10-K
1
tm2024769d1_10k.htm
FORM 10-K
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
For the fiscal year ended June 30, 2020
OR
For the transition period from ___ to ___
Commission file number 001-35023
iBio,
Inc.
(Exact name of registrant as specified in
its charter)
(Address of principal executive offices) (Zip Code)
Registrant’s telephone number, including
area code: (302) 355-0650
Securities registered pursuant to Section
12(b) of the Act:
Title of each class Ticker symbol(s) Name of each exchange on which registered
Common Stock IBIO NYSE American
Securities registered pursuant to Section
12(g) of the Act: None
Indicate by check mark if the registrant
is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ̈ No x
Indicate by check mark if the registrant
is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ̈No x
Indicate by check mark whether the registrant
(1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding
12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes xNo ̈
Indicate by check mark whether the registrant
has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405
of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Yes xNo ̈
Indicate by check mark whether the registrant
is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth
company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting
company” and “emerging growth company” in Rule 12b-2 of the Exchange Act:
Large accelerated filer ̈ Accelerated filer ̈
Non-accelerated filer x Smaller reporting company x
Emerging growth company ̈
If an emerging growth company, indicate
by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial
accounting standards provided pursuant to Section 13(a) of the Exchange Act.
̈
Indicate by check mark whether the registrant
has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial
reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared
or issued its audit report. ̈
Indicate by check mark whether the registrant is a shell company
(as defined in Rule 12b-2 of the Exchange Act). Yes ̈No x
The aggregate market value of the voting
and non-voting common equity held by non-affiliates of the registrant was $13,641,864
as of December 31, 2019, based upon the closing sale price on the NYSE American of $0.25 per share reported for such date.
There were 180,287,751 shares of the registrant’s
common stock issued and outstanding as of October 8, 2020.
Documents
IncorOporated By Reference:
Certain portions of the Definitive Proxy
Statement to be used in connection with the Registrant’s 2020 Annual Meeting of Stockholders are incorporated by reference
into Part III of this Annual Report on Form 10-K
IBIO, INC.
ANNUAL REPORT ON FORM 10-K
TABLE OF CONTENTS
Page
PART I
Item 1. Business 1
Item 1A. Risk Factors 16
Item 1B. Unresolved Staff Comments 48
Item 2. Property 48
Item 3. Legal Proceedings 49
Item 4. Mine Safety Disclosures 49
PART II
Item 6. Selected Financial Data 50
Item 7A. Quantitative and Qualitative Disclosures About Market Risk 53
Item 8. Financial Statements and Supplementary Data 54
Item 9A. Controls and Procedures 54
Item 9B. Other Information 56
PART III
Item 10. Directors, Executive Officers and Corporate Governance 57
Item 11. Executive Compensation and Director Compensation 57
Item 14. Principal Accountant Fees and Services 57
PART IV
Item 15. Exhibits and Financial Statement Schedules 58
SPECIAL NOTE REGARDING FORWARD-LOOKING
STATEMENTS
Unless the context requires otherwise,
references in this Annual Report on Form 10-K (this “Annual Report”) to “iBio,” the “Company,”
“we,” “us,” “our” and similar terms mean iBio, Inc.
Certain statements in this Annual Report,
including, without limitation, statements under the heading “Management’s Discussion and Analysis of Financial Condition
and Results of Operations,” includes forward-looking statements as defined in Section 27A of the Securities Act of 1933 (the
“Securities Act”), Section 21E of the Securities Exchange Act of 1934 (the “Exchange Act”), the Private
Securities Litigation Reform Act of 1995 (the “PSLRA”) or in releases made by the Securities and Exchange Commission
(the “SEC”), all as may be amended from time to time. These cautionary statements are being made pursuant to the Securities
Act, the Exchange Act and the PSLRA with the intention of obtaining the benefits of the “safe harbor” provisions of
such laws. All statements contained in this Annual Report, other than statements that are purely historical, are forward-looking
statements. Forward looking-statements can be identified by, among other things, the use of forward-looking language, such as the
words “plans,” “intends,” “believes,” “expects,” “anticipates,” “estimates,”
“projects,” “potential,” “may,” “will,” “would,” “could,”
“should,” “seeks,” or “scheduled to,” or other similar words, the negative of these terms,
other variations of these terms or comparable language, or by discussion of strategy or intentions. Forward-looking statements
are based upon management’s present expectations, objectives, anticipations, plans, hopes, beliefs, intentions or strategies
regarding the future and are subject to known and unknown risks and uncertainties that could cause actual results, events or developments
to be materially different from those indicated in such forward-looking statements, including the risks and uncertainties set forth
in Item 1A of this Annual Report on Form 10-K and in other securities filings by the Company. These risks and uncertainties should
be considered carefully, and readers are cautioned not to place undue reliance on such forward-looking statements. As such, no
assurance can be given that the future results covered by the forward-looking statements will be achieved. All information in this
Annual Report on Form 10-K is as of June 30, 2020, unless otherwise indicated. The Company does not intend to update this information
to reflect events after the date of this Annual Report.
Copies of this Annual Report, our Quarterly
Reports on Form 10-Q, our Current Reports on Form 8-K and our other reports filed with the SEC can be obtained free of charge as
soon as reasonably practicable after such material is electronically filed with, or furnished to, the SEC on our website at http://www.ibioinc.com/
or directly from the SEC’s website at http://www.sec.gov/. Our website and the information contained therein or connected
thereto are not intended to be incorporated into this Annual Report.
PART I
Item 1. Business.
Overview
We are a biotechnology company and biologics
contract development and manufacturing organization (“CDMO”). We apply our licensed and owned technologies to develop
novel products to fight fibrotic diseases, cancers, and infectious diseases. We use our FastPharming® Development
and Manufacturing System to increase “speed-to-clinic” for new candidates. We are also using the FastPharming System
to create proteins and bioinks for research and further manufacturing uses in a variety of research and development (“R&D”)
applications, including 3D-bioprinting. In addition, we make the FastPharming System available to clients on a fee-for-service
basis for the production of proteins.
During the year ended June 30, 2020, we operated in two segments:
(i) our CDMO segment, operated via our subsidiary iBio CDMO LLC (“iBio CDMO”), and (ii) our proprietary biologics development
and licensing activities, conducted within iBio, Inc. In the past, our primary focus was the CDMO business, pursuant to which iBio
CDMO provided manufacturing services to collaborators and third-party customers as well as to us, for our own product development
purposes. However, during the second half of 2020 and subsequent to our fiscal year end, we shifted our primary focus to our proprietary
biologics development programs, including novel vaccines and therapeutics.
Our current platforms and programs include:
(i) CDMO services using our licensed and owned FastPharming Technologies and GlycaneeringTM Services;
(ii) the development of therapeutics, for which we intend to conduct preclinical and clinical trials; (iii) the development of
vaccines, for which we intend to conduct preclinical and clinical trials, and (iv) the production of proteins for research and
further manufacturing use in 3D-bioprinting and other applications. We are developing a portfolio of technologies, products, and
services driven by the following platforms and programs, which we intend to use individually, and in combination:
· CDMO Services
· Therapeutics
· Vaccines
o The lichenase (“LicKMTM”)-subunit vaccine for COVID-19 (“IBIO-201”).
· Research & Bioprocess Products
o Cytokines and growth factors for cell culture applications.
Our Platforms and Programs
CDMO Services
Our contract development and
manufacturing services include:
1
FastPharming®
System
The FastPharming System
is iBio’s proprietary approach to plant-made pharmaceutical production. It uses iBio’s Nicotiana benthamiana
plants, novel expression vectors, a large-scale transient transfection method, and other technologies that can be used to produce
complex therapeutic proteins emerging from our own, our clients’ and our potential clients’ pipelines. The FastPharming System
offers several advantages versus traditional mammalian cell expression systems, including:
The FastPharming Process
Technologies have been established in iBio CDMO’s operations in Bryan, Texas. The process begins with robotic seeding of
iBio’s plants into an inert matrix for hydroponic cultivation under optimized LED lighting conditions. While the plants grow,
FastPharming Vectors carrying the genes encoding the desired protein product are developed and then loaded into a bacterial
host (Agrobacterium tumefaciens). Then, the bacteria carrying the vectors and DNA for producing the desired protein are
introduced into the leaves of the plants via an automated vacuum infiltration process. The vectors introduce the DNA into the plant
nucleus, where it is coded into instructions that direct the plant’s own cellular machinery to make the desired protein.
A specific arrangement of genes for plant viral enzymes causes these protein production instructions to be copied hundreds of thousands
of times in each plant cell. Thus, as the plants continue growing for about another week, the gene transfer vectors combine the
desirable features of the DNA mobilization plasmid, with gene control elements taken from single-stranded RNA plant viruses, to
produce the encoded protein in abundance. With the target protein accumulated in the leaves, the plants are harvested, and the
bulk drug substance is purified via traditional methods.
In the FastPharming System,
no animal- or human-derived materials are used, decreasing the risk of product contamination with mammalian viruses or prions.
In place of animal-origin raw materials, green plants, grown under clean and controlled conditions, provide for the expression
of proteins. This portion of the bioprocess uses raw materials readily available to us, decreasing certain supply chain risks.
By incorporating transient gene
expression technology, the FastPharming System can rapidly deliver high quality proteins for clinical use without several
of the time-consuming steps that competitive mammalian-cell based expression systems require, such as the need to i) isolate a
high-producing cell clone from millions of non-productive cells, ii) establish a master cell bank, and iii) grow the clonal cells
in a sterile fermenter to start the manufacturing process. In addition to saving months of development time associated with traditional
methods, the use of plants instead of bioreactors – and sterile liquid-handling systems to prevent bacterial, fungal, or
viral contamination of the protein drug substance – saves money and reduces plastic waste.
2
FastPharming Facility
Joint Venture with Eastern Capital Limited
iBio CDMO’s operations
take place in Bryan, Texas in a 130,000 square-foot cGMP manufacturing facility controlled by an affiliate (the “Second Eastern
Affiliate”) of Eastern Capital Limited (“Eastern”), a stockholder of the Company as sublandlord (the “Sublandlord”).
The facility is a Class A life sciences building located on land owned by the Texas Agricultural and Mechanical College of Texas
(“Texas A&M”) system designed and equipped for the manufacture of plant-made biopharmaceuticals. The Sublandlord
granted iBio CDMO a 34-year lease for the facility that expires in 2050.
On December 16, 2015, we formed
iBio CDMO as a Delaware limited liability company to develop and manufacture plant-made pharmaceuticals. On January 13, 2016, we
entered into a contract manufacturing joint venture with an affiliate of Eastern (the “Eastern Affiliate”). The Eastern
Affiliate contributed $15 million in cash for a 30% interest in iBio CDMO. We retained a 70% interest in iBio CDMO and granted
iBio CDMO a non-exclusive license to use our proprietary technologies for research purposes and an exclusive U.S. license for manufacturing
purposes. We retained the exclusive right to grant product licenses to those who wish to sell or distribute products made using
our technology. On February 23, 2017, we entered into an exchange agreement with the Eastern Affiliate, pursuant to which we acquired
substantially all of the interest held by the Eastern Affiliate in iBio CDMO and issued one share of our iBio CMO Preferred Tracking
Stock, par value $0.001 per share. After giving effect to the transaction, we own 99.99% of iBio CDMO. At any time, at our election
or the election of the Eastern Affiliate, the outstanding share of iBio CMO Preferred Tracking Stock may be exchanged for 29,990,000
units of limited liability company interests of iBio CDMO. Following such exchange, we would own a 70% interest in iBio CDMO and
the Eastern Affiliate would own a 30% interest.
See Notes 1, 13 and 14 in the
consolidated financial statements for a further discussion.
Commercial activities commenced
in January 2016 with most of our initial efforts directed towards recommissioning the facility to help meet cGMP manufacturing
standards and provisions for iBio’s service offerings. The facility houses laboratory and pilot-scale operations, as well
as large-scale automated hydroponic systems capable of growing more than four million plants and delivering dozens of kilograms
of protein per year.
Vaccines
In
the first half of 2020, we renewed development of our E2 classic swine fever vaccine program (IBIO-400). During the second half
of fiscal 2020, we entered the human vaccine space with the filing on March 11, 2020 of four provisional patent applications
with the U.S. Patent and Trademark Office in support of our COVID-19 vaccine platforms, followed by the announcement
in March 2020 of our Virus-Like Particle (VLP)-Based Platform (“VLP”) vaccine program (IBIO-200) and our announcement
in June 2020 of our second candidate, the LicKM-subunit vaccine (IBIO-201).
SARS-CoV-2
Severe
acute respiratory syndrome coronavirus 2 (SARS-CoV-2) is a strain of coronavirus that
causes coronavirus disease 2019 (COVID-19). The virus was introduced to human populations from an animal source in the Chinese
province of Hubei in late 2019. The spread of infection has since been driven by human-to-human transmission and has resulted
in an ongoing pandemic. According to the World Health Organization, as of September 15, 2020, more than 28 million cases have
been reported globally with more than 900,000 deaths.
IBIO-200
IBIO-200 is a vaccine candidate
currently in preclinical development for the prevention of COVID-19 and leverages iBio’s own VLP platform. The first
VLP vaccine was approved in 1998, and the safety and effectiveness of additional VLP-based vaccines have been well documented since
that time. VLP-based vaccines interact with immune cells differently than soluble antigens and trigger both humoral and cellular
responses. IBIO-200 incorporates the receptor binding motif (RBM) of SARS-CoV-2 within the VLP structure to direct antigen presentation
to activate both polyfunctional CD4+ and CD8+ T cells and increase the overall immune response.
This design allows for a multivalent particle to display high density antigens to the immune system in a highly structured format.
Combined with iBio’s FastPharming Manufacturing System, iBio’s technology delivers a tightly controlled
particle size, leading to better dose definition and higher product consistency.
3
IBIO-201
IBIO-201
is a vaccine candidate currently in preclinical development for the prevention of COVID-19. IBIO-201 is based on a subunit platform
that combines antigens derived from the SARS-CoV-2 spike protein fused with iBio’s patented LicKMTM booster
molecule to enhance immune response. iBio’s proprietary LicKM technology offers the potential to strengthen the initial
immune response to the antigen and extend the duration of the immune response.
Preclinical
Development of IBIO-200 and IBIO-201
We have engaged in preclinical
studies of both IBIO-200 and IBIO-201 and are developing IBIO-200 and IBIO-201 in tandem, and in combination with multiple adjuvants.
In August 2020, we announced that preclinical immunization studies with IBIO-200 and IBIO-201, combined with select adjuvants from
the Infectious Disease Research Institute (“IDRI”), induced anti-SARS-CoV-2 antibodies with notable antibody responses
with two particular antigen-adjuvant combinations. Additional data from cell-based pseudovirus neutralization assay testing demonstrated
that IBIO-201 induced the production of more anti-spike neutralizing antibodies than IBIO-200 in immunized mice. Based on these
results, in September 2020, we announced the selection of IBIO-201 as our lead candidate for the prevention of SARS-CoV-2 infection.
We intend to conduct more focused studies on each of IBIO-200 and IBIO-201 with the goal of advancing IBIO-201 to toxicology studies
ahead of planned clinical development while we continue preclinical development of IBIO-200 and our VLP platform as a potential
‘plug-and-play’ vaccine development system.
Classical
Swine Fever
Classical
swine fever (“CSF”) is a contagious, often fatal disease affecting both feral and domesticated pigs. Outbreaks in Europe,
Asia, Africa, and South America have not only adversely impacted animal health and food security but have also had severe socioeconomic
impacts on both the pig industry worldwide and small-scale pig farming.
IBIO-400
In collaboration with the Institute of Infectious Animal Diseases
at Texas A&M University and Kansas State University, iBio used the FastPharming System to develop a potentially
safe and protective [DIVA]-capable subunit vaccine.Characterized as a candidate that can “differentiate
infected from vaccinated animals” [DIVA]-capable, the antigen is formulated in cost-effective oil-in-water emulsion adjuvants.
IBIO-400 studies have shown that after single-dose vaccination, the adjuvanted, plant-made CSF E2 subunit vaccine provides complete
protection in challenged pigs and is accompanied by strong virus neutralization antibody responses.
Therapeutics
We are developing novel therapeutic
candidates that we believe can quickly move into clinical trials by using our FastPharming® System. Our
current focus is on biological medicines for the treatment of fibrotic and infectious diseases, and we intend to continue to
explore the application of our FastPharming Technologies in oncology and other therapeutic areas.
Fibrosis
Fibrosis
is a pathological disorder in which connective tissue replaces normal parenchymal tissue to the extent
that it goes unchecked, leading to considerable tissue remodeling and the formation of permanent scar tissue. Fibrosis
can occur in many tissues within the body, including the lungs (e.g., idiopathic pulmonary fibrosis (“IPF”) and skin
(e.g. systemic scleroderma).
Systemic
scleroderma is a rare chronic disease of uncertain etiology characterized by diffuse fibrosis and vascular abnormalities in the
skin, joints, and internal organs. IPF is a type of chronic scarring lung disease characterized
by a progressive and irreversible decline in lung function. In both cases, while there are medications that can
slow the progression of specific existing symptoms or temporarily reduce the development of new symptoms, there remains an unmet
need for more effective treatments.
IBIO-100
IBIO-100, is our lead therapeutic
candidate being advanced for Investigational New Drug (“IND”) development based on in-licensed patents from the University
of Pittsburgh. The molecule is a fusion of the endostatin derived E4 antifibrotic peptide to the hinge and heavy chain of human
IgG1. In preclinical studies, IBIO-100 has been shown to reduce: (i) bleomycin-induced lung
fibrosis in mice, as measured by hydroxyproline content and modified
Ashcroft histopathology scoring; (ii)collagen content in mice in
which fibrosis was produced by osmotic pump delivery of bleomycin followed by pump delivery of IBIO-100, and (iii) hydroxyproline
content of human lung tissue obtained after transplant of diseased, terminal-stage organs. Tissue fragments exhibited a significant
reduction of hydroxyproline when cultured in the presence of IBIO-100 after only 72 hours. We expect to conduct our remaining
IND-enabling studies in 2021. IBIO-100 has been granted orphan drug designation by the FDA for treatment of systemic scleroderma.
4
COVID-19
Coronavirus
disease 2019 is an infectious disease caused by severe acute respiratory syndrome coronavirus 2 (SARS-CoV-2). It
was first identified in December 2019 in Wuhan, Hubei, China, and has resulted in an ongoing pandemic. According
to the World Health Organization, as of September 15, 2020, more than 28million
cases have been reported globally with more than 900,000 deaths. Common symptoms include fever, cough, fatigue, shortness
of breath or breathing difficulties, and loss of smell and taste. While most people have mild symptoms, some
people develop acute respiratory distress syndrome (ARDS), possibly precipitated by cytokine dysregulation, multi-organ
failure, septic shock, and blood clots.
ACE2-Fc Immunoadhesin
As part of our strategy to develop
new therapeutics for infectious diseases, we entered into an exclusive license agreement with Planet Biotechnology, Inc., (“Planet”)
in August 2020 to develop a recombinant ACE2-Fc protein as a treatment for COVID-19 and related coronavirus diseases. We received
worldwide, sublicensable rights to the technology and assumed responsibility for preclinical development expenses. In the event
we, at our sole discretion, choose to continue to develop the technology, Planet will be eligible for certain clinical development
milestone payments, and royalties on net sales if products are commercialized. The molecule is in the lead optimization stage of
development.
Research & Bioprocess Products
We are also developing recombinant proteins
for third parties on a catalog and custom basis. We plan to initially focus on creating products that will help life science researchers
working in the field of cell and tissue biofabrication, including those using 3D-bioprinting techniques. Biofabrication involves
the use of cells, proteins, and biological materials to construct functional tissues and organs in the laboratory as a means to
ultimately replace human donors as a source of organs for transplantation. The speed, economy, and safety profile of plant-produced
recombinant proteins should allow us to leverage our FastPharming System to enter the market for cytokines, growth factors,
scaffolds (sometimes referred to as “bioinks”) and other proteins for use in the cell and tissue biofabrication category.
Strategic Alliances, Collaborations,
and Service Agreements
We have formed collaborations and strategic
alliances to gain access to funding, capabilities, technical resources and intellectual property to further our development efforts,
commercialize our technology and to generate revenues, including through the development and manufacture of products at iBio’s
FastPharming Facility.
License Agreement with Planet Biotechnology,
Inc.
As part of our strategy to develop new
therapeutics for infectious diseases, we entered into an exclusive license agreement with Planet in August 2020, as described above.
Service Agreement with IBM, Corp.
In June 2020, we entered into a Cloud Services
Agreement with IBM Watson Health under which iBio will receive free-of-charge access to IBM’s
clinical development solution for 18 months. Thereafter, we will be required to pay standard service fees.
Collaboration with AzarGen Biotechnologies
(Pty) Ltd.
In March 2020, we entered into a
second Statement of Work (SOW) with AzarGen Biotechnologies (Pty) Ltd (“AzarGen”) under the 2018 Master Joint
Development Agreement (“MJDA”) between the companies. iBio continues to provide contract development and manufacturing services
for AzarGen’s development of a rituximab biosimilar/biobetter for the South African market.
Collaboration with The Texas A&M
University System
We entered into two new SOWs with The Texas
A&M University System ("TAMUS") during 2020. In March, we entered into an SOW related to iBio’s preclinical
development of COVID-19 vaccine candidates as part of the MJDA executed in June 2016. The other SOW, executed in January, involved
TAMUS support of certain CDMO services.
5
License Agreement with University of
Natural Resources and Life Sciences, Vienna
Effective February 1, 2020, we expanded
our non-exclusive license agreement with the University of Natural Resources and Life Sciences, Vienna, to include commercial applications
as well as research use of technology for the expression of recombinant proteins with modified N-glycosylation patterns in Nicotiana
benthamiana plants.
Collaboration with EdgePoint AI, a division
of Mateon Therapeutics, Inc.
On December 20, 2019, we entered into a
collaboration agreement with EdgePoint AI, a division of Mateon Therapeutics, Inc., to deploy EdgePoint’s proprietary artificial
intelligence (“AI”)/blockchain-driven vision system for pharmaceutical manufacturing, known as TrustPoint Fabric. Initial
implementation is occurring at iBio’s FastPharming Facility for the optimization of raw material documentation and
verification activities from receipt through final manufacturing.
Collaboration with CC-Pharming Ltd.
In August 2019, we licensed our rituximab biosimilar/biobetter
candidates to CC-Pharming Ltd. of Beijing (“CC-Pharming”) for the China territory, along with a research license to
the FastPharming Technologies for use in the evaluation of reagents for research, diagnostic, bioprocess, and cosmetic applications.
The license to our rituximab candidate follows as part of the strategic, royalty-bearing, commercial relationship with we established
with CC-Pharming in June 2018 under a MJDA between the parties. In April 2020, we amended and restated the Master Joint Development
Agreement and iBio recognized more than $1.2 million in revenues in fiscal year 2020, primarily attributable to Process Development
and Tech Transfer.
Service Agreement with Lung Biotechnology
PBC, a subsidiary of United Therapeutics Corporation
In July 2019,
we entered into an MSA with Lung Biotechnology PBC ("Lung Bio"), to produce recombinant human collagen (“rhCollagen”)
licensed from CollPlant Biotechnologies, Inc., to be used as a bioink for 3D bioprinting. The initial work involves the development
of a scalable purification process for rhCollagen tailored to the biofabrication of lung scaffolds.
License with University of Pittsburgh
(“UP”)
On January 14, 2014 (the “Effective
Date”), we entered into an exclusive worldwide License Agreement with UP covering all of the U.S. and foreign patents and
patent applications and related intellectual property owned by UP pertinent to the use of endostatin peptides for the treatment
of fibrosis. We paid an initial license fee of $20,000 and we are required to pay all of UP’s patent prosecution costs that
were incurred prior to, totaling $30,627, and subsequent to the Effective Date. On each anniversary date we are to pay license
fees ranging from $25,000 to $150,000 for the first five years and $150,000 on each subsequent anniversary date until the first
commercial sale of the licensed technology. Beginning with commercial sales of the technology or approval by the FDA or foreign
equivalent, the Company will be required to pay milestone payments, royalties and a percentage of any non-royalty sublicense income
to UP. We are also required to meet certain diligence milestones and we and UP have agreed to set a new milestone schedule and
are currently undergoing an analysis based on new data and revised forecasted timelines.
Intellectual Property
We currently own or license 106 patents,
of which 100 are owned and 6 are licensed. Of the 100 patents we own, 32 are U.S. and 68 are international. We have an exclusive
license to five U.S. patents and one application. Additionally, we have one international patent application allowed, as well as
seven U.S. and 12 international applications pending. International patents and applications include numerous foreign countries
including Australia, Brazil, Canada, China, Hong Kong, India, Korea, Russia and several countries in Europe.
We exclusively own the right to use certain
intellectual property acquired by or developed at Fraunhofer for human health and certain veterinary and diagnostic applications.
We also own intellectual property developed or acquired independently of Fraunhofer.
In addition, we have an exclusive worldwide
license agreement with the University of Pittsburgh covering U.S. and foreign patents and patent applications and related intellectual
property co-owned with the University of Pittsburgh and the Medical University of South Carolina pertinent to the use of endostatin
peptides for the treatment of fibrosis.
Our success will depend in part on our
ability to obtain and maintain patent protection for our technologies and products and to preserve our trade secrets. Our policy
is to seek to protect our proprietary rights, by among other methods, filing patent applications in the U.S. and foreign jurisdictions
to cover certain aspects of our technology. We continue to prepare patent applications relating to our expanding technology in
the U.S. and abroad.
6
The technology and products covered by
our issued and pending patent applications are summarized below:
Technology and Product Patents (U.S.)
• Virus-induced gene silencing in plants
• Transient expression of foreign genes in plants
• Production of foreign nucleic acids and polypeptides in sprout systems
• Production of pharmaceutically active proteins in sprouted seedlings
• Systems and method for clonal expression in plants
• Influenza antigens, vaccine compositions, and related methods
• Plague antigens, vaccine compositions, and related methods
• Influenza therapeutic antibodies
• Trypanosomiasis vaccine
• Anthrax antigens, vaccine compositions, and related methods
• Use of endostatin peptides for the treatment of fibrosis
Pending Technology Patent Applications
(U.S. and International)
• Activation of transgenes in plants by viral vectors
• Transient expression of proteins in plants
• Thermostable carrier molecule
• In vivo deglycosylation of recombinant proteins in plants
Pending Product Patent Applications
(U.S. and International)
• Antibodies
• Influenza vaccines
• Influenza therapeutic antibodies
• Anthrax vaccines
• Plague vaccines
• HPV vaccines
• Trypanosomiasis vaccine
• Malaria vaccines
Competition
The biotechnology and pharmaceutical industries
are characterized by rapidly advancing technologies, intense competition and a strong emphasis on proprietary products.
We face competition from many different
sources, including commercial pharmaceutical and biotechnology enterprises, academic institutions, government agencies, and private
and public research institutions. Our commercial opportunities will be reduced or eliminated if our competitors develop and commercialize
products that are safer, more effective, have fewer side effects or are less expensive than any products that we or our collaborators
may develop based on the use of our technologies.
Our competition in the CDMO market includes
a number of full-service contract manufacturers and large pharmaceutical companies offering third-party development and manufacturing
services to fill their excess capacity. Large pharmaceutical companies have been seeking to divest portions of their manufacturing
capacity, and any such divested businesses may compete with us in the future. In addition, most of our competitors may have substantially
greater financial, marketing, technical or other resources than we do. Moreover, additional competition may emerge and may, among
other things, result in a decrease in the fees paid for our services, which would affect our results of operations and financial
condition.
While we believe that the potential
advantages of our new technologies will enable us to compete effectively against other providers of technology for biologic
product development and manufacturing, many of our competitors have significantly greater financial resources and expertise
in research and development, manufacturing, preclinical testing, clinical trials, regulatory approvals and marketing approved
products than we do. Smaller or early stage companies may also prove to be significant competitors, particularly through
arrangements with large and established companies, and this may reduce the value of our technologies for the purposes of
establishing license agreements. In addition, these third parties compete with us in recruiting and retaining qualified
scientific and management personnel, establishing clinical trial sites and patient registration for clinical trials, as well
as in acquiring technologies and technology licenses complementary to our programs or advantageous to our business.
7
We expect to rely upon licensees, collaborators
or customers for support in advancing certain of our drug candidates and intend to rely on additional work with our collaborators
during our efforts to commercialize our product candidates. Our licensees, collaborators or customers may be conducting multiple
product development efforts within the same disease areas that are the subjects of their agreements with us. Agreements with collaborators
may not preclude them from pursuing development efforts using a different approach from that which is the subject of our agreement
with them. Any of our drug candidates, therefore, may be subject to competition with a drug candidate under development by a customer.
There are currently approved vaccines and
therapies for many of the diseases and conditions addressed by the product candidates our clients and collaborators may be developing
or manufacturing or in our own pipeline. Specifically, with respect to the development of COVD-19 biopharmaceuticals, there are
over 180 vaccines in various stages of development, and 549 therapeutics, according to the Biotechnology Industry Organization.
Several of those candidates are in late stage clinical trials and are sponsored by large, multinational biopharmaceutical companies,
some of whom have also received government funding. There are also a number of companies working to develop new drugs and other
therapies for diseases of commercial interest to us that are undergoing various stages of testing including clinical trials. The
key competitive factors affecting the success of our technologies for commercial product candidates are likely to be efficacy,
safety profile, price, and convenience.
Research and Development
Our research and development functions
are focused on the creation of new products and services, as well as enhancements to our existing offerings, both of which are
necessary to maintain our competitive position. Our research and development activities take place primarily at our facilities
in Bryan, Texas.
Suppliers
We outsource certain functions to third
parties. While we rely on our outsourcing partners to perform their contracted functions, we are continuing to build internal capabilities.
Refer to Item 1A, “Risk Factors,” for a description of risks associated with our reliance on suppliers and outsourcing
partners.
Backlog
Our backlog consists primarily of orders
for which we have entered into a Master Services Agreement with an accompanying Statement of Work (“SOW”). Our backlog
was approximately $2.6 million as of June 30, 2020.
Government Regulation and Product Approval
Regulation by governmental authorities
in the U.S. and other countries is a significant factor in the development, manufacturing and marketing of pharmaceutical drugs
and vaccines.
CDMO Regulatory
Requirements
iBio CDMO’s operations are subject
to a variety of environmental, health and safety laws and regulations, including those of the Environmental Protection Agency and
equivalent local and state agencies. These laws and regulations govern, among other things, air emissions, wastewater discharges,
the use, handling and disposal of hazardous substances and wastes, soil and groundwater contamination and employee health and safety.
Any failure to comply with environmental, health and safety requirements could result in the limitation or suspension of production
or monetary fines or civil or criminal sanctions, or other future liabilities. iBio CDMO is also subject to laws and regulations
governing the destruction and disposal of raw materials and the handling and disposal of regulated material. In particular, we
are subject to laws and regulations concerning research and development, testing, manufacturing processes, equipment and facilities,
including compliance with current Good Manufacturing Practices (“cGMPs”), labeling and distribution, import and export,
and product registration and listing. As a result, our facility is subject to regulation by the FDA, as well as regulatory bodies
of other jurisdictions where our customers have marketing approval for their products.
Certain products manufactured by us
involve the use, storage and transportation of toxic and hazardous materials. Our operations are subject to extensive laws
and regulations relating to the storage, handling, emission, transportation and discharge of materials into the environment
and the maintenance of safe working conditions. We maintain environmental and industrial safety and health compliance
programs and training at our facilities. Prevailing legislation tends to hold companies primarily responsible for the proper
disposal of their waste even after transfer to third party waste disposal facilities. Other future developments, such as
increasingly strict environmental, health and safety laws and regulations, and enforcement policies, could result in
substantial costs and liabilities to us and could subject the handling, manufacture, use, reuse or disposal of substances or
pollutants at our facilities to more rigorous scrutiny than at present.
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These regulatory requirements impact many
aspects of our operations, including manufacturing, developing, labeling, packaging, storage, distribution, import and export and
record keeping related to customers’ products. Noncompliance with any applicable regulatory requirements can result in government
refusal to approve facilities for manufacturing products or products for commercialization.
U.S. Drug Approval
Process
All of the vaccine and therapeutic products
developed from our technologies will require regulatory approval by governmental agencies prior to commercialization. In particular,
pharmaceutical drugs and vaccines are subject to rigorous preclinical testing and clinical trials and other pre-marketing approval
requirements by the U.S. Food and Drug Administration (“FDA”) and regulatory authorities in other countries. In the
U.S., various federal, and, in some cases, state statutes and regulations, also govern or impact the manufacturing, safety, labeling,
storage, record-keeping and marketing of vaccines and pharmaceutical products. The lengthy process of seeking required approvals
and the continuing need for compliance with applicable statutes and regulations requires the expenditure of substantial resources.
Regulatory approval, if and when obtained for any of our product candidates, may be limited in scope, which may significantly limit
the indicated uses for which our product candidates may be marketed. Further, FDA approved vaccines and drugs are subject to ongoing
oversight and discovery of previously unknown problems may result in restrictions on their manufacture, sale or use, or in their
withdrawal from the market.
The process required by the FDA before
a drug or biological product may be marketed in the United States generally involves the following:
· FDA review and approval of the NDA or licensure of the BLA.
Before any product candidates with potential
immunization or therapeutic value may be tested in human subjects, we must satisfy stringent government requirements for preclinical
studies. Preclinical testing includes both in vitro and in vivo laboratory evaluation and characterization of the
safety and efficacy of the product candidate. “In vitro” refers to tests conducted with cells in culture and
“in vivo” refers to tests conducted in animals. The conduct of the preclinical tests must comply with federal
regulations and requirements including good laboratory procedures (“GLP”). Preclinical testing results obtained from
studies in several animal species, as well as data from in vitro studies, are submitted to the FDA as part of an IND application
and are reviewed by the FDA prior to the commencement of human clinical trials. These preclinical data must provide an adequate
basis for evaluating both the safety and the scientific rationale for the initial clinical trials. In the case of vaccine candidates,
animal immunogenicity and immune protection tests must establish a sound scientific basis to believe that the product candidate
may be beneficial when administered to humans.
An IND becomes effective
automatically 30 days after receipt by the FDA unless the FDA raises concern or questions about the conduct of the clinical
trials as outlined in the IND prior to that time. In such an event, the IND sponsor and the FDA must resolve any outstanding
concerns before clinical trials may proceed. For additional information on the most recent FDA regulations and guidance on
vaccine and therapeutic product testing and approval, visit its website at http://www.fda.gov. The FDA may also impose
clinical holds on a product candidate at any time before or during clinical trials due to potential safety concerns or
non-compliance. If the FDA imposes a clinical hold, trials may not recommence without FDA authorization and then only under
terms authorized by the FDA. Accordingly, we cannot be sure that submission of an IND will result in the FDA allowing
clinical trials to begin, or that, once begun, issues will not arise that suspend or terminate such trials.
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Clinical trials involve the administration
of the product candidate to healthy volunteers or patients under the supervision of qualified investigators, generally physicians
not employed by or under the trial sponsor’s control. Clinical trials are conducted under protocols detailing, among other
things, the objectives of the clinical trial, dosing procedures, subject selection and exclusion criteria, and the parameters to
be used to monitor subject safety, including stopping rules that assure a clinical trial will be stopped if certain adverse events
should occur. Each protocol and any amendments to the protocol must be submitted to the FDA as part of the IND. Clinical trials
must be conducted and monitored in accordance with the FDA’s regulations composing the good clinical practice requirements,
including the requirement that all research subjects provide informed consent. Further, each clinical trial must be reviewed and
approved by an independent institutional review board, or IRB at or servicing each institution at which the clinical trial will
be conducted. An IRB is charged with protecting the welfare and rights of trial participants and considers such items as whether
the risks to individuals participating in the clinical trials are minimized and are reasonable in relation to anticipated benefits.
The IRB also approves the form and content of the informed consent that must be signed by each clinical trial subject or his or
her legal representative and must monitor the clinical trial until completed. Human clinical trials involving biological products
are typically conducted in three sequential phases that may overlap or be combined:
Post-approval clinical trials, sometimes referred to as Phase
4 clinical trials, may be conducted after initial FDA marketing approval. These clinical trials are used to gain additional experience
from the treatment of patients in the intended therapeutic indication, particularly for long-term safety follow-up.
During all phases of clinical development,
regulatory agencies require extensive monitoring and auditing of all clinical activities, clinical data, and clinical trial investigators.
Annual progress reports detailing the results of the clinical trials must be submitted to the FDA. Written IND safety reports must
be promptly submitted to the FDA and the investigators for serious and unexpected adverse events, any findings from other studies,
tests in laboratory animals or in vitro testing that suggest a significant risk for human subjects, or any clinically important
increase in the rate of a serious suspected adverse reaction over that listed in the protocol or investigator brochure. The sponsor
must submit an IND safety report within 15 calendar days after the sponsor determines that the information qualifies for reporting.
The sponsor also must notify the FDA of any unexpected fatal or life-threatening suspected adverse reaction within seven calendar
days after the sponsor’s initial receipt of the information. Phase 1, Phase 2 and Phase 3 clinical trials may not be completed
successfully within any specified period, if at all. The FDA or the sponsor or its data safety monitoring board may suspend or
terminate a clinical trial at any time on various grounds, including a finding that the research subjects are being exposed to
an unacceptable health risk. Similarly, an IRB can suspend or terminate approval of a clinical trial at its institution if the
clinical trial is not being conducted in accordance with the IRB’s requirements or if the biological product has been associated
with unexpected serious harm to subjects.
Concurrently with clinical trials, companies
usually complete additional studies and must also develop additional information about the physical characteristics of the biological
product as well as finalize a process for manufacturing the product in commercial quantities in accordance with cGMP requirements.
The manufacturing process must be capable of consistently producing quality batches of the product candidate and, among other criteria,
the sponsor must develop methods for testing the identity, strength, quality, potency and purity of the final biological product.
Additionally, appropriate packaging must be selected and tested, and stability studies must be conducted.
U.S. Review and Approval Processes
After the completion of clinical trials
of a product candidate, FDA approval of an NDA or BLA must be obtained before commercial marketing of the product. The NDA or
BLA must include results of product development, laboratory and animal studies, human trials, information on the manufacture and
composition of the product, proposed labeling and other relevant information. The FDA may grant deferrals for submission of data,
or full or partial waivers. The testing and approval processes require substantial time and effort and there can be no assurance