commercialize any drug candidates
we develop. Even if we succeed in developing and commercializing one or more of our drug candidates, we may not be able to generate
sufficient revenue and we may never be able to achieve or sustain profitability.
We will continue to require substantial additional capital
for the foreseeable future. If we are unable to raise additional capital when needed, we may be forced to delay, reduce or eliminate
our drug development programs and commercialization efforts.
We expect to continue to incur significant
operating expenses in connection with our ongoing activities, including conducting clinical trials, manufacturing and seeking regulatory
approval of our drug candidates, prexigebersen, prexigebersen-A, BP1002 and BP1003. In addition, if we obtain regulatory approval
of one or more of our drug candidates, we expect to incur significant commercialization expenses related to product sales, marketing,
manufacturing and distribution.
As of December 31, 2020, we had $13.8
million in cash on hand, compared to $20.4 million as of December 31, 2019. Our ongoing future capital requirements will depend
on numerous factors, including:
• the costs of obtaining regulatory approval of our drug candidates;
• the scope, prioritization and number of drug development programs we pursue;
• competing technological and market developments.
Any additional fundraising efforts may divert
our management from their day to day activities, which may adversely affect our ability to develop and commercialize our drug candidates.
Our ability to raise additional funds will depend, in part, on the success of our product development activities and other factors
related to financial, economic and market conditions, many of which are beyond our control. There can be no assurance that we will
be able to raise additional capital when needed or on terms that are favorable to us, if at all. If adequate funds are not available
on a timely basis, we may be forced to:
• liquidate and dissolve the Company.
If our operating plans change, we may require
additional capital sooner than planned. Such additional financing may not be available when needed or on terms favorable to us.
In addition, we may seek additional capital due to favorable market conditions or strategic considerations, even if we believe
we have sufficient funds for our current and future operating plan.
The pharmaceutical and biotechnology industry is highly
competitive. If we are unable to compete effectively, our drug candidates may be rendered noncompetitive or obsolete.
We are engaged in segments of the pharmaceutical
and biotechnology industry that are highly competitive and characterized by rapid and significant technological change. Many large
pharmaceutical and biotechnology companies, academic and research institutions, governmental agencies and other public and private
research organizations are pursuing the development of novel drugs that target AML, CML, ALL, MDS, lymphoma, ovarian, breast cancer,
solid tumors and other cancers generally. We face, and expect to continue to face, intense and increasing competition as new products
enter the market and advanced technologies become available. Our competitors may discover, develop or commercialize products or
other novel technologies that are more effective, safer or less costly than our drug candidates. Our competitors may also obtain
FDA or other regulatory approval for their products more rapidly than we may obtain approval for our drug candidates.
Many of our competitors have:
Mergers and acquisitions in the pharmaceutical
and biotechnology industry may result in even more resources being concentrated among a smaller number of our competitors. Smaller
or early stage companies may also prove to be significant competitors, particularly through collaborative arrangements with large
and established companies. These competitors also compete with us in recruiting and retaining qualified scientific and management
personnel, establishing clinical trial sites and patent registration for clinical trials, and acquiring technologies complementary
to, or necessary for, our drug candidates and programs.
Competitive products and technological developments
may render our drug candidates noncompetitive or obsolete before we can recover the expenses of developing and commercializing
our drug candidates. Furthermore, the development of new treatment methods and/or the widespread adoption or increased utilization
of any vaccine for the diseases we are targeting could render our drug candidates noncompetitive, obsolete or uneconomical. If
we successfully develop and obtain approval for any of our drug candidates, we will face competition based on the safety and effectiveness
of our drug candidates, the timing of their entry into the market in relation to competitive products in development, the availability
and cost of supply, marketing and sales capabilities, reimbursement coverage, price, patent position and other factors. If we successfully
develop drug candidates but those drug candidates do not achieve and maintain market acceptance, our business will not be successful.
Future collaboration arrangements to leverage our capabilities
may not be successful.
As part of our business strategy, we may
enter into collaborative arrangements for the development and commercialization of our drug candidates. For our collaboration efforts
to be successful, we must identify partners whose competencies complement ours. We must also successfully enter into collaboration
agreements with them on terms attractive to us and integrate and coordinate their resources and capabilities with our own. We may
be unsuccessful in entering into collaboration agreements with acceptable partners or negotiating favorable terms in these agreements.
In addition, we may face a disadvantage in seeking to enter into or negotiating collaborations with potential partners because
other potential collaborators may have greater management and financial resources than we do.
If we do enter into collaborative arrangements,
the success of these collaboration arrangements will depend heavily on the efforts and activities of our collaborators. Furthermore,
we may face risks and uncertainties in connection with collaborative arrangements, including:
• inability to integrate the resources or capabilities of collaborators;
If we are unsuccessful in our collaborative
efforts, our ability to develop and market drug candidates could be severely limited.
If we are unable to attract and retain key management,
scientific personnel and advisors, we may not successfully develop our drug candidates or achieve our other business objectives.
Our success depends on the availability
and contributions of members of our senior management team, scientific team and other key personnel. The loss of services of any
of these individuals could delay, reduce or prevent our drug development and other business objectives. Furthermore, recruiting
and retaining qualified scientific personnel to perform drug development work will be critical to our success. We face intense
competition for qualified individuals from numerous pharmaceutical and biotechnology companies, universities, governmental entities
and other public and private research institutions. We may be unable to attract and retain these individuals, and our failure to
do so could materially adversely affect our business and financial condition.
Our employees, agents, consultants and commercial partners
may engage in misconduct or other improper activities, including non-compliance with applicable regulatory standards and requirements.
We are exposed to the risk of fraud or other
misconduct by our employees, principal investigators, consultants, advisors and commercial partners. Misconduct by these persons
could include intentional failures to comply with the regulations of the FDA and non-U.S. regulators, comply with healthcare fraud
and abuse laws and regulations in the U.S. and abroad, report financial information or data accurately or disclose unauthorized
activities to us. In particular, sales, marketing and business arrangements in the healthcare industry are subject to extensive
laws and regulations intended to prevent fraud, kickbacks, self-dealing and other abusive practices. These laws and regulations
may restrict or prohibit a wide range of pricing, discounting, marketing and promotion, sales commission, customer incentive programs
and other business arrangements. Such misconduct could involve the improper use of information obtained in the course of clinical
studies, which could result in regulatory sanctions and cause serious harm to our business, financial condition and reputation.
We currently have codes of business conduct and ethics applicable to all of our employees, but it is not always possible to identify
and deter employee misconduct, and our codes of business conduct and ethics and the other precautions we take to detect and prevent
improper activities may not be effective in controlling unknown or unmanaged risks or losses, or in protecting us from governmental
investigations or other actions or lawsuits stemming from a failure to comply with these laws or regulations. If any such actions
are instituted against us, and we are not successful in defending ourselves or asserting our rights, those actions could result
in the imposition of significant fines or other sanctions, which could materially adversely affect our business and financial condition.
Whether or not we are successful in defending against such actions or investigations, we could incur substantial costs, including
legal fees, and divert the attention of management in defending ourselves against any of these claims or investigations.
We expect to expand our operations, including clinical
trials, in the future and may face challenges in managing our growth, which may result in disruptions to our operations.
We expect to expand our operations, including
clinical trials for our drug candidates, over time. To successfully manage future growth, we may need to implement and improve
our managerial, operational and financial resources, and may need to expand our facilities and recruit and train additional qualified
personnel. Our expected growth may also require significant financial resources, which may not be available when needed or on terms
favorable to us. Our senior management may be required to devote substantial attention to managing growth activities and may be
unable to effectively manage the expansion of our operations due to our limited resources, which may result in disruptions to our
business operations and could harm our business and financial condition.
If we acquire or license technologies, resources or drug
candidates, we will incur a variety of costs and may never realize benefits from the transaction.
If appropriate opportunities become available,
we may license or acquire technologies, resources, drugs or drug candidates. We may never realize the anticipated benefits of such
a transaction. In particular, due to the risks inherent in drug development, we may not successfully develop or obtain marketing
approval for the drug candidates we acquire. Future licenses or acquisitions could result in potentially dilutive issuances of
our equity securities, the incurrence of debt, the creation of contingent liabilities, material impairment expenses related to
goodwill and impairment or amortization expenses related to other intangible assets, which could harm our business and financial
condition.
Our business has a substantial risk of product liability
claims. If we are unable to obtain or maintain appropriate levels of insurance, a product liability claim could adversely affect
our business.
Our business exposes us to significant potential
product liability risks that are inherent in the development, manufacturing and sales and marketing of human therapeutic products.
Although we do not currently commercialize any products, claims could be made against us based on the use of our drug candidates
in clinical trials. Product liability claims could delay or prevent completion of our clinical development programs. We
currently have product liability insurance, but we may not be able to maintain such insurance on acceptable terms. However, even
if we maintain or obtain other product liability insurance, our insurance may not provide adequate coverage against potential liabilities.
As a result, we may be unable to obtain or maintain insurance coverage at a reasonable cost to protect against losses that could
harm our business and financial condition. If any claims are brought against us, and we are not successful in defending ourselves,
those claims could result in damage awards against us, which could materially adversely affect our business and financial condition.
Whether or not we are successful in defending against such claims, we could incur substantial costs, including legal fees, and
divert the attention of management in defending ourselves against any of these claims.
We are increasingly dependent on information technology
systems to operate our business and a cyber-attack or other breach of our systems, or those of third parties on whom we may rely,
could subject us to liability or interrupt the operation of our business.
We are increasingly dependent on information
technology systems to operate our business. A breakdown, invasion, corruption, destruction or interruption of critical information
technology systems by employees, others with authorized access to our systems or unauthorized persons could negatively impact operations.
In the ordinary course of business, we collect, store and transmit confidential information and it is critical that we do so in
a secure manner to maintain the confidentiality and integrity of such information. Additionally, we outsource certain elements
of our information technology systems to third parties. As a result of this outsourcing, our third party vendors may or could have
access to our confidential information making such systems vulnerable. Data breaches of our information technology systems, or
those of our third party vendors, may pose a risk that sensitive data may be exposed to unauthorized persons or to the public.
For example, the loss of clinical trial data from completed or ongoing clinical trials or preclinical studies could result in delays
in our regulatory approval efforts and significantly increase our costs to recover or reproduce the data. While we believe that
we have taken appropriate security measures to protect our data and information technology systems, and have been informed by our
third party vendors that they have as well, there can be no assurance that our efforts will prevent breakdowns or breaches in our
systems, or those of our third party vendors, that could materially adversely affect our business and financial condition.
Our ability to use our net operating loss carryforwards
and certain other tax attributes may be limited.
Under Section 382 of the Internal Revenue
Code of 1986, as amended (the “Code”), if a corporation experiences an “ownership change,” generally defined
as a greater than 50% change (by value) in its equity ownership over a three-year period, the corporation’s ability to utilize
its pre-change net operating loss carryforwards and other pre-change tax attributes (such as research tax credits) to offset its
post-change taxable income or taxes may be limited. Our prior and potential future equity offerings and other changes in our stock
ownership, some of which are outside of our control, may have resulted or could in the future result in an ownership change under
Section 382 of the Code. If a limitation were to apply, utilization of a portion of our domestic net operating loss and tax
credit carryforwards could be limited in future periods and a portion of the carryforwards could expire before being available
to reduce future income tax liabilities.
On December 22, 2017, the U.S. government
enacted legislation referred to as the Tax Cuts and Jobs Act (the “Tax Act”). Under the Tax Act, net operating losses
generated prior to 2018 will continue to be governed by the net operating loss tax rules as they existed prior to the adoption
of the new Tax Act, which means that generally they will expire 20 years after they were generated if not used prior thereto. Accordingly,
our net operating losses could expire unused and be unavailable to offset future income tax liabilities, if any. Under the Tax
Act, net operating losses incurred in 2018 and in future years may be carried forward indefinitely, but the deductibility of such
net operating losses is limited to 80% of current year taxable income. We continue to examine the impact that this provision of
the Tax Act, among other provisions, may have on our business.
Provisions of our charter documents or Delaware law could
delay or prevent an acquisition of our company, even if the acquisition would be beneficial to our stockholders, and could make
it more difficult to change management.
Provisions of our certificate of incorporation
and bylaws may discourage, delay or prevent a merger, acquisition or other change in control that stockholders might otherwise
consider favorable, including transactions in which stockholders might otherwise receive a premium for their shares. In addition,
these provisions may frustrate or prevent any attempt by our stockholders to replace or remove our current management by making
it more difficult to replace or remove our board of directors. These provisions include:
• the authority of our Board to fill vacancies occurring on the Board;
In addition, because we are governed by
Delaware law, we are subject to the provisions of Section 203 of the Delaware General Corporation Law, which prohibits a publicly
held Delaware corporation from engaging in a business combination with an interested stockholder, generally a person who, together
with its affiliates, owns or within the last three years has owned 15% of our voting stock, for a period of three years after the
date of the transaction in which the person became an interested stockholder, unless the business combination is approved in a
prescribed manner.
We face competition from entities that have developed
or may develop therapeutic candidates for our target disease indications, including companies developing novel treatments and technology
platforms based on modalities and technology that may be similar to ours. If these companies develop technologies, including delivery
technologies, or therapeutic candidates more rapidly than we do, or their technologies are more effective, our ability to develop
and successfully commercialize therapeutic candidates may be adversely affected.
While we believe that our DNAbilize®
technology is the only delivery method of its type, the area of cancer treatment research is rapidly progressing, with many stakeholders,
including for-profit and nonprofit institutions, conducting preclinical and clinical studies of various types of therapeutic products
for the same or similar indications for use as our drug candidates. We expect that such work by others will continue, which may
make it difficult for us to effectively recruit and enroll a satisfactory number of participants in clinical trials.
Our success will partially depend on our
ability to develop therapeutics that are safer and more effective than competing therapeutics. Our commercial opportunity and success
will be reduced or eliminated if competing therapeutics are safer, more effective, or less expensive than the therapeutics we develop,
or if any are granted exclusive marketing approval by the FDA that precludes the marketing of our drug candidates for a period
of time. If our lead drug candidates are approved for the indications we are currently pursuing, they will compete with a range
of therapeutic treatments that are either in development or currently marketed. For example, the FDA has recently approved a number
of drugs indicated for treatment of AML, some of which may have target patient populations similar to that of our drug candidates.
Many of our competitors may have significantly
greater financial, technical, manufacturing, marketing, sales and supply resources or experience than we do. If we successfully
obtain FDA approval for any drug candidate, we will face competition based on many different factors, including the safety and
effectiveness of our products, the ease with which our products can be administered, the timing and scope of regulatory approvals
(if we are able to obtain any) for these drug candidates, the availability and cost of manufacturing, marketing and sales capabilities,
price, reimbursement coverage and patent position. Competing therapeutics could present superior treatment alternatives, including
by being more effective, safer, less expensive or marketed and sold more effectively than any therapeutics we may develop. Competitive
alternatives may make any drugs that we develop obsolete or noncompetitive before we recover the expense of developing and commercializing
our drug candidates, if we are able to obtain regulatory approval to commercialize such drug candidates.
We may be subject, directly or indirectly, to certain
U.S. federal and state healthcare laws and regulations, such as anti-kickback, false claims laws, physician payment transparency
laws or similar fraud and abuse laws, which could expose us to potential criminal sanctions, civil penalties, contractual damages,
reputational harm and diminished profits and future earnings.
Healthcare providers, physicians and others
will play a primary role in the recommendation, ordering and utilization of any products for which we obtain regulatory approval.
If we obtain FDA approval for any of our products and begin commercializing those products in the U.S., our operations may be subject
to various federal and state fraud and abuse laws, including, without limitation, the federal Anti-Kickback Statute, the federal
False Claims Act, and physician payment transparency laws and regulations. These laws may impact, among other things, our potential
sales, marketing and education programs and our relationships with physicians, patients, and other persons or entities in a position
to refer, use, or recommend our future products. The laws that may affect our ability to operate could include, but are not limited
to:
Because of the breadth of these laws and
the narrowness of the statutory exceptions and safe harbors available, it is possible that some of our business activities could
be subject to challenge under one or more of such laws once our products are commercialized. In addition, healthcare reform legislation
has strengthened these laws and additional laws or requirements may be implemented in the future. For example, the Affordable Care
Act, among other things, amended the intent requirement of the federal Anti-Kickback and criminal healthcare fraud statutes. As
a result of such amendment, a person or entity no longer needs to have actual knowledge of these statutes or specific intent to
violate them in order to have committed a violation. Moreover, the Affordable Care Act provides that the government may assert
that a claim including items or services resulting from a violation of the federal Anti-Kickback Statute constitutes a false or
fraudulent claim for purposes of the False Claims Act.
Efforts to ensure that our business arrangements
comply with applicable healthcare laws and regulations will involve substantial costs. It is possible that governmental authorities
will conclude that our existing or future business practices do not comply with current or future statutes, regulations or case
law involving applicable fraud and abuse or other healthcare laws and regulations. Any such actions instituted against us could
have a significant adverse impact on our business, including the imposition of civil, criminal and administrative penalties, damages,
disgorgement, monetary fines, possible exclusion from participation in Medicare, Medicaid and other federal healthcare programs,
contractual damages, reputational harm, diminished profits and future earnings, and curtailment of our operations, any of which
could adversely affect our ability to operate our business and our results of operations. Even if we are successful in defending
against such actions, we may nonetheless be subject to substantial costs, reputational harm and adverse effects on our ability
to operate our business.
If any of our employees, agents, or the
physicians or other providers or entities with whom we expect to do business are found to have violated applicable laws, we may
be subject to criminal, civil or administrative sanctions, including exclusions from government funded healthcare programs, or,
if we are not subject to such actions, we may suffer reputational harm for conducting business with persons or entities found,
or accused of being, in violation of such laws. Any such events could adversely affect our ability to operate our business and
our results of operations.
Inadequate funding for the FDA, the SEC and other government
agencies, or a work slowdown or stoppage at those agencies as part of a broader federal government shutdown, could hinder
their ability to hire and retain key leadership and other personnel, prevent new products and services from being developed or
commercialized in a timely manner, or otherwise prevent those agencies from performing normal business functions on which the operation
of our business may rely, which could negatively impact our business.
The ability of the FDA to review and approve
new products can be affected by a variety of factors, including government budget and funding levels, ability to hire and retain
key personnel and accept the payment of user fees, and statutory, regulatory and policy changes. Average review times at the agency
have fluctuated in recent years as a result. In addition, government funding of the SEC and other government agencies on which
our operations may rely, including those that fund research and development activities, is subject to the political process, which
is inherently fluid and unpredictable.
Disruptions at the FDA and other agencies
may also slow the time necessary for new drugs to be reviewed and/or approved by necessary government agencies, which could adversely
affect our business. For example, over the last several years, including December 22, 2018 to January 25, 2019, the U.S.
government has shut down several times and certain regulatory agencies, such as the FDA and the SEC, have had to furlough employees
and stop critical activities. If a prolonged government shutdown or a series of shutdowns occurs, it could significantly affect
the ability of the FDA to timely review and process our regulatory submissions, which could have a material adverse effect on our
business. Further, future government shutdowns could impact our ability to gain access to the public markets and obtain necessary
capital in order to properly capitalize and continue our operations, which could have a material adverse effect on our business
and financial condition.
Risks Related to the Development of
Our Drug Candidates
We must complete extensive clinical trials to demonstrate
the safety and efficacy of our drug candidates. If we are unable to demonstrate the safety and efficacy of our drug candidates,
we will not be successful.
To date, none of our drug candidates
have been approved for sale in the U.S. or any foreign country. While antisense therapeutics have been in development for
over 20 years, only a limited number of antisense drugs have been successfully developed to date. Further, the development of
liposomal antisense therapeutics, which comprise our drug therapeutics technology, has faced many challenges and generally
remains unproven in the treatment of cancers. The success of our business depends primarily on our ability to develop and
commercialize our drug candidates successfully. Our drug candidates must satisfy rigorous standards of safety and efficacy
before they can be approved for sale. To satisfy these standards, we must engage in expensive and lengthy testing of our drug
candidates.
We may not be able to obtain authority from
the FDA or other equivalent foreign regulatory agencies to move on to further efficacy segments of our ongoing clinical
trials or commence and complete any other clinical trials for any of our drug candidates. Positive results in preclinical studies
of a drug candidate may not be predictive of similar results in human clinical trials, and promising results from early clinical
trials of a drug candidate may not be replicated in later clinical trials. A number of companies in the pharmaceutical and biotechnology
industries have suffered significant setbacks in late-stage clinical trials even after achieving promising results in early-stage
development. Accordingly, the results from the preclinical tests or clinical trials for our drug candidates may not be predictive
of the results we may obtain in later stage trials. The failure of clinical trials to demonstrate safety and efficacy of one or
more of our drug candidates will have a material adverse effect on our business and financial condition.
Delays in the commencement of clinical trials of our drug
candidates could result in increased costs to us and delay our ability to generate revenues.
Our drug candidates will require continued
extensive clinical trials prior to the submission of a regulatory application for commercial sales. Because of the nature of clinical
trials, we do not know whether future planned clinical trials will begin on time, if at all. Delays in the commencement of clinical
trials could significantly increase our drug development costs and delay any commercialization of our drug candidates. In addition,
many of the factors that may cause, or lead to, a delay in the commencement of clinical trials may also ultimately lead to denial
of regulatory approval of a drug candidate.
The commencement of clinical trials can
be delayed for a variety of reasons, including delays in:
In addition, the commencement of clinical
trials may be delayed due to insufficient patient enrollment, which is a function of many factors, including the size of the patient
population, the nature of the protocol, the proximity of patients to clinical sites, the availability of effective treatments for
the relevant disease and the eligibility criteria for the clinical trial.
Delays in the completion of, or the termination of, clinical
trials of our drug candidates could result in increased costs to us and could delay or prevent us from generating revenues.
Once a clinical trial has begun, it may
be delayed, suspended or terminated by us or the FDA or other regulatory authorities due to a number of factors, including:
• the timing of our clinical trials may be longer than we currently anticipate;
• inadequacy of or changes in our manufacturing process or compound formulation;
• changes in applicable regulatory policies and regulations;
• uncertainty regarding proper dosing;
• scheduling conflicts with participating clinicians and clinical institutions;
• failure to construct appropriate clinical trial protocols;
• insufficient data to support regulatory approval;
Many of these factors that may lead to a
delay, suspension or termination of clinical trials of our drug candidates may also ultimately lead to denial of regulatory approval
of our drug candidates.
From time to time, we may publicly announce
our expected timing of completing certain milestones relating to various scientific, clinical, regulatory, development and other
objectives related to our business. For example, these milestones may include the commencement or completion of scientific studies
or clinical trials or the submission or approval of regulatory filings. Our estimates for completion of these milestones are based
on a variety of assumptions, some of which may be out of our control.
If we experience delays in the completion
of, or termination of, clinical trials of any drug candidates in the future, or if we do not meet our milestones within the estimated
timeframes that we have publicly announced, our business, financial condition and the commercial prospects for our drug candidates
could be materially adversely affected, and our ability to generate product revenues could be delayed or eliminated. In addition,
our stock price could decline.
If we are unable to obtain U.S. and/or foreign regulatory
approval, we will be unable to commercialize our drug candidates.
Our drug candidates are subject to extensive
governmental regulations relating to, among other things, research, testing, development, manufacturing, safety, efficacy, record
keeping, labeling, marketing and distribution of drugs. Rigorous preclinical testing and clinical trials and an extensive regulatory
approval process are required in the U.S. and in many foreign jurisdictions prior to the commercial sale of our drug candidates.
Satisfaction of these and other regulatory requirements is costly, time consuming, uncertain and subject to unanticipated delays.
It is possible that none of the drug candidates we are developing will obtain marketing approval. In connection with the clinical
trials for our drug candidates, we face risks that:
• the drug candidate may not prove to be efficacious;
• the drug candidate may not prove to be safe;
We have limited experience in conducting
and managing later stage clinical trials necessary to obtain regulatory approvals, including approval by the FDA. However, this
risk would be mitigated in the event the Company is successful entering into a co-development agreement with a pharma partner for
late stage clinical development. The time required to complete clinical trials and for the FDA and other countries’ regulatory
review processes is uncertain and typically takes many years. Our analysis of data obtained from preclinical and clinical trials
is subject to confirmation and interpretation by regulatory authorities, which could delay, limit or prevent regulatory approval.
We may also encounter unanticipated delays or increased costs due to government regulation from future legislation or administrative
action or changes in FDA policy during the period of product development, clinical trials, and FDA regulatory review.
Any regulatory approval to market a product
may be subject to limitations on the indicated uses for which we may market the product and affect reimbursement by third-party
payors. These limitations may limit the size of the market for the product. We may also become subject to numerous foreign regulatory
requirements governing the conduct of clinical trials, manufacturing and marketing authorization, pricing and third-party reimbursement.
The foreign regulatory approval process includes all of the risks associated with FDA approval described above as well as risks
attributable to the satisfaction of foreign regulations. Approval by the FDA does not ensure approval by regulatory authorities
outside the U.S. Foreign jurisdictions may have different approval procedures than those required by the FDA and may impose additional
testing requirements for our drug candidates.
In addition to regulations in the U.S., we may be subject
to a variety of regulations in other jurisdictions governing, among other things, clinical trials and any commercial sales and
distribution of our products, if approved.
Whether or not we obtain FDA approval for
a drug candidate, we must obtain the requisite approvals from regulatory authorities in non-U.S. countries prior to the commencement
of clinical trials or marketing of our products in those countries. Certain countries outside of the U.S. have a process that requires
the submission of a clinical trial application, much like an IND, prior to the commencement of human clinical trials. In the E.U.,
for example, a CTA must be submitted to the competent national health authority and to independent ethics committees in each country
in which a company intends to conduct clinical trials. Once the CTA is approved in accordance with a country’s requirements,
clinical trial development may proceed in that country.
The requirements and process governing the
conduct of clinical trials, product licensing, pricing and reimbursement vary from country to country. In all cases, the clinical
trials must be conducted in accordance with GCP and other applicable regulatory requirements.
To obtain regulatory approval of an investigational
drug under E.U. regulatory systems, we must submit a marketing authorization application. This application is similar to the NDA
in the U.S., with the exception of, among other things, country-specific document requirements. Drugs can be authorized in the
E.U. by using (i) the centralized authorization procedure, (ii) the mutual recognition procedure, (iii) the decentralized
procedure or (iv) national authorization procedures.
The EMA implemented the centralized procedure
for the approval of human drugs to facilitate marketing authorizations that are valid throughout the E.U. This procedure results
in a single marketing authorization granted by the European Commission that is valid across the E.U., as well as in Iceland, Liechtenstein
and Norway. The centralized procedure is compulsory for certain human drugs including those that are: (i) derived from biotechnology
processes, such as genetic engineering, or (ii) contain a new active substance indicated for the treatment of certain diseases.
Changes in existing laws and regulations affecting the
healthcare industry could increase our costs and otherwise adversely affect our business.
Our research and development activities,
preclinical studies and clinical trials, and the manufacturing, marketing and labeling of any products we may develop, are subject
to extensive regulation by the FDA and other regulatory authorities in the U.S. and other countries. Changes in existing federal,
state and foreign laws and agency regulations may be established that could prevent or delay regulatory approval of our drug candidates
or materially increase our costs, including:
Delays in obtaining or preventing our obtaining
regulatory approval of our drug candidates could materially adversely affect our ability to commercialize any of our drug candidates
and our ability to receive product revenues or to receive milestone payments or royalties from any product rights we might license
to others.
We rely on third parties to conduct clinical trials for
our drug candidates, and their failure to timely and properly perform their obligations may result in costs and delays that prevent
us from obtaining regulatory approval or successfully commercializing our drug candidates.
We rely on independent contractors, including
clinical research organizations, in certain areas that are particularly relevant to our research and drug development plans, such
as for data management for the conduct of clinical trials. The competition for these relationships is intense, and we may not be
able to maintain our relationships with them on acceptable terms. Independent contractors generally may terminate their engagements
at any time, subject to notice. As a result, we can control their activities only within certain limits, and they will devote only
a certain amount of their time conducting research on and trials of our drug candidates and assisting in developing them. If they
do not successfully carry out their duties under their agreements with us, fail to inform us if these trials fail to comply with
clinical trial protocols or fail to meet expected deadlines, our clinical trials may need to be extended, delayed or terminated.
We may not be able to enter into replacement arrangements without undue delays or excessive expenditures. If there are delays in
testing or regulatory approvals as a result of the failure to perform by our independent contractors or other outside parties,
our drug candidate development costs will increase and we may not be able to attain regulatory approval for or successfully commercialize
our drug candidates.
In addition, we have no control over the
financial health of our independent contractors. Several of our independent contractors are in possession of valuable and sensitive
information relating to the safety and efficacy of our drug candidates, and several others provide services to a significant percentage
of the patients enrolled in our clinical trials in which such independent contractors participate. Should one or more of these
independent contractors become insolvent, or otherwise are not able to continue to provide services to us, the clinical trial in
which such contractor participates could become significantly delayed and we may be materially adversely affected as a result of
the delays and additional expenses associated with such event.
We may not be able to obtain or maintain orphan drug exclusivity
for our product candidates.
Prexigebersen has received orphan drug designations
for the treatment of AML in the U.S. Orphan designation is available to drugs intended to treat, diagnose or prevent a rare disease
or condition that affects fewer than 200,000 people in the U.S. at the time of application for orphan designation. Orphan drug
designation must be requested before submitting an application for marketing authorization. Orphan designation qualifies the sponsor
of the product for a tax credit and marketing incentives. The first sponsor to receive FDA marketing approval for a drug with an
orphan designation is entitled to a seven-year exclusive marketing period in the U.S. for that product for that indication and,
typically, a waiver of the prescription drug user fee for its marketing application. However, a drug that the FDA considers to
be clinically superior to, or different from, the approved orphan drug, even though for the same indication, may also obtain approval
in the U.S. during the seven-year exclusive marketing period. Orphan drug exclusive marketing rights may also be lost if the FDA
later determines that the request for designation was materially defective or if the manufacturer is unable to assure sufficient
quantity of the drug.
In October 2016, prexigebersen also
received orphan drug designation for AML in the E.U. from the EMA. To receive orphan drug designation from the EMA, a therapy must
be intended for the treatment of a life-threatening or chronically debilitating rare condition with a prevalence of less than five
in 10,000 in the E.U. Orphan drug designation provides incentives designed to facilitate development, including fee reductions
for protocol assistance, scientific advice and importantly, may provide up to ten years of market exclusivity in the E.U. following
product approval.
There is no guarantee that any of our other
drug candidates will receive orphan drug designation or that, even if such drug candidate is granted such status, the drug candidate’s
clinical development and regulatory approval process will not be delayed or will be successful.
Risks Related to Manufacturing Our Drug
Candidates
We rely on third parties for manufacturing of our clinical
drug supplies; our dependence on these manufacturers may impair the development of our drug candidates.
We have no ability to internally manufacture
the drug candidates that we need to conduct our clinical trials. For the foreseeable future, we expect to continue to rely on third-party
manufacturers and other third parties to produce, package and store sufficient quantities of our drug candidates and any future
drug candidates for use in our clinical trials. We have entered into agreements with our third-party manufacturer for the manufacture
of our drug requirements, including an agreement for the manufacture of prexigebersen for use in our Phase 2 clinical trial for
AML and third-party manufacture of our drug requirements agreement for BP1002. To date, we have made steady progress with our current
third-party manufacturers, overcoming challenges associated with scaling up manufacturing to develop their capabilities to supply
us with our necessary quantities of drug supplies for our clinical trials. However, we may face various risks and uncertainties
in connection with our reliance on third-party manufacturers, including:
Our drug candidates are complicated and
expensive to manufacture. If our third-party manufacturers fail to deliver our drug candidates for clinical use on a timely basis,
with sufficient quality, and at commercially reasonable prices, we may be required to delay or suspend clinical trials or otherwise
discontinue development of our drug candidates. While we may be able to identify replacement third-party manufacturers or develop
our own manufacturing capabilities for these drug candidates, this process would likely cause a delay in the availability of our
drug candidates and an increase in costs. In addition, third-party manufacturers may have a limited number of facilities in which
our drug candidates can be manufactured, and any interruption of the operation of those facilities due to events such as equipment
malfunction or failure or damage to the facility by natural disasters could result in the cancellation of shipments, loss of product
in the manufacturing process or a shortfall in available drug candidates.
We may in the future elect to manufacture
certain of our drug candidates in our own manufacturing facilities. If we do so, we will require substantial additional funds and
need to recruit qualified personnel in order to build or lease and operate any manufacturing facilities.
There are underlying risks associated with the manufacture
of our drug candidates, which have never been manufactured in large scale. Furthermore, we anticipate continued reliance on third-party
manufacturers if we are successful in obtaining marketing approval from the FDA or other regulatory agencies for any of our drug
candidates.
To date, our drug candidates have been manufactured
in relatively small quantities for preclinical testing and clinical trials by third-party manufacturers, and have never been manufactured
in large scale. Additionally, as in the development of any new compound, there are underlying risks associated with their manufacture.
These risks include, but are not limited to, cost, process scale-up, process reproducibility, construction of a suitable process
plant, timely availability of raw materials, as well as regulatory issues associated with the manufacture of an active pharmaceutical
agent. Any of these risks may prevent us from successfully developing our drug candidates. Our failure, or the failure of our third-party
manufacturers to achieve and maintain these high manufacturing standards, including the incidence of manufacturing errors and reliable
product packaging for diverse environmental conditions, could result in patient injury or death, product recalls or withdrawals,
delays or failures in product testing or delivery, cost overruns or other problems that could materially adversely affect our business
and financial condition.
If the FDA or other regulatory agencies
approve any of our drug candidates for commercial sale, we expect that we would continue to rely, at least initially, on third-party
manufacturers to produce commercial quantities of such approved drug candidates. These manufacturers may not be able to successfully
increase the manufacturing capacity for any of our approved drug candidates in a timely or economic manner, or at all. Significant
scale-up of manufacturing may require additional validation studies, which the FDA or other regulatory authorities must review
and approve. If our third-party manufacturers are unable to successfully increase the manufacturing capacity for a drug candidate,
or we are unable to establish our own manufacturing capabilities, the commercial launch of any approved products may be delayed
or there may be a shortage in supply.
Identification of previously unknown problems with respect
to a drug candidate, manufacturer or facility may result in restrictions on the drug candidate, manufacturer or facility.
The FDA stringently applies regulatory standards
for the manufacturing of our drug candidates. Identification of previously unknown problems with respect to a drug candidate, manufacturer
or facility may result in restrictions on the drug candidate, manufacturer or facility, including warning letters, suspensions
of regulatory approvals, operating restrictions, delays in obtaining new product approvals, withdrawal of the product from the
market, product recalls, fines, injunctions and criminal prosecution. Any of the foregoing could have a material adverse effect
on our business and financial condition.
We may experience delays in the development of our drug
candidates if the third-party manufacturers of our drug candidates cannot meet FDA requirements relating to current Good Manufacturing
Practices.
Our third-party manufacturers are required
to produce our drug candidates under FDA cGMP in order to meet acceptable standards for our preclinical testing and clinical trials.
If such standards change, the ability of third-party manufacturers to produce our drug candidates on the schedule we require for
our preclinical tests and clinical trials may be affected. In addition, third-party manufacturers may not perform their obligations
under their agreements with us or may discontinue their business before the time required by us to gain approval for or commercialize
our drug candidates. Any difficulties or delays in the manufacturing and supply of our drug candidates could increase our costs
or cause us to lose revenue or postpone or cancel clinical trials.
The FDA also requires that we demonstrate
structural and functional comparability of a drug candidate produced by different third-party manufacturers. Because we may use
multiple sources to manufacture our drug candidates, we may need to conduct comparability studies to assess whether manufacturing
changes have affected the safety, identity, purity or potency of any drug candidate compared to the drug candidate produced by
another manufacturer. If we are unable to demonstrate comparability, the FDA could require us to conduct additional clinical trials,
which would be expensive and significantly delay commercialization of our drug candidates.
Risks Related to Commercialization
If we are unable to establish sales and marketing capabilities
or enter into agreements with third parties to market and sell our drug candidates, we may not generate product revenue.
We have no commercial products, and we do
not currently have an organization for the sales and marketing of pharmaceutical products. In order to successfully commercialize
any drug candidates that may be approved in the future by the FDA or comparable foreign regulatory authorities, we must build our
sales and marketing capabilities or make arrangements with third parties to perform these services. For certain drug candidates
in selected indications where we believe that an approved product could be commercialized by a specialty sales force that calls
on a limited but focused group of physicians, we may commercialize these products ourselves. However, in therapeutic indications
that require a large sales force selling to a large and diverse prescribing population, we may enter into arrangements with other
companies for commercialization. If we are unable to establish adequate sales, marketing and distribution capabilities, whether
independently or with third parties, we may not be able to generate product revenue and may not become profitable.
If our future drugs do not achieve market acceptance,
we may be unable to generate significant revenue, if any.
Even if our drug candidates obtain regulatory
approval, they may not gain market acceptance among physicians, health care payors, patients and the medical community. Factors
that we believe could materially affect market acceptance of our drug candidates include:
• the timing of market introduction of competitive drugs;
• the convenience and ease of administration of our drug candidates;
• the existence, prevalence and severity of adverse side effects;
• other potential advantages of alternative treatment methods;
• the effectiveness of marketing and distribution support;
• the cost-effectiveness of our drug candidates; and
If our approved drug candidates fail to
achieve market acceptance, we would not be able to generate significant revenue. In addition, even if our approved drug candidates
achieve market acceptance, we may not be able to maintain that market acceptance over time if:
• unforeseen complications arise with respect to the use of our products; or
If third-party payors do not adequately reimburse patients
for any of our drug candidates that are approved for marketing, they might not be purchased or used, and our revenues and profits
will not develop or increase.
Our revenues and profits will depend significantly
upon the availability of adequate reimbursement for the use of any approved drug candidates from governmental and other third-party
payors, both in the U.S. and in foreign markets. Reimbursement by a third party may depend upon a number of factors, including
the third-party payor’s determination that use of an approved drug candidate is:
• a covered benefit under its health plan;
• safe, effective and medically necessary;
• appropriate for the specific patient;
• cost effective; and
• neither experimental nor investigational.
The regulations that govern marketing approvals,
pricing and reimbursement for new therapeutic and diagnostic products vary widely from country to country. Some countries require
approval of the sale price of a drug candidate before it can be marketed. In many countries, the pricing review period begins after
marketing or product licensing approval is granted. In some foreign markets, prescription pharmaceutical pricing remains subject
to continuing governmental control even after initial approval is granted. As a result, we might obtain regulatory approval for
a drug candidate in a particular country, but then be subject to price regulations that delay our commercial launch of the approved
drug and negatively impact the revenues we are able to generate from the sale of the approved drug in that country. Adverse pricing
limitations may hinder our ability to recoup our investment in one or more drug candidates, even if our drug candidates obtain
regulatory approval.
Obtaining reimbursement approval for an
approved drug from each third-party and government payor is a time-consuming and costly process that could require us to provide
supporting scientific, clinical and cost-effectiveness data for the use of any approved drug candidates to each payor. We may not
be able to provide data sufficient to gain acceptance with respect to reimbursement. There also exists substantial uncertainty
concerning third-party reimbursement for the use of any approved drug incorporating new technology, and even if determined eligible,
coverage may be more limited than the purposes for which the drug is approved by the FDA. Moreover, eligibility for coverage does
not imply that any approved drug will be reimbursed in all cases or at a rate that allows us to make a profit or even cover our
costs. Interim payments for new products, if applicable, may also be insufficient to cover our costs and may not be made permanent.
Reimbursement rates may vary according to the use of the approved drugs and the clinical setting in which it is used, may be based