ITEM 1A. RISK FACTORS
We
are providing the following cautionary discussion of risk factors and uncertainties that we believe are relevant to our business. These
are factors that, individually or in the aggregate, we think could cause our actual results to differ materially from expected or historical
results and our forward-looking statements. We note these factors for investors as permitted by Section 21E of the Securities Exchange
Act, and Section 27A of the Securities Act. You should understand that it is not possible to predict or identify all such factors. Consequently,
you should not consider the following to be a complete discussion of all potential risks or uncertainties that may impact our business.
Moreover, we operate in a competitive and rapidly changing environment. New factors emerge from time to time, and it is not possible
to predict the impact of all of these factors on our business, financial condition or results of operations. We undertake no obligation
to publicly update forward-looking statements, whether as a result of new information, future events, or otherwise.
Risk
Factors Summary
The
following is a summary of some of the Company’s most important risks and uncertainties that could materially adversely affect our
business, financial condition, and results of operations. You should read this summary together with the more detailed description of
each risk factor. Additional discussion of the risks summarized in this Risk Factors Summary, and other risks that we face, can be found
below under the heading “Risk Factors” and should be carefully considered, together with other information in this Form 10-K
and our other filings with the SEC, before making an investment in our securities.
Risk
Related to Our Business and Operations
● We rely on third parties to conduct all of our clinical trials.
● We may fail to comply with evolving European and other privacy laws.
● We may be subject to significant product liability claims and litigation.
Risks
Related to Intellectual Property
Risks
Related to Our Securities
● The market price of our common stock may be significantly volatile.
RISKS
RELATED TO OUR BUSINESS AND OPERATIONS
We
have a history of significant losses from operations and expect to continue to incur significant losses for the foreseeable future, and
we may never achieve or maintain profitability.
Since
our inception, our expenses have substantially exceeded our revenue, resulting in continuing losses and an accumulated deficit of $369
million at December 31, 2022. For the years ended December 31, 2022 and 2021, we incurred net losses of $35.9 million and $20.8 million,
respectively. We currently have no product revenue and do not expect to generate any product revenue for the foreseeable future. Because
we are committed to continuing our product research, development, clinical trial and commercialization programs, we will continue to
incur significant operating losses unless and until we complete the development of GEN-1 and other new drug candidates and these drug
candidates have been clinically tested, approved by the U.S. FDA and successfully marketed. The amount of future losses is uncertain.
Our ability to achieve profitability, if ever, will depend on, among other things, the following, which we cannot guarantee:, us or our
collaborators successfully developing drug candidates, obtaining regulatory approvals to market and commercialize drug candidates, manufacturing
any approved products on commercially reasonable terms, establishing a sales and marketing organization or suitable third-party alternatives
for any approved product, generating sufficient sales revenue from our drug candidates, and raising sufficient funds to finance business
activities.
We
will need to raise additional capital to fund our planned future operations, and we may be unable to secure such capital without dilutive
financing transactions. If we are not able to raise additional capital, we may not be able to complete the development, testing and commercialization
of our drug candidates.
We
have not generated significant revenue and have incurred significant net losses in each year since our inception. For the year ended
December 31, 2022, we incurred a net loss of $35.9 million. We have incurred approximately $369 million of cumulative net losses. As
of December 31, 2022, we had cash and cash equivalents, short-term investments, interest receivable, net proceeds on the sale of net
operating losses and restricted money market investments of $38.9 million.
We
have substantial future capital requirements to continue our research and development activities and advance our drug candidates through
various development stages. We are unable to estimate the duration and completion costs of our research and development projects or when,
if ever, and to what extent we will receive cash inflows from the commercialization and sale of a product. Our inability to complete
any of our research and development activities, preclinical studies or clinical trials in a timely manner or our failure to enter into
collaborative agreements when appropriate could significantly increase our capital requirements and could adversely impact our liquidity.
While our estimated future capital requirements are uncertain and could increase or decrease as a result of many factors, including the
extent to which we choose to advance our research, development activities, preclinical studies and clinical trials, or if we are in a
position to pursue manufacturing or commercialization activities, we will need significant additional capital to develop our drug candidates
through development and clinical trials, obtain regulatory approvals and manufacture and commercialize approved products, if any. We
do not know whether we will be able to access additional capital when needed or on terms favorable to us or our stockholders. Our inability
to raise additional capital, or to do so on terms reasonably acceptable to us, would jeopardize the future success of our business.
If
we do not obtain or maintain FDA and foreign regulatory approvals for our drug candidates on a timely basis, or at all, or if the terms
of any approval impose significant restrictions or limitations on use, we will be unable to sell those products and our business, results
of operations and financial condition will be negatively affected.
To
obtain regulatory approvals from the FDA and foreign regulatory agencies, we must conduct clinical trials demonstrating that our drug
candidates are safe and effective. We may need to amend ongoing trials, or the FDA and/or foreign regulatory agencies may require us
to perform additional trials beyond those we planned. The testing and approval process requires substantial time, effort and resources,
and generally takes a number of years to complete. The time to obtain approvals is also uncertain, and the FDA and foreign regulatory
agencies have substantial discretion, at any phase of development, to terminate clinical studies, require additional clinical studies
or other testing, delay or withhold approval, and mandate product withdrawals, including recalls. In addition, our drug candidates may
have undesirable side effects or other unexpected characteristics that could cause us or regulatory authorities to interrupt, delay or
halt clinical trials and could result in a more restricted label or the delay or denial of regulatory approval by regulatory authorities.
Even
if we receive regulatory approval of a product, the approval may limit the indicated uses for which the drug may be marketed. The failure
to obtain timely regulatory approval of drug candidates, the imposition of marketing limitations, or a product withdrawal would negatively
impact our business. Even if we receive approval, we will be subject to ongoing regulatory obligations and continued regulatory review,
which may result in significant additional expense and subject us to restrictions, withdrawal from the market, or penalties if we fail
to comply with applicable regulatory requirements or if we experience unanticipated problems with our drug candidates, when and if approved.
Finally, even if we obtain FDA approval of any of our drug candidates, we may never obtain approval or commercialize such products outside
of the U.S., given that we may be subject to additional regulatory burdens in other markets. This could limit our ability to realize
their full market potential.
Drug
development is an inherently uncertain process with a high risk of failure at every stage of development.
Securing
FDA or comparable foreign regulatory approval requires the submission of extensive preclinical and clinical data and supporting information
for each therapeutic indication to establish the drug candidate’s safety and efficacy for its intended use. It takes years to complete
the testing of a new drug or biological product and development delays and/or failure can occur at any stage of testing. Any of our present
and future clinical trials may be delayed, halted, not authorized, or approval of any of our products may be delayed or may not be obtained
due to any of the following:
In
addition, information generated during the clinical trial process is susceptible to varying interpretations that could delay, limit,
or prevent marketing approval. Moreover, early positive preclinical or clinical trial results may not be replicated in later clinical
trials. As more drug candidates within a particular class of drugs proceed through clinical development to regulatory review and approval,
the amount and type of clinical data that may be required by regulatory authorities may increase or change. Failure to demonstrate adequately
the quality, safety, and efficacy of any of our drug candidates would delay or prevent marketing approval. We cannot assure you that
if clinical trials are completed, either we or our potential collaborators will submit applications for required authorizations to manufacture
or market potential products or that any such application will be reviewed and approved by appropriate regulatory authorities in a timely
manner, if at all.
The
outbreak, duration and severity of the novel coronavirus disease, COVID-19 pandemic, or other similar health crises could adversely impact
our business, including our preclinical studies and clinical trials.
The
Company’s ability to raise additional capital may be adversely impacted by potential worsening global economic conditions and the
recent disruptions to, and volatility in, financial markets in the U.S. and worldwide resulting from the ongoing COVID-19 pandemic. As
a result of the COVID-19 pandemic, or similar pandemics, we may experience disruptions that could severely affect our business, including
our preclinical studies, the clinical trials process and enrollment of patients. This may delay commercialization efforts. The
Company is currently monitoring its operating activities in light of these events and it is reasonably possible that the virus could
have a negative effect on the Company’s financial condition and results of operations. The specific impact is not readily determinable
as of the date of this report.
The
extent to which COVID-19 will continue to impact our business will depend on future developments, which are highly uncertain and its
implications cannot be predicted with confidence. While, as of the date of this report, we have not experienced any material disruptions
to the execution of the clinical trials and the research and development activities that we currently have underway, if
we or any of the third parties with whom we engage were to experience shutdowns or other business disruptions, our ability to
conduct our business in the manner and on the timelines presently planned could be materially and negatively affected, which could have
a material adverse impact on our business and our results of operations and financial condition.
New
gene-based products for therapeutic applications are subject to extensive regulation by the FDA and comparable agencies in other countries.
The precise regulatory requirements with which we will have to comply, now and in the future, are uncertain due to the novelty of the
gene-based products we are developing.
The
regulatory approval process for novel drug candidates such as ours can be significantly more expensive and take longer than for other,
better known or more extensively studied drug candidates. Limited data exist regarding the safety and efficacy of DNA-based therapeutics
compared with conventional therapeutics, and government regulation of DNA-based therapeutics is evolving. Regulatory requirements governing
gene and cell therapy products have changed frequently and may continue to change in the future. The FDA has established the Office of
Cellular, Tissue and Gene Therapies within CBER, to consolidate the review of gene therapy and related products, and has established
the Cellular, Tissue and Gene Therapies Advisory Committee to advise CBER in its review. It is difficult to determine how long it will
take or how much it will cost to obtain regulatory approvals for our drug candidates in either the U.S. or the European Union or how
long it will take to commercialize our drug candidates.
Adverse
events or the perception of adverse events in the field of gene therapy generally, or with respect to our drug candidates specifically,
may have a particularly negative impact on public perception of gene therapy and result in greater governmental regulation, including
future bans or stricter standards imposed on gene-based therapy clinical trials, stricter labeling requirements and other regulatory
delays in the testing or approval of our potential products. For example, if we were to engage an NIH-funded institution to conduct a
clinical trial, we may be subject to review by the NIH Office of Biotechnology Activities’ Recombinant DNA Advisory Committee (the
RAC). If undertaken, RAC can delay the initiation of a clinical trial, even if the FDA has reviewed the trial design and details and
approved its initiation. Conversely, the FDA can put an IND application on a clinical hold even if the RAC has provided a favorable review
or an exemption from in-depth, public review. Such committee and advisory group reviews and any new guidelines they promulgate may lengthen
the regulatory review process, require us to perform additional studies, increase our development costs, lead to changes in regulatory
positions and interpretations, delay or prevent approval and commercialization of our drug candidates or lead to significant post-approval
limitations or restrictions. Any increased scrutiny could delay or increase the costs of our product development efforts or clinical
trials.
Even
if our products receive regulatory approval, they may still face future development and regulatory difficulties. Government regulators
may impose ongoing requirements for potentially costly post-approval studies. This governmental oversight may be particularly strict
with respect to gene-based therapies.
If
we encounter difficulties enrolling patients in our clinical trials, our clinical development activities could be delayed or otherwise
adversely affected.
We
may experience difficulties in patient enrollment in our clinical trials for a variety of reasons. The timely completion of clinical
trials in accordance with their protocols depends, among other things, on our ability to enroll a sufficient number of patients who remain
in the trial until its conclusion. The enrollment of patients depends on many factors, including:
● the patient eligibility and exclusion criteria defined in the protocol;
● the willingness or availability of patients to participate in our trials;
● the proximity of patients to trial sites;
● the design of the trial;
● our ability to obtain and maintain patient informed consents; and
Our
inability to enroll a sufficient number of patients for our clinical trials could result in significant delays or may require us to abandon
one or more clinical trials altogether. Enrollment delays in our clinical trials may result in increased development costs for our drug
candidates, delay or halt the development of and approval processes for our drug candidates and jeopardize our ability to achieve our
clinical development timeline and goals, including the dates by which we will commence, complete and receive results from clinical trials.
Enrollment delays may also delay or jeopardize our ability to commence sales and generate revenues from our drug candidates. Any of the
foregoing could cause the value of our company to decline and limit our ability to obtain additional financing, if needed.
We
rely on third parties to conduct all of our clinical trials. If these third parties are unable to carry out their contractual duties
in a manner that is consistent with our expectations, comply with budgets and other financial obligations or meet expected deadlines,
we may not receive certain development milestone payments or be able to obtain regulatory approval for or commercialize our drug candidates
in a timely or cost-effective manner.
We
do not independently conduct clinical trials for our drug candidates. We rely, and expect to continue to rely, on third-party clinical
investigators, clinical research organizations (“CROs”), clinical data management organizations and consultants to design,
conduct, supervise and monitor our clinical trials.
Because
we do not conduct our own clinical trials, we must rely on the efforts of others and have reduced control over aspects of these activities,
including, the timing of such trials, the costs associated with such trials and the procedures that are followed for such trials. We
do not expect to significantly increase our personnel in the foreseeable future and may continue to rely on third parties to conduct
all of our future clinical trials. If we cannot contract with acceptable third parties on commercially reasonable terms or at all, if
these third parties are unable to carry out their contractual duties or obligations in a manner that is consistent with our expectations
or meet expected deadlines, if they do not carry out the trials in accordance with budgeted amounts, if the quality or accuracy of the
clinical data they obtain is compromised due to their failure to adhere to our clinical protocols or for other reasons, or if they fail
to maintain compliance with applicable government regulations and standards, our clinical trials may be extended, delayed or terminated
or may become significantly more expensive, we may not receive development milestone payments when expected or at all, and we may not
be able to obtain regulatory approval for or successfully commercialize our drug candidates.
Despite
our reliance on third parties to conduct our clinical trials, we are ultimately responsible for ensuring that each of our clinical trials
is conducted in accordance with the general investigational plan and protocols for the trial. Moreover, the FDA requires clinical trials
to be conducted in accordance with good clinical practices for conducting, recording and reporting the results of clinical trials and
that the rights, integrity and confidentiality of clinical trial participants are protected. We also are required to register ongoing
clinical trials and post the results of completed clinical trials on a government-sponsored database, ClinicalTrials.gov, within
certain timeframes. Failure to do so can result in fines, adverse publicity and civil and criminal sanctions. Our reliance on third parties
that we do not control does not relieve us of these responsibilities and requirements. If we or a third party we rely on fails to meet
these requirements, we may not be able to obtain, or may be delayed in obtaining, marketing authorizations for our drug candidates and
will not be able to, or may be delayed in our efforts to, successfully commercialize our drug candidates. This could have a material
adverse effect on our business, financial condition, results of operations and prospects.
Because
we rely on third party manufacturing and supply partners, our supply of research and development, preclinical and clinical development
materials may become limited or interrupted or may not be of satisfactory quantity or quality.
We
rely on third party supply and manufacturing partners to supply the materials and components for, and manufacture, our research and development,
preclinical and clinical trial drug supplies. We do not own manufacturing facilities or supply sources for such components and materials.
There can be no assurance that our supply of research and development, preclinical and clinical development drugs and other materials
will not be limited, interrupted, restricted in certain geographic regions or of satisfactory quality or continue to be available at
acceptable prices. Suppliers and manufacturers must meet applicable manufacturing requirements and undergo rigorous facility and process
validation tests required by FDA and foreign regulatory authorities in order to comply with regulatory standards, such as current cGMP.
If
we or any of our third-party manufacturers or testing contractors fail to maintain regulatory compliance, this could cause the delay
of clinical trials, regulatory submissions, required approvals or commercialization of our drug candidates, cause us to incur higher
costs and prevent us from commercializing our products successfully. Furthermore, if our suppliers fail to meet contractual requirements,
and we are unable to secure one or more replacement suppliers capable of production at a substantially equivalent cost, our clinical
trials may be delayed, or we could lose potential revenue. In the event that any of our suppliers or manufacturers fails to comply with
such requirements or to perform its obligations to us in relation to quality, timing or otherwise, or if our supply of components or
other materials becomes limited or interrupted for other reasons, we may be forced to manufacture the materials ourselves, for which
we currently do not have the capabilities or resources, or enter into an agreement with another third party, which we may not be able
to do on reasonable terms, if at all.
The
regulatory authorities also may, at any time following approval of a product for sale, audit the manufacturing facilities of our third-party
manufacturers. If any such inspection or audit identifies a failure to comply with applicable regulations or if a violation of our product
specifications or applicable regulations occurs independent of such an inspection or audit, we or the relevant regulatory authority may
require remedial measures that may be costly and/or time-consuming for us or our third-party manufacturers to implement and that may
include the temporary or permanent suspension of a clinical trial or commercial sales or the temporary or permanent closure of a manufacturing
facility. Any such remedial measures imposed upon third parties with whom we contract could materially harm our business.
If
we fail to enter into and maintain successful strategic alliances for our drug candidates, we may have to reduce or delay our drug candidate
development or increase our expenditures. To the extent was are able to enter into strategic transactions, we will be exposed to risks
related to those collaborations and alliances.
An
important element of our strategy for developing, manufacturing and commercializing our drug candidates is entering into strategic alliances
with pharmaceutical companies, research institutions or other industry participants to advance our programs and enable us to maintain
our financial and operational capacity.
We
face significant competition in seeking appropriate alliances. We may not be able to negotiate alliances on acceptable terms, if at all.
In addition, these alliances may be unsuccessful. If we fail to create and maintain suitable alliances, we may have to limit the size
or scope of, or delay, one or more of our drug development or research programs. If we elect to fund drug development or research programs
on our own, we will have to increase our expenditures and will need to obtain additional funding, which may be unavailable or available
only on unfavorable terms.
We
may not successfully engage in future strategic transactions, which could adversely affect our ability to develop and commercialize drug
candidates, impact our cash position, increase our expenses and present significant distractions to our management.
In
the future, we may consider strategic alternatives intended to further the development of our business, which may include acquiring businesses,
technologies, or products, out- or in-licensing drug candidates or technologies or entering into a business combination with another
company. Any strategic transaction may require us to incur non-recurring or other charges, increase our near- and long-term expenditures
and pose significant integration or implementation challenges or disrupt our management or business. These transactions would entail
numerous operational and financial risks, including exposure to unknown liabilities, disruption of our business and diversion of our
management’s time and attention in order to manage a collaboration or develop acquired products, drug candidates or technologies,
incurrence of substantial debt or dilutive issuances of equity securities to pay transaction consideration or costs, higher than expected
collaboration, acquisition or integration costs, write-downs of assets or goodwill or impairment charges, increased amortization expenses,
difficulty and cost in facilitating the collaboration or combining the operations and personnel of any acquired business, impairment
of relationships with key suppliers, manufacturers or customers of any acquired business due to changes in management and ownership and
the inability to retain key employees of any acquired business. Accordingly, although there can be no assurance that we will undertake
or successfully complete any transactions of the nature described above, any transactions that we do complete may be subject to the foregoing
or other risks and have a material adverse effect on our business, results of operations, financial condition and prospects. Conversely,
any failure to enter any strategic transaction that would be beneficial to us could delay the development and potential commercialization
of our drug candidates and have a negative impact on the competitiveness of any drug candidate that reaches market.
We
have obtained Orphan Drug Designation for IMNN-001 and may seek Orphan Drug Designation for other drug candidates, but we may be unsuccessful
or may be unable to maintain the benefits associated with Orphan Drug Designation, including the potential for market exclusivity.
IMNN-001
has been granted orphan drug designation for ovarian cancer in both the U.S. and Europe. Regulatory authorities in some jurisdictions,
including the U.S. and Europe, may designate drugs or biologics for relatively small patient populations as orphan drugs. Under the Orphan
Drug Act, the FDA may designate a drug or biologic as an orphan drug if the disease or condition for which the drug is intended affects
fewer than 200,000 individuals annually in the U.S., or, if the drug is intended for a disease or condition affecting 200,000 or more
people in the U.S., there is no reasonable expectation that the cost of research and developing the drug or biologic for the indication
can be recovered by sales of the drug in the U.S.
Even
though we have obtained Orphan Drug Designation for IMNN-001 and may obtain such designation for other drug candidates in specific indications,
we may not be the first to obtain marketing approval of these drug candidates for the orphan-designated indication due to the uncertainties
associated with developing pharmaceutical products. In addition, exclusive marketing rights in the U.S. may be limited if we seek approval
for an indication broader than the orphan-designated indication or may be lost if the FDA later determines that the request for designation
was materially defective or if the manufacturer is unable to assure sufficient quantities of the product to meet the needs of patients
with the rare disease or condition. Further, even if we obtain orphan drug exclusivity for a product, that exclusivity may not effectively
protect the product from competition because different drugs with different active moieties can be approved for the same condition. Even
after an orphan product is approved, the FDA can subsequently approve the same drug with the same active moiety for the same condition
if the FDA concludes that the later drug is safer, more effective or makes a major contribution to patient care. Orphan Drug Designation
neither shortens the development time or regulatory review time of a drug nor gives the drug any advantage in the regulatory review or
approval process.
Fast
Track designation may not actually lead to a faster development or regulatory review or approval process.
IMNN-001
has received U.S. FDA Fast Track Designation in 2021. However, we may not experience a faster development process, review, or approval
compared to conventional FDA procedures. The FDA may withdraw our Fast Track designation if the FDA believes that the designation is
no longer supported by data from our clinical or pivotal development program. Our Fast Track designation does not guarantee that we will
qualify for or be able to take advantage of the FDA’s expedited review procedures or that any application that we may submit to
the FDA for regulatory approval will be accepted for filing or ultimately approved.
Our
relationships with healthcare providers and physicians and third-party payors will be subject to applicable false claims act, anti-kickback,
transparency, fraud and abuse and other healthcare laws and regulations, which could expose us to criminal sanctions, civil penalties,
contractual damages, administrative burdens, reputational harm and diminished profits and future earnings.
Healthcare
providers, physicians and third-party payors in the U.S. and elsewhere play a primary role in the recommendation and prescription of
biopharmaceutical products. Arrangements with third-party payors and customers can expose biopharmaceutical manufacturers to broadly
applicable fraud and abuse and other healthcare laws and regulations, including, without limitation, the federal Anti-Kickback Statute
and the federal False Claims Act, which may constrain the business or financial arrangements and relationships through which such companies
sell, market and distribute biopharmaceutical products. In particular, the research of our drug candidates, as well as the promotion,
sales and marketing of healthcare items and services, as well as certain business arrangements in the healthcare industry, are subject
to extensive laws designed to prevent fraud, kickbacks, self-dealing and other abusive practices. These laws and regulations may restrict
or prohibit a wide range of pricing, discounting, marketing and promotion, structuring and commission(s), certain customer incentive
programs and other business arrangements generally. Activities subject to these laws also involve the improper use of information obtained
in the course of patient recruitment for clinical trials.
The
distribution of biopharmaceutical products is subject to additional requirements and regulations, including extensive record-keeping,
licensing, storage, and security requirements intended to prevent the unauthorized sale of biopharmaceutical products.
The
scope and enforcement of each of these laws is uncertain and subject to rapid change in the current environment of healthcare reform,
especially in light of the lack of applicable precedent and regulations. Ensuring business arrangements comply with applicable healthcare
laws, as well as responding to possible investigations by government authorities, can be time- and resource-consuming and can divert
a company’s attention from the business.
It
is possible that governmental and enforcement authorities will conclude that our business practices may not comply with current or future
statutes, regulations or case law interpreting applicable fraud and abuse or other healthcare laws and regulations. If any such actions
are instituted against us, and we are not successful in defending ourselves or asserting our rights, those actions could have a significant
impact on our business, including the imposition of significant civil, criminal and administrative penalties, damages, fines, disgorgement,
imprisonment, reputational harm, possible exclusion from participation in federal and state funded healthcare programs, contractual damages
and the curtailment or restricting of our operations, as well as additional reporting obligations and oversight if we become subject
to a corporate integrity agreement or other agreement to resolve allegations of non-compliance with these laws. Further, if any of the
physicians or other healthcare providers or entities with whom we expect to do business is found to be not in compliance with applicable
laws, they may be subject to significant criminal, civil or administrative sanctions, including exclusions from government funded healthcare
programs. Any action for violation of these laws, even if successfully defended, could cause a biopharmaceutical manufacturer to incur
significant legal expenses and divert management’s attention from the operation of the business. Prohibitions or restrictions on
sales or withdrawal of future marketed products could materially affect business in an adverse way.
Ongoing
legislative and regulatory changes affecting the healthcare industry could have a material adverse effect on our business.
Political,
economic and regulatory influences are subjecting the healthcare industry to potential fundamental changes that could substantially affect
our results of operations by requiring, for example: (i) changes to our manufacturing arrangements; (ii) additions or modifications to
product labeling; (iii) the recall or discontinuation of our products; or (iv) additional record-keeping requirements.
We
cannot predict what healthcare reform initiatives may be adopted in the future. Further, federal and state legislative and regulatory
developments are likely, and we expect ongoing initiatives in the U.S. to increase pressure on drug pricing. Such reforms could have
an adverse effect on anticipated revenues any drug candidates that we may successfully develop and for which we may obtain regulatory
approval and may affect our overall financial condition and ability to develop drug candidates.
We
may fail to comply with evolving European and other privacy laws.
We
are subject to varying degrees of governmental regulation in the countries in which we operate operations, and the general trend is toward
increasingly stringent regulation and enforcement. We are, for example, subject to costly and complex U.S. and foreign laws governing
the collection, use, disclosure, and cross-border transfer of information about patients and other individuals that may materially adversely
affect our financial condition and business operations. Since we conduct clinical trials in the European Economic Area (“EEA”),
we are subject to additional data protection and clinical trial laws in the European Union. The General Data Protection Regulation, (EU)
2016/679 (“GDPR”), for example, governs the processing of personal data, and imposes numerous requirements on companies that
process personal data, including requirements relating to processing health and other sensitive data, obtaining consent of the individuals
to whom the personal data relates, providing notices to individuals regarding data processing activities, implementing safeguards to
protect the security and confidentiality of personal data, alerting data subjects and authorities about data breaches, and taking specific
measures when engaging third-party processors. The GDPR also imposes strict rules on the transfer of personal data to countries outside
the EEA, including the U.S., and confers on data subjects the right to lodge complaints with supervisory authorities, and seek certain
judicial review for violations of the GDPR. In addition, the GDPR includes restrictions on cross-border data transfers. Under the GDPR,
competent regulatory authorities have the power to impose fines up to EUR 20 million or 4% of the global annual turnover (whichever is
higher), depending on the nature of the violation (see Art. 83, GDPR). Further consequences of non-compliance could be cease and desist
claims by certain organizations/competitors, damage claims and reputational damage. Further,
Regulation (EU) No 536/2014 of the European Parliament and of the Council of 16 April 2014 on clinical trials on medicinal products for
human use and repealing Directive 2001/20/EC governs how we conduct clinical trials in the European Union together with Good Clinical
Practices. As a result of Brexit, moreover, we also have independent obligations, similar to those already imposed on us by GDPR, under
the United Kingdom’s Data Protection Act, 2018, as amended and replaced from time to time, as well as other local Member State
data protection laws, industry-specific requirements, regulations, or applicable codes of conduct. We have established privacy compliance
programs and controls, but as with many technology and data-driven initiatives being prioritized across throughout our operations and
involving multiple vendors and third parties, there are potential risks of controls imposed on cross border data flows, unauthorized
access, and loss of personal data through internal and external threats that could impact our business operations and research activities.
The
success of our products may be harmed if the government, private health insurers and other third-party payers do not provide sufficient
coverage or reimbursement.
Our
ability to commercialize our new cancer treatment systems successfully will depend in part on the extent to which reimbursement for the
costs of such products and related treatments will be available from third-party payors, which include government authorities such as
Medicare, Medicaid, TRICARE, and the Veterans Administration, managed care providers, private health insurers, and other organizations.
Patients who are provided medical treatment for their conditions generally rely on third-party payors to reimburse all or part of the
costs associated with their treatment. Patients are unlikely to use our drug candidates unless coverage is provided, and reimbursement
is adequate to cover a significant portion of the cost. We cannot be sure that coverage and reimbursement will be available for, or accurately
estimate the potential revenue from, our drug candidates.
Our
products may not achieve sufficient acceptance by the medical community to sustain our business.
The
commercial success of our products will depend upon their acceptance by the medical community and third-party payors as clinically useful,
cost effective and safe. Any of our drug candidates or similar drug candidates being investigated by our competitors may prove not to
be effective in trial or in practice, cause adverse events or other undesirable side effects. Our testing and clinical practice may not
confirm the safety and efficacy of our drug candidates or even if further testing and clinical practice produce positive results, the
medical community may view these new forms of treatment as effective and desirable or our efforts to market our new products may fail.
Market acceptance depends upon physicians and hospitals obtaining adequate reimbursement rates from third-party payors to make our products
commercially viable. Any of these factors could have an adverse effect on our business, financial condition and results of operations.
We
have no internal sales or marketing capability. If we are unable to create sales, marketing and distribution capabilities or enter into
alliances with others possessing such capabilities to perform these functions, we will not be able to commercialize our products successfully.
We
currently have no sales, marketing, or distribution capabilities. We intend to market our products, if and when such products are approved
for commercialization by the FDA and foreign regulatory agencies, either directly or through other strategic alliances and distribution
arrangements with third parties. If we decide to market our products directly, we will need to commit significant financial and managerial
resources to develop a marketing and sales force with technical expertise and with supporting distribution, administration, and compliance
capabilities, including providing adequate training on such topics. If we rely on third parties with such capabilities to market our
products, we will need to establish and maintain partnership arrangements, and there can be no assurance that we will be able to enter
into third-party marketing or distribution arrangements on acceptable terms or at all. To the extent that we do enter into such arrangements,
we will be dependent on our marketing and distribution partners. In entering into third-party marketing or distribution arrangements,
we expect to incur significant additional expenses and there can be no assurance that such third parties will establish adequate sales
and distribution capabilities or be successful in gaining market acceptance for our products and services.
Our
success will depend in part on our ability to grow and diversify, which in turn will require that we manage and control our growth effectively.
Our
business strategy contemplates growth and diversification. Our ability to manage growth effectively will require that we continue to
expend funds to improve our operational, financial and management controls, reporting systems and procedures. In addition, we must effectively
expand, train and manage our employees. We will be unable to manage our business effectively if we are unable to alleviate the strain
on resources caused by growth in a timely and successful manner. There can be no assurance that we will be able to manage our growth
and a failure to do so could have a material adverse effect on our business.
We
face intense competition and the failure to compete effectively could adversely affect our ability to develop and market our products,
if approved.
There
are many companies and other institutions engaged in research and development of various technologies for cancer treatment products that
seek treatment outcomes similar to those that we are pursuing. We believe that the level of interest by others in investigating the potential
of possible competitive treatments and alternative technologies will continue and may increase. Potential competitors engaged in all
areas of cancer treatment research in the U.S. and other countries include, among others, major pharmaceutical, specialized technology
companies, and universities and other research institutions. Most of our current and potential competitors have substantially greater
financial, technical, human and other resources, and may also have far greater experience than do we, both in pre-clinical testing and
human clinical trials of new products and in obtaining FDA and other regulatory approvals. One or more of these companies or institutions
could succeed in developing products or other technologies that are more effective than the products and technologies that we have been
or are developing, or which would render our technology and products obsolete and non-competitive. Furthermore, if we are permitted to
commence commercial sales of any of our products, we will also be competing, with respect to manufacturing efficiency and marketing,
with companies having substantially greater resources and experience in these areas.
We
may be subject to significant product liability claims and litigation.
Our
business exposes us to potential product liability risks inherent in the testing, manufacturing and marketing of human therapeutic products.
We presently have product liability insurance limited to $10 million per incident and $10 million annually. If we were to be subject
to a claim in excess of this coverage or to a claim not covered by our insurance and the claim succeeded, we would be required to pay
the claim with our own limited resources, which could have a severe adverse effect on our business. Whether or not we are ultimately
successful in any product liability litigation, such litigation would harm the business by diverting the attention and resources of our
management, consuming substantial amounts of our financial resources and by damaging our reputation. Additionally, we may not be able
to maintain our product liability insurance at an acceptable cost, if at all.
Our
internal computer systems, or those of our CROs or other contractors or consultants, may fail or suffer security breaches, which could
result in a material disruption of our product development programs.
Despite
the implementation of security measures, our internal computer systems and those of our CROs and other contractors and consultants are
vulnerable to damage from computer viruses and malicious software that could attack our networks and data centers or those of our service
providers; unauthorized parties may attempt to gain access to our systems, networks, or facilities, or those of third parties with whom
we do business, through fraud, trickery, or other forms of deceiving our employees or contractors, direct social engineering, phishing,
credential stuffing, ransomware, denial or degradation of service attacks and similar types of attacks against any or all of us, our
patients and our services providers; inadvertent security breaches or theft, misuse, unauthorized access or other improper actions by
our employees, patients, service providers and other business partners; natural disasters, terrorism, war and telecommunication and electrical
failures. . These extensive information security and cybersecurity threats, which affect companies globally, pose a risk to the security
and availability of our systems and networks, and the confidentiality, integrity, and availability of our sensitive data. We continually
assess these threats and makes investments to increase internal protection, detection, and response capabilities, as well as ensure that
our third party providers have required capabilities and controls, to address those risks. Even so ,such events could cause significant
interruptions of our operations. For instance, the loss of preclinical data or data from any clinical trial involving our drug candidates
could result in delays in our development and regulatory filing efforts and significantly increase our costs. To the extent that any
disruption or privacy or security breach were to result in a loss of, or damage to, our data, or inappropriate disclosure of confidential
or proprietary information, we could be subject to reputational harm, monetary fines, civil suits, civil penalties or criminal sanctions
and requirements to disclose the breach, and other forms of liability and the development of our drug candidates could be delayed. In
addition, such interruptions and cyber security incidents and faults can cause reputational damage.
Our
employees, independent contractors, consultants, collaborators and contract research organizations may engage in misconduct or other
improper activities, including non-compliance with regulatory standards and requirements, which could cause significant liability for
us and harm our reputation.
We
are exposed to the risk that our employees, independent contractors, consultants, collaborators and contract research organizations may
engage in fraudulent conduct or other illegal activity. Misconduct by those parties could include intentional, reckless and/or negligent
conduct or disclosure of unauthorized activities to us that violates: (1) FDA regulations or similar regulations of comparable non-U.S.
regulatory authorities, including those laws requiring the reporting of true, complete and accurate information to such authorities,
(2) manufacturing standards, (3) federal and state healthcare fraud and abuse laws and regulations and similar laws and regulations established
and enforced by comparable non-U.S. regulatory authorities, and (4) laws that require the reporting of financial information or data
accurately. In particular, sales, marketing and business arrangements in the healthcare industry are subject to extensive laws and regulations
intended to prevent fraud, misconduct, kickbacks, self- dealing, bribery and other abusive practices. These laws and regulations restrict
or prohibit a wide range of pricing, discounting, marketing and promotion, sales commission, customer incentive programs and other business
arrangements. Employee or collaborator misconduct could also involve the improper use of, including trading on, information obtained
in the course of clinical trials, which could result in regulatory sanctions and serious harm to our reputation. While we have a code
of conduct and business ethics, it is not always possible to identify and deter misconduct, and the precautions we take to detect and
prevent this activity may not be effective in controlling unknown or unmanaged risks or losses or in protecting us from governmental
investigations or other actions or lawsuits stemming from a failure to be in compliance with such laws, standards or regulations. If
any such actions are instituted against us, and we are not successful in defending ourselves or asserting our rights, those actions could
have a significant impact on our business and results of operations, including the imposition of civil, criminal and administrative penalties,
damages, monetary fines, possible exclusion from participation in Medicare, Medicaid and other federal healthcare programs, additional
reporting requirements and/or oversight if we become subject to a corporate integrity agreement or similar agreement to resolve allegations
of non-compliance with these laws, imprisonment, contractual damages, reputational harm, diminished profits and future earnings, and
curtailment of our operations, any of which could have a material adverse effect on our ability to operate our business and our results
of operations.
RISKS
RELATED TO OUR INTELLECTUAL PROPERTY
Our
business depends on license agreements with third parties to permit us to use patented technologies. The loss of any of our rights under
these agreements could impair our ability to develop and market our products.
Our
success will depend, in a substantial part, on our ability to maintain our rights under license agreements granting us rights to use
patented technologies. For instance, we are party to license agreements with Duke University, under which we have exclusive rights to
commercialize medical treatment products and procedures based on Duke’s thermo-sensitive liposome technology. The Duke University
license agreement contains a license fee, royalty and/or research support provisions, testing and regulatory milestones, and other performance
requirements that we must meet by certain deadlines. If we breach any provisions of the license and research agreements, we may lose
our ability to use the subject technology, as well as compensation for our efforts in developing or exploiting the technology. Any such
loss of rights and access to technology could have a material adverse effect on our business.
Further,
we cannot guarantee that any patent or other technology rights licensed to us by others will not be challenged or circumvented successfully
by third parties, or that the rights granted will provide adequate protection. We may be required to alter any of our potential products
or processes or enter into a license and pay licensing fees to a third party or cease certain activities. There can be no assurance that
we can obtain a license to any technology that we determine we need on reasonable terms, if at all, or that we could develop or otherwise
obtain alternate technology. If a license is not available on commercially reasonable terms or at all, our business, results of operations,
and financial condition could be significantly harmed, and we may be prevented from developing and commercializing the product. Litigation,
which could result in substantial costs, may also be necessary to enforce any patents issued to or licensed by us or to determine the
scope and validity of another’s claimed proprietary rights.
If
any of our pending patent applications do not issue, or are deemed invalid following issuance, we may lose valuable intellectual property
protection.
The
patent positions of pharmaceutical and biotechnology companies, such as ours, are uncertain and involve complex legal and factual issues.
We own various U.S. and international patents and have pending U.S. and international patent applications that cover various aspects
of our technologies. There can be no assurance that patents that have issued will be held valid and enforceable in a court of law through
the entire patent term. Even for patents that are held valid and enforceable, the legal process associated with obtaining such a judgment
is time-consuming and costly. Additionally, issued patents can be subject to opposition, interferences or other proceedings that can
result in the revocation of the patent or maintenance of the patent in amended form (and potentially in a form that renders the patent
without commercially relevant or broad coverage). Further, our competitors may be able to circumvent and otherwise design around our
patents. Even if a patent is issued and enforceable because development and commercialization of pharmaceutical products can be subject
to substantial delays, patents may expire early and provide only a short period of protection, if any, following the commercialization
of products encompassed by our patents. We may have to participate in interference proceedings declared by the U.S. Patent and Trademark
Office, which could result in a loss of the patent and/or substantial cost to us.
We
have filed patent applications, and plan to file additional patent applications, covering various aspects of our technologies and our
proprietary drug candidates. There can be no assurance that the patent applications for which we apply would actually issue as patents
or do so with commercially relevant or broad coverage. The coverage claimed in a patent application can be significantly reduced before
the patent is issued. The scope of our claim coverage can be critical to our ability to enter into licensing transactions with third
parties and our right to receive royalties from our collaboration partnerships. Since publication of discoveries in scientific or patent
literature often lags behind the date of such discoveries, we cannot be certain that we were the first inventor of inventions covered
by our patents or patent applications. In addition, there is no guarantee that we will be the first to file a patent application directed
to an invention.
An
adverse outcome in any judicial proceeding involving intellectual property, including patents, could subject us to significant liabilities
to third parties, require disputed rights to be licensed from or to third parties or require us to cease using the technology in dispute.
In those instances where we seek an intellectual property license from another, we may not be able to obtain the license on a commercially
reasonable basis, if at all, thereby raising concerns on our ability to freely commercialize our technologies or products.
We
rely on trade secret protection and other unpatented proprietary rights for important proprietary technologies, and any loss of such
rights could harm our business, results of operations and financial condition.
We
rely on trade secrets and confidential information that we seek to protect, in part, by confidentiality agreements with our corporate
partners, collaborators, employees and consultants. We cannot assure you that these agreements are adequate to protect our trade secrets
and confidential information or will not be breached or, if breached, we will have adequate remedies. Furthermore, others may independently
develop substantially equivalent confidential and proprietary information or otherwise gain access to our trade secrets or disclose such
technology. Any loss of trade secret protection or other unpatented proprietary rights could harm our business, results of operations
and financial condition.
We
may incur substantial costs as a result of litigation or other proceedings relating to patent and other intellectual property rights.
Our
commercial success depends on our ability to operate without infringing the patents and other proprietary rights of third parties. Although
we currently are not involved in any material litigation involving patents, a third-party patent holder may assert a claim of patent
infringement against us in the future. Alternatively, we may initiate litigation against the third-party patent holder to request that
a court declare that we are not infringing the third party’s patent and/or that the third party’s patent is invalid or unenforceable.
Any infringement action asserted against us, even if we are ultimately successful in defending against such action, would likely delay
the regulatory approval process of our products, harm our competitive position, be expensive and require the time and attention of our
key management and technical personnel. In addition, there is a risk that the court will decide that such patents are not valid and that
we do not have the right to stop the other party from using the inventions.
RISKS
RELATED TO OUR SECURITIES
The
market price of our common stock has been, and may continue to be volatile and fluctuate significantly, which could result in substantial
losses for investors and subject us to securities class action litigation.
The
trading price for our common stock has been, and we expect it to continue to be, volatile. The price at which our common stock trades
depends upon a number of factors, some of these factors are beyond our control. Broad market fluctuations may lower the market price
of our common stock and affect the volume of trading in our stock, regardless of our financial condition, results of operations, business
or prospects. In addition to the factors discussed in this “Risk Factors” section and elsewhere in this annual report, these
factors include:
● regulatory developments in both the United States and abroad;
● public announcements by our competitors or others; and
● general market conditions and comments by securities analysts and investors.
Our
common stock may be delisted from The Nasdaq Capital Market if we fail to comply with continued listing standards.
Our
common stock is currently traded on The Nasdaq Capital Market under the symbol “IMNN.” If we fail to comply with Nasdaq’s
continued listing standards, we may be delisted and our common stock will trade, if at all, only on the over-the-counter market, such
as the OTC Bulletin Board or OTCQX market, and then only if one or more registered broker-dealer market makers comply with quotation
requirements. In addition, delisting of our common stock could depress our stock price, substantially limit liquidity of our common stock
and materially adversely affect our ability to raise capital on terms acceptable to us, or at all. Further, delisting of our common stock
would likely result in our common stock becoming a “penny stock” under the Exchange Act
Future
sales of our common stock in the public market could cause our stock price to fall.
Sales
of a substantial number of shares of our common stock in the public market, or the perception that these sales might occur, could depress
the market price of our common stock and could impair our ability to raise capital through the sale of additional equity securities.
As of March 28, 2023, we had 9,089,789 shares of common stock outstanding, all of which, other than shares held by our directors and
certain officers, were eligible for sale in the public market, subject in some cases to compliance with the requirements of Rule 144,
including the volume limitations and manner of sale requirements. In addition, all of the shares of common stock issuable upon exercise
of warrants will be freely tradable without restriction or further registration upon issuance.
Our
stockholders may experience significant dilution as a result of future equity offerings or issuances and exercise of outstanding options
and warrants.
In
order to raise additional capital or pursue strategic transactions, we may in the future offer, issue or sell additional shares of our
common stock or other securities convertible into or exchangeable for our common stock, including the issuance of common stock in relation
to the achievement, if any, of milestones triggering our payment of earn-out consideration in connection with the EGEN acquisition. Our
stockholders may experience significant dilution as a result of future equity offerings or issuances. Investors purchasing shares or
other securities in the future could have rights superior to existing stockholders. As of March 28, 2023, we have the following number
of securities convertible into, or allowing the purchase of, our common stock, including 168,519 shares of common stock issuable upon
exercise of warrants outstanding, 820,507 options to purchase shares of our common stock and restricted stock awards outstanding, and
388,932 shares of common stock reserved for future issuance under our stock incentive plan.
Unstable
global market and economic conditions may have serious adverse consequences on our business, financial condition and share price.
The