UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
10-K
(Mark
One)
☒
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For
the fiscal year ended December 31, 2022
OR
☐TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For
the transition period from to
Commission
File Number 001-40652
INDAPTUS
THERAPEUTICS, INC.
(Exact
name of Registrant as specified in its Charter)
3 Columbus Circle 15th Floor New York, NY 10019
(Address of principal executive offices) (Zip Code)
Registrant’s
telephone number, including area code: +(646)427-2727
Securities
registered pursuant to Section 12(b) of the Act:
Common stock, par value $0.01 INDP Nasdaq Capital Market
Securities
registered pursuant to Section 12(g) of the Act:
None
Indicate
by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. YES ☐ NO ☒
Indicate
by check mark if the Registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. YES ☐ NO ☒
Indicate
by check mark whether the Registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days. YES ☒ NO ☐
Indicate
by check mark whether the Registrant has submitted electronically, every Interactive Data File required to be submitted pursuant to Rule
405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant
was required to submit such files). YES ☒ NO ☐
Indicate
by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company,
or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller
reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer ☐ Accelerated filer ☐
Non-accelerated filer ☒ Smaller reporting company ☒
Emerging growth company ☐
If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate
by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness
of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered
public accounting firm that prepared or issued its audit report. ☐
Indicate
by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES ☐ NO ☒
At
June 30, 2022, the last business day of the Registrant’s most recently completed second fiscal quarter, the aggregate market value
of the voting and non-voting common equity held by non-affiliates of the Registrant was $15,083,730.
The
number of shares of Registrant’s common stock outstanding as of March 17, 2023 was 8,401,047.
DOCUMENTS
INCORPORATED BY REFERENCE
Portions
of the Registrant’s definitive proxy statement for its 2023 Annual Meeting of Stockholders, which the Registrant intends to file
pursuant to Regulation 14A with the Securities and Exchange Commission not later than 120 days after December 31, 2022, are incorporated
by reference into Part III of this Annual Report on Form 10-K.
Table of Contents Page
PART I
Item 1. Business 7
Item 1A. Risk Factors 23
Item 1B. Unresolved Staff Comments 58
Item 2. Properties 58
Item 3. Legal Proceedings 58
Item 4. Mine Safety Disclosures 58
PART II
Item 6. [Reserved] 59
Item 7A. Quantitative and Qualitative Disclosures About Market Risk 66
Item 8. Financial Statements and Supplementary Data F-1
Item 9A. Controls and Procedures 67
Item 9B. Other Information 67
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections 67
PART III
Item 10. Directors, Executive Officers and Corporate Governance 68
Item 11. Executive Compensation 72
Item 14. Principal Accountant Fees and Services 72
PART IV
Item 15. Exhibits, Financial Statement Schedules 73
ABOUT
THIS ANNUAL REPORT
All
references to “we,” “us,” “our,” “Indaptus Therapeutics”, “Indaptus”, “the
Company” and “our company”, in this Annual Report on Form 10- K, or our Annual Report, are to Indaptus Therapeutics,
Inc. (formerly Intec Parent, Inc.) and, where appropriate, its consolidated subsidiaries, Intec Pharma Ltd. and Decoy Biosystems, Inc.
following the Domestication Merger and the Merger described elsewhere in this Annual Report. References to “Intec Parent”
refer to Intec Parent, Inc., the successor of Intec Pharma Ltd. following the Domestication Merger, references to “Intec Israel”
refer to Intec Pharma Ltd., the predecessor of Indaptus prior to the Domestication Merger, and references to “Decoy” refer
to Decoy Biosystems, Inc., the entity acquired by Indaptus in connection with the Merger. All references to “common stock”
and “share capital” refer to common stock and share capital of Indaptus. Our historical results do not necessarily indicate
our expected results for any future periods. Any discrepancies in any table between totals and sums of the amounts listed are due to
rounding. Unless otherwise indicated, or the context otherwise requires, references in this Annual Report to financial and operational
data for a particular year refer to the fiscal year of our Company ended December 31 of that year.
EXPLANATORY
NOTE
Market
data and certain industry data and forecasts used throughout this Annual Report were obtained from market research databases, consultant
surveys commissioned by us, publicly available information, reports of governmental agencies and industry publications and surveys. Industry
surveys, publications, consultant surveys commissioned by us and forecasts generally state that the information contained therein has
been obtained from sources believed to be reliable. We have relied on certain data from third-party sources, including internal surveys,
industry forecasts and market research, which we believe to be reliable based on our management’s knowledge of the industry. Statements
as to our market position are based on the most currently available data. While we are not aware of any misstatements regarding the industry
data presented in this Annual Report, our estimates involve risks and uncertainties and are subject to change based on various factors,
including those discussed under Part I. Item 1A. “Risk Factors” in this Annual Report.
CAUTIONARY
NOTE REGARDING FORWARD-LOOKING STATEMENTS
This
Annual Report contains, and management may make, certain forward-looking statements within the meaning of the Private Securities Litigation
Reform Act of 1995. All statements other than statements of historical facts contained in this Annual Report on Form 10-K are forward-looking
statements. In some cases, forward-looking statements can be identified by the use of terms such as “believe,” “expect,”
“intend,” “plan,” “may,” “should,” “anticipate,” “could,” “might,”
“seek,” “target,” “will,” “project,” “forecast,” “continue” or
their negatives or variations of these words or other comparable words. These statements include, without limitation, our statements
about: our product candidate development, including the timing and design of the Phase I clinical trial of Decoy20; our plans to develop
and commercialize our product candidates; the market potential and treatment potential of our product candidates, including Decoy20;
our commercialization, marketing and manufacturing capabilities and strategy; our expectations
about the willingness of healthcare professionals to use our product candidates; our general business strategy and the
plans and objectives of management for future operations; our research and development activities
and costs; our future results of operations and condition; and the sufficiency of our cash, cash equivalents and marketable securities
to fund our ongoing activities; and the anticipated impact of the COVID-19 pandemic on our business.
The
forward-looking statements in this Annual Report are only predictions and are based largely on our current expectations and projections
about future events and financial trends that we believe may affect our business, financial condition and results of operations. These
forward-looking statements speak only as of the date of this Annual Report and are subject to a number of known and unknown risks, uncertainties
and assumptions, including those described under the sections in this Annual Report entitled “Summary Risk Factors,” Part
I. Item 1A. “Risk Factors” and Part II. Item 7. “Management’s Discussion and Analysis of Financial Condition
and Results of Operations” and elsewhere in this Annual Report.
Because
forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified and some
of which are beyond our control, you should not rely on these forward-looking statements as predictions of future events. The events
and circumstances reflected in our forward-looking statements may not be achieved or occur and actual results could differ materially
from those projected in the forward-looking statements. Moreover, we operate in an evolving environment. New risk factors and uncertainties
may emerge from time to time, and it is not possible for management to predict all risk factors and uncertainties.
Except
as required by applicable law, we do not plan to publicly update or revise any forward-looking statements contained herein, whether as
a result of any new information, future events, changed circumstances or otherwise. We intend the forward-looking statements contained
in this Annual Report to be covered by the safe harbor provisions for forward-looking statements contained in Section 27A of the Securities
Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act.
Summary
Risk Factors
The
principal factors and uncertainties that make investing in our common stock risky, include, among others:
PART
I
Item
1. Business.
Overview
We
are a clinical biotechnology company developing a novel and patented systemically-administered anti-cancer and anti-viral immunotherapy.
We have evolved from more than a century of immunotherapy advances. Our approach is based on the hypothesis that efficient activation
of both innate and adaptive immune cells and associated anti-tumor and anti-viral immune responses will require a multi-targeted package
of immune system activating signals that can be administered safely intravenously. Our patented technology is composed of single strains
of attenuated and killed, non-pathogenic, Gram-negative bacteria, designed to have reduced i.v. toxicity, but largely uncompromised ability
to prime or activate many of the cellular components of innate and adaptive immunity. This approach has led to broad anti-tumor and anti-viral
activity in pre-clinical models, including durable anti-tumor response synergy observed with each of five different classes of existing
agents, including checkpoint therapy, targeted antibody therapy and low-dose chemotherapy. Tumor eradication by our technology has demonstrated
activation of both innate and adaptive immunological memory and, importantly, did not require provision of or targeting a tumor antigen
in pre-clinical models. We have carried out successful current Good Manufacturing Practice (cGMP) manufacturing of our lead clinical
candidate, Decoy20, and completed other Investigational New Drug application (IND) enabling studies.
Unlike
many competitor products, our technology does not depend on targeting with or to a specific antigen, providing broad potential across
multiple indications. Our products are designed to have a much shorter half-life and produce less systemic exposure than small molecule,
antibody or human cell-based therapies, potentially reducing the risk of non-specific auto-immune reactions. Our technology has produced
single agent activity and/or combination therapy-based durable responses in lymphoma, hepatocellular, colorectal and pancreatic tumors
and has also showed activity against hepatitis B virus (HBV) and HIV infection in standard pre-clinical models. In
May 2022, the U.S. Food and Drug Administration cleared our Investigational New Drug, or IND, application for a Phase 1 clinical trial
in patients with advanced solid tumors where currently approved therapies have failed and in December 2022, we initiated this
Phase 1 clinical trial. Target indications include, but are not limited to, colorectal, hepatocellular (± HBV), bladder, cervical
and pancreatic carcinoma, which according to GLOBOCAN 2020, account in the aggregate for 23% of yearly cancer cases and over 28% of yearly
cancer deaths world-wide.
Historically,
we have operated virtually with a team of highly experienced consultants and advisors, carrying out research and development at contract
research organizations (CROs). We have a broad patent portfolio with 34 granted patents and 16 pending patent applications. Since our
inception, we have funded our operations primarily through public and private offerings of our equity securities.
Background
Approved
immunotherapies, such as Interluekin-2, Interferon-alpha and the more recently approved “checkpoint” and CAR-T therapies
produce durable responses in a few percent to about fifty percent of patients across about a dozen out of over one hundred different
types of cancer. Although checkpoint therapies are able to effectively cure many previously incurable patients, only about 15% of patients
receiving this type of therapy respond. The main limitation of existing immunotherapies is that they each activate only one or a small
number of key steps in either the innate or adaptive immune system, but there is general agreement that highly efficient cancer immunotherapy
will require activation of both innate and adaptive immunity. The human body’s innate and adaptive immune systems are each capable
of cell-mediated destruction of tumors if the tumor cells are recognized as foreign or damaged. Activation of innate and adaptive responses
is also dependent on immune cells sensing the presence of “danger.” The most potent immune cell activating danger signals
are released by bacteria and viruses in the setting of infection, and include agonists of immune cell receptors, such as Toll-Like (TLR),
NOD and STING. Bacterial danger signals, including TLR agonists are called pathogen-associated molecular patterns (PAMPs) and can activate
both innate and adaptive immune cells, including antigen-presenting cells, promoting innate (NK, macrophage) and adaptive (T cell-mediated)
destruction of tumors.
The
oldest form of cancer immunotherapy involves the provision of decoy danger signals from bacteria. It was based on the long-standing observation
of tumor regression in the setting of bacterial infection. Treatment of cancer patients with heat-killed bacteria (“Coley’s
toxins”) was established in 1891 and used for 70 years with significant success. For example, ≥5-year survival was reported
for 45% of 432 inoperable sarcoma, lymphoma, melanoma, and carcinoma patients. Despite this success, several limitations led to the abandonment
of this approach by the pharmaceutical industry. Although there was an indication that Coley’s toxins worked best when administered
intravenously (i.v.), it was too toxic when given by this route, limiting the approach to local administration, which produced highly
variable results. Another limitation was lack of knowledge about the mechanism of action, preventing optimization and standardization
of manufacturing, leading to another source of variability in clinical response. Due to this high variability, Coley’s toxins was
not grandfathered-in as an approved drug by the FDA in 1963 and was supplanted by radiation and chemotherapy, despite the fact that these
more modern approaches rarely produce durable responses in advanced cancer patients. Scientists now understand the mechanism of action
of Coley’s toxins. Gram-negative bacteria contain multiple immune-stimulating danger signals, including TLR agonists such as lipopolysaccharide
(LPS). Bacteria and purified or mono-specific TLR agonists, including LPS derivatives, have been validated and approved for prevention
and treatment of early stage cancer. However, a safe and effective TLR agonist-based approach for advanced cancer has been elusive, possibly
due to limitations in the ability of intratumorally administered, mono-specific TLR agonists to induce potent, systemic anti-tumor immune
responses. In addition, the intratumoral approach is not feasible with all tumor types or patients. Our hypothesis is that an effective
TLR agonist-based immunotherapy for advanced cancer will require invention of a packaged, multi-TLR agonist or multi-danger signal product
that is modified or attenuated to allow safe i.v. administration.
Our
Approach
Our
patented approach is based on the hypothesis that efficient activation of both innate and adaptive immune cells and associated anti-tumor
immune responses can be achieved by using intact bacteria, containing multiple PAMPs, which have been attenuated so that they can be
administered safely intravenously. Because LPS appears to be the most important contributor to both toxicity and efficacy, our patented
product candidates are single strains of killed, non-pathogenic Gram-negative bacteria that have been treated in an effort to kill the
bacteria and significantly reduce, but not completely eliminate, the cell surface LPS-endotoxin activity. Our product candidates are
designed to have enhanced sufficient residual LPS to synergize with other PAMPs in the bacteria to efficiently prime innate and adaptive
immune pathways. This approach has led to broad anti-tumor responses, including synergistic regressions and durable responses with five
different classes of existing anti-tumor agents, in preclinical models, including checkpoint therapy, targeted antibody therapy and low-dose
chemotherapy. Tumor eradication by our technology is designed to produce both innate and adaptive immunological memory and, importantly,
not require provision of an exogenous tumor antigen, potentially due to the ability of LPS and other PAMPS to activate dendritic cells
that have already captured a tumor antigen.
All
immune cells can participate in killing of tumors and viruses. As illustrated below, current therapies activate only one or a small subset
of both pathways and cure only a small percentage of patients.
Our
technology, however, is designed to synergize with existing therapies to activate both innate and adaptive immune cells, inducing efficient
anti- tumor immune responses with a wide safety margin. Induction of adaptive anti-tumor immune responses and immunological memory by
our technology does not require an exogenous tumor antigen.
Innate
and adaptive immune responses require identification of a tumor as foreign or not self. However, most steps required for migration and
activation of immune cells are unrelated to the tumor or are tumor non-specific. All innate and adaptive non-specific steps are induced
or promoted by immune system “danger signal” molecules, such as those found in our bacteria. Bacteria-derived danger signals
are also able to enhance the processing and recognition of tumor antigens, which are frequently present, but not “seen” by
the immune system.
Results
We
have developed patented treatment methods (and associated patented compositions) for attenuation and killing of non-pathogenic, Gram-negative
bacteria (34 issued or granted patents). In preclinical models, Indaptus treated bacteria induced less systemic toxicity than untreated
bacteria but were still able to activate innate and adaptive immune responses. Despite exhibiting reduced in vivo pyrogenicity and a
higher maximally tolerated dose, our bacteria were able to induce secretion of most cytokines and chemokines from mouse and human immune
cells in vitro at levels comparable to those seen with untreated bacteria. Our bacteria were also able to synergize with human immune
cells to kill human tumor cells in vitro.
We
have observed significant single agent anti-tumor activity and/or combination therapy-mediated regression with durable responses in established
non-Hodgkin’s lymphoma, as well as colorectal, hepatocellular and pancreatic carcinoma in pre-clinical syngeneic and human tumor
xenograft models. Our bacteria synergized with each of five different classes of approved agents in preclinical models, including checkpoint
therapy, targeted antibodies, low-dose chemotherapy, non-steroidal anti-inflammatory drugs (NSAIDs) and cytokines to induce tumor regression,
providing significant flexibility for targeting of diverse types of cancer. Our technology is designed to eradicate tumors via activation
of both innate (NK cell) and adaptive (CD4+ and CD8+ T cell) mechanisms, with the goal of producing both innate and adaptive immunological
memory. In our preclinical studies, tumor eradication occurred at non-toxic doses of our bacteria, with a very wide (10 to ≥33-fold)
therapeutic index. Notable mechanism of action information has also been obtained, via gene expression analysis with treated tumors and
plasma cytokine analysis, demonstrating that our combination technology has the potential to turn “cold” tumors into “hot”
tumors and induce, activate or recruit innate and adaptive genes, cells and pathways. Immune cell pre-depletion studies have demonstrated
that both innate (NK) and adaptive (CD4 T and CD8 T) immune cells are involved in tumor eradication. We have also demonstrated significant
single agent activity against chronic Hepatitis B virus (HBV) and human immunodeficiency virus (HIV) infection in standard pre-clinical
models.
We
have carried out successful cGMP manufacturing and stability studies with our lead product candidate, Decoy20. In addition, IND-enabling
multi-dose toxicology studies have been completed and did not produce sustained induction of factors that are associated with cytokine
release syndrome.
The
chart above demonstrates that our bacteria synergize with Anti-PD-1 Checkpoint therapy to regress established mouse hepatocellular carcinoma
(HCC) Tumors. All mice (all groups) received a low-dose, non-steroidal anti-inflammatory drug (NSAID/Indomethacin), which increases the
number of regressions in the combination setting. Most regressions were durable, with 5/6 combination regressions stable through termination
at Day 91 and in a repeat experiment through termination at Day 143 (see next Figure below) (CR = complete response or complete regression).
The repeat experiment also produced 5/6 or 6/6 durable regressions per group over a 33-fold Indaptus concentration range and an absence
of safety concerns, demonstrating a very wide therapeutic index. Similar tumor eradication results have been obtained by combining our
bacteria with low-dose chemotherapy in a mouse non-Hodgkin’s lymphoma model. Eradication of established non-Hodgkin’s lymphoma
tumors by our technology has also been observed with human tumor xenografts, via activation of the innate immune system. Development
and preclinical efficacy characterization of a systemically administered multiple Toll-like receptor (TLR) agonist for antitumor immunotherapy
[abstract]. In: Proceedings of the Fourth CRI-CIMT-EATI-AACR International Cancer Immunotherapy Conference: Translating Science into
Survival; Sept 30-Oct 3, 2018; New York, NY. Philadelphia (PA): AACR; Cancer Immunol Res 2019;7(2 Suppl):Abstract
nr B178.
The
chart above illustrates that the synergistic tumor eradication by our technology and Anti-PD-1 produces immunological memory. Established
tumors were regressed in 11 mice by combination treatment as in the Figure above and then the mice were re-challenged with fresh HCC
tumor cells, without further treatment. All of the new tumors were rejected. Similar results have been obtained by combining our bacteria
with low-dose chemotherapy in a non-Hodgkin’s lymphoma model.
In
May 2022, the FDA cleared our IND application for a Phase 1 clinical trial in patients with advanced solid tumors where currently approved
therapies have failed, and in December 2022, we initiated this Phase 1 clinical trial which is an open label, multi-center, dose escalation
and expansion, single arm (monotherapy) study conducted in 2 parts. The Phase 1 study has
begun with a single dose escalation, which is planned to be followed by an expansion part with continuous weekly administration of Decoy20.
The study is enrolling patients with advanced/metastatic solid tumors, who have exhausted approved treatment options. The
study’s objectives are to assess the safety and tolerability of Decoy20, to determine the maximum tolerated dose and recommended
phase 2 dose, as well as to assess Decoy20 pharmacokinetics (“PK”), pharmacodynamics and clinical activity. The primary
endpoint of the study is incidence, relatedness and severity of adverse events and treatment-emergent adverse events and determining
the number of subjects per cohort with dose limiting toxicity-based adverse events. Secondary endpoints include the incidence of anti-drug
antibodies and neutralizing antibodies pre- and post-treatment, change in Decoy20 PK parameters over time, objective response rate in
subjects with measurable disease and duration of response.
Business
Strategy
Our
mission is to enhance and expand curative cancer immunotherapy for patients with unresectable or metastatic solid tumors and lymphomas,
which are responsible for approximately 90% of all cancer deaths.
Our
business strategy includes:
● advancing to the expansion portion of the Phase 1 clinical trial for Decoy20;
● maintaining, expanding and protecting our intellectual property portfolio; and
Competitive
Advantages
Our
bacteria contain multiple constituents, capable of priming or activating many of the cellular components of both innate and adaptive
immunity, but have been attenuated by a patented process to reduce the potential for over-stimulation of the immune system and consequential
induction of undesirable autoimmune reactions. Our bacteria are also likely to be cleared very quickly by the liver and spleen, which
may further reduce the risk of non-specific autoimmune side effects, relative to other types of immunotherapy that are designed for continuous
exposure. We believe a short Indaptus exposure is sufficient to act alone and as a “primer” to enhance other products. Additionally,
our products can be manufactured by a highly cost-efficient process, potentially providing accelerated patient access in both developed
and developing geographical regions.
Governmental
Regulation
Among
others, the FDA and comparable regulatory authorities in state and local jurisdictions and in other countries impose substantial and
burdensome requirements upon companies involved in the clinical development, manufacture, marketing and distribution of drugs such as
those we are developing. These agencies and other federal, state and local entities regulate, among other things, the research and development,
testing, manufacture, quality control, safety, effectiveness, labeling, storage, record keeping, approval, advertising and promotion,
distribution, post-approval monitoring and reporting, sampling and export and import of our product candidates.
U.S.
Regulation of Drugs and Biologics
In
the United States, the FDA regulates drugs under the Federal Food, Drug, and Cosmetic Act (FDCA) and its implementing regulations, and
biologics under the FDCA and the Public Health Service Act (PHSA) and its implementing regulations. FDA approval is required before any
new unapproved drug or dosage form, including a new use of a previously approved drug, can be marketed in the United States. Drugs and
biologics are also subject to other federal, state, and local statutes and regulations. The process required by the FDA before product
candidates may be marketed in the United States generally involves the following:
Once
a product candidate is identified for development, it enters the preclinical testing stage. Preclinical tests include laboratory evaluations
of product chemistry, toxicity and formulation, as well as animal studies. An IND sponsor must submit the results of the preclinical
tests, together with manufacturing information and analytical data, to the FDA as part of an IND. An IND is a request for authorization
from the FDA to administer an investigational drug product to humans. An IND will also include a protocol detailing, among other things,
the objectives of the clinical trial, the parameters to be used in monitoring safety, and the effectiveness criteria to be evaluated,
if the trial includes an efficacy evaluation. Some preclinical testing may continue even after the IND is submitted. The IND automatically
becomes effective 30 days after receipt by the FDA, unless the FDA, within the 30-day time period, places the clinical trial on a clinical
hold. In such a case, the IND sponsor and the FDA must resolve any outstanding concerns before the clinical trial can begin. Clinical
holds also may be imposed by the FDA at any time before or during clinical trials due to safety concerns about on-going or proposed clinical
trials or non-compliance with specific FDA requirements, and the trials may not begin or continue until the FDA notifies the sponsor
that the hold has been lifted.
All
clinical trials must be conducted under the supervision of one or more qualified investigators in accordance with GCPs, which include
the requirement that all research subjects provide their informed consent in writing for their participation in any clinical trial. Clinical
trials must be conducted under protocols detailing the objectives of the trial, dosing procedures, subject selection and exclusion criteria
and the safety and effectiveness criteria to be evaluated. Each protocol must be submitted to the FDA as part of the IND, and a separate
submission to the existing IND must be made for each successive clinical trial conducted during product development and for any subsequent
protocol amendments. While the IND is active, progress reports summarizing the results of the clinical trials and nonclinical studies
performed since the last progress report, among other information, must be submitted at least annually to the FDA, and written IND safety
reports must be submitted to the FDA and investigators for serious and unexpected suspected adverse events, findings from other studies
suggesting a significant risk to humans exposed to the same or similar drugs, findings from animal or in vitro testing suggesting a significant
risk to humans, and any clinically important increased incidence of a serious suspected adverse reaction compared to that listed in the
protocol or investigator brochure.
Furthermore,
an independent IRB at each institution participating in the clinical trial must review and approve each protocol before a clinical trial
commences at that institution and must also approve the information regarding the trial and the consent form that must be provided to
each trial subject or his or her legal representative, monitor the study until completed and otherwise comply with IRB regulations. The
FDA or the sponsor may suspend a clinical trial at any time on various grounds, including a finding that the research subjects or patients
are being exposed to an unacceptable health risk. Similarly, an IRB can suspend or terminate approval of a clinical trial at its institution
if the clinical trial is not being conducted in accordance with the IRB’s requirements or if the drug has been associated with
unexpected serious harm to patients. In addition, some clinical trials are overseen by an independent group of qualified experts organized
by the sponsor, known as a data safety monitoring board or committee. Depending on its charter, this group may determine whether a trial
may move forward at designated check points based on access to certain data from the trial. There are also requirements governing the
reporting of ongoing clinical studies and clinical study results to public registries, including clinicaltrials.gov.
The
clinical investigation of a drug is generally divided into three phases. Although the phases are usually conducted sequentially, they
may overlap or be combined.
Post-approval
trials, sometimes referred to as Phase 4 studies, may be conducted after initial marketing approval. These trials are used to gain additional
experience from the treatment of patients in the intended therapeutic indication. In certain instances, the FDA may mandate the performance
of Phase 4 clinical trials as a condition of approval of an NDA.
During
the development of a product candidate, sponsors are given opportunities to meet with the FDA at certain points. These points may be
prior to submission of an IND, at the end of Phase 2, and before an NDA or BLA is submitted. Meetings at other times may be requested.
These meetings can provide an opportunity for the sponsor to share information about the data gathered to date, for the FDA to provide
advice, and for the sponsor and the FDA to reach agreement on the next phase of development. Concurrent with clinical trials, companies
usually complete additional animal studies and must also develop additional information about the chemistry and physical characteristics
of the drug and finalize a process for manufacturing the product in commercial quantities in accordance with cGMPs. The manufacturing
process must be capable of consistently producing quality batches of the product candidate and, among other things, the manufacturer
must develop methods for testing the identity, strength, quality and purity of the final drug. In addition, appropriate packaging must
be selected and tested, and stability studies must be conducted to demonstrate that the product candidate does not undergo unacceptable
deterioration over its shelf life.
NDA
and BLA Review Process
Assuming
successful completion of all required testing in accordance with all applicable regulatory requirements, the results of product development,
nonclinical studies and clinical trials are submitted to the FDA as part of an NDA or BLA requesting approval to market the product for
one or more indications. The NDA or BLA must include all relevant data available from pertinent preclinical studies and clinical trials,
including negative or ambiguous results as well as positive findings, together with detailed information relating to the product’s
CMC and proposed labeling, among other things. Data can come from company-sponsored clinical studies intended to test the safety and
effectiveness of the product, or from a number of alternative sources, including studies initiated and sponsored by investigators. The
submission of an NDA or BLA requires payment of a substantial application user fee to the FDA, unless a waiver or exemption applies.
In
addition, under the Pediatric Research Equity Act, or PREA, an NDA or BLA or supplement to an NDA or BLA must contain data to assess
the safety and effectiveness of the biological product candidate for the claimed indications in all relevant pediatric subpopulations
and to support dosing and administration for each pediatric subpopulation for which the product is safe and effective. The Food and Drug
Administration Safety and Innovation Act requires that a sponsor who is planning to submit a marketing application for a drug or biological
product that includes a new active ingredient, new indication, new dosage form, new dosing regimen or new route of administration submit
an initial pediatric study plan within sixty days after an end-of-Phase 2 meeting or as may be agreed between the sponsor and FDA. Unless
otherwise required by regulation, PREA does not apply to any drug or biological product for an indication for which orphan designation
has been granted.
Within
60 days following submission of the application, the FDA reviews the submitted BLA or NDA to determine if the application is substantially
complete before the agency accepts it for filing. The FDA may refuse to file any NDA or BLA that it deems incomplete or not properly
reviewable at the time of submission and may request additional information. In this event, the NDA or BLA must be resubmitted with the
additional information. Once an NDA or BLA has been accepted for filing, the FDA’s goal is to review standard applications within
ten months after the filing date, or, if the application qualifies for priority review, six months after the FDA accepts the application
for filing. In both standard and priority reviews, the review process may also be extended by FDA requests for additional information
or clarification. The FDA reviews an NDA to determine, among other things, whether a product candidate is safe and effective for its
intended use and whether its manufacturing is sufficient to assure and preserve the product’s identity, strength, quality and purity.
The FDA reviews a BLA to determine, among other things, whether a product candidate is safe, pure and potent and the facility in which
it is manufactured, processed, packed or held meets standards designed to assure the product’s continued safety, purity and potency.
When reviewing an NDA or BLA, the FDA may convene an advisory committee to provide clinical insight on application review questions.
The FDA is not bound by the recommendations of an advisory committee, but it considers such recommendations carefully when making decisions.
Before
approving an NDA or BLA, the FDA will typically inspect the facility or facilities where the product is manufactured. The FDA will not
approve an application unless it determines that the manufacturing processes and facilities are in compliance with cGMP requirements
and adequate to assure consistent production of the product within required specifications. Additionally, before approving an NDA or
BLA, the FDA will typically inspect one or more clinical sites to assure compliance with GCP.
After
the FDA evaluates the NDA or BLA and conducts inspections of manufacturing facilities where the investigational product and/or its drug
substance will be produced, the FDA may issue an approval letter or a Complete Response Letter, or CRL. An approval letter authorizes
commercial marketing of the product with specific prescribing information for specific indications. A CRL will describe all of the deficiencies
that the FDA has identified in the NDA or BLA, except that where the FDA determines that the data supporting the application are inadequate
to support approval, the FDA may issue the CRL without first conducting required inspections, testing submitted product lots and/or reviewing
proposed labeling. In issuing the CRL, the FDA may recommend actions that the applicant might take to place the NDA or BLA in condition
for approval, including requests for additional information or clarification. The FDA may delay or refuse approval of an NDA or BLA if
applicable regulatory criteria are not satisfied, require additional testing or information and/or require post-marketing testing and
surveillance to monitor safety or efficacy of a product.
If
regulatory approval of a product is granted, such approval will be granted for particular indications and may entail limitations on the
indicated uses for which such product may be marketed. For example, the FDA may approve the NDA or BLA with a Risk Evaluation and Mitigation
Strategy, or REMS, to ensure the benefits of the product outweigh its risks. A REMS is a safety strategy to manage a known or potential
serious risk associated with a product and to enable patients to have continued access to such medicines by managing their safe use,
and could include medication guides, physician communication plans, or elements to assure safe use, such as restricted distribution methods,
patient registries and other risk minimization tools. The FDA also may condition approval on, among other things, changes to proposed
labeling or the development of adequate controls and specifications. Once approved, the FDA may withdraw the product approval if compliance
with pre- and post-marketing requirements is not maintained or if problems occur after the product reaches the marketplace. The FDA may
require one or more Phase 4 post-market studies and surveillance to further assess and monitor the product’s safety and effectiveness
after commercialization, and may limit further marketing of the product based on the results of these post-marketing studies.
Expedited
Development and Review Programs
The
FDA offers a number of expedited development and review programs for qualifying product candidates. For example, the fast track program
is intended to expedite or facilitate the process for reviewing new products that meet certain criteria. Specifically, product candidates
are eligible for fast track designation if they are intended to treat a serious or life-threatening disease or condition and demonstrate
the potential to address unmet medical needs for the disease or condition. Fast track designation applies to the combination of the product
candidate and the specific indication for which it is being studied. The sponsor of a fast track product candidate has opportunities
for more frequent interactions with the review team during product development and, once an NDA or BLA is submitted, the application
may be eligible for priority review. A fast track product candidate may also be eligible for rolling review, where the FDA may consider
for review sections of the NDA or BLA on a rolling basis before the complete application is submitted, if the sponsor provides a schedule
for the submission of the sections of the NDA or BLA, the FDA agrees to accept sections of the NDA or BLA and determines that the schedule
is acceptable, and the sponsor pays any required user fees upon submission of the first section of the NDA or BLA.
A
product candidate intended to treat a serious or life-threatening disease or condition may also be eligible for breakthrough therapy
designation to expedite its development and review. A product candidate can receive breakthrough therapy designation if preliminary clinical
evidence indicates that the product candidate, alone or in combination with one or more other drugs or biologics, may demonstrate substantial
improvement over existing therapies on one or more clinically significant endpoints, such as substantial treatment effects observed early
in clinical development. The designation includes all of the fast track program features, as well as more intensive FDA interaction and
guidance beginning as early as Phase 1 and an organizational commitment to expedite the development and review of the product candidate,
including involvement of senior managers.
Any
marketing application for a drug or biologic submitted to the FDA for approval, including a product candidate with a fast track designation
and/or breakthrough therapy designation, may be eligible for other types of FDA programs intended to expedite the FDA review and approval
process, such as priority review and accelerated approval. A product candidate is eligible for priority review if it has the potential
to provide a significant improvement in the treatment, diagnosis or prevention of a serious disease or condition. For new-molecular-entity
NDAs and original BLAs, priority review designation means the FDA’s goal is to take action on the marketing application within
six months of the 60-day filing date (as compared to ten months under standard review).
Additionally,
product candidates studied for their safety and effectiveness in treating serious or life-threatening diseases or conditions may receive
accelerated approval upon a determination that the product candidate has an effect on a surrogate endpoint that is reasonably likely
to predict clinical benefit, or on a clinical endpoint that can be measured earlier than irreversible morbidity or mortality, that is
reasonably likely to predict an effect on irreversible morbidity or mortality or other clinical benefit, taking into account the severity,
rarity, or prevalence of the condition and the availability or lack of alternative treatments. As a condition of accelerated approval,
the FDA will generally require the sponsor to perform adequate and well-controlled post-marketing clinical studies to verify and describe
the anticipated effect on irreversible morbidity or mortality or other clinical benefit. Products receiving accelerated approval may
be subject to expedited withdrawal procedures if the sponsor fails to conduct the required post-marketing studies in a timely manner
or if such studies fail to verify the predicted clinical benefit. In addition, the FDA currently requires as a condition for accelerated
approval pre-approval of promotional materials, which could adversely impact the timing of the commercial launch of the product.
Fast
track designation, breakthrough therapy designation, priority review, and accelerated approval do not change the standards for approval
but may expedite the development or approval process. Even if a product qualifies for one or more of these programs, the FDA may later
decide that the product no longer meets the conditions for qualification or decide that the time period for FDA review or approval will
not be shortened. We may explore some of these opportunities for our product candidates as appropriate.
Post-Approval
Requirements
Any
products manufactured or distributed pursuant to FDA approvals are subject to pervasive and continuing regulation by the FDA, including,
among other things, requirements relating to record-keeping, reporting of adverse experiences, periodic reporting, product sampling and
distribution, and advertising and promotion of the product. After approval, most changes to the approved product, such as adding new
indications or other labeling claims, are subject to prior FDA review and approval. There also are continuing user fee requirements,
under which the FDA assesses an annual program fee for each product identified in an approved NDA or BLA. Drug and biologic manufacturers
and their subcontractors are required to register their establishments with the FDA and certain state agencies, and are subject to periodic
unannounced inspections by the FDA and certain state agencies for compliance with cGMPs, which impose certain procedural and documentation
requirements upon us and our third-party manufacturers. Changes to the manufacturing process are strictly regulated, and, depending on
the significance of the change, may require prior FDA approval before being implemented. FDA regulations also require investigation and
correction of any deviations from cGMPs and impose reporting requirements upon us and any third-party manufacturers that we may decide
to use. Accordingly, manufacturers must continue to expend time, money and effort in the area of production and quality control to maintain
compliance with cGMPs and other aspects of regulatory compliance.
The
FDA may withdraw approval if compliance with regulatory requirements and standards is not maintained or if problems occur after the product
reaches the market. Later discovery of previously unknown problems with a product, including adverse events of unanticipated severity
or frequency, or with manufacturing processes, or failure to comply with regulatory requirements, may result in revisions to the approved
labeling to add new safety information; imposition of post-market studies or clinical studies to assess new safety risks; or imposition
of distribution restrictions or other restrictions under a REMS program. Other potential consequences include, among other things:
● fines, warning letters or holds on post-approval clinical studies;
● injunctions or the imposition of civil or criminal penalties.
The
FDA closely regulates the marketing, labeling, advertising and promotion of drug products and biologics. A company can make only those
claims relating to safety and efficacy, purity and potency that are approved by the FDA and in accordance with the provisions of the
approved label. The FDA and other agencies actively enforce the laws and regulations prohibiting the promotion of off-label uses. Failure
to comply with these requirements can result in, among other things, adverse publicity, warning letters, corrective advertising and potential
civil and criminal penalties. Physicians may prescribe legally available products for uses that are not described in the product’s
labeling and that differ from those tested by us and approved by the FDA. Such off-label uses are common across medical specialties.
Physicians may believe that such off-label uses are the best treatment for many patients in varied circumstances. The FDA does not regulate
the behavior of physicians in their choice of treatments. The FDA does, however, restrict manufacturer’s communications on the
subject of off-label use of their products.
Drug
Product Marketing Exclusivity
Market
exclusivity provisions authorized under the FDCA can delay the submission or the approval of certain marketing applications. For example,
the FDCA provides a five-year period of non-patent data exclusivity within the United States to the first applicant to obtain approval
of an NDA for a new chemical entity. A drug is a new chemical entity if the FDA has not previously approved any other new drug containing
the same active moiety, which is the molecule or ion responsible for the action of the drug substance. During the exclusivity period,
the FDA may not approve or even accept for review an abbreviated new drug application, or ANDA, or an NDA submitted under Section 505(b)(2),
or 505(b)(2) NDA, submitted by another company for another drug based on the same active moiety, regardless of whether the drug is intended
for the same indication as the original innovative drug or for another indication, where the applicant does not own or have a legal right
of reference to all the data required for approval. However, an application may be submitted after four years if it contains a certification
of patent invalidity or non-infringement to one of the patents listed with the FDA by the innovator NDA holder.
The
FDCA alternatively provides three years of marketing exclusivity for an NDA, or supplement to an existing NDA if new clinical investigations,
other than bioavailability studies, that were conducted or sponsored by the applicant are deemed by the FDA to be essential to the approval
of the application, for example new indications, dosages or strengths of an existing drug. This three-year exclusivity covers only the
modification for which the drug received approval on the basis of the new clinical investigations and does not prohibit the FDA from
approving ANDAs or 505(b)(2) NDAs for drugs containing the active agent for the original indication or condition of use. Five-year and
three-year exclusivity will not delay the submission or approval of a full NDA. However, an applicant submitting a full NDA would be
required to conduct or obtain a right of reference to any preclinical studies and adequate and well-controlled clinical trials necessary
to demonstrate safety and effectiveness.
Pediatric
exclusivity is another type of marketing exclusivity available in the United States. Pediatric exclusivity provides for an additional
six months of marketing exclusivity attached to another period of exclusivity if a sponsor conducts clinical trials in children in response
to a written request from the FDA. The issuance of a written request does not require the sponsor to undertake the described clinical
trials. In addition, orphan drug exclusivity, as described above, may offer a seven-year period of marketing exclusivity, except in certain
circumstances.
Biosimilars
and Reference Product Exclusivity
The
Biologics Price Competition and Innovation Act of 2009, or BPCIA, created an abbreviated approval pathway for biological products that
are highly similar, or “biosimilar,” to or interchangeable with an FDA-approved reference biological product. The FDA has
issued several guidance documents outlining an approach to review and approval of biosimilars. Biosimilarity, which requires that there
be no clinically meaningful differences between the biological product and the reference product in terms of safety, purity, and potency,
is generally shown through analytical studies, animal studies, and a clinical study or studies. Interchangeability requires that a product
is biosimilar to the reference product and the product must demonstrate that it can be expected to produce the same clinical results
as the reference product in any given patient and, for products that are administered multiple times to an individual, the biologic and
the reference biologic may be alternated or switched after one has been previously administered without increasing safety risks or risks
of diminished efficacy relative to exclusive use of the reference biologic. A product shown to be biosimilar or interchangeable with
an FDA-approved reference biological product may rely in part on the FDA’s previous determination of safety and effectiveness for
the reference product for approval, which can potentially reduce the cost and time required to obtain approval to market the product.
Under
the BPCIA, an application for a biosimilar product may not be submitted to the FDA until four years following the date that the reference
product was first licensed by the FDA. In addition, the approval of a biosimilar product may not be made effective by the FDA until 12
years from the date on which the reference product was first licensed. During this 12-year period of exclusivity, another company may
still market a competing version of the reference product if the FDA approves a full BLA for the competing product containing that applicant’s
own preclinical data and data from adequate and well-controlled clinical trials to demonstrate the safety, purity and potency of its
product. The BPCIA also created certain exclusivity periods for biosimilars approved as interchangeable products. At this juncture, it
is unclear whether products deemed “interchangeable” by the FDA will, in fact, be readily substituted by pharmacies, which
are governed by state pharmacy law.
A
biological product can also obtain pediatric market exclusivity in the United States. Pediatric exclusivity, if granted, adds six months
to existing exclusivity periods and patent terms. This six-month exclusivity, which runs from the end of other exclusivity protection
or patent term, may be granted based on the voluntary completion of a pediatric study in accordance with an FDA-issued “Written
Request” for such a study.
Other
Healthcare Laws
Pharmaceutical
companies are subject to additional healthcare regulation and enforcement by the federal government and by authorities in the states
and foreign jurisdictions in which they conduct their business and may constrain the financial arrangements and relationships through
which we research as well as sell, market and distribute any products for which we obtain marketing approval. Such laws include, without
limitation, federal and state anti-kickback, fraud and abuse, false claims, data privacy and security and physician and other healthcare
provider transparency laws and regulations. If our operations are found to be in violation of any of such laws or any other governmental
regulations that apply, they may be subject to penalties, including, without limitation, administrative, civil and criminal penalties,
damages, fines, disgorgement, the curtailment or restructuring of operations, integrity oversight and reporting obligations, exclusion
from participation in federal and state healthcare programs and imprisonment.
Coverage
and Reimbursement
Sales
of any product depend, in part, on the extent to which such product will be covered by third-party payors, such as federal, state, and
foreign government healthcare programs, commercial insurance and managed healthcare organizations, and the level of reimbursement for
such product by third-party payors. Decisions regarding the extent of coverage and amount of reimbursement to be provided are made on