Item 1A. Risk Factors.
Our business faces many risks. Past experience
may not be indicative of future performance, and as noted elsewhere in this Annual Report on Form 10-K, we have included forward-looking
statements about our business, plans and prospects that are subject to change. Forward-looking statements are particularly located
in, but not limited to, the sections “Business” and “Management’s Discussion and Analysis of Financial
Condition and Results of Operations.” In addition to the other risks or uncertainties contained in this Annual Report, the
risks described below may affect our operating results, financial condition and cash flows. If any of these risks occur, either
alone or in combination with other factors, our business, financial condition or operating results could be adversely affected
and the trading price of our common stock may decline. Moreover, readers should note this is not an exhaustive list of the risks
we face; some risks are unknown or not quantifiable, and other risks that we currently perceive as immaterial may ultimately prove
more significant than expected. Statements about plans, predictions or expectations should not be construed to be assurances of
performance or promises to take a given course of action.
COVID-19
We have in the past been impacted
by the COVID-19 pandemic and may in the future been impacted by the COVID-19 pandemic.
As a result of the pandemic, we have at times experienced reduced
capacity to provide CDMO services as a result of instituting social distancing at work requirements in our Texas facility, restricting
access to essential workers, as well as taking other precautions. We also experienced a full three-day operational shutdown in
April 2020 for extensive facility cleaning following the discovery that an employee had contracted COVID-19, and successfully resumed
operations on a reduced capacity basis.
We have ascertained that certain risks associated with further
COVID-19 developments may adversely impact our operations and liquidity, and our business and share price may also be affected
by the COVID-19 pandemic. However, we do not anticipate any significant threat to our operations at this point in time. Due to
the general unknown nature surrounding the crisis, we cannot reasonably estimate the potential for any future impacts on our operations
or liquidity.
The outbreak and spread of COVID-19
and continued progress in various countries around the world, including the United States, has led authorities around the
globe to take various extraordinary measures to stem the spread of the disease, such as emergency travel and transportation
restrictions, school closures, quarantines and social distancing measures. The outbreak of COVID-19 has had an adverse effect
on global markets and may lead to a major slowdown in the economy in the United States and globally.
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In recognition of the significant threat
to the liquidity of financial markets posed by COVID-19, on March 27, 2020, the Coronavirus Aid, Relief, and Economic Security
Act (the “CARES Act”), a stimulus bill intended to bolster the U.S. economy, among other things, was signed into law
to provide emergency assistance to qualifying businesses and individuals. There can be no assurance that these interventions by
the government will be successful, and the financial markets may experience significant contractions in available liquidity. On
April 16, 2020, the Company received $600,000 related to its filing under the Paycheck Protection Program and the CARES Act. Forgiveness
of this loan is only available for principal that is used for the limited purposes that qualify for forgiveness under the Small
Business Administration’s ("SBA") requirements, and that to obtain forgiveness, we must request it and must provide
documentation in accordance with the SBA's requirements, and certify that the amounts we are requesting to be forgiven qualify
under those requirements. Forgiveness of the loan is dependent upon approval of the SBA and there can be no assurance or certainty
that forgiveness will in fact occur. It is not possible at this time to estimate the further need, availability, extent or impact
of any additional such relief. There can be no assurance that these interventions by the government will be successful, and the
financial markets may experience significant contractions in available liquidity. Although the Company does not anticipate current
operational difficulties, the risk exists that further COVID-19 developments may negatively impact the Company’s financial
condition and restrict the availability of liquidity for its operational needs.
On March 11, 2020, iBio filed four provisional
patent applications (the “Patent Applications”) that apply its Virus Like Particle ("VLP") platform technology,
or its lichenase carrier immunostimulatory (“LicKM”) adjuvant technology, in conjunction with its FastPharming
Manufacturing System for treating or preventing infections with the SARS-CoV-2 virus, which is the agent that causes COVID-19.
We announced our first proprietary COVID-19 development program on March 26, 2020, and its second program on June 4, 2020.
In addition, as previously announced, on
February 6, 2020, iBio and CC-Pharming Ltd., of Beijing, China (“CC-Pharming”) executed a Statement of Work 2 (“SOW2”),
pursuant to an existing Master Joint Development Agreement to develop and test a new CC-Pharming SARS-CoV-2 antigen to be manufactured
using iBio’s FastPharming Manufacturing System. The contemplated collaborative effort has not yet progressed in any
material respect.
There is no assurance that our activities relating to the development
of intellectual property in the field of vaccine candidate development for the SARS-CoV-2 virus, which are reflected in the filing
of the Patent Applications described above, will result in the development of any successful product candidates or generate any
proceeds or that we will be able to develop a vaccine in time for its use. These efforts are subject to the risks relating to the
development and commercialization of our technologies and product candidates, risks relating to our intellectual property and other
risks relating to our operations described in this Annual Report.
In addition, we may face additional risks
relating to the COVID-19 pandemic and its potential negative effects on our operations, share price and its toll on the world economy
and health risks generally. COVID-19 may affect our operations and those of third parties on which we rely, including our customers
and suppliers. Our business, financial condition, and results of operations may be affected by: disruptions in our customers’
abilities to fund, develop, or bring to market products as anticipated; delays in or disruptions to the conduct of clinical trials
by our customers; cancellations of contracts or confirmed orders from our customers; and the inability, difficulty, or additional
cost or delays in obtaining key raw materials, components, and other supplies from our existing supply chain; among other factors
caused by the COVID-19 pandemic. Our operations could again be disrupted if some of our employees become ill or are otherwise absent
from work as a result of the COVID-19 pandemic. Additionally, governmental restrictions, including travel restrictions, quarantines,
shelter-in-place orders, business closures, new safety requirements or regulations, or restrictions on the import or export of
certain materials, or other operational issues related to the COVID-19 pandemic may have an adverse effect on our business and
results of operations. We continue to monitor our operations and governmental recommendations and have made modifications for an
indefinite period to our normal operations because of the COVID-19 pandemic, including requiring most non-production related employees
to work remotely, which may increase cyber security risks or create data accessibility concerns.
The evolving nature of the circumstances
is such that it is impossible, at this stage, to determine the full and overall impact the COVID-19 pandemic may have, but it could
further disrupt production and cause delays in the supply and delivery of products used in our operations, adversely affect our
employees and disrupt our operations and manufacturing activities, all of which may have a material adverse effect on our business.
Risks Related
to Our Financial Position and Need for Additional Capital
We have incurred significant losses
since our inception. We expect to incur losses during our next fiscal year and may never achieve or maintain profitability.
Since our 2008
spinoff from Integrated BioPharma, we have incurred operating losses and negative cash flows from operations. Our net loss was
approximately $16.4 million and $17.6 million for 2020 and 2019, respectively. As of June 30, 2020, we had an accumulated deficit
of approximately $150.4 million.
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To date, we have
financed our operations primarily through the sale of common stock, preferred stock and warrants. We have devoted substantially
all of our efforts to research and development, including the development and validation of our technologies, our CDMO facilities,
and the development of a proprietary therapeutic product against fibrosis and COVID-19 vaccines based upon our technologies. We
have not completed development of or commercialized any vaccine or therapeutic product candidates. We expect to continue to incur
significant expenses and may incur operating losses for at least the next year. We anticipate that our expenses and losses will
increase substantially if we:
· initiate clinical trials of our product candidates;
· continue the research and development of our product candidates;
· seek to discover additional product candidates; and
To become and
remain profitable, we must succeed in attracting and maintaining customers for the development, manufacturing and technology transfer
services offered by iBio CDMO, or acquire customers for our new Research & Bioprocess Products presently in development. Our
profitability in large part depends on the spending on iBio CDMO’s services by its customers and potential customers and
our ability to successfully develop and commercialize our product candidates. In addition, our profitability will also depend on
continuing to commercialize our technologies or we, alone or with our licensees, must succeed in developing and eventually commercializing
products that generate significant revenue. This will require us, alone or with our licensees and collaborators, to be successful
in a range of challenging activities, including completing preclinical testing and clinical trials of our product candidates, obtaining
regulatory approval for these product candidates and manufacturing, marketing and selling those products for which regulatory approval
is obtained or establishing collaborations with parties willing and able to provide necessary capital or other value. We may never
succeed in these activities. We may never generate revenues that are significant or large enough to achieve profitability.
Even if we do
achieve profitability, we may not be able to sustain or increase profitability on a quarterly or annual basis. Our failure to become
and remain profitable would diminish the value of our company and could impair our ability to raise capital, expand our business,
diversify our product offerings or continue our operations. A decline in the value of our company could also cause you to lose
all or part of your investment.
We anticipate
that our expenses will increase in the future.
We
expect our research and development expenses to increase significantly as our product candidates advance in clinical development.
Because of numerous risks and uncertainties involved in our business, the timing or amount of increased development expenses cannot
be accurately predicted, and our expenses could increase beyond expectations if we are required by the FDA, or comparable non-U.S.
regulatory authorities, to perform studies or clinical trials in addition to those we currently anticipate. Even if our product
candidate is approved for commercial sale, we anticipate incurring significant costs associated with the commercial launch of and
the related commercial-scale manufacturing requirements for our product candidate. As a result, we expect to continue to incur
significant and increasing operating losses and negative cash flows for the foreseeable future. Because of the numerous risks and
uncertainties associated with biopharmaceutical product development and commercialization, we are unable to accurately predict
the timing or amount of future expenses or when, or if, we will be able to achieve or maintain profitability. These losses have
had and will continue to have an adverse effect on our financial position and working capital.
We anticipate that our expenses will increase to the extent
we:
· conduct additional clinical studies of our product candidates in the future;
· seek to discover additional product candidates;
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We need
additional funding to fully execute our business plan, which funding may not be available on commercially acceptable terms or at
all. If we are unable to raise capital when needed, we may be forced to delay, reduce or eliminate the commercialization of our
development and manufacturing services and efforts or our product development programs.
Even though we issued and sold an
aggregate of (i) 19,473,013 shares of our common stock through July 16, 2020 for gross proceeds of $25,228,437 pursuant to the
Lincoln Park March 2020 Purchase Agreement and (ii) 28,394,064 shares of our common stock September 9, 2020 for gross proceeds
of $68,888,074 pursuant to the equity distribution agreement with UBS Securities, LLC ("UBS Securities") as our sales
agent, as well as a significant percentage of the additional $27,000,000 of shares of our common stock pursuant to the equity
distribution agreement, as amended by amendment no. 1, we still need additional capital to fully implement our current business,
operating and development plans. To the extent that we initiate or continue clinical development without securing collaborator
or licensee funding, our research and development expenses could increase substantially. Additionally, if we are unsuccessful in
our efforts to attract and retain customers for CDMO services, develop and launch Research & Bioprocess Products, out-license
our technologies and product candidates, or we find that it is necessary to advance the development of product candidates further
than contemplated by our current business plans to secure favorable licensing terms, we would require substantial additional capital.
When we elect to raise additional funds
or additional funds are required, we may raise such funds from time to time through public or private equity offerings, debt financings,
corporate collaboration and licensing arrangements or other financing alternatives. Additional equity or debt financing or corporate
collaboration and licensing arrangements may not be available on acceptable terms, if at all. In addition, no further sales of
shares of our common stock will be made pursuant to the Purchase Agreement that we entered into with Lincoln Park in March 2020
since we could no longer issue additional shares due to NYSE American limitations and therefore we terminated such agreement, effective
July 27, 2020. If we are unable to raise capital in sufficient amounts when needed or on attractive terms, we would be forced to
delay, reduce or eliminate our research and development programs or commercialization efforts and our ability to generate revenues
and achieve or sustain profitability will be substantially harmed.
Given that our total cash and marketable securities as of October
8, 2020, exceeded $83 million we believe we have adequate cash to support our current operations. We plan to fund our future business
operations using cash on hand, through proceeds realized in connection with the commercialization of our technologies and proprietary
products, license and collaboration arrangements and the operation of iBio CDMO, and through proceeds from the sale of additional
equity or other securities. We cannot be certain that such funding will be available on favorable terms or available at all. To
the extent that the Company raises additional funds by issuing equity securities, its stockholders may experience significant dilution.
We have based this projection on assumptions
that may prove to be wrong, in which case we may deplete our cash resources sooner than we currently anticipate. Our future capital
requirements will depend on many factors, including:
· the costs, timing and regulatory review of our own product candidates;
If we are unable to raise funds when required
or on favorable terms, this assumption may no longer be operative, and we may have to: a) significantly delay, scale back, or discontinue
the product application and/or commercialization of our proprietary technologies; b) seek collaborators for our technology and
product candidates on terms that are less favorable than might otherwise be available; c) relinquish or otherwise dispose of rights
to technologies, product candidates, or products that we would otherwise seek to develop or commercialize; or d) possibly cease
operations.
Raising
additional capital may cause dilution to our existing stockholders, restrict our operations or require us to relinquish rights
to our technologies or product candidates.
Until such time
as we can generate substantial development, manufacturing, license or product revenues, we expect to finance our cash needs through
a combination of equity offerings, collaborations, strategic alliances, service contracts, manufacturing contracts, facility build-out
and technology transfer contracts, licensing and other arrangements. Sources of funds may not be available or, if available, may
not be available on terms satisfactory to us.
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If we raise additional
funds by issuing equity securities, our stockholders will experience dilution. Debt financing, if available, would result in increased
fixed payment obligations and may involve agreements that include covenants limiting or restricting our ability to take specific
actions, such as incurring additional debt, making capital expenditures or declaring dividends. Any debt financing or additional
equity that we raise may contain terms, such as liquidation and other preferences, which are not favorable to us or our stockholders.
If we raise additional funds through collaboration and licensing arrangements with third parties, it may be necessary to relinquish
valuable rights to our technologies, future revenue streams, research programs or product candidates or to grant licenses on terms
that may not be favorable to us. Should the financing we require to sustain our working capital needs be unavailable or prohibitively
expensive when we require it, our business, operating results, financial condition and prospects could be materially and adversely
affected and we may be unable to continue our operations.
To the extent
that we raise additional capital through a public or private offering and sale of equity securities, your ownership interest will
be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect your rights as
a stockholder. If we raise additional funds through collaborations, strategic alliances or licensing arrangements with third parties,
we may have to relinquish valuable rights to our technologies, future revenue streams, research programs or product candidates
or to grant licenses on terms that may not be favorable to us. Should the financing we require to sustain our working capital needs
be unavailable or prohibitively expensive when we require it, our business, operating results, financial condition and prospects
could be materially and adversely affected and we may be unable to continue our operations.
We have a limited operating history
conducting commercial activities as a CDMO and developing vaccines and therapeutics, which may limit the ability of investors to
make an informed investment decision.
We commenced independent operations in
2008, and our operations to date have included organizing and staffing our company, business planning, raising capital, acquiring
and developing our proprietary technologies, recommissioning and operating our CDMO facility, identifying potential product candidates
and undertaking, through third parties, preclinical trials and clinical trials of product candidates derived from our technologies.
Commercial activities at our CDMO facility commenced in January 2016 with the large majority of our early efforts directed towards
recommissioning the facility to help meet cGMP manufacturing standards and provisions for iBio’s core service offerings.
The current vaccines and therapeutics being developed are all in preclinical development. Certain vaccine candidates using iBio’s
technologies have previously been evaluated by other organizations in Phase 1 clinical trials; however, all of our vaccine and
therapeutic protein product candidates are still in preclinical development. Neither we nor our collaborators have completed any
other clinical trials for any vaccine or therapeutic protein product candidate produced using iBio technology. As a result, we
have not yet demonstrated our ability to successfully complete any Phase 2 or pivotal clinical trials, obtain regulatory approvals,
manufacture a commercial scale product, or arrange for a third party to do so on our behalf, or conduct sales and marketing activities
necessary for successful product commercialization. Consequently, any conclusion you reach about our future success or viability
may not be as predictive as it might be if we had a longer operating history.
Even if we receive regulatory approval
for the sale of any of our product candidates, we do not know when we will begin to generate significant revenue from such product
candidates, if at all. Our ability to generate revenue depends on a number of factors, including our ability to:
· attract and retain an experienced management and advisory team;
· maintain, expand and protect our intellectual property portfolio.
Because of the
numerous risks and uncertainties associated with development and manufacturing, we are unable to predict if we will generate significant
revenue. If we cannot successfully execute on any of the factors listed above, our business may not succeed, and we may never generate
significant revenue.
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Reliance
on government funding for our R&D programs may impose requirements that limit our ability to take certain actions, and subject
us to potential financial penalties, which could materially and adversely affect our business, financial condition and results
of operations.
We have applied
for government grants to support some of our research and development activities for our product candidates. Often government grants
include provisions that reflect the government’s substantial rights and remedies, many of which are not typically found in
commercial contracts, including powers of the government to potentially require repayment of all or a portion of the grant award
proceeds, in certain cases with interest, in the event we violate certain covenants pertaining to various matters.
Risks Related to the Development and
Commercialization of Our Technologies and Product Candidates
We rely
on licenses to use various technologies that are material to our business and if the agreements underlying the licenses were to
be terminated or if other rights that may be necessary for commercializing our intended products cannot be obtained, it would halt
our ability to market our products and technology, as well as have an immediate material adverse effect on our business, operating
results and financial condition.
Our prospects
for our fibrosis product candidate are significantly dependent upon our U-Pitt License Agreements. The license grants us exclusive,
worldwide rights to certain existing patents and related intellectual property that cover fibrosis. If we breach the terms of the
license, including any failure to make minimum royalty payments required thereunder or failure to reach certain developmental milestones
and by certain deadlines or other factors, U-Pitt has the right to terminate the license. If we were to lose or otherwise be unable
to maintain the license on acceptable terms, or find that it is necessary or appropriate to secure new licenses from other third
parties, we would not be able to market IBIO-100.
We currently
have only four product candidates in early stages of pre-clinical development and are dependent on the success of these product
candidates, which requires significant clinical testing before seeking regulatory approval. If our product candidates do not receive
regulatory approval or are not successfully commercialized, our business may be harmed.
We are currently in preclinical development of four product
candidates, IBIO-100, -200, -201 and -400, as a potential treatment for of fibrosis, COVID-19 and a veterinary vaccine for swine
fever. It is possible that we may never be able to develop a marketable product candidate.
We expect that
a substantial portion of our efforts and expenditures over the next few years will be devoted to these product candidates. Accordingly,
our business currently depends heavily on the successful development, regulatory approval and commercialization of these product
candidates, which may not receive regulatory approval or be successfully commercialized even if regulatory approval is received.
The research, testing, manufacturing, labeling, approval, sale, marketing and distribution of product candidates are and will remain
subject to extensive regulation by the FDA and other regulatory authorities in the United States and other countries that each
have differing regulations. We are not permitted to market any product in the United States unless and until we receive approval
from the FDA, or in any foreign countries unless and until we receive the requisite approval from regulatory authorities in such
countries. We have never submitted an NDA or BLA to the FDA or comparable applications to other regulatory authorities and do not
expect to be in a position to do so for the foreseeable future. Obtaining approval of an NDA or BLA is an extensive, lengthy, expensive
and inherently uncertain process, and the FDA may delay, limit or deny approval of its product for many reasons.
We depend on spending and demand
from our customers for our contract manufacturing and development services.
Any reduction in customer spending on outsourcing
contract manufacturing and development services could have a material adverse effect on our business, financial condition, and
results of operations. The amount that our customers choose to spend on our contract manufacturing and development services offerings
is based upon, among other things, the clinical outcomes and market success of their research, development and marketing, available
resources, access to capital and their need to develop new products which, in turn, depend upon a number of other factors, including
their competitors’ research, development and product initiatives and the anticipated market for any new products, as well
as clinical and reimbursement scenarios for specific products and therapeutic areas. In addition, increasing consolidation in the
pharmaceutical industry may adversely impact such spending, particularly in the event that any of our customers choose to develop
or acquire integrated manufacturing operations.
Our business, financial condition,
and results of operations could be significantly impacted if the products we manufacture for our customers do not gain market acceptance.
If the products we manufacture for our
customers do not gain market acceptance or production volumes of key products that we manufacture for our customers decline, our
financial condition and results of operations may be adversely affected. We depend on, and have no control over, market acceptance
for the products we manufacture for our customers. Consumer demand for our customers’ products could be adversely affected
by, among other things, delays in securing regulatory approvals, the emergence of competing or alternative products, including
generic drugs, the loss of patent and other intellectual property rights protection, reductions in private and government payment
product subsidies or changing product marketing strategies.
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We expect that continued changes to the
healthcare industry, including ongoing healthcare reform, changes in government or private funding of healthcare products and services,
legislation or regulations governing the delivery, pricing or reimbursement of pharmaceuticals and healthcare services or mandated
benefits, could cause healthcare industry participants to purchase fewer services from us or influence the price that others are
willing to pay for our services. Changes in the healthcare industry’s pricing, selling, inventory, distribution or supply
policies or practices could also significantly reduce our revenue and profitability.
We may expend
our limited resources to pursue a particular technology or product candidate and fail to capitalize on technologies or product
candidates that may be more profitable or for which there is a greater likelihood of success.
Because we have
limited financial and managerial resources, we focus on specific product candidates derived from or enhanced by our technologies
or that have been identified and partially developed by our clients or collaborators. As a result, we may forego or delay pursuit
of opportunities with other technologies or product candidates that later prove to have greater commercial potential. Our resource
allocation decisions may cause us to fail to capitalize on viable commercial products or profitable market opportunities. Our spending
and the spending of our clients and collaborators may not yield any commercially viable products.
We have based
our research and development efforts largely on our technologies and product candidates derived from such technologies. Notwithstanding
our large investment to date and anticipated future expenditures in these technologies, we have not yet developed, and may never
successfully develop, any marketed products using these technologies. As a result, we may fail to address or develop product candidates
based on other scientific approaches that may offer greater commercial potential or for which there is a greater likelihood of
success.
We also may not
be successful in our efforts to identify or discover additional product candidates using our technologies. Research programs to
identify new product candidates require substantial technical, financial and human resources. These research programs may initially
show promise in identifying potential product candidates, yet fail to yield product candidates for clinical development.
If we do not accurately
evaluate the commercial potential or target market for a particular product candidate, we may relinquish valuable rights to that
product candidate through collaboration, licensing or other royalty arrangements on terms less favorable to us than possible.
We, our
clients and collaborators, are very early in our development efforts. If we or our clients and collaborators are unable to successfully
develop and commercialize product candidates or experience significant delays in doing so, our business will be materially harmed.
Excepting a limited
number of vaccine candidates that have been evaluated in completed Phase 1 clinical trials, all of our other vaccine and therapeutic
protein product candidates are still in preclinical development. Our ability to generate product sales revenues for our own products,
which we do not expect will occur for many years, will depend heavily on the successful development and eventual commercialization
of our product candidates. The success of our product candidates will depend on several factors, including the following:
· completion of preclinical studies and clinical trials with positive results;
· receipt of marketing approvals from applicable regulatory authorities;
· effectively competing with other products;
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· protecting our rights in our intellectual property portfolio; and
If we or our collaborators
do not achieve one or more of these factors in a timely manner or at all, we could experience significant delays or an inability
to successfully develop and commercialize our product candidates, which would materially harm our business.
We may not
be successful in our efforts to use iBio technologies to build a pipeline of product candidates and develop marketable products.
While we believe
that data we and our collaborators have obtained from preclinical studies and Phase I clinical trials of iBio technology-derived
and iBio technology-enhanced product candidates has validated these technologies, our technologies have not yet, and may never
lead to, approvable or marketable products. Even if we are successful in further validating our technologies and continuing to
build our pipeline, the potential product candidates that we identify may not be suitable for clinical development for many
possible reasons, including harmful side effects, limited efficacy or other characteristics that indicate that such product candidates
are unlikely to be products that will receive marketing approval and achieve market acceptance. If we and our collaborators
do not successfully develop and commercialize product candidates based upon our technologies, we will not obtain product or collaboration
revenues in future periods, which likely would result in significant harm to our financial position and adversely affect our stock
price.
Neither we nor our clients, collaborators
or licensees will be able to commercialize product candidates based on our technologies and services if preclinical studies do
not produce successful results or clinical trials do not demonstrate safety and efficacy in humans.
Preclinical and clinical testing is expensive,
difficult to design and implement, can take many years to complete and has an uncertain outcome. Success in preclinical testing
and early clinical trials does not ensure that later clinical trials will be successful, and interim results of a clinical trial
do not necessarily predict final results. We and our licensees may experience numerous unforeseen events during, or as a result
of, preclinical testing and the clinical trial process that could delay or prevent the commercialization of product candidates
based on our iBio technologies, including the following:
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Significant clinical trial delays could
allow our competitors to bring products to market before we or our licensees do and impair our ability to commercialize our technologies
and product candidates based on our technologies. Poor clinical trial results or delays may make it impossible to license a product
candidate, or reduce its attractiveness to prospective licensees, so that we will be unable to successfully develop and commercialize
such a product candidate.
Clinical trials
are risky, lengthy and expensive. We incur substantial expense for, and devote significant time and resources to, preclinical testing
and clinical trials, yet cannot be certain that these tests and trials will demonstrate that a product candidate is effective and
well-tolerated, or will ever support its approval and commercial sale. For example, clinical trials require adequate supplies of
clinical trial material and sufficient patient enrollment to power the trial. Delays in patient enrollment can result in increased
costs and longer development times. Even if we, or a licensee or collaborator, if applicable, successfully complete clinical trials
for our clinical product candidate, we or they might not file the required regulatory submissions in a timely manner and may not
receive marketing approval for the clinical product candidate. We cannot assure you that our clinical product candidate will successfully
progress further through the drug development process, or will ultimately result in an approved and commercially viable product.
Enrollment
and retention of subjects in clinical trials is an expensive and time-consuming process and could be made more difficult or rendered
impossible by multiple factors outside our control.
We may encounter
delays in enrolling, or be unable to enroll, a sufficient number of participants to complete any of our clinical trials. Once enrolled,
we may be unable to retain a sufficient number of participants to complete any of our trials. Late-stage clinical trials of our
clinical product candidate may require the enrollment and retention of large numbers of subjects. Subject enrollment and retention
in clinical trials depends on many factors, including the size of the subject population, the nature of the trial protocol, the
existing body of safety and efficacy data with respect to the trial drug, the number and nature of competing treatments and ongoing
clinical trials of competing drugs for the same indication, the proximity of subjects to clinical sites and the eligibility criteria
for the trial.
Furthermore, any
negative results we may report in clinical trials of our clinical product candidate or negative results of similar product candidates
may make it difficult or impossible to recruit and retain participants in other clinical trials of that same clinical product candidate.
Delays or failures in planned subject enrollment or retention may result in increased costs, program delays or both, which could
have a harmful effect on its ability to develop its clinical product candidate, or could render further development impossible.
In addition, we expect to rely on contract research organizations (“CROs”) and clinical trial sites to ensure proper
and timely conduct of our future clinical trials and, while we intend to enter into agreements governing our services, we will
be limited in our ability to compel our actual performance in compliance with applicable regulations. Enforcement actions brought
against these third parties may cause further delays and expenses related to our clinical development programs.
If we, or
our clients and collaborators, are not able to obtain, or if there are delays in obtaining, required regulatory approvals, we,
or our clients and collaborators, will not be able to commercialize our, or third-party, product candidates or will not be able
to do so as soon as anticipated, and our ability to generate revenue will be materially impaired.
Our product candidates
and the activities associated with their development and commercialization, including their design, testing, manufacture, safety,
efficacy, recordkeeping, labeling, storage, approval, advertising, promotion, sale and distribution, are subject to comprehensive
regulation by the FDA and by similar regulatory authorities outside the United States. Failure to obtain marketing approval for
a product candidate will prevent us from commercializing the product candidate. We have not received approval to market any of
our product candidates from regulatory authorities in any jurisdiction. We have only limited experience in filing and supporting
the applications necessary to gain marketing approvals and expect to rely on third parties to assist us in this process. Securing
marketing approval requires the submission of extensive preclinical and clinical data and supporting information to regulatory
authorities for each therapeutic indication to establish the product candidate’s safety and efficacy. Securing marketing
approval also requires the submission of information about the product manufacturing process to, and inspection of manufacturing
facilities by, the regulatory authorities. Our product candidates may not be effective, may be only moderately effective or may
prove to have undesirable or unintended side effects, toxicities or other characteristics that may preclude our obtaining marketing
approval or prevent or limit commercial use. If any of our product candidates receives marketing approval, the accompanying
label may limit the approved use in such a restrictive manner that it is not possible to obtain commercial viability for such product.
The process
of obtaining marketing approvals, both in the United States and abroad, is expensive and may take many years. If additional
clinical trials are required for certain jurisdictions, these trials can vary substantially based upon a variety of factors,
including the type, complexity and novelty of the product candidates involved, and may ultimately be unsuccessful. Changes in
marketing approval policies during the development period, changes in or the enactment of additional statutes or regulations,
or changes in regulatory review process for each submitted product application, may cause delays in the review and approval
of an application. Regulatory authorities have substantial discretion in the approval process and may refuse to accept a
marketing application as deficient or may decide that our data is insufficient for approval and require additional
preclinical, clinical or other studies. In addition, varying interpretations of the data obtained from preclinical and
clinical testing could delay, limit or prevent marketing approval of a product candidate. Any marketing approval we
ultimately obtain may be limited or subject to restrictions or post-approval commitments that render the approved product not
commercially viable.
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Although the FDA
and other regulatory authorities have approved plant-based therapeutics in the past, consistent with the oversight of all products,
the FDA is monitoring whether these plant-based therapeutics pose any health and human safety risks. While they have not issued
any regulation to date that is averse to plant-based vaccines or therapeutics, it is possible that the FDA and other regulatory
authorities could issue regulations in the future that could adversely affect our product candidates.
If we experience
delays in obtaining approval or if we fail to obtain approval of our product candidates, the commercial prospects for our product
candidates may be harmed and our ability to generate revenues will be materially impaired.
Alternative
technologies may supersede our technologies or make them noncompetitive, which would harm our ability to generate future revenue.
The manufacture
of biologics and the methods of such manufacture are intensely competitive fields. Each of these fields is characterized by extensive
research efforts, which result in rapid technological progress that can render existing technologies obsolete or economically noncompetitive.
If our competitors succeed in developing more effective technologies or render our technologies obsolete or noncompetitive, our
business will suffer. Many universities, public agencies and established pharmaceutical, biotechnology, and other life sciences
companies with substantially greater resources than we have are developing and using technologies and are actively engaging in
the development of products similar to or competitive with our technologies and products. To remain competitive, we must continue
to invest in new technologies and improve existing technologies. To make such renewing investment we will need to obtain additional
financing. If we are unable to secure such financing, we will not have sufficient resources to continue such investment. In addition,
they also have significantly greater experience in the discovery and development of products, as well as in obtaining regulatory
approvals of those products in the United States and in foreign countries. Our current and potential future competitors also have
significantly more experience commercializing drugs that have been approved for marketing. Mergers and acquisitions in the pharmaceutical
and biotechnology industries could result in even more resources being concentrated among a small number of our competitors.
Our competitors
may devise methods and processes for protein expression that are faster, more efficient or less costly than that which can be achieved
using iBio technologies. There has been and continues to be substantial academic and commercial research effort devoted to the
development of such methods and processes. If successful competitive methods are developed, it may undermine the commercial basis
for iBio products and our technologies and related services.
We will face competition
from other drugs currently approved or that will be approved in the future for the treatment of the diseases we are currently targeting.
Therefore, our ability to compete successfully will depend largely on our ability to:
· attract qualified scientific and commercial personnel;
The availability
of our competitors’ products could limit the demand, and the price we are able to charge, for any product candidate we develop.
The inability to compete with existing or subsequently introduced therapies would have an adverse impact on our business, financial
condition and prospects.
Established
pharmaceutical companies may invest heavily to accelerate discovery and development of novel compounds or to in-license novel
compounds that could make our product candidate less competitive. In addition, any new products that competes with an
approved product must demonstrate compelling advantages in efficacy, convenience, tolerability and safety in order to
overcome price competition and to be commercially successful. Accordingly, our competitors may succeed in obtaining patent
protection, discovering, developing, receiving the FDA’s approval for or commercializing medicines before we do, which
would have an adverse impact on our business and results of operations.
Our clinical
product candidate may exhibit undesirable side effects when used alone or in combination with other approved pharmaceutical products,
which may delay or preclude its development or regulatory approval, or limit its use if ever approved.
Throughout the
drug development process, we must continually demonstrate the activity, safety and tolerability of our clinical product candidate
in order to obtain regulatory approval to further advance our clinical development, or to eventually market it. Even if our clinical
product candidate demonstrates adequate biologic activity and clear clinical benefit, any unacceptable side effects or adverse
events, when administered alone or in the presence of other pharmaceutical products, may outweigh these potential benefits. We
may observe adverse or serious adverse events or drug-drug interactions in preclinical studies or clinical trials of our clinical
product candidate, which could result in the delay or termination of its development, prevent regulatory approval, or limit its
market acceptance if it is ultimately approved.
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Even if
we obtain FDA approval in the United States, we may never obtain approval for or commercialize our clinical product candidate in
any other jurisdiction, which would limit our ability to realize each product’s full market potential.
In order to market
our clinical product candidate in a particular jurisdiction, we must establish and comply with numerous and varying regulatory
requirements on a country-by-country basis regarding safety and efficacy. Approval by the FDA in the United States does not ensure
approval by regulatory authorities in other countries or jurisdictions. In addition, 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 candidate 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 clinical product candidate in those
countries. We do not have any product candidates approved for sale in any jurisdiction, including in international markets, and
it does not have experience in obtaining regulatory approval in international markets. 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 any product candidate we develop
will be unrealized.
Even if
we obtain regulatory approval, we will still face extensive ongoing regulatory requirements and our clinical product candidate
may face future development and regulatory difficulties.
Any product candidate
for which we obtain marketing approval, along with the manufacturing processes, post-approval clinical data, labeling, packaging,
distribution, adverse event reporting, storage, recordkeeping, export, import, advertising and promotional activities for such
product candidate, among other things, will be subject to extensive and ongoing requirements of and review by the FDA and other
regulatory authorities. These requirements include submissions of safety, efficacy and other post-marketing information and reports,
establishment registration and drug listing requirements, continued compliance with current Good Manufacturing Practice, or cGMP,
requirements relating to manufacturing, quality control, quality assurance and corresponding maintenance of records and documents,
requirements regarding the distribution of samples to physicians and recordkeeping and current GCP requirements for any clinical
trials that we conduct post-approval. Even if marketing approval of a product candidate is granted, the approval may be subject
to limitations on the indicated uses for which the product candidate may be marketed or to the conditions of approval. If our clinical
product candidate receives marketing approval, the accompanying label may limit the approved use of our product, which could limit
sales.
The FDA may also
impose requirements for costly post-marketing studies or clinical trials and surveillance to monitor the safety and/or efficacy
of our clinical product candidate. The FDA closely regulates the post-approval marketing and promotion of drugs to ensure drugs
are marketed only for the approved indications and in accordance with the provisions of the approved labeling. The FDA imposes
stringent restrictions on manufacturers’ communications regarding off-label use and if we do not market our clinical product
candidate for its approved indications, we may be subject to enforcement action for off-label marketing. Violations of the Federal
Food, Drug, and Cosmetic Act relating to the promotion of prescription drugs may lead to FDA enforcement actions and investigations
alleging violations of federal and state health care fraud and abuse laws, as well as state consumer protection laws.
In addition, later
discovery of previously unknown adverse events or other problems with our clinical product candidate, manufacturers or manufacturing
processes, or failure to comply with regulatory requirements, may yield various results, including:
· restrictions on manufacturing such clinical product candidate;
· restrictions on the labeling or marketing of such clinical product candidate;
· restrictions on product distribution or use;
· requirements to conduct post-marketing studies or clinical trials;
· warning letters;
· withdrawal of the clinical product candidate from the market;
· recall of such clinical product candidate;
· fines, restitution or disgorgement of profits or revenues;
· suspension or withdrawal of marketing approvals;
· refusal to permit the import or export of such clinical product candidate;
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· clinical product candidate seizure; or
· injunctions or the imposition of civil or criminal penalties.
The FDA’s
policies may change and additional government regulations may be enacted that could prevent, limit or delay regulatory approval
of our clinical product candidate. If we are slow or unable to adapt to changes in existing requirements or the adoption of new
requirements or policies, or if we are not able to maintain regulatory compliance, we may lose any marketing approval that we may
have obtained.
Even if
our clinical product candidate receives marketing approval, we may fail to achieve market acceptance by physicians, patients, third-party
payors or others in the medical community necessary for commercial success.
If our clinical
product candidate receives marketing approval, we may nonetheless fail to gain sufficient market acceptance by physicians, patients,
third-party payors and others in the medical community. If we do not achieve an adequate level of acceptance, we may not generate
significant revenues and become profitable. The degree of market acceptance, if approved for commercial sale, will depend on a
number of factors, including but not limited to:
· the efficacy and potential advantages compared to alternative treatments;
· effectiveness of sales and marketing efforts;
· the cost of treatment in relation to alternative treatments;
· the convenience and ease of administration compared to alternative treatments;
· the strength of marketing and distribution support;
· the availability of third-party coverage and adequate reimbursement;
· the prevalence and severity of any side effects; and
· any restrictions on the use of our product together with other medications.
Because we expect
sales of our clinical product candidate to be based on the same mechanism of action, the failure of our first product candidate
to achieve market acceptance would harm our business and could require us to seek additional financing sooner than we otherwise
planned.
The
insurance coverage and reimbursement status of newly approved products are uncertain. Our product candidates may become
subject to unfavorable pricing regulations, third-party coverage and reimbursement practices, or healthcare reform
initiatives, which would harm our business. Failure to obtain or maintain adequate coverage and reimbursement for new or
current products could limit our ability to market those products and decrease our ability to generate revenue.
The regulations
that govern marketing approvals, pricing, coverage, and reimbursement for new drugs vary widely from country to country. In the
United States, recently enacted legislation may significantly change the approval requirements in ways that could involve additional
costs and cause delays in obtaining approvals. Some countries require approval of the sale price of a drug before it can be marketed.
In many countries, the pricing review period begins after marketing or product licensing approval is granted. In some foreign markets,
prescription pharmaceutical pricing remains subject to continuing governmental control even after initial approval is granted.
As a result, we might obtain marketing approval for a product in a particular country, but then be subject to price regulations
that delay our commercial launch of the product, possibly for lengthy time periods, and negatively impact the revenue we are able
to generate from the sale of the product in that country. Adverse pricing limitations may hinder our ability to recoup our investment
in one or more product candidates, even if any product candidates we may develop obtain marketing approval.
Our ability to
successfully commercialize our product candidates also will depend in part on the extent to which coverage and adequate reimbursement
for these products and treatments will be available from government health administration authorities, private health insurers,
and other organizations. Government authorities and third-party payors, such as private health insurers and health maintenance
organizations, decide which medications they will pay for and establish reimbursement levels. The availability of coverage and
extent of reimbursement by governmental and private payors is essential for most patients to be able to afford treatments such
as gene therapy products. Sales of these or other product candidates that we may identify will depend substantially, both domestically
and abroad, on the extent to which the costs of our product candidates will be paid by health maintenance, managed care, pharmacy
benefit and similar healthcare management organizations, or reimbursed by government health administration authorities, private
health coverage insurers and other third-party payors. If coverage and adequate reimbursement is not available, or is available
only to limited levels, we may not be able to successfully commercialize our product candidates. Even if coverage is provided,
the approved reimbursement amount may not be high enough to allow us to establish or maintain pricing sufficient to realize a sufficient
return on our investment.
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The availability
and extent of reimbursement by governmental and private payors is essential for most patients to be able to afford expensive treatments.
Sales of our clinical product candidate that receive marketing approval will depend substantially, both in the United States and
internationally, on the extent to which the costs of our clinical product candidate will be paid by health maintenance, managed
care, pharmacy benefit and similar healthcare management organizations, or reimbursed by government health administration authorities,
private health coverage insurers and other third-party payors. If reimbursement is not available, or is available only on a limited
basis, we may not be able to successfully commercialize our clinical product candidate. Even if coverage is provided, the approved
reimbursement amount may not be high enough to allow us to establish or maintain adequate pricing that will allow it to realize
a sufficient return on our investment.
Outside the United
States, international operations are generally subject to extensive governmental price controls and other market regulations, and
we believe the increasing emphasis on cost-containment initiatives in Europe, Canada and other countries may cause us to price
our clinical product candidate on less favorable terms that we currently anticipate. In many countries, particularly the countries
of the European Union, the prices of medical products are subject to varying price control mechanisms as part of national health
systems. In these countries, pricing negotiations with governmental authorities can take considerable time after the receipt of