10-K
1
f10k2020_geminitherape.htm
ANNUAL REPORT
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, 2020
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 001-39438
GEMINI
THERAPEUTICS, INC.
(Exact
name of Registrant as specified in its Charter)
300 One Kendall Square, 3rd Floor Cambridge, MA 02139
(Address of principal executive offices) (Zip Code)
Registrant’s
telephone number, including area code: (617) 401-4400
Securities
registered pursuant to Section 12(b) of the Act:
Title of each class Trading Symbol(s) Name of each exchange on which registered
Common stock, par value $0.0001 per share GMTX The Nasdaq Global 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 if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405) is not contained herein,
and will not be contained, to the best of Registrant’s knowledge, in definitive proxy or information statements incorporated
by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ☐
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 is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
As
of March 15, 2021, the Registrant had 42,998,664 shares of its common stock, $0.0001 par value per share outstanding.
Documents
Incorporated by Reference: None.
Table
of Contents
Page
PART I 1
Item 1. Business 1
Item 1A. Risk Factors 3
Item 1B. Unresolved Staff Comments 42
Item 2. Properties 42
Item 3. Legal Proceedings 42
Item 4. Mine Safety Disclosures 42
Item 6. Selected Financial Data 43
Item 7A. Quantitative and Qualitative Disclosures About Market Risk 50
Item 8. Consolidated Financial Statements and Supplementary Data 50
Item 9A. Controls and Procedures 50
Item 9B. Other Information 50
PART III 51
Item 10. Directors, Executive Officers and Corporate Governance 51
Item 11. Executive Compensation 57
Item 14. Principal Accounting Fees and Services 62
Item 15. Exhibits, Consolidated Financial Statement Schedules 63
i
SUMMARY
OF MATERIAL RISKS ASSOCIATED WITH OUR BUSINESS
Our
business is subject to numerous risks and uncertainties that you should be aware of in evaluating our business. These risks include,
but are not limited to, the following:
The
summary risk factors described above should be read together with the text of the full risk factors below and in the other information
set forth in this Annual Report on Form 10-K, including our consolidated financial statements and the related notes, as well as
in other documents that we file with the SEC. If any such risks and uncertainties actually occur, our business, prospects, financial
condition and results of operations could be materially and adversely affected. The risks summarized above or described in full
below are not the only risks that we face. Additional risks and uncertainties not currently known to us, or that we currently
deem to be immaterial may also materially adversely affect our business, prospects, financial condition and results of operations.
ii
EXPLANATORY
NOTE
On
February 5, 2021 (the “Closing Date”), subsequent to the end of the fiscal year ended December 31, 2020, the fiscal
year to which this Annual Report on Form 10-K relates, FS Development Corporation, a Delaware corporation (“FSDC”),
consummated the previously announced business combination (the “Business Combination”) pursuant to the terms
of the Agreement and Plan of Merger, dated as of October 15, 2020 (as amended, supplemented or otherwise modified from time to
time, the “Merger Agreement”), by and among Gemini Therapeutics, Inc., a Delaware corporation (“Old
Gemini”), Shareholder Representative Services LLC, a Colorado limited liability company solely in its capacity as the
representative, agent and attorney-in-fact of the Company Securityholders (the “Stockholders’ Representative”),
FSDC and FSG Merger Sub Inc., a Delaware corporation (“Merger Sub”).
On
the day prior to the Closing Date, Old Gemini changed its name to “Gemini Therapeutics Sub, Inc.” Pursuant to the
Merger Agreement, on the Closing Date, (i) FSDC changed its name to “Gemini Therapeutics, Inc.” (together with its
consolidated subsidiaries, “Gemini”), and (ii) Old Gemini merged with and into Merger Sub (the “Merger”),
with Old Gemini as the surviving company in the Merger and, after giving effect to such Merger, Old Gemini becoming a wholly-owned
subsidiary of Gemini.
In
accordance with the terms and subject to the conditions of the Merger Agreement, at the effective time of the Merger (the “Effective
Time”), (i) all shares of Old Gemini’s Series B Preferred Stock (including shares of Series B Preferred Stock
issued upon conversion of outstanding convertible promissory notes), Series A Preferred Stock and Common Stock (collectively,
“Old Gemini Stock”) issued and outstanding immediately prior to the Effective Time, whether vested or unvested,
was converted into the right to receive their pro rata portion of the 17,942,274 shares of FSDC Class A Common Stock (the “Common
Stock”) issued as Merger consideration (the “Merger Consideration”), provided that 2,150,000 shares
of Common Stock are being held in escrow for a period of 12 months to satisfy any indemnification obligations of Old Gemini under
the Merger Agreement; (ii) each option exercisable for Old Gemini Stock that was outstanding immediately prior to the Effective
Time was assumed and continues in full force and effect on the same terms and conditions as were previously applicable to such
options, subject to adjustments to exercise price and number of shares Common Stock issuable upon exercise based on the final
conversion ratio calculated in accordance with the Merger Agreement, and (iii) 4,264,341 shares of Common Stock were reserved
for issuance under the newly adopted 2021 Stock Option and Incentive Plan (the “2021 Plan”).
All
references herein to the “Closing” refer to the closing of the transactions contemplated by the Merger Agreement (the
“Transactions”), including the Merger and the transactions contemplated by the subscription agreements entered
into by FSDC and certain investors (the “PIPE Investors”) pursuant to which the PIPE Investors collectively
committed to subscribe for, and did subscribe for, an aggregate of 9,506,000 shares of Common Stock for an aggregate purchase
price of $95,060,000 (the “PIPE Investment”).
By
operation of Rule 12g-3(a) under the Exchange Act, Gemini is the successor issuer to FSDC and has succeeded to the attributes
of FSDC as the registrant, including FSDC’s U.S. Securities and Exchange Commission file number 001-39438 and CIK Code 0001816736.
Except
as otherwise expressly provided herein, the information in this Annual Report on Form 10-K does not reflect the consummation of
the business combination which, as discussed above, occurred subsequent to the period covered hereunder.
iii
CAUTIONARY
NOTE REGARDING FORWARD-LOOKING STATEMENTS
We
make forward-looking statements in this report. These forward-looking statements relate to expectations for future financial performance,
business strategies or expectations for our business. Specifically, forward-looking statements may include statements relating
to:
● the benefits of the Business Combination;
● Public securities’ potential liquidity and trading;
● from the outcome of any known and unknown litigation; and
These
forward-looking statements are based on information available as of the date of this report and our management’s current
expectations, forecasts and assumptions, and involve a number of judgments, risks and uncertainties. Accordingly, forward-looking
statements should not be relied upon as representing our views as of any subsequent date. We do not undertake any obligation to
update forward-looking statements to reflect events or circumstances after the date they were made, whether as a result of new
information, future events or otherwise, except as may be required under applicable securities laws.
Forward-looking
statements in this report relating to Gemini following the Closing include, but are not limited to, statements about:
● the timing, scope and likelihood of regulatory filings;
● the impact of government laws and regulations;
As
a result of a number of known and unknown risks and uncertainties, our actual results or performance may be materially different
from those expressed or implied by these forward-looking statements. Some factors that could cause actual results to differ include:
● the risk that the Business Combination disrupts current plans and operations;
● costs related to the Business Combination;
● changes in applicable laws or regulations;
iv
PART
I
References
in this report to “FSDC” refer to FS Development Corporation, the reporting company prior to the business combination.
References to “Gemini,” the “Company,” “we,” “us” and “our” refer
to Gemini Therapeutics, Inc., a Delaware corporation, the post-combination company and the successor entity to FSDC. References
to our “Board” refer to our officers and directors, and references to the “Sponsor” refer to FS Development
Holdings, LLC, a Delaware limited liability company.
Item
1. Business.
Introduction
FSDC
was formed as a blank check company incorporated on June 25, 2020 in Delaware, formed for the purpose of effecting a merger, share
exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses (the “business
combination”). Until the consummation of the business combination, FSDC did not engage in any operations nor generate any
revenue.
On
August 14, 2020, FSDC consummated its initial public offering (the “Initial Public Offering”) of 12,075,000 shares
of Class A Common Stock, generating total gross proceeds of $120,750,000. Substantially concurrent with the consummation
of the Initial Public Offering, the Sponsor purchased 441,500 shares of Class A Common Stock (the “Private Placement
Shares”) for an aggregate purchase price of $4,415,000, or $10.00 per share. A total of $120,750,000, comprised of the proceeds
from the Initial Public Offering and the sale of the Private Placement Shares, were placed in a U.S.-based trust account at JP
Morgan Chase Bank, N.A., maintained by Continental Stock Transfer & Trust Company, acting as trustee. Except with respect
to interest earned on the funds held in the trust account that may be released to FS Development to pay its taxes, the proceeds
from the Initial Public Offering will not be released from the trust account until the earliest to occur of: (i) the completion
of FSDC’s initial business combination, (ii) the redemption of the Public Shares if FSDC has not completed its initial
business combination by August 14, 2022, subject to applicable law, and (iii) the redemption of the Public Shares properly
tendered in connection with a stockholder vote to amend the current charter to modify the substance or timing of its obligation
to redeem 100% of its Public Shares if FSDC does not complete its initial business combination by August 14, 2022 or with respect
to any other provisions relating to stockholders’ rights or pre-initial business combination activity.
On
February 5, 2021, FSDC consummated the previously announced Business Combination. In accordance with the terms and subject to
the conditions of the Merger Agreement, at the Effective Time of the Merger (i) all shares of Old Gemini Stock issued and outstanding
immediately prior to the Effective Time, whether vested or unvested, was converted into the right to receive their pro rata portion
of the 17,942,274 shares of Common Stock issued as Merger Consideration, provided that 2,150,000 shares of Common Stock are being
held in escrow for a period of 12 months to satisfy any indemnification obligations of Old Gemini under the Merger Agreement;
(ii) each option exercisable for Old Gemini Stock that was outstanding immediately prior to the Effective Time was assumed and
continues in full force and effect on the same terms and conditions as were previously applicable to such options, subject to
adjustments to exercise price and number of shares Common Stock issuable upon exercise based on the final conversion ratio calculated
in accordance with the Merger Agreement, and (iii) 4,264,341 shares of Common Stock were reserved for issuance under the newly
adopted 2021 Plan.
In
connection with the Closing, the PIPE Investors subscribed for an aggregate of 9,506,000 shares of Common Stock for an aggregate
purchase price of $95,060,000.
In
connection with the Business Combination, 100 shares of Class A common Stock of FSDC were redeemed at a per share purchase price
of approximately $10.00. Upon the Closing, Gemini had 42,998,664 shares of Common Stock outstanding.
1
As
a result of the Business Combination, FSDC was renamed Gemini Therapeutics, Inc., and Old Gemini became a wholly-owned subsidiary
of Gemini.
Except
as otherwise expressly provided below, this report does not reflect the consummation of the business combination which, as discussed
above, occurred subsequent to the period covered hereunder.
Employees
As
of December 31, 2020 and prior to the business combination, we had three executive officers. These individuals were not obligated
to devote any specific number of hours to our matters but they intended to devote as much of their time as they deemed necessary
to our affairs until we completed an initial business combination. The amount of time they devoted in any time period varied based
on the stage of the business combination process we were in. We had no full-time employees prior to the completion of the business
combination.
Available
Information
We
are required to file Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q with the U.S. Securities and Exchange Commission
(the “SEC”) on a regular basis, and are required to disclose certain material events in a Current Report on Form 8-K.
The public may read and copy any materials we file with the SEC at the SEC’s Public Reference Room at 100 F Street, NE,
Washington, DC 20549. The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330.
The SEC also maintains an Internet website that contains reports, proxy and information statements and other information regarding
issuers that file electronically with the SEC. The SEC’s Internet website is located at http://www.sec.gov.
2
Item
1A. Risk Factors.
RISK
FACTORS
An
investment in our securities involves a high degree of risk. You should consider carefully all of the risks described below, together
with the other information contained in this annual report, before making a decision to invest in our securities. If any of the
following events occur, our business, financial condition and operating results may be materially adversely affected. In that
event, the trading price of our securities could decline, and you could lose all or part of your investment.
Risks
Related to our Business
Gemini
has incurred significant losses since its inception and expects to incur losses for the foreseeable future.
Gemini
has no products approved for commercial sale and has not generated any revenue to date, and Gemini continues to incur significant
research and development and other expenses related to its ongoing operations. As a result, Gemini is not profitable and has incurred
significant losses in each period since its inception in March 2015.
For
the years ended December 31, 2020 and December 31, 2019, Gemini reported net losses of $40.8 million and $41.4 million. As of
December 31, 2020, Gemini had an accumulated deficit of $112.8 million. Gemini expects to continue to incur significant losses
for the foreseeable future, and Gemini expects these losses to increase as Gemini continues its research and development of, and
seeks regulatory approvals for, its product candidates. Gemini anticipates that its expenses will increase substantially if, and
as, Gemini:
● seeks regulatory approvals for its product candidates;
● commercializes GEM103 or any other product candidates, if approved;
● hires additional clinical, scientific, and management personnel;
● adds operational, financial, and management information systems and personnel;
● incurs additional costs associated with operating as a public company.
Even
if Gemini succeeds in commercializing GEM103 or any other product candidates, Gemini may continue to incur substantial research
and development and other expenditures to develop and market additional product candidates. Gemini may encounter unforeseen expenses,
difficulties, complications, delays and other unknown factors that may adversely affect its business for any reason, including
as a result of the Coronavirus Disease 19, or COVID-19 pandemic. The size of its future net losses will depend, in part, on the
rate of future growth of its expenses and its ability to generate revenue. Its prior losses and expected future losses have had
and will continue to have an adverse effect on its stockholders’ equity and working capital.
3
Gemini
currently has a limited operating history, has not generated any revenue to date, and may never become profitable.
Gemini
is a clinical-stage biotechnology company with a limited operating history. Its operations to date have been limited to organizing
and staffing its company, acquiring, developing and securing its technology and product candidates, and conducting clinical trials
and preclinical studies of its product candidates. Gemini has not yet demonstrated its ability to complete clinical trials, obtain
regulatory approval, formulate and manufacture a commercial-scale product, or conduct sales and marketing activities necessary
for successful product commercialization. Investment in biotechnology product development is highly speculative because it entails
substantial upfront expenditures in contract research organizations, or CROs, and contract manufacturing organizations, or CMOs,
and significant risk that any potential product candidate will fail to demonstrate adequate effect or an acceptable safety profile,
gain regulatory approval and become commercially viable. Consequently, any predictions you may make about its future success or
viability may not be as accurate as they could be if Gemini had a longer operating history.
Though
GEM103 is in Phase 2a clinical development, Gemini does not expect to receive revenue from GEM103 for a number of years, if ever.
To date, Gemini has not generated any revenue and Gemini will not be able to generate product revenue unless and until GEM103,
or any other product candidate, successfully completes clinical trials, receives regulatory approval, and is commercialized. Gemini
may seek to obtain revenue from collaboration or licensing agreements with third parties. Its ability to generate future product
revenue from GEM103 or any other product candidates also depends on a number of additional factors, including its, or its current
and future collaborators’, ability to:
● achieve market acceptance for any approved products;
● address any competing technological and market developments;
● establish, maintain, protect and enforce its intellectual property rights; and
● attract, hire and retain qualified personnel.
4
In
addition, because of the numerous risks and uncertainties associated with biotechnology product development, including that its
product candidates may not advance through development or achieve the endpoints of applicable clinical trials, Gemini is unable
to predict the timing or amount of increased expenses, or if or when Gemini will achieve or maintain profitability. In addition,
its expenses could increase beyond expectations if Gemini decides, or are required by the U.S. Food and Drug Administration, or
FDA, or applicable foreign regulatory authorities in other jurisdictions where Gemini may pursue regulatory approval, or applicable
foreign regulatory authorities, to perform nonclinical studies or clinical trials in addition to those that Gemini currently anticipates.
Even if Gemini completes the development and regulatory processes described above, Gemini anticipates incurring significant costs
associated with launching and commercializing any approved product.
If
Gemini does achieve profitability, Gemini may not be able to sustain or increase profitability on a quarterly or annual basis.
Its failure to become and remain profitable would decrease the value of its company and could impair its ability to raise capital,
maintain its research and development efforts, expand its business or continue its operations. A decline in the value of its company
also could cause you to lose all or part of your investment.
Gemini
will require additional capital to finance its operations, which may not be available to it on acceptable terms, or at all. As
a result, Gemini may not complete the development and commercialization of GEM103 or any other product candidates.
As
a research and development company, Gemini’s operations have consumed substantial amounts of cash since inception. Gemini
expects its research and development expenses to increase substantially in connection with its ongoing activities, particularly
as Gemini advances GEM103 into later-stage clinical development.
As
of December 31, 2020, Gemini had $4.5 million of cash and cash equivalents. Gemini believes that the net proceeds from the Business
Combination and the PIPE transaction, together with its existing cash and cash equivalents, will fund its projected operating
requirements into 2023. Its forecast of the period of time through which its financial reserves will adequately support its operations
is a forward-looking statement and involves risks and uncertainties, and actual results could vary as a result of a number of
factors, including the factors discussed elsewhere in this “Risk factors” section. Gemini has based this estimate
on assumptions that may prove to be wrong, and Gemini could utilize its available capital resources sooner than Gemini currently
expects. Its future funding requirements, both short and long-term, will depend on many factors, including, but not limited to:
● the effect of competing technological and market developments;
5
Gemini
does not have any committed external source of funds or other support for its development efforts and Gemini cannot be certain
that additional funding will be available on acceptable terms, or at all. Until Gemini can generate sufficient revenue to finance
its cash requirements, which Gemini may never do, Gemini expects to finance its future cash needs through a combination of public
or private equity offerings, debt financings, collaborations, strategic alliances, licensing arrangements, and other marketing
or distribution arrangements. If Gemini raises additional funds through public or private equity offerings, the terms of these
securities may include liquidation or other preferences that adversely affect its stockholders’ rights. Further, to the
extent that Gemini raises additional capital through the sale of common stock or securities convertible or exchangeable into common
stock, your ownership interest will be diluted. If Gemini raises additional capital through debt financing, Gemini could be subject
to fixed payment obligations and may be subject to covenants limiting or restricting its ability to take specific actions, such
as incurring additional debt, making capital expenditures or declaring dividends. If Gemini raises additional capital through
marketing and distribution arrangements or other collaborations, strategic alliances or licensing arrangements with third parties,
Gemini may have to relinquish certain valuable rights to its product candidates, technologies, future revenue streams or research
programs or grant licenses on terms that may not be favorable to us. Gemini also could be required to seek collaborators for one
or more of its product candidates at an earlier stage than otherwise would be desirable or relinquish its rights to product candidates
or technologies that Gemini otherwise would seek to develop or commercialize itself. If Gemini is unable to raise additional capital
in sufficient amounts or acceptable terms, Gemini may have to significantly delay, scale back or discontinue the development or
commercialization of one or more of its product candidates or one or more of its other research and development initiatives. Any
of the above events could significantly harm its business, prospects, financial condition and results of operations and cause
the price of its common stock to decline.
Gemini
is heavily dependent on the success of GEM103, its lead product candidate.
Gemini
currently has no products that are approved for commercial sale and may never be able to develop marketable products. Gemini expects
that a substantial portion of its efforts and expenditures over the next several years will be devoted to its lead product candidate,
GEM103. Accordingly, its business currently depends heavily on the successful development, regulatory approval, and commercialization
of GEM103. GEM103 is currently being tested in a Phase 2a clinical trial in genetically defined patients with dry age-related
macular degeneration, or AMD and in a Phase 2a clinical trial as an add-on to anti-VEGF therapy for the treatment of wet AMD patients
at risk for progressive vision loss due to macular atrophy. Gemini cannot be certain that GEM103 will successfully complete clinical
trials, receive regulatory approval or be successfully commercialized even if Gemini receives regulatory approval. If Gemini is
required to discontinue development of GEM103 or if GEM103 does not receive regulatory approval or fails to achieve significant
market acceptance, Gemini would be substantially delayed in its ability to achieve profitability, if ever.
The
research, testing, manufacturing, safety, efficacy, labeling, approval, sale, marketing, and distribution of GEM103 is, and will
remain, subject to comprehensive regulation by the FDA and applicable foreign regulatory authorities. Failure to obtain regulatory
approval for GEM103 will prevent Gemini from commercializing and marketing GEM103.
Further,
its Phase 2a clinical trials of GEM103 and other future clinical trials may not be able to replicate the results from its preclinical
studies or past clinical trials of GEM103. To the extent any of foregoing has not occurred, its expected development time and
development costs for GEM103 may be increased.
Even
if Gemini is able to successfully obtain approval from the FDA or applicable foreign regulatory authorities for GEM103, any approval
might contain significant limitations related to use, including limitations on the stage of disease GEM103 is approved to treat,
as well as restrictions for specified age groups, warnings, precautions or contraindications. Furthermore, even if Gemini obtains
regulatory approval for GEM103, Gemini will still need to develop a commercial infrastructure or develop relationships with collaborators
to commercialize, establish a commercially viable pricing structure and obtain coverage and adequate reimbursement from third-party
payors, including government healthcare programs otherwise. If Gemini, or any future collaborators, are unable to successfully
commercialize GEM103, Gemini may not be able to generate sufficient revenue to continue its business.
6
If
Gemini is not successful in discovering, developing, receiving regulatory approval for and commercializing GEM103 or other product
candidates, its ability to expand its business and achieve its strategic objectives would be impaired.
Although
Gemini plans to devote a majority of its resources to the continued preclinical and clinical testing and potential approval of
GEM103 for the treatment of patients with AMD, another key element of its strategy is to discover, develop and commercialize a
portfolio of products. Gemini is seeking to do so through its internal discovery programs, but its resources are limited, and
those that Gemini have are geared towards preclinical and clinical testing and seeking regulatory approval of GEM103 for the treatment
of patients with AMD. Gemini may also explore strategic collaborations for the development or acquisition of new product candidates,
but Gemini may not be successful in entering into such relationships. GEM103 is its only product candidate in clinical stages
of development. Research programs to identify product candidates require substantial technical, financial and human resources,
regardless of whether any product candidates are ultimately identified. Its research programs may initially show promise in identifying
potential product candidates, yet fail to yield product candidates for clinical development for many reasons, including:
If
Gemini fails to develop and successfully commercialize other product candidates, its business and future prospects may be harmed
and its business will be more vulnerable to any problems that Gemini encounters in developing and commercializing its product
candidates.
GEM103
and any other product candidates must undergo rigorous clinical trials and regulatory approvals, and success in nonclinical studies
or earlier-stage clinical trials may not be indicative of results in future clinical trials.
GEM103
and any other product candidates will be subject to rigorous and extensive clinical trials and extensive regulatory approval processes
implemented by the FDA and applicable foreign regulatory authorities. The approval process is typically lengthy and expensive,
and approval is never certain. Gemini has limited experience in conducting the clinical trials required to obtain regulatory approval.
Gemini may not be able to conduct clinical trials at preferred sites, enlist clinical investigators, enroll sufficient numbers
of participants or begin or successfully complete clinical trials in a timely fashion, if at all. Its planned clinical trials
may be insufficient to demonstrate that its potential products will be active, safe or effective. Additional clinical trials may
be required if clinical trial results are negative or inconclusive, which will require us to incur additional costs and significant
delays.
Success
in preclinical studies and earlier-stage clinical trials does not ensure that later clinical trials will generate the same results
or otherwise provide adequate data to demonstrate the effectiveness and safety of a product candidate. In addition, the design
of a clinical trial can determine whether its results will support approval of a product, and flaws in the design of a clinical
trial may not become apparent until the clinical trial is well advanced. Because Gemini has limited experience designing clinical
trials, Gemini may be unable to design and execute a clinical trial to support regulatory approval. In addition, there is a high
failure rate for drugs and biologics proceeding through clinical trials. In fact, many companies in the pharmaceutical and biotechnology
industries have suffered significant setbacks in late-stage clinical trials even after achieving promising results in nonclinical
studies and earlier-stage clinical trials. Similarly, the outcome of nonclinical studies may not predict the success of clinical
trials. Moreover, data obtained from nonclinical and clinical activities are subject to varying interpretations, which may delay,
limit or prevent regulatory approval. In addition, Gemini may experience regulatory delays or rejections as a result of many factors,
including due to changes in regulatory policy during the period of development of its product candidates. Any such delays could
negatively impact its business, financial condition, results of operations and prospects.
7
From
time to time, Gemini may publish interim “top-line” or preliminary data from its clinical trials. Preliminary or interim
data from clinical trials that Gemini may complete are subject to the risk that one or more of the clinical outcomes may materially
change as patient enrollment continues and more patient data become available. Preliminary or interim data also remain subject
to audit and verification procedures that may result in the final data being materially different from the preliminary data Gemini
previously published. As a result, interim and preliminary data should be viewed with caution until the final data are available.
Adverse differences between preliminary or interim data and final data could significantly harm its business and financial prospects.
Additionally,
several of its planned and ongoing clinical trials utilize an “open-label” trial design. An “open-label”
clinical trial is one where both the patient and investigator know whether the patient is receiving the investigational product
candidate or either an existing approved biologic, drug, or placebo. Most typically, open-label clinical trials test only the
investigational product candidate and sometimes may do so at different dose levels. Open-label clinical trials are subject to
various limitations that may exaggerate any therapeutic effect as patients in open-label clinical trials are aware when they are
receiving treatment. Open-label clinical trials may be subject to a “patient bias” where patients perceive their symptoms
to have improved merely due to their awareness of receiving an experimental treatment. In addition, open-label clinical trials
may be subject to an “investigator bias” where those assessing and reviewing the physiological outcomes of the clinical
trials are aware of which patients have received treatment and may interpret the information of the treated group more favorably
given this knowledge. The results from an open-label trial may not be predictive of future clinical trial results with any of
its product candidates for which Gemini includes an open-label clinical trial when studied in a controlled environment with a
placebo or active control.
Gemini
is subject to many manufacturing risks, any of which could substantially increase its costs, delay clinical programs and limit
supply of its products.
Gemini
has contracted with a third party manufacturer to make new drug substance to support future clinical trials and for commercial
sale, if approved. Its contract manufacturer may not be able to adopt, adapt or scale up the manufacturing process in a timely
manner to support its future clinical trials. The process of manufacturing its product is complex, highly regulated and subject
to several risks, including:
The
manufacture of GEM103 and other product candidates require significant expertise and capital investment, including the development
of advanced manufacturing techniques and process controls. Manufacturers of these products sometimes encounter difficulties in
production, especially during scale-up from the manufacturing process used for early clinical trials to a validated process needed
for pivotal clinical studies and commercial launch. These problems include failure to meet target production costs and yields,
sub-par quality control testing, including stability of the product, quality assurance system failures, operator error and shortages
of qualified personnel, as well as compliance with strictly enforced federal, state and foreign regulations. Gemini cannot assure
you that any product quality issues relating to the manufacture of GEM103 or any other product candidates will not occur in the
future.
Gemini
does not have and Gemini does not currently plan to acquire or build the facilities or internal capabilities to manufacture bulk
drug substance or filled drug product for use in clinical trials or commercialization. To a large extent, that makes us dependent
on the goodwill of its contract manufacturing partners to quickly fix deviations that will inevitably occur during the manufacturing
of its product. Any delay or interruption in the supply of clinical trial materials could delay the completion of clinical trials,
increase the costs associated with maintaining clinical trial programs and, depending upon the period of delay, require us to
commence new clinical trials at additional expense or terminate clinical trials altogether.
8
Its
business could be adversely affected by the effects of health epidemics, including the recent COVID-19 pandemic, in regions where
third parties for which Gemini relies have significant research, development or manufacturing facilities, concentrations of clinical
trial sites or other business operations, causing disruption in supplies and services.
Its
business could be adversely affected by health epidemics in regions where third parties for which Gemini relies, such as CROs
or CMOs, have concentrations of clinical trial sites or other business operations, and could cause significant disruption in the
operations of third-party manufacturers and CROs upon whom Gemini relies. On January 30, 2020, the World Health Organization,
or WHO, announced a global health emergency because of SARS-CoV-2, a new strain of novel coronavirus originating in Wuhan, China,
and the risks to the international community as the virus spread globally beyond its point of origin. In March 2020, the WHO declared
the COVID-19 outbreak a pandemic, which continues to spread throughout the world. The spread of this pandemic has caused significant
volatility and uncertainty in U.S. and international markets. This could result in an economic downturn and may disrupt its business
and delay its clinical programs and timelines.
Quarantines,
shelter-in-place and similar government orders, or the perception that such orders, shutdowns or other restrictions on the conduct
of business operations could occur, related to COVID-19 pandemic or other infectious diseases, could impact personnel at third-party
manufacturing facilities in the United States and other countries, or the availability or cost of materials, which would disrupt
its supply chain. Any manufacturing supply interruption of materials could adversely affect its ability to conduct ongoing and
future research and manufacturing activities.
In
addition, its clinical trials may be affected by the COVID-19 pandemic. Clinical site initiation and patient enrollment may be
delayed due to prioritization of healthcare system resources toward the COVID-19 pandemic. Some patients may not be able to comply
with clinical trial protocols if quarantines impede patient movement or interrupt healthcare services. Similarly, Gemini’s
clinical trial operations may be adversely impacted due to increased difficulty to recruit and retain patients and principal investigators
and site staff who, as healthcare providers, may have heightened exposure to COVID-19 pandemic.
The
spread of COVID-19 pandemic, which has caused a broad impact globally, may materially affect Gemini economically. While the potential
economic impact brought by, and the duration of, COVID-19 pandemic may be difficult to assess or predict, a widespread pandemic
could result in significant disruption of global financial markets, reducing its ability to access capital, which could in the
future negatively affect its liquidity. In addition, a recession or market correction resulting from the spread of COVID-19 pandemic
could materially affect its business and the value of its common stock.
The
global pandemic of COVID-19 continues to rapidly evolve. The ultimate impact of the COVID-19 pandemic or a similar health epidemic
is highly uncertain and subject to change. Gemini does not yet know the full extent of potential delays or impacts on its business,
its clinical trials, healthcare systems or the global economy as a whole. However, these effects could have a material impact
on its operations.
Gemini
may encounter difficulties in managing its growth, which could adversely affect its operations.
As
of the date of this annual report, Gemini had 29 full-time and part-time employees. As Gemini continues development and pursues
the potential commercialization of its product candidates, Gemini will need to expand its financial, development, regulatory,
manufacturing, marketing and sales capabilities or contract with third parties to provide these capabilities for us. As its operations
expand, Gemini expects that it will need to manage additional relationships with various strategic collaborators, suppliers and
other third parties. Its future financial performance and its ability to develop and commercialize its product candidates and
to compete effectively will depend, in part, on its ability to manage any future growth effectively.
Management’s
focus and resources may be diverted from operational matters and other strategic opportunities as a result of the Business Combination.
The
Business Combination may place a significant burden on our management and other internal resources. The diversion of management’s
attention and any difficulties encountered in the transition process could harm our financial condition, results of operations
and prospects. In addition, uncertainty about the effect of the Business Combination on our systems, employees, customers, partners,
and other third parties, including regulators, may have an adverse effect on us. These uncertainties may impair our ability to
attract, retain and motivate key personnel for a period of time after the completion of the Business Combination.
The
unaudited pro forma financial information included elsewhere in the proxy statement/prospectus may not be indicative of what our
actual financial position or results of operations would have been.
The
unaudited pro forma financial information in the proxy statement/prospectus is presented for illustrative purposes only and has
been prepared based on a number of assumptions. Accordingly, such pro forma financial information may not be indicative of our
future operating or financial performance and our actual financial condition and results of operations may vary materially from
our pro forma results of operations and balance sheet contained elsewhere in this annual report, including as a result of such
assumptions not being accurate. Additionally, the final acquisition accounting adjustments could differ materially from the unaudited
pro forma adjustments presented in this annual report. The unaudited pro forma condensed combined financial information does not
give effect to any anticipated synergies, operating efficiencies or cost savings that may be associated with the Business Combination.
9
If
Gemini fails to maintain an effective system of internal control over financial reporting, Gemini may not be able to accurately
report its financial results or prevent fraud. As a result, stockholders could lose confidence in its financial and other public
reporting, which would harm its business and the trading price of its common stock.
Effective
internal controls over financial reporting are necessary for Gemini to provide reliable financial reports and, together with adequate
disclosure controls and procedures, are designed to prevent fraud. Any failure to implement required new or improved controls,
or difficulties encountered in their implementation could cause us to fail to meet its reporting obligations. In addition, any
testing by Gemini conducted in connection with Section 404 of the Sarbanes-Oxley Act, or Section 404, or any subsequent testing
by its independent registered public accounting firm, may reveal deficiencies in its internal controls over financial reporting
that are deemed to be material weaknesses or that may require prospective or retroactive changes to its financial statements or
identify other areas for further attention or improvement. Inferior internal controls could also cause investors to lose confidence
in its reported financial information, which could have a negative effect on the trading price of its stock.
Gemini
will be required to disclose changes made in its internal controls and procedures on a quarterly basis and its management will
be required to assess the effectiveness of these controls annually. However, for as long as Gemini is an emerging growth company,
or EGC, its independent registered public accounting firm will not be required to attest to the effectiveness of its internal
controls over financial reporting pursuant to Section 404. An independent assessment of the effectiveness of its internal controls
over financial reporting could detect problems that its management’s assessment might not. Undetected material weaknesses
in its internal controls over financial reporting could lead to restatements of its financial statements and require us to incur
the expense of remediation.
Gemini’s
disclosure controls and procedures may not prevent or detect all errors or acts of fraud.
Gemini’s
disclosure controls and procedures are designed to reasonably assure that information required to be disclosed by it in reports
Gemini files or submits under the Securities Exchange Act of 1934, as amended, or Exchange Act, is accumulated and communicated
to management, recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC.
Gemini believes that any disclosure controls and procedures or internal controls and procedures, no matter how well conceived
and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. These inherent
limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple
error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more
people or by an unauthorized override of the controls. Accordingly, because of the inherent limitations in its control system,
misstatements or insufficient disclosures due to error or fraud may occur and not be detected.
Gemini
must attract and retain highly skilled employees in order to succeed. If Gemini is not able to retain its current senior management
team and its scientific advisors or continue to attract and retain qualified scientific, technical and business personnel, its
business will suffer.
To
succeed, Gemini must recruit, retain, manage and motivate qualified clinical, scientific, technical and management personnel and
Gemini faces significant competition for experienced personnel. If Gemini does not succeed in attracting and retaining qualified
personnel, particularly at the management level, it could adversely affect its ability to execute its business plan and harm its
operating results. Gemini is dependent on the members of its management team and its scientific advisors for its business success,
including its Chief Executive Officer, Jason Meyenburg. Gemini does not maintain “key person” insurance for any of
its key personnel. An important element of its strategy is to take advantage of the research and development expertise of its
current management. Gemini currently has employment agreements with all of its executive officers. Its employment agreements with
its executive officers are terminable by them without notice and some provide for severance and change in control benefits. The
loss of any one of its executive officers could result in a significant loss in the knowledge and experience that Gemini, as an
organization, possesses and could cause significant delays, or outright failure, in the development and further commercialization
of its product candidates.
There
is intense competition for qualified personnel, including management in the technical fields in which Gemini operates and Gemini
may not be able to attract and retain qualified personnel necessary for the successful research, development and commercialization
of its product candidates. In particular, Gemini has experienced a very competitive hiring environment in Cambridge, Massachusetts,
where Gemini is headquartered. Many of the other pharmaceutical companies that Gemini competes against for qualified personnel
has greater financial and other resources, different risk profiles and a longer history in the industry than Gemini does. They
also may provide more diverse opportunities and better chances for career advancement. Some of these characteristics may be more
appealing to high-quality candidates than what Gemini has to offer. If Gemini is unable to continue to attract and retain high-quality
personnel, the rate and success with which Gemini can discover and develop product candidates and its business will be limited.
Its
employees, independent contractors, consultants, commercial partners and vendors may engage in misconduct or other improper activities,
including noncompliance with regulatory standards and requirements.
Gemini
cannot ensure that its compliance controls, policies, and procedures will in every instance protect us from acts committed by