ITEM 1A. RISK FACTORS.
Not
applicable. See, however, Item 7 of this Annual Report (“Management’s Discussion and Analysis of Financial Condition and
Results of Operations - Factors That May Affect Future Results and Financial Condition”).
ITEM 1B. UNRESOLVED STAFF COMMENTS.
Not
applicable.
ITEM 2. PROPERTIES.
Our
principal executive offices and laboratory are located at 40 Marcus Drive, Suite One, Melville, New York. We occupy 6,800 square feet
of space at the premises pursuant to a lease that expires in December 2024. The lease provides for an annual base rental during the five
year period ending in December 2024 ranging between $153,748 and $173,060. Our premises are suitable and adequate for our current operations.
ITEM 3. LEGAL PROCEEDINGS.
None.
ITEM 4. MINE SAFETY DISCLOSURES.
Not
applicable.
PART
II
Market
Information
Transactions
in our common stock are currently reported under the symbol “BRTX” on the Nasdaq Capital Market.
Holders
As
of March 28, 2022, there were 359 record holders of our shares of common stock.
Dividends
Not
applicable.
Recent
Sales of Unregistered Securities
During
the three months ended December 31, 2021, we issued the following securities in transactions not involving any public offering. For each
of the following transactions, we relied upon Section 4(a)(2) of the Securities Act of 1933, as amended, or the Securities Act, as transactions
by an issuer not involving any public offering, Section 3(a)(9) of the Securities Act as a security exchanged by an issuer with its existing
security holders exclusively where no commission or other renumeration was paid or given directly or indirectly for soliciting such exchange,
or Section 1145 of the Bankruptcy Code as a security exchanged by an issuer for a claim against the issuer in a bankruptcy plan of reorganization.
For each such transaction, we did not use general solicitation or advertising to market the securities, the securities were offered to
a limited number of persons, the investors had access to information regarding us (including information contained in our Annual Report
on Form 10-K for the year ended December 31, 2020, Quarterly Reports on Form 10-Q for the periods ended March 31, 2021, June 30, 2021
and September 30, 2021 and Current Reports on Form 8-K filed with the Securities and Exchange Commission and press releases made by us),
and we were available to answer questions by prospective investors. We reasonably believe that each of the investors is an accredited
investor. No proceeds were received from any of the issuances.
Warrants
(2) Accredited investor.
(4) Issued in lieu of cash for consulting services rendered.
Issuer
Purchases of Equity Securities
The
following table sets forth certain information with respect to purchases of common stock made by affiliated purchasers during the quarter
ended December 31, 2021:
(1) Purchases were made by affiliated purchasers in open market transactions.
ITEM 6. [RESERVED]
The
following discussion and analysis of the consolidated results of operations and financial condition of BioRestorative Therapies, Inc.
and its subsidiary as of December 31, 2021 and 2020 and for the years ended December 31, 2021 and 2020 should be read in conjunction
with our financial statements and the notes to those financial statements that are included elsewhere in this Annual Report following
Item 16 (“Form 10-K Summary”). References in this “Management’s Discussion and Analysis of Financial Condition
and Results of Operations” to “us,” “we,” “our,” and similar terms refer to BioRestorative
Therapies, Inc.. This Annual Report contains forward-looking statements as that term is defined in the federal securities laws. The events
described in forward-looking statements contained in this Annual Report may not occur. Generally these statements relate to business
plans or strategies, projected or anticipated benefits or other consequences of our plans or strategies, projected or anticipated benefits
from acquisitions that may be made by us, or projections involving anticipated revenues, earnings or other aspects of our operating results.
The words “may,” “will,” “expect,” “believe,” “anticipate,” “project,”
“plan,” “intend,” “estimate,” and “continue,” and their opposites and similar expressions,
are intended to identify forward-looking statements. We caution you that these statements are not guarantees of future performance or
events and are subject to a number of uncertainties, risks and other influences, many of which are beyond our control, which may influence
the accuracy of the statements and the projections upon which the statements are based. Reference is made to “Factors That May
Affect Future Results and Financial Condition” in this Item 7 for a discussion of some of the uncertainties, risks and assumptions
associated with these statements.
Overview
We develop therapeutic products
and medical therapies using cell and tissue protocols, primarily involving adult (non-embryonic) stem cells. We are currently pursuing
our Disc/Spine Program with our initial investigational therapeutic product being called BRTX-100. In March 2022, a United States patent issued in our Disc/Spine Program.
We submitted an IND application to the FDA to obtain authorization to commence a Phase 2 clinical trial investigating the use of
BRTX-100, our lead cell therapy candidate, in the treatment of chronic lower back pain arising from degenerative disc disease.
We have received such authorization from the FDA and have commenced such clinical trial through the execution of a CRO agreement with
PRC Clinical, the commencement of clinical trial site identification, the purchase of manufacturing equipment and the expansion of our
laboratory to include capabilities for clinical production. We have obtained a license to use technology for investigational adult stem
cell treatment of disc and spine conditions, including protruding and bulging lumbar discs. The technology is an advanced stem cell injection
procedure that may offer relief from lower back pain, buttock and leg pain, and numbness and tingling in the leg and foot. We are also
developing our ThermoStem Program. This pre-clinical program involves the use of brown adipose (fat) in connection with the cell-based
treatment of type 2 diabetes and obesity as well as hypertension, other metabolic disorders and cardiac deficiencies. United States patents
related to the ThermoStem Program were issued in September 2015, January 2019, March 2020, March 2021, and July 2021; Australian
patents related to the ThermoStem Program were issued in April 2017, October 2019 and August 2021; Japanese patents related to
the ThermoStem Program were issued in December 2017 and June 2021; a notice of allowance also issued in January 2022 for a
separate Japanese application in our ThermoStem Program and is expected to issue in the near future; Israeli patents related
to our ThermoStem Program were issued in October 2019 and May 2020; a notice of allowance also issued in September 2021
for a separate Israeli application in our ThermoStem Program and is expected to issue in the near future; and European patents
related to the ThermoStem Program were issued in April 2020 and January 2021.
We
have licensed a patented curved needle device that is a needle system designed to deliver cells and/or other therapeutic products or
materials to the spine and discs or other potential sites. We anticipate that FDA approval or clearance will be necessary for this device
prior to commercialization. We do not intend to utilize this device in connection with our contemplated Phase 2 clinical trial with regard
to BRTX-100.
Our
offices are located in Melville, New York where we have established a laboratory facility in order to increase our capabilities for the
further development of possible cellular-based treatments, products and protocols, stem cell-related intellectual property and translational
research applications.
As
of December 31, 2021, our accumulated deficit was $134,146,129. We have historically only generated a modest amount of revenue,
and our losses have principally been operating expenses incurred in research and development, marketing and promotional activities in
order to commercialize our products and services, plus costs associated with meeting the requirements of being a public company. We expect
to continue to incur substantial costs for these activities over at least the next year.
On
March 20, 2020, we filed a voluntary petition commencing a case under Chapter 11 of Title 11 of the U.S. Code in the United States Bankruptcy
Court for the Eastern District of New York. On October 30, 2020, the Bankruptcy Court entered an order confirming the Plan of Reorganization
and, on November 16, 2020, the plan became effective. As a result of the confirmed Plan of Reorganization, $14,796,000 in outstanding
debt and liabilities were exchanged for (i) shares of common stock, (ii) new convertible debt or (iii) new convertible debt and warrants
to purchase common stock.
In
November 2021, we completed a $23,000,000 underwritten public offering of units of securities pursuant to which an aggregate of 2,300,000
shares of our common stock and warrants for the purchase of an aggregate of 2,645,000 shares of our common stock were issued. We intend
to use the net proceeds from the offering as follows: (i) undertaking of clinical trials with respect to BRTX-100 and its related
collection and delivery procedure; (ii) pre-clinical research and development with respect to our ThermoStem Program; and (iii)
for general corporate and working capital purposes. In connection with the public offering, our common stock was listed on the Nasdaq
Capital Market.
In November 2021, concurrently
with the consummation of the public offering, we issued an aggregate of 313,789 shares of our common stock, 1,543,158 shares of
our Series A preferred stock and warrants for the purchase of an aggregate of 1,856,938 shares of our common stock in exchange for convertible
promissory notes in the aggregate principal amount of $10,046,897, together with accrued interest thereon, and warrants for the purchase
of an aggregate of 3,677,997 shares of our common stock. Such indebtedness and warrants were exchanged at a price of $10.00 per unit
of securities, consistent with the public offering price of our units of common stock and warrants. The newly issued warrants are exercisable
for a period of five years at an exercise price of $10.00 per share.
The
net proceeds received from our November 2021 public offering are sufficient for us to complete our Phase 2 clinical trial with regard
to BRTX-100; however, we anticipate that we will require approximately $35,000,000 in additional funding to complete our
contemplated Phase 3 BRTX-100 clinical trial (assuming the receipt of no revenues). We will also require a substantial amount
of additional funding to implement our other programs as discussed in this Annual Report under the caption Item 1 (“Business”),
including our metabolic ThermoStem Program, and fund general operations. No assurance can be given that the anticipated amount
of required funding is correct or that we will be able to accomplish our goals within the timeframes projected. In addition, no assurance
can be given that we will be able to obtain any required financing on commercially reasonable terms or otherwise.
Consolidated
Results of Operations
Year
Ended December 31, 2021 Compared with Year Ended December 31, 2020
The
following table presents selected items in our consolidated statements of operations for the years ended December 31, 2021 and
2020, respectively:
For The Years Ended
December 31,
Operating Expenses:
Other (Expense) Income:
Change in fair value of derivative liabilities - (2,141,069 )
Reorganization items, net - (4,081,245 )
Revenues
For
the years ended December 31, 2021 and 2020, we generated $46,000 and $77,000, respectively, of royalty revenue in connection with our
sublicense agreement.
Marketing
and promotion
Marketing and promotion expenses
include advertising and promotion, marketing and seminars, meals, entertainment and travel expenses. For the year ended December 31,
2021, marketing and promotion expenses decreased by $15,991, or 57%, from $28,281 to $12,290 as compared to the year ended December 31,
2020. The decrease is due to our reduced marketing plan during the first half of 2021 due to our emergence from our Chapter
11 reorganization.
We
expect that marketing and promotion expenses will increase in the future as we increase our marketing activities following full commercialization
of our products and services.
Consulting
Consulting
expenses consist of consulting fees and stock-based compensation to consultants. For the year ended December 31, 2021, consulting expenses
decreased by $62,258, or 45%, from $137,250 to $74,992, as compared to the year ended December 31, 2020, due to our reduced usage of
consultants during the first half of 2021 due to our emergence from our Chapter 11 reorganization.
Research
and development
Research and development expenses
include cash and non-cash compensation of (a) our Vice President of Research and Development; (b) our Scientific Advisory Board members;
and (c) laboratory staff and costs related to our brown fat and disc/spine initiatives. Research and development expenses are expensed
as they are incurred. For the year ended December 31, 2021, research and development expenses decreased by $147,771, or 17%, from
$876,829 to $729,058, as compared to the year ended December 31, 2020. The decrease was primarily due to a decrease in stock
compensation allocated to our research and development activities of $95,765.
We
expect that our research and development expenses will increase with the continuation of the aforementioned initiatives.
General
and administrative
General and administrative expenses
consist primarily of salaries, bonuses, payroll taxes, severance costs and stock-based compensation to employees (excluding any cash
or non-cash compensation of our Vice President of Research and Development and our laboratory staff), as well as corporate expenses such
as legal and professional fees, investor relations and occupancy related expenses. For the year ended December 31, 2021, general and
administrative expenses increased by $23,750,817, or 1,329%, from $1,786,716 to $25,537,533, as compared to the
year ended December 31, 2020. The increase is primarily due to an increase of approximately $22,417,254 in stock-based compensation resulting
from the issuance of 838,550 stock options and 293,479 RSUs.
We
expect that our general and administrative expenses related to operations will continue to increase as we expand our staff, develop our
infrastructure and incur additional costs to support the growth of our business.
Interest
expense
For
the year ended December 31, 2021, interest expense increased $175,221, or 11%, as compared to the year ended December 31, 2020. The increase
was due to the increase in both interest expense, due to the issuance of an additional $715,303 in convertible debt, and amortization
of debt discount on outstanding notes payable.
Loss
on extinguishment of notes payable, net
For
the year ended December 31, 2021, we recorded a loss on extinguishment of notes payable, net of $16,180,056 as compared to a loss
on extinguishment of notes payable, net of $658,152 for the year ended December 31, 2020. The increase is associated with the conversion
of $10,046,897 in outstanding convertible debt principal pursuant to exchange agreements with noteholders in connection with
our public offering.
Change
in fair value of derivative liabilities
For
the year ended December 31, 2021, we did not record a gain (loss) related to the change in fair value of derivative liabilities, as compared
to a loss related to the change in fair value of derivative liabilities of $2,141,069 for the year ended December 31, 2020.
Reorganization
items, net
Reorganization
items, net consists primarily of costs associated the post-petition Chapter 11 bankruptcy. For the year ended December 31, 2021, we did
not record reorganization items, net, as compared to reorganization items, net of $4,081,245 for the year ended December 31, 2020.
Liquidity
and Capital Resources
Liquidity
We
measure our liquidity in a number of ways, including the following:
December 31,
Availability
of Additional Funds
Based
upon our accumulated deficit of $134,146,129 as of December 31, 2021, along with our forecast for continued operating losses and
our need for financing to fund our contemplated clinical trials, as of such date, we required additional equity and/or debt financing
to continue our operations.
On
November 9, 2021, we completed a public offering of units, each consisting of one share of common stock and a warrant for the purchase
of one share of common stock. Pursuant to the public offering, we issued and sold 2,300,000 units at a public offering price of $10.00
per unit (resulting in gross proceeds of $23,000,000) and, pursuant to the exercise of an option granted to the underwriters, warrants
for the purchase of 345,000 shares of common stock at a public offering price of $0.01 per warrant, less underwriting discounts and commissions.
The net proceeds of the public offering are sufficient for us to complete our Phase 2 clinical trial investigating the use of BRTX-100.
Management believes that we have sufficient cash to fund operations for the twelve months from the issuance of the financial
statements included in this Annual Report.
Our
operating needs include the planned costs to operate our business, including amounts required to fund our clinical trials, working capital
and capital expenditures. Our future capital requirements and the adequacy of our available funds will depend on many factors, including
our ability to successfully commercialize our products and services, competing technological and market developments, and the need to
enter into collaborations with other companies or acquire other companies or technologies to enhance or complement our product and service
offerings.
We
may be unable to raise sufficient additional capital when we need it or raise capital on favorable terms. Future financing may require
us to pledge certain assets and enter into covenants that could restrict certain business activities or our ability to incur further
indebtedness and may contain other terms that are not favorable to our stockholders or us. If we are unable to obtain adequate funds
on reasonable terms, we may be required to significantly curtail or discontinue operations or obtain funds by entering into financing
agreements on unattractive terms.
During
the years ended December 31, 2021 and 2020, our sources and uses of cash were as follows:
Net
Cash Used in Operating Activities
We experienced negative cash
flows from operating activities for the years ended December 31, 2021 and 2020 in the amounts of $3,329,908 and $1,964,265,
respectively. The net cash used in operating activities for the year ended December 31, 2021 was primarily due to cash used to fund a
net loss of $44,303,296, adjusted for non-cash expenses in the aggregate amount of $40,648,702 and partially offset by $67,921
of cash generated by changes in the levels of operating assets and liabilities, primarily as a result of decreases in accounts payable
and accrued expenses. The net cash used in operating activities for the year ended December 31, 2020 was primarily due to cash used to
fund a net loss of $11,272,687, adjusted for non-cash expenses in the aggregate amount of $8,736,072 and partially offset by $572,350
of cash generated by changes in the levels of operating assets and liabilities, primarily as a result of increases in accrued expenses.
Net
Cash Used in Investing Activities
Net
cash used in investing activities during the year ended December 31, 2021 was $30,658, due to the purchase of manufacturing equipment.
There were no investing activities during the year ended December 31, 2020.
Net
Cash Provided by Financing Activities
Net
cash provided by financing activities during the years ended December 31, 2021 and 2020 was $21,322,683 and $5,027,211, respectively.
During the year ended December 31, 2021, $21,072,683 of net proceeds were from equity financings. During the year ended December
31, 2020, $5,517,211 of net proceeds were from debt financings.
Critical
Accounting Policies and Estimates
Impairment
of Long-lived Assets
We
review for the impairment of long-lived assets whenever events or changes in circumstances indicate that the carrying amount of an asset
may not be recoverable. An impairment loss would be recognized when estimated future cash flows expected to result from the use of the
asset and its eventual disposition are less than its carrying amount. While our near term liquidity is tight, historically we have been
successful in raising capital as needed (although there can be no assurance that we will continue to be successful in raising capital
as needed). We continue to progress our scientific agenda. We have not identified any impairment losses.
Stock-Based
Compensation
We
measure the cost of services received in exchange for an award of equity instruments based on the fair value of the award. For employees
and directors, the fair value of the award is measured on the grant date and for non-employees, the fair value of the award is generally
re-measured on vesting dates and interim financial reporting dates until the service period is complete. Awards granted to directors are treated on the same basis as awards granted to employees.
Recently
Issued Accounting Pronouncements
See
Note 3 to our consolidated financial statements for the years ended December 31, 2021 and 2020 included elsewhere in this Annual Report
following Item 16 (“Form 10-K Summary”).
Off-Balance
Sheet Arrangements
We
have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition,
changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that
is material to investors.
Factors
That May Affect Future Results and Financial Condition
The
risk factors listed in this section provide examples of risks, uncertainties and events that may cause our actual results to differ materially
from the expectations we describe in our forward-looking statements. Readers should be aware that the occurrence of any of the events
described in these risk factors could have a material adverse effect on our business, results of operations and financial condition.
We undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future
events, or otherwise.
Risks
Related to Our Business Generally
We
have a limited operating history; we have incurred substantial losses since inception; we expect to continue to incur losses for the
near term.
We
have a limited operating history. Since our inception, we have incurred net losses. As of December 31, 2021, our accumulated deficit
was $134,146,129.
We
will need to obtain a significant amount of financing to complete our clinical trials and implement our business plan.
Since
our inception, we have not generated revenues from our operations and have funded our operations through the sale of our equity securities
and debt securities. The implementation of our business plan, as discussed in this Annual Report under Item 1 (“Business”),
will require the receipt of sufficient equity and/or debt financing to purchase necessary equipment, technology and materials, fund our
clinical trials and other research and development efforts and otherwise fund our operations. We anticipate that we will require approximately
$35,000,000 in additional funding to complete our clinical trials using BRTX-100 (assuming the receipt of no revenues).
We will also require a substantial amount of additional funding to implement our other programs described in this Annual Report under
Item 1 (“Business”), including our metabolic ThermoStem Program, and fund general operations. No assurance can be
given that the anticipated amount of required funding is correct or that we will be able to accomplish our goals within the timeframes
projected. In addition, no assurance can be given that we will be able to obtain any required financing on commercially reasonable terms
or otherwise. In the event we do not obtain the financing required for the above purposes, we may have to curtail our development, marketing
and promotional activities, which would have a material adverse effect on our business, financial condition and results of operations,
and ultimately we could be forced to discontinue our operations and liquidate.
Our
business strategy is high risk.
We
are focusing our resources and efforts primarily on the development of cellular-based products and services which will require extensive
cash for research, development and commercialization activities. This is a high-risk strategy because there is no assurance that our
products and services, including our Disc/Spine Program and our ThermoStem metabolic brown fat research initiative, will
ever become commercially viable (commercial risk), that we will prevent other companies from depriving us of market share and profit
margins by offering services and products based on our inventions and developments (legal risk), that we will successfully manage a company
in a new area of business, regenerative medicine, and on a different scale than we have operated in the past (operational risk), that
we will be able to achieve the desired therapeutic results using stem and regenerative cells (scientific risk), or that our cash resources
will be adequate to develop our products and services until we become profitable, if ever (financial risk). We are using our cash in
one of the riskiest industries in the economy (strategic risk). This may make our securities an unsuitable investment for many investors.
We
will need to enter into agreements in order to implement our business strategy.
Except
for a certain license agreement with Regenerative Sciences, LLC and a master services agreement with PRC Clinical with regard to CRO
services discussed in this Annual Report under Item 1 (“Business”), we do not have any material agreements or understandings
in place with respect to the implementation of our business strategy. No assurances can be given that we will be able to enter into any
necessary agreements with respect to the development of our business. Our inability to enter into any such agreements would have a material
adverse effect on our results of operations and financial condition.
We
depend on our executive officers and on our ability to attract and retain additional qualified personnel.
Our
performance is substantially dependent on the performance of Lance Alstodt, our Chief Executive Officer. We rely upon him for strategic
business decisions and guidance. We are also dependent on the performance of Francisco Silva, our Vice President of Research and Development.
Each of Messrs. Alstodt and Silva is subject to an employment agreement with us. We do not have any key-man insurance policies on the
lives of either of our executive officers. We believe that our future success in developing marketable products and services and achieving
a competitive position will depend in large part upon whether we can attract and retain additional qualified management and scientific
personnel. Competition for such personnel is intense, and there can be no assurance that we will be able to attract and retain such personnel.
The loss of the services of Mr. Alstodt and/or Mr. Silva or the inability to attract and retain additional personnel and develop expertise
as needed would have a substantial negative effect on our results of operations and financial condition.
The
impact of COVID-19 and related risks could materially affect our results of operations and prospects.
Beginning
in March 2020, the global pandemic related to the novel coronavirus COVID-19 began to impact the global economy. Because of the size
and breadth of this pandemic, all of the direct and indirect consequences of COVID-19 are not yet known and may not emerge for some time.
Risks presented by the ongoing effects of COVID-19 include, among others, the following:
Clinical
Trials. We anticipate that the COVID-19 pandemic may negatively impact our contemplated clinical trials. Due to the worldwide efforts
being taken to combat COVID-19 and the increased clinical work being done in this respect, we believe that it may be difficult for certain
needed laboratory supplies, equipment and other materials to be obtained in order to conduct our clinical trials. We also anticipate
that, due to a fear of COVID-19 transmission, there may be a hesitancy on the part of certain individuals to become clinical trial participants.
We hope that these possible negative effects will lessen as more of the population becomes vaccinated; however, the impact that the vaccinations
will have is uncertain at this time.
Adverse
Legislative and/or Regulatory Action. Federal, state and local government actions to address and contain the impact of COVID-19 may
adversely affect us. For example, we may be subject to legislative and/or regulatory action that negatively impacts the manner in which
the clinical trials may be conducted.
Operational
Disruptions and Heightened Cybersecurity Risks. Our operations could be disrupted if key members of our senior management or a significant
percentage of our workforce are unable to continue to work because of illness, government directives or otherwise. In addition, in connection
with increased remote working arrangements, we face a heightened risk of cybersecurity attacks or data security incidents and are more
dependent on internet and telecommunications access and capabilities.
Risks
Related to Our Cell Therapy Product Development Efforts
Our
future success is significantly dependent on the timely and successful development and commercialization of BRTX-100, our lead product
candidate for the treatment of chronic lumbar disc disease; if we encounter delays or difficulties in the development of this product
candidate, as well as any other product candidates, our business prospects would be significantly harmed.
We
are dependent upon the successful development, approval and commercialization of our product candidates. Before we are able to seek regulatory
approval of our product candidates, we must conduct and complete extensive clinical trials to demonstrate their safety and efficacy in
humans. Our lead product candidate, BRTX-100, is in early stages of development and we have not yet commenced a Phase 2 clinical
trial using BRTX-100 to treat chronic lower back pain due to degenerative disc disease related to protruding/bulging discs.
Clinical
testing is expensive, difficult to design and implement, and can take many years to complete. Importantly, a failure of one or more of
these or any other clinical trials can occur at any stage of testing. We may experience numerous unforeseen events during, or as a result
of, clinical trials that could delay or prevent our ability to complete our clinical studies, receive regulatory approval or commercialize
our cell therapy product candidates, including the following:
● difficulty collaborating with patient groups and investigators;
● patients dropping out of a study;
● delays in our clinical trials caused by the COVID-19 pandemic;
● failure to raise sufficient funds to complete our clinical trials.
Any
inability to successfully complete pre-clinical and clinical development could result in additional costs to us or impair our ability
to generate revenue. In addition, if we make manufacturing or formulation changes to our product candidates, we may be required, or we
may elect, to conduct additional studies to bridge our modified product candidates to earlier versions. Clinical study delays could also
shorten any periods during which our products have patent protection and may allow our competitors to bring products to market before
we do, which could impair our ability to successfully commercialize our product candidates and may harm our business and results of operations.
Even
if we are able to successfully complete our clinical development program for our product candidates, and ultimately receive regulatory
approval to market one or more of the products, we may, among other things:
● have the product removed from the market after obtaining marketing approval;
● encounter issues with respect to the manufacturing of commercial supplies;
● be subject to additional post-marketing testing requirements; and/or
● be subject to restrictions on how the product is distributed or used.
We
anticipate that we will not be able to commercialize our BRTX-100 product candidate for at least five years.
We
may experience delays and other difficulties in enrolling a sufficient number of patients in our clinical trials which could delay or
prevent the receipt of necessary regulatory approvals.
We
may not be able to initiate or complete as planned any clinical trials if we are unable to identify and enroll a sufficient number of
eligible patients to participate in the clinical trials required by the FDA or other regulatory authorities. We also may be unable to
engage a sufficient number of clinical trial sites to conduct our trials.
We
may face challenges in enrolling patients to participate in our clinical trials due to the novelty of our cell-based therapies, the size
of the patient populations and the eligibility criteria for enrollment in the trial, and potential subjects’ concern over the
COVID-19 pandemic. In addition, some patients may have concerns regarding cell therapy that may negatively affect their perception
of therapies under development and their decision to enroll in the trials. Furthermore, patients suffering from diseases within target
indications may enroll in competing clinical trials, which could negatively affect our ability to complete enrollment of our trials.
Enrollment challenges in clinical trials often result in increased development costs for a product candidate, significant delays and
potentially the abandonment of the clinical trial.
We
may have other delays in completing our clinical trials and we may not complete them at all.
We
have not commenced the clinical trials necessary to obtain FDA approval to market our product candidate, BRTX-100, or any of our
other product candidates in development. Since we lack significant experience in completing clinical trials and bringing a drug through
commercialization, we have hired outside consultants with such experience. Clinical trials for BRTX-100 and other product candidates
in development may be delayed or terminated as a result of many factors, including the following:
● failure by regulators to authorize us to commence a clinical trial;
● treatment candidates demonstrating a lack of efficacy during clinical trials;
● treatment candidates demonstrating significant safety signals; and/or
Any
delay or failure to complete clinical trials and obtain FDA approval for our product candidates could have a material adverse effect
on our cost to develop and commercialize, and our ability to generate revenue from, a particular product candidate.
The
development of our cell therapy product candidates is subject to uncertainty because autologous cell therapy is inherently variable.
When
manufacturing an autologous cell therapy, the number and composition of the cell population varies from patient to patient. Such variability
in the number and composition of these cells could adversely affect our ability to manufacture autologous cell therapies in a cost-effective
or profitable manner and meet acceptable product release specifications for use in a clinical trial or, if approved, for commercial sale.
As a consequence, the development and regulatory approval process for autologous cell therapy products could be delayed or may never
be completed.
Any
disruption to our access to the media (including cell culture media) and reagents we are using in the clinical development of our cell
therapy product candidates could adversely affect our ability to perform clinical trials and seek future regulatory submissions.
Certain
media (including cell culture media) and reagents, as well as devices, materials and systems, that we intend to use in our planned clinical
trials, and that we may need or use in commercial production, are provided by unaffiliated third parties. Any lack of continued availability
of these media, reagents, devices, materials and systems for any reason would have a material adverse effect on our ability to complete
these studies and could adversely impact our ability to achieve commercial manufacture of our planned therapeutic products. Although
other available sources for these media, reagents, devices, materials and systems may exist in the marketplace, we have not evaluated
their cost, effectiveness, or intellectual property foundation and therefore cannot guarantee the suitability or availability of such
other potential sources.
Products
that appear promising in research and development may be delayed or may fail to reach later stages of clinical development.
The
successful development of cellular based products is highly uncertain. Product candidates that appear promising in preclinical and early
research and development may be delayed or fail to reach later stages of development. Decisions regarding the further development of
product candidates must be made with limited and incomplete data, which makes it difficult to ensure or even accurately predict whether
the allocation of limited resources and the expenditure of additional capital on specific product candidates will result in desired outcomes.
Pre-clinical and clinical data can be interpreted in different ways, and negative or inconclusive results or adverse events during a
clinical trial could delay, limit or prevent the development of a product candidate. Positive preclinical data may not continue or occur
for future subjects in our clinical studies and may not be repeated or observed in ongoing or future studies involving our product candidates.
Furthermore, our product candidates may also fail to show the desired safety and efficacy in later stages of clinical development despite
having successfully advanced through initial clinical studies. In addition, regulatory delays or rejections may be encountered as a result
of many factors, including changes in regulatory policy during the period of product development.
Our
clinical trials may fail to demonstrate adequately the safety and efficacy of our product candidates, which would prevent or delay regulatory
approval and commercialization.
The
clinical trials of our product candidates are, and the manufacturing and marketing of our products will be, subject to extensive and
rigorous review and regulation by numerous government authorities in the United States and in other countries where we intend to test
and market our product candidates. Before obtaining regulatory approvals for the commercial sale of any of our product candidates, we
must demonstrate through lengthy, complex and expensive preclinical testing and clinical trials that our product candidates are both
safe and effective for use in each target indication. In particular, because some of our product candidates are subject to regulation
as biological drug products, we will need to demonstrate that those products are safe, pure, and potent for use in their target
indications. Each product candidate must demonstrate an adequate risk versus benefit profile in its intended patient population and for
its intended use. The risk/benefit profile required for product licensure will vary depending on these factors and may include decrease
or elimination of pain, adequate duration of response, a delay in the progression of the disease, an improvement in function and/or decrease
in disability.
In
addition, even if such trials are successfully completed, we cannot guarantee that the FDA will interpret the results as we do, and more
trials could be required before we submit our product candidates for approval. To the extent that the results of the trials are not satisfactory
to the FDA for support of a marketing application, we may be required to expend significant resources, which may not be available to
us, to conduct additional trials in support of potential approval of our product candidates.
Even
if we complete the necessary clinical trials, we cannot predict when, or if, we will obtain regulatory approval to commercialize a product
candidate, and the approval may be for a narrower indication than we seek.
We
cannot commercialize a product candidate until the appropriate regulatory authorities have reviewed and approved the product candidate.
Even if our product candidates meet their safety and efficacy endpoints in clinical trials, the regulatory authorities may not complete
their review processes in a timely manner, or we may not be able to obtain regulatory approval. Additional delays may result if an FDA
Advisory Committee or other regulatory authority recommends non-approval or restrictions or conditions on approval. In addition, we may
experience delays or rejections based upon additional government regulation from future legislation or administrative action, or changes
in regulatory authority policy during the period of product development, clinical trials and the review process. Regulatory authorities
also may approve a product candidate for more limited indications than requested or they may impose significant limitations in the form
of narrow indications, contraindications or a Risk Evaluation and Mitigation Strategy, or REMS. These regulatory authorities may require
warnings or precautions with respect to conditions of use or they may grant approval subject to the performance of costly post-marketing
clinical trials. In addition, regulatory authorities may not approve the labeling claims or allow the promotional claims that are necessary
or desirable for the successful commercialization of our product candidates. Any of the foregoing scenarios could materially harm the
commercial prospects for our product candidates and materially and adversely affect our business, financial condition, results of operations
and prospects.
We
may never obtain FDA approval for any of our product candidates in the United States and, even if we do, we may never obtain approval
for or commercialize any of our product candidates in any foreign jurisdiction, which would limit our ability to realize our full market
potential.
In
order to eventually market any of our product candidates in any particular foreign jurisdiction, we must establish and comply with numerous
and varying regulatory requirements regarding safety and efficacy on a jurisdiction-by-jurisdiction basis. Approval by the FDA in the
United States, if obtained, does not ensure approval by regulatory authorities in other countries or jurisdictions. In addition, preclinical
studies and clinical trials conducted in one country may not be accepted by regulatory authorities in other countries, and regulatory
approval in one country does not guarantee regulatory approval in any other country.
Approval
processes vary among countries and can involve additional product testing and validation and additional administrative review periods.
Seeking foreign regulatory approval could result in difficulties and costs for us and require additional preclinical studies or clinical
trials which could be costly and time consuming. Regulatory requirements can vary widely from country to country and could delay or prevent
the introduction of our product candidates in those countries. The foreign regulatory approval process involves similar risks to those
associated with FDA approval. We do not have any product candidates approved for sale in any jurisdiction, including international markets,
nor have we attempted to obtain such approval. If we fail to comply with regulatory requirements in international markets or to obtain
and maintain required approvals, or if regulatory approvals in international markets are delayed, our target market will be reduced and
our ability to realize the full market potential of our products may be unrealized.
We
presently lack manufacturing capabilities to produce our product candidates at commercial scale quantities and do not have an alternate
manufacturing supply, which could negatively impact our ability to meet any future demand for the products.
Currently,
we expect our laboratory (or a contract laboratory) to provide the cell processing services necessary for clinical production of BRTX-100
for our disc clinical trial. To date, we have not produced any products at our laboratory. We expect that we would need to significantly
expand our manufacturing capabilities to meet potential commercial demand for BRTX-100 and any other of our product candidates,
if approved, as well as any of our other product candidates that might attain regulatory approval. Such expansion would require additional
regulatory approvals. Even if we increase our manufacturing capabilities, it is possible that we may still lack sufficient capacity to
meet demand. Ultimately, if we are unable to supply our products to meet commercial demand, whether because of processing constraints
or other disruptions, delays or difficulties that we experience, sales of the products and their long-term commercial prospects could
be significantly damaged.
We
do not presently have a third-party manufacturer for BRTX-100 or any of our other product candidates. If our facilities at which
these product candidates would be manufactured or our equipment were significantly damaged or destroyed, or if there were other disruptions,
delays or difficulties affecting manufacturing capacity, our planned and future clinical studies and commercial production for these
product candidates would likely be significantly disrupted and delayed. It would be both time consuming and expensive to replace this
capacity with third parties, particularly since any new facility would need to comply with the regulatory requirements.
Ultimately,
if we are unable to supply our cell therapy product candidates to meet commercial demand (assuming commercial approval is obtained),
whether because of processing constraints or other disruptions, delays or difficulties that we experience, our production costs could
dramatically increase and sales of the product and its long-term commercial prospects could be significantly damaged.
The
commercial potential and profitability of our products are unknown and subject to significant risk and uncertainty.
Even
if we successfully develop and obtain regulatory approval for our cell therapy product candidates, the market may not understand or accept
the products, which could adversely affect both the timing and level of future sales. Ultimately, the degree of market acceptance of
our product candidates (or any of our future product candidates) will depend on a number of factors, including:
Even
if we are successful in achieving sales of our product candidates, it is not clear to what extent, if any, the products will be profitable.
The costs of goods associated with production of cell therapy products are significant. In addition, some changes in manufacturing processes
or procedures generally require FDA or foreign regulatory authority review and approval prior to implementation. We may need to conduct
additional pre-clinical studies and clinical trials to support approval of any such changes. Furthermore, this review process could be
costly and time-consuming and could delay or prevent the commercialization of product candidates.
We
may have difficulties in sourcing brown adipose (fat) tissue.
We
use brown adipose (fat) tissue to identify and characterize brown adipose derived stem cells for use in our pre-clinical ThermoStem
Program. There is no certainty that we will be able to continue to collect brown adipose samples through any relationships that we
have, have had or may establish with potential sources of brown adipose tissue. The inability to procure brown fat tissue would have
a material adverse effect upon our ability to advance our ThermoStem Program.
We do not have exclusive
license rights with regard to the disc/spine technology. The lack of such exclusive rights could have a material adverse
effect upon us.
Pursuant to our
license agreement with Regenerative Sciences, LLC, we were required to complete our Phase 2 clinical trial by a certain date in
order to maintain our exclusive rights with regard to the disc/spine technology. Such time has passed and accordingly our license
rights are currently non-exclusive. We are in negotiations with the licensor with regard to a possible reinstatement of the exclusive
nature of our rights. No assurances can be given in this regard. The lack of such exclusive rights will not affect our ability
to conduct our Phase 2 clinical trial with regard to BRTX-100 but could have a material adverse effect upon our business,
results of operations and financial condition. See “Item 1 (“Business-Disc/Spine Program – License”).
If
safety problems are encountered by us or others developing new stem cell-based therapies, our stem cell initiatives could be materially
and adversely affected.
The
use of stem cells for therapeutic indications is still in the very early stages of development. If an adverse event occurs during clinical
trials related to one of our proposed products and/or services or those of others, the FDA and other regulatory authorities may halt
clinical trials or require additional studies. The occurrence of any of these events would delay, and increase the cost of, our development
efforts and may render the commercialization of our proposed products and/or services impractical or impossible.
We
are vulnerable to competition and technological change, and also to physicians’ inertia.
We
will compete with many domestic and foreign companies in developing our technology and products, including biotechnology, medical device
and pharmaceutical companies. Many current and potential competitors have substantially greater financial, technological, research and
development, marketing, and personnel resources. There is no assurance that our competitors will not succeed in developing alternative
products and/or services that are more effective, easier to use, or more economical than those which we may develop, or that would render
our products and/or services obsolete and non-competitive. In general, we may not be able to prevent others from developing and marketing
competitive products and/or services similar to ours or which perform similar functions or which are marketed before ours.
Competitors
may have greater experience in developing products, therapies or devices, conducting clinical trials, obtaining regulatory clearances
or approvals, manufacturing and commercialization. It is possible that competitors may obtain patent protection, approval or clearance
from the FDA or achieve commercialization earlier than we can, any of which could have a substantial negative effect on our business.
We
will compete against cell-based therapies derived from alternate sources, such as bone marrow, adipose tissue, umbilical cord blood and
potentially embryos. Doctors historically are slow to adopt new technologies like ours, whatever the merits, when older technologies