UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 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, 2024
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: 001-41575
Lipella Pharmaceuticals Inc.
(Exact name of registrant as specified in
its charter)
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
7800 Susquehanna St., Suite 505
Pittsburgh, PA15208
(Address of principal executive offices)
(Zip Code)
Registrant’s telephone number, including
area code: (412)894-1853
Securities registered pursuant to Section
12(b) of the Act:
Title of each class: Trading Symbol Name of each exchange on which registered:
Common Stock, par value $0.0001 per share LIPO The Nasdaq Stock Market LLC
Securities registered pursuant to Section
12(g) of the Act:
None
(Title of class)
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 Section 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, a smaller reporting company or an emerging growth
company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting
company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer ☐ Accelerated filer ☐
Non-accelerated filer ☒ 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. ☐
If securities are registered pursuant to
Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect
the correction of an error to previously issued financial statements. ☐
Indicate by check mark whether any of those
error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s
executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate by check mark whether the registrant
is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐No☒
The aggregate
market value of common stock held by non-affiliates of the registrant, based on the closing price for the registrant’s common
stock on June 30, 2024 (the last business day of the second quarter of the registrant’s current fiscal year), was
$2,623,125.60.
The registrant had 2,548,811 shares of its common stock outstanding
as of March 26, 2025.
References in this Annual Report on Form 10-K to the “Company,”
“Lipella,” “we,” “us,” or “our” mean Lipella Pharmaceuticals Inc. unless otherwise
expressly stated or the context indicates otherwise.
Documents Incorporated By Reference: None.
SPECIAL NOTE REGARDING FORWARD-LOOKING
STATEMENTS
This Annual Report on Form 10-K (this “Report”)
contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section
27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act
of 1934, as amended (the “Exchange Act”). Forward-looking statements include information concerning our strategy, future
operations, future financial position, future revenue, projected expenses, prospects and plans and objectives of management. Forward-looking
statements include all statements that are not historical facts and can be identified by terms such as “anticipate,”
“believe,” “continue,” “could,” “estimate,” “expect,” “intend,”
“may,” “plan,” “potential,” “predict,” “project,” “seek,”
“should,” “target,” “will,” “would” or similar expressions and the negatives of
those terms.
Forward-looking statements contained in
this Report include, but are not limited to, statements about the following:
● our research and development programs for our product candidates;
● our ability to identify and develop new product candidates;
● our ability to identify, recruit and retain key personnel;
● our commercialization, marketing and manufacturing capabilities and strategy;
● our competitive position;
● our financial performance;
● developments and projections relating to our competitors and our industry;
● the impact of laws and regulations;
i
Forward-looking statements are subject
to a number of risks, uncertainties and assumptions, including those described in “Risk Factors” and elsewhere
in this Report. Moreover, we operate in a very competitive and rapidly changing environment, and new risks emerge from time to
time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or
the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in
any forward-looking statements we may make. In light of these risks, uncertainties and assumptions, the forward-looking events
and circumstances discussed in this Report may not occur and actual results could differ materially and adversely from those anticipated
or implied in the forward-looking statements. Given these uncertainties, you should not place undue reliance on these forward-looking
statements. Also, forward-looking statements represent our management’s beliefs and assumptions only as of the date of this
Report. You should read this Report and the documents that we have filed as exhibits hereto completely and with the understanding
that our actual future results may be materially different from what we expect.
Except as required by law, we assume no
obligation to update these forward-looking statements publicly, or to update the reasons actual results could differ materially
from those anticipated in these forward-looking statements, even if new information becomes available in the future.
For discussion of factors that we believe
could cause our actual results to differ materially from expected and historical results, see “Item 1A - Risk Factors”
below. These and other factors could cause results to differ materially from those expressed in the estimates made by the independent
parties and by us.
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TABLE OF CONTENTS
PART I 1
Item 1. Business 1
Item 1A. Risk Factors 22
Item 1B. Unresolved Staff Comments 54
Item 1C. Cybersecurity 54
Item 2. Properties 54
Item 3. Legal Proceedings 54
Item 4. Mine Safety Disclosures 54
Item 6. [Reserved] 55
Item 7A. Quantitative and Qualitative Disclosures about Market Risk 65
Item 8. Financial Statements and Supplementary Data 65
Item 9A. Controls and Procedures 65
Item 9B. Other Information 66
Item 9C. Disclosure Regarding Foreign Jurisdictions That Prevent Inspections 66
PART III 67
Item 10. Directors, Executive Officers and Corporate Governance 67
Item 11. Executive Compensation 73
Item 14. Principal Accountant Fees and Services 84
Item 15. Exhibits and Financial Statement Schedules 86
iii
pART
i
Item 1. Business
Overview
We are a clinical-stage biotechnology company
that was incorporated under the laws of the State of Delaware in February 2005. We are focused on developing new drugs by reformulating
the active agents in existing generic drugs and optimizing these reformulations for new applications.
We believe that our strategy combines many
of the cost efficiencies and risk abatements derived from using existing generic drugs with potential patent protections for our
proprietary formulations; this strategy allows us to expedite, protect, and monetize our product candidates. Additionally, we maintain
a therapeutic focus on diseases with significant, unaddressed morbidity and mortality where no approved drug therapy currently
exists. We believe that this focus can potentially help reduce the cost, time and risk associated with obtaining marketing approval.
We have not yet commercialized any products, and we do not expect to generate revenue from sales of any product candidates for
several years.
Our Product Candidates: LP-10,
LP-310, LP-410, and LP-50
Consistent with our strategy, we are currently
addressing two indications via development of our product candidates, which we have designated as LP-10 for the indication of
hemorrhagic cystitis (“HC”) and LP-310 for the indication of oral lichen planus (“OLP”), which is chronic,
uncontrolled urinary blood loss that results from certain chemotherapies (such as alkylating agents) or pelvic radiation therapy
(also called “radiation cystitis”). Many radiation cystitis patients experience severe morbidity (and in some cases,
mortality), and currently, there is no therapy for their condition approved by the FDA, or, to our knowledge, any other regulatory
body. LP-310 employs a formulation similar to LP-10, for the treatment of OLP. OLP is a chronic, T-cell-mediated, autoimmune oral
mucosal disease, and LP-310 contains tacrolimus which inhibits T-lymphocyte activation. Symptoms of OLP include painful burning
sensations, bleeding and irritation with tooth brushing, painful, thickened patches on the tongue, and discomfort when speaking,
chewing or swallowing. These symptoms frequently cause weight loss, nutritional deficiency, anxiety, depression, and scarring
from erosive lesions. OLP can also be a precursor to cancer, predominately squamous cell carcinoma, with a malignant transformation
rate of approximately one percent.
LP-10 is the development name of our reformulation
of tacrolimus (an approved generic active agent) specifically optimized for topical deposition to the internal surface of the urinary
bladder lumen using a proprietary drug delivery platform that we have developed and that we refer to as our metastable liposome
drug delivery platform (our “Platform”). We are developing LP-10 and our Platform to be, to our knowledge, the first
drug candidate and drug delivery technology that could be successful in treating cancer survivors who acquire HC. Our first issued
U.S. patent covering LP-10 expires July 11, 2035, unless extended for regulatory delay (up to 14 years), our second issued U.S.
patent covering the method of making LP-10 expires November 9, 2034, unless extended for regulatory delay, and our third U.S. patent
covering particular LP-10 tacrolimus formulations expires November 9, 2034, unless extended for regulatory delay. Our issued Australian
patent covering LP-10 expires October 22, 2034. The Canadian patent, issued on August 23, 2022, expires October 22, 2034. The European
patent, issued on June 7, 2023, expires October 22, 2034. We also have a corresponding patent application pending in the U.S. (U.S.S.N.
18/924,830). We also have a pending U.S. patent application on an improvement to the technology. We have received FDA “orphan
drug” designation covering LP-10 and plan to apply for additional regulatory designations in the event we achieve qualifying
results in the current phase 2a clinical trial for LP-10. Market data exclusivity may be available in the US and other jurisdictions
in which regulatory approval is obtained for the Company’s product, regardless of patent status.
The safety and efficacy of LP-10
was evaluated in a 13-subject, open-label, multi-center, dose-escalation, phase 2a clinical trial in patients experiencing complications
associated with a rare but highly morbid disease called “radiation-induced hemorrhagic cystitis” or “radiation
cystitis.” This phase 2a clinical trial commenced on February 15, 2021, and we reported the trial’s summary results
in the first quarter of 2023. There is currently no FDA approved drug therapy available for radiation cystitis patients, who are
all cancer survivors who received pelvic radiation therapy to treat solid pelvic tumors, including prostate and ovarian cancers
and who are now dealing with therapy-associated complications, including urinary bleeding (a radiation cystitis symptom). LP-10’s
active ingredient, tacrolimus, which has a well-known pharmacology and toxicology, addresses a reduction (or cessation) of uncontrolled
urinary bleeding.
1
LP-310 is the development name of our oral,
liposomal formulation of tacrolimus (the same approved generic active agent in LP-10) specifically optimized for local delivery
to oral mucosa. We believe that our approach of using metastable liposomal tacrolimus as a treatment for OLP is novel. To date,
upon review of relevant FDA public data resources on approved drugs and biologics, we are not aware of any other liposomal products
developed to treat such disease. We received investigational new drug (“IND”) approval from the FDA regarding LP-310
in the third quarter of 2023. We initiated a Phase 2a multicenter dose escalation of using LP-310 for the treatment of OLP in 2024.
In this first cohort, eight participants received a dose of 0.25 mg LP-310, with promising initial results. No product-related
serious adverse events were reported. Pharmacokinetic data demonstrated that whole blood tacrolimus levels in all patients were
either undetectable or minimal, highlighting LP-310’s potential to deliver localized therapeutic effects while minimizing
systemic exposure. Additionally, all patients tolerated LP-310 without significant adverse reactions. The trial is expected to
be completed in the second quarter of 2025. The top line data from the first two dose cohorts of this trial has been selected for
podium presentation at the 2025 American Association of Oral Medicine and European Association of Oral Medicine Joint Meeting that
will be held in Las Vegas, NV on May 15, 2025.
Our issued U.S. and Australian patents
covering LP-310 expire July 11, 2035, November 9, 2034 and October 22, 2034, respectively. The Canadian patent, issued on August
23, 2022, expires October 22, 2034. The European patent, issued on June 7, 2023, expires October 22, 2034. We also have a corresponding
patent application pending in the U.S. (U.S.S.N. 18/924,830). We also have a pending U.S. patent application on an improvement
to the technology. As noted above, patent term extensions may be available in Europe, Canada and the US for regulatory delay. Market
data exclusivity is also applicable in many jurisdictions, regardless of patent status. Approval of a 505(b)(1) or 505(b)(2) application
can result in five or three years of such exclusivity, respectively.
In a third program, Lipella is also developing
an oral, liposomal formulation of tacrolimus, LP-410, for the treatment of oral graft-versus-host disease (“GVHD”).
LP-410 is an oral rinse, similar to LP-310, but will have a different containment system. Hematopoietic cell transplantation (“HCT”)
is used to treat a wide range of malignancies, hematologic and immune deficiency states, and autoimmune diseases. GVHD is a clinical
syndrome where donor-derived immunocompetent T-cells react against patient tissues directly or through exaggerated inflammatory
responses following HCT. Oral GVHD is a rare and serious disease, with a prevalence of approximately 30,000 patients in the US
annually in 2023 (Bachier et al., 2019; Bachier et al., 2021, Orphanet 2023). GVHD remains a major cause of morbidity and mortality
with patients who undergo HCT treatment, with chronic GVHD being the leading cause of non-malignant fatality for such patients
who receive such HCT treatments.
Topical and local management of symptomatic
oral GVHD can reduce oral symptoms that can interfere with oral function and quality of life and can reduce the need for more intensive
immunosuppressive systemic therapies. However, there is currently no FDA approved local drug treatment of oral GVHD (Martini et
al., 2022).
Lipella has developed LP-410 for the topical
delivery directly to the mouth surface. LP-410 targets the underlying mechanisms of oral GVHD, potentially providing a safe and
effective treatment option for affected individuals. Lipella received orphan designation approval, on November 11, 2023, for tacrolimus
for the treatment of oral GVHD. We received IND approval from the FDA for LP-410’s treatment of oral GVHD on March 5, 2024.The
issued and pending patents regarding LP-310 are relevant to LP-410 as well. We plan to expand and specify patent coverage of LP-410
in the patent application currently pending in the U.S. (U.S.S.N. 18/924,830).
In a fourth program, Lipella is also developing
an intravesical formulation of immunoglobulins including checkpoint inhibitors, referred to as LP-50. LP-50 is an intravesical
formulation of immunoglobulins including local, intravesical PD-1 (i.e. checkpoint) inhibition, intended for the treatment of
non-muscle invasive bladder cancer (“NMIBC”), offering the potential for increasing efficacy while minimizing systemic toxicity.
Additional information regarding this preclinical program is included in the International Journal of Molecular Sciences 2024,
25(9), 4945, titled “Enhancing Therapeutic Efficacy and Safety of Immune Checkpoint Inhibition for Bladder Cancer: A Comparative
Analysis of Injectable vs. Intravesical Administration,” as well as in US patent publication number 2024/0115503 titled “Intravesical
Delivery of Hydrophilic Therapeutic Agents Using Liposomes.” We have a corresponding patent application pending in the U.S.
(U.S.S.N 18/011,635).
Our Metastable Liposome Drug Delivery
Platform
We have developed a proprietary technology,
referred to as our Platform, which is optimized for local hydrophobic drug delivery to body cavities having endothelial surfaces.
Our process employs liposomal technology protected by issued patents in the United States, Australia, and Canada. We also have
a corresponding patent application pending in the U.S. (U.S.S.N. 18/924,830) and a corresponding European Patent, issued on June
7, 2023. This technology involves direct drug delivery to the urinary bladder mucosa, and, we believe, has the potential to improve
efficacy (by increasing drug concentration at the site of injury) and to reduce the possibility of side effects (by reducing the
drug’s exposure to unrelated organs). The first body-cavity application for which we intend to utilize our Platform is the
urinary bladder, which has been designed to deliver LP-10. We are also developing an oral cavity product for the treatment of OLP
and oral GVHD using our Platform (liposomal-tacrolimus). We are continuing to research and develop products for additional body
cavities, including the anal-rectal cavity (radiation proctitis) and the esophagus (eosinophilic esophagitis). We have a pending
U.S. patent application on a new embodiment of this technology.
2
We predict that our Platform will provide
a superior approach for treating inflammatory urinary bladder conditions compared to other delivery mechanisms and that certain
inherent features of the metastable liposomes, combined with our intravesical formulations, provides our Platform with several
advantages over existing bladder drug delivery methodologies in current clinical practice for inflammatory bladder applications.
These advantageous characteristics include the following:
● large payload capacity of hydrophobic agents (10% by mass);
● urothelial affinity, which results in efficient drug transfer;
● low systemic distribution (large particle size);
● reproducible manufacturing and scalability; and
● prior clinical experience utilizing the liposomal delivery vehicle.
The following table summarizes
our therapeutic candidate pipeline and discovery research programs:
Figure 1
3
Our Strengths
We believe we are uniquely positioned to
employ liposome technology in the development of intravesical treatments for urinary bladder and oral indications due, in part,
to our particular strengths, including:
○ our receipt of FDA “orphan drug” designations covering LP-10 and LP-410;
Our Strategy
We are, to our
knowledge, currently developing the first drug candidate and proprietary drug delivery platform that could be successful in treating
cancer survivors who acquire HC and we intend to apply our proprietary drug delivery technology to the oral mucosa for the treatment
of OLP and oral GVHD. Our development programs are designed to address opportunities for capital efficient drug discovery and
development, especially research programs that reposition existing therapeutics for new indications that exploit new formulations.
The key elements of the strategy that we are employing to achieve our goals are:
4
Our product development strategy involves
combining intellectual property protection for novel formulations and indications for approved active pharmaceutical ingredients
(“APIs”) with regulatory efficiencies provided by obtaining FDA designations that make our product candidates eligible
for certain incentives that expedite development and review. We believe that this product development strategy is more capital
efficient compared to traditional discovery of a new chemical entity because the safety and mechanisms of the approved APIs for
the novel formulations of our product candidates are better understood and established. In the United States, approval of API products
follows the “505(b)(2) regulatory pathway”; which permits us to rely on existing research and development (“R&D”)
data pertaining to the generic active ingredient. The 505(b)(2) regulatory pathway often provides an alternate path to FDA approval
for new or improved formulations or new uses of previously approved products. Using a 505(b)(2) new drug application (“NDA”),
we expect to reduce the cost, time and risk that would otherwise be associated with bringing these programs to market. See “Government
Regulation Applicable To Our Business – The 505(b)(2) NDA Regulatory Pathway” below for more information.
LP-10 and the Intended Treatment of HC
We completed our phase 2a clinical trial
of LP-10 and reported top-line results in January 2023. LP-10 relies on intravesical vasoconstrictive and anti-inflammatory drug
therapy for our intended treatment of HC, a rare and severe consequence of cancer therapy for which there is currently no approved
treatment. HC affects the bladder lining and is caused by the protein-cross-linking effects of chemotherapy as well as longer-term
effects from radiation-induced damage to urothelial tissue. In HC patients, the urothelial damage results in significant urinary
bleeding, inducing the need for blood transfusions. Those cancer patients who acquire HC suffer from pain and discomfort that accompanies
their bleeding. Based on information from the American Cancer Society as well as published reports on the incidence of HC resulting
from either chemo or radiation therapy, we believe there are approximately 60,000 patients annually in the United States who suffer
from a severe form of radiation-induced HC and an estimated 60,000 patients annually with systemic chemotherapy-induced HC. We
received “orphan drug” designation from the FDA for the use of tacrolimus (including LP-10) for the treatment of HC.
We believe that our approach of using metastable
liposomal tacrolimus as a treatment for HC, which has not yet been approved by the FDA, is novel. To date, we are not aware of
any other liposomal products developed for clinical urinary bladder instillation. The current standard of care for HC patients
is limited to measures such as irrigation and cauterization, which seek to reduce or halt the urinary bleeding of HC but often
do not work effectively. There is no approved treatment for HC, and there are currently no other drug treatments for HC in clinical
development of which we are aware. LP-10 is designed to be an acute treatment for HC to be administered via urinary catheter either
at a hospital or doctor’s office within 30 minutes, which would be repeated daily for a total of four instillations in the
same number of days. LP-10 seeks to treat HC via two mechanisms: high local vasoconstriction and longer-term anti-inflammation.
5
On December 23, 2019, we received IND
approval from the FDA for LP-10, including approval for LP-10’s proposed clinical protocol, and central investigational
review board (“IRB”) approval of our IND-approved clinical protocol, as well as approval for the investigator’s
brochure and patient’s informed consent associated with LP-10. From 2020 to 2022, we signed clinical trial agreements in
connection with eight clinical sites to conduct the dose-escalation, phase 2a clinical trial of LP-10. We completed the phase
2a dose-escalation trial (reporting results in January 2023) and intend to apply for FDA accelerated approval pathways, and the
design of a pivotal phase 2b well-controlled clinical trial. If successful, a pivotal phase 3 trial can be requested, and we believe
the results of an LP-10 phase 3 trial could support the submission of an NDA for LP-10 to the FDA through the 505(b)(2) regulatory
pathway and a Marketing Authorization Application to the EMA in Europe. However, there can be no assurance that we will obtain
such designation from, or be permitted to use such pathway by, the FDA, who is ultimately responsible for making such determinations.
Background on HC
HC is characterized by the presence of
sustained hematuria and lower urinary tract symptoms in the absence of active tumor and other conditions or infections that cause
excessive bleeding, (Gorzynska et al. 2005). Urologic adverse events caused by HC include frequency, dysuria, urgency, nocturia,
suprapubic pain, bladder infection, fatigue and both microscopic and gross hematuria.
Bleeding from HC ranges from non-visible
(or microscopic) hematuria to gross (visible) hematuria with clots (Decker et al. 2009). Moderately severe cases of HC involve
massive bleeding and clot formation. Severe HC is a challenging condition to treat and may give rise to serious complications,
leading to prolonged hospitalization and/or mortality (Decker et al. 2009; Mukhtar and Woodhouse 2010) and HC cases resulting from
chemotherapy are reported to have a mortality rate approaching 4% (Rastinehad et al. 2007). Even mild cases of HC can cause disabling
symptoms (e.g., frequency, urgency and pelvic pain, often localized to the bladder or urethra) (Payne et al. 2013). A standardized
grading system (Droller et al. 1982) to classify the severity of HC has been proposed, which is shown in Figure 2 below:
Figure 2
6
HC can be classified as early- or late-onset
(Zwaans et al. 2016). HC can also develop weeks to months after treatment in 20%–25% of patients who receive high doses of
cyclophosphamide. The effects of radiation-induced HC may be acute or delayed, occurring long after radiation treatment has ended,
from two months to 15 years later (Zwaans et al. 2018; Manikandan et al. 2010).
Prevalence
At the suggestion of the FDA’s Office
of Orphan Products Development, we have measured annual cyclophosphamide and ifosphamide use in a large commercial database for
private health plans between 2008 and 2010 and, based on guidance from the FDA, applied a 40% rate of HC in such patient database.
The information from the database, combined with the FDA’s recommended guidance, results in a prevalence of consequential
HC to potentially reach 60,000 new cases per year in the United States. This methodology implicitly assumes that the prevalence
of use observed in private health plans (including Medicare beneficiaries enrolled in private plans) is generalizable to the nation
as a whole, and such figure represents our conservative estimate of the number of new cases per year after applying the FDA’s
recommended 40% rate to the figures in such patient database. HC resulting from pelvic radiation therapy (occurring in the prostate,
rectum and uterine corpus) is less common than HC resulting from chemotherapy and is believed to be proportional to the incidence
of the “primary neoplasia” (the original malignancy). Such incidence of HC is based on a combined estimate of the incidence
of both chemotherapy-induced HC and radiation-induced HC from (i) peer-reviewed literature estimating the proportion of cyclophosphamide
and ifosphamide recipients that acquire chemotherapy-induced HC after undergoing chemotherapy, as applied to a national chemotherapy
incidence measurement study, and (ii) peer-reviewed literature containing estimates of the proportion of cancers treated with pelvic
radiation therapy and the number of years patients survive post-radiation therapy, in addition to pelvic cancer incidence estimates
publicly available from sources such as the American Cancer Society. According to the American Cancer Society publication Cancer
Facts & Figures 2023 (available at: https://www.cancer.org/content/dam/cancer-org/research/cancer-facts-and-statistics/annual-cancer-facts-and-figures/2023/2023-cancer-facts-and-figures.pdf),
there are an estimated 288,300 new cases of prostate cancer in the U.S. each year, 153,020 new cases of rectum and colon cancer
in the U.S. each year, and 66,200 cases new cases of uterine corpus cancer in the U.S. each year. Based, in part, on this data,
we estimate the U.S. incidence of HC to be in the range of approximately 100,000 to 200,000 cases per year.
Existing Treatment Options
There is currently no standard therapy
available for patients with HC, and there are no guidelines available on how HC should be optimally managed. Current HC treatments
are regarded as ineffective, risky, or both. Such treatments include general medical management (e.g., estrogens, pentosan-polysulfate,
and hyperbaric oxygen (“HBO”)), instillation therapy (e.g., aminocaproic-acid, alum, silver-nitrate, formalin, and
fibrin glue), embolization and surgery (e.g., coagulation and cystectomy). The moderately severe cases of HC involve massive bleeding
as well as clot formations that require evacuation. The most severe cases require surgical intervention (e.g., urinary diversion
or cystectomy) (Sant 2002; Perez-Brayfield and Kirsch 2009). In addition, we believe current treatments pose significant patient
risk: interventional fulguration of bleeding sites rarely works and exposes sick, frail patients to surgical risks; treatment with
aminocaprotic acid often leads to dangerous clots; treatment with silver nitrate can cause bladder perforation or kidney failure;
and treatment with formalin significantly reduces bladder functionality and causes excruciating pain (Vicente, Rios et al. 1990).
HBO treatments for HC may decrease and
prevent the risk of bleeding but cannot treat ongoing bleeding, in part because therapy takes up to 40 sessions over a period of
two to three months. Cystectomy causes significant morbidity and is generally an option of last resort; in some cases where cystectomy
is conducted, old and/or frail patients can bleed to death. There are no other products in development of which we are aware that
are indicated for the treatment of HC. Should LP-10 ultimately receive FDA market approval, we believe it will address this unmet
medical need and provide a benefit over existing products while fitting into the existing treatment algorithm as a treatment for
refractory HC.
7
LP-10’s Mechanisms of Action – Tacrolimus
LP-10’s API tacrolimus has been approved
by the FDA for systemic use for inhibiting transplant rejection and as topical ointment for moderate to severe atopic dermatitis.
Tacrolimus acts by inhibition of IL-2-dependent T-cell activation and has a direct inhibitory effect on cell-mediated immunity
(Kino et al., 1987; Tamura et al., 2002). Tacrolimus prolongs the survival of the host and transplanted graft in animal transplant
models of liver, kidney, heart, bone marrow, small bowel and pancreas, lung and trachea, skin, cornea and limb. In animals, tacrolimus
has been demonstrated to suppress some humoral immunity and, to a greater extent, cell-mediated reactions such as allograft rejection,
delayed type hypersensitivity, collagen-induced arthritis, experimental allergic encephalomyelitis and graft versus host disease.
Tacrolimus inhibits T-lymphocyte activation, though the exact mechanism is not known. Experimental evidence suggests that tacrolimus
binds to an intracellular protein named FKBP-12. A complex molecule comprising tacrolimus-FKBP-12, calcium, calmodulin and calcineurin
is formed and the phosphatase activity of calcineurin is inhibited. This effect may prevent the dephosphorylation and translocation
of the nuclear factor of activated T-cells, a nuclear component thought to initiate gene transcription for the formation of lymphokines
(such as interleukin-2, gamma interferon). The net result is the inhibition of T-lymphocyte activation (i.e., immunosuppression).
The urothelium is the primary site of tissue
damage in the general pathophysiology of cystitis (Erdogan et al. 2002). Recent studies have highlighted the overexpression of
genes related to immune and inflammatory responses, including activation of CD4+ T-helper type-1-related chemokines in general
cystitis (Trompeter et al. 2002; Almawi and Melemedjian 2000). Expression of chemokines precedes infiltration of immune cells and
elevation of chemokines is an established signature of the inflammatory phenotype in bladder pain. Many of the symptoms of HC are
related to inflammation of urothelial tissues. We believe that our application of the liposomal tacrolimus could potentially have
a two-fold effect of (i) inhibiting calcineurin and the related response, and (ii) causing acute arteriole vasoconstriction to
suppress HC (see Figure 2 above). Calcineurin inhibition is the well-known tacrolimus intracellular signal transduction mechanism
that impairs the ability of certain immune cells to activate, and tacrolimus’ vasoconstrictive properties are referenced,
for example, in section “5.7 Nephrotoxicity” of the Label (prescribing information) associated with the “PROGRAF®
(tacrolimus) injection (for intravenous use) Initial U.S. Approval: 1994.”
Non-Clinical Study Results Involving Intravesical Tacrolimus
The following is a summary of non-clinical
studies conducted with rats and dogs that were sponsored by the Company or conducted in collaboration with Company scientists.
Results from animal studies are not always predictive of results of subsequent human clinical trials:
Effect of intravesical-tacrolimus on chemotherapy-induced
HC
In September 2010, the effect of intravesical-tacrolimus
was examined in a rat model for chemotherapy-induced, intraperitoneal injection of cyclophosphamide (200 mg/kg; i.p.) HC. This
study demonstrated that cyclophosphamide-induced hyperactivity (i.e., decrease in inter-contraction interval) was suppressed in
rats with intravesical LP-10 treatment but not in the rat groups left untreated (sham) or treated with empty liposomes (vehicle
control) (Chuang et al. 2010). This result indicates that liposomal tacrolimus may mitigate cyclophosphamide injury in an animal
model (Neurology and Urodynamics 30:421-427 (2011)).
Effect of intravesical-tacrolimus on radiation-induced HC
In October 2012, the efficacy of intravesical-tacrolimus
was also examined in a rat model for radiation-induced HC. A 40 Gy radiation dose induced statistically significant reductions
in the intermicturition interval recorded during metabolic urination patterns. Irradiated rats were randomly assigned to receive
a single instillation of saline or intravesical-tacrolimus. Intravesical-tacrolimus increased the post-irradiation intermicturition
intervals (p <0.001). Rat bladders that were harvested six weeks after the 40 Gy irradiation doses and two weeks after saline
instillation showed edematous changes accompanying infiltration of inflammatory cells and hyperplastic urothelial changes. In contrast,
bladder from group treated with intravesical-tacrolimus shows minimal edematous change, consistent with the hypothesis that the
intravesical-tacrolimus had an anti-inflammatory effect (J. of Urology 194, 578-584 (2015)).
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Pharmacokinetics of sphingomyelin formulated tacrolimus
A 2013 study examined levels of tacrolimus
in blood, urine and bladder tissue following a single dose of liposome formulated tacrolimus instilled in the bladder of rats under
anesthesia as compared to intravesical instillation of tacrolimus or intraperitoneal injection of tacrolimus in other rat groups.
The tacrolimus dose was constant in all formulations at 200g/ml. At different times, blood, urine and bladder samples were collected.
Tacrolimus levels in samples were analyzed using microparticle enzyme immunoassay. The area under curve (“AUC”) of
liposome tacrolimus in serum at 0 to 24 hours was significantly lower than that of tacrolimus instillation or injection. Non-compartmental
pharmacokinetic data analysis revealed maximum concentration of liposomal tacrolimus and tacrolimus in blood and urine at one and
at two hours, respectively. Urine AUC (0–24 hours) after intravesical administration was significantly higher than in the
intraperitoneal group (p < 0.05). Bladder tacrolimus AUC (0–24 hours) did not differ significantly between the groups.
Single dose pharmacokinetics revealed that bladder instillation of liposome tacrolimus significantly decreased systemic exposure
to instilled tacrolimus. This appears to indicate that a reduction in systemic exposure helps to limit the potential side effects
of the tacrolimus by concentrating the dose to only one organ (J. of Urology Vol. 189, 1553-1558 (2013)).
LP-10 Toxicology Studies
In 2018, we completed chronic toxicology
studies in rats and dogs, which were the two species of animals that we agreed to study in the course of our pre-IND communications
with the FDA. The completion of such studies is normally required prior to requesting IND approval. The in-life phase of the toxicology
rat study was performed between February and March 2018 and the in-life phase of the dog toxicology study was performed in March
2018. Such studies were company-sponsored and conducted by qualified vendors specializing in good laboratory practice in-vivo toxicology
studies. The animals in such 2018 studies were assessed for morbidity, mortality, clinical observations and weekly body weight.
Full sets of standard tissues, including urinary tract tissues, were collected and weighed and histopathology evaluations were
conducted from all such animals. The studies concluded that no significant local and systemic toxicity resulted from the administration
of LP-10 by intravesical instillation in either rats or dogs.
LP-10’s Addressable Market
LP-10 has been designed for the approximately
one million cancer survivors in the United States today who have had pelvic radiation therapy and are at risk for HC. Based on
the managed care database study that we sponsored in 2012 as part of our approved request for FDA “orphan drug” designation
of tacrolimus for HC, approximately 60,000 of these patients annually experience severe chronic bladder bleeding that is often
fatal. LP-10 has been developed to address this form of bleeding, as well as bladder bleeding associated with breast cancer patients
who are taking systemic cyclophosphamide or ifosfamide, leading to chemotherapy-related cystitis experienced by an estimated 60,000
patients annually in the United States, inferring an addressable market in excess of 120,000 patients annually.
Figure 3
(1) American Cancer Society Cancer Facts
and Figures 2023, (2) derived from a Company-sponsored study, (3) based on the Company’s 40% estimate, (4) American Cancer
Society Cancer Treatment and Survivorship Fact and Figures 2022-2024, (5) based on the Company’s 30% estimate (6) 8% estimate,
(7) based on the Company’s estimate, (8) $20,000 average revenue per each of an estimated 60,000 patients treated per year.
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Figure 3 above illustrates the potential
sources of revenue for LP-10. LP-10 is not currently approved for any indication; however, if clinical development is successful
and we receive marketing approval for LP-10, we estimate the average LP-10 price to exceed $20,000 per patient-year domestically.
This estimate is based on costs of HBO therapy, which is an option for patients with mild cases. HBO therapy can cost approximately
$15,000 for a course of 30 sessions. Our price estimate also includes the potential for associated reductions in direct medical
expenditures, especially for severe cases. We estimate the peak demand, at this price, to be, approximately 60,000 patients annually,
which represents an approximate 50% market penetration in the U.S. Based on such price and demand estimates, we believe there is
potential to receive up to $1.2 billion in annual gross revenue.
Our Lead Drug Candidates, LP-10, LP-310,
and Our Product Pipeline
Five fundamental aspects of our LP-10 drug
candidate make it an excellent fit for our strategy (see Figure 4 below). First, our API has a well-known mechanism of action.
Second, published non-clinical studies involving animals, which are described above, demonstrate the potential for significant
efficacy in our intended indication and route of administration. Third, we are fortunate to have had a successful human experience
with intravesical tacrolimus (Dave et. al. Int Urol Nephrol 2015). Fourth, we believe we can take advantage of accelerated regulatory
approval pathways for LP-10; we have already received “orphan drug” designation from the FDA that grants us product
exclusivity, and we plan to apply for designations under one or more of the FDA’s expedited development and review programs.
Fifth, we believe that the revenue potential for LP-10 could be significant. We believe our focus on capital-efficient drug development
provides us with additional opportunities as we evaluate potential drug candidates for other rare diseases, especially those associated
with locally delivering drugs to body cavities. When evaluating opportunities, we ensure that both the indication as well
as the regulatory pathway are conducive to capital-efficient drug development. Our product candidate pipeline includes product
candidates that could treat OLP (LP-310) and oral GVHD (LP-410). On November 10, 2023, we received the FDA’s IND approval
for a Phase 2a dose escalation clinical trial regarding LP-310, and we were granted “orphan drug” designation for LP-410
the treatment of oral GVHD in November 2023. We submitted a Phase 2a IND for LP-310 treatment of OLP in the first quarter of 2024
and proceeded into clinical trial that is expected to be completed in the second quarter of 2025. We believe that our current product
candidate pipeline could enable us to apply our drug delivery technology (our Platform) for multiple types of severe, rare diseases,
and in the future, could enable us to address additional broader indications associated with endothelial inflammation. Local delivery
often allows us to avert known risk factors by only locally applying the effective dose.
Figure 4
We are currently evaluating several potential
product candidates for additional indications (including radiation proctitis and eosinophilic esophagitis).
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LP-10’s Regulatory Status
In 2019, we completed the required manufacturing
and toxicology program to submit an IND request to the FDA to begin testing LP-10 in human subjects. We submitted the IND request
in September 2019 and received approval from the FDA within 30 days of submission to begin a clinical study involving LP-10. In
December 2019, we received an advice letter from the FDA recommending several modifications to our proposed clinical protocol for
LP-10, which we accommodated. We also submitted and received approval from the FDA for the trial’s associated investigator
brochure and the proposed documentation of patient consent. Both of these documents, in addition to the clinical protocol, were
submitted to Adverra, our central IRB, and we subsequently received IRB approval to conduct our clinical trial. In February 2020,
the first patient was dosed in LP-10’s FDA phase 2a open-label, dose-escalation clinical trial for patients experiencing
moderate to severe HC, which is intended to demonstrate proof-of-concept in humans. We reported summary results from LP-10’s
phase 2a clinical trial in January 2023. We had a type-C meeting with the FDA on November 7, 2023, during which we agreed on a
submission of a well-controlled phase 2b double-blind placebo-controlled trial with gross hematuria as assessed by patient report
outcome as primary endpoint. This submission has been completed, and we are proceeding toward the initiation of a Phase2b clinical
trial.
LP-10’s FDA “Orphan Drug” Designation Status
In 2010, we submitted a request to the
FDA for “orphan drug” designation covering LP-10 and subsequently received approval for such designation in July 2012.
This provides us with marketing exclusivity and permits us to benefit from shorter FDA review periods and reduced regulatory fees
for LP-10. We intend to apply for similar “orphan drug” designations in additional jurisdictions, including Europe
and Japan, as well as additional regulatory classifications, such as the FDA’s Breakthrough Therapy and Fast Track designations,
in the United States. We expect that any designations that we have received, or may in the future receive, will confer additional
advantages during LP-10’s development. However, there can be no assurance that we will obtain such designations from the
FDA, who is ultimately responsible for making such determinations.
LP-10’s Clinical Status
Our multi-center, open-label dose-escalation
phase 2a LP-10 clinical trial involved a total of thirteen subjects who received tacrolimus doses in one or two instillations of
2, 4 or 8mg via a pre-liposomal lyophilate reconstituted in 40 milliliters of sterile water. Subjects were cancer survivors with
a history of pelvic radiotherapy who developed moderate to severe HC refractory to conventional therapy. The study was IRB-approved
at nine clinical sites within the FDA’s jurisdiction.
Four subjects were enrolled in the 2mg
group, four subjects were enrolled in the 4mg group, and five subjects were enrolled in the 8mg group. All subjects were male,
with a median age of 67 years. Nine of the thirteen subjects had a history of prostate cancer and had been previously treated with
external beam radiation. Two of the thirteen subjects had a history of lymphoma previously treated with radiation, and two had
a history of bladder cancer previously treated with radiation.
The last subject of the LP-10 phase 2a
study completed the last visit in October 2022. We reported top-line data from this trial in January 2023. All twenty-three LP-10
instillations in the 2mg, 4 mg and 8mg groups were well-tolerated by all thirteen subjects without related adverse events or elevated
blood tacrolimus levels. For multiple subjects, hematuria and urinary symptoms improved, and cystoscopic bleeding and ulceration
sites decreased. There was a complete response in three of the subjects, a partial response in seven of the subjects and no response
in three of the subjects. We believe that such data and instillation safety findings indicate LP-10’s tolerability in HC
patients and evidence LP-10’s potential use for the treatment of HC.
The results of the LP-10 phase-2a clinical
trial have been published in the journal of International Urology and Nephrology, on September 19, 2023 (Hafron J. et al. Int.
Urol. Nephrol. September 2023, Springer).
LP-310 and the Intended Treatment of OLP
LP-310 is currently in clinical development.
LP-310 uses immunosuppressive and anti-inflammatory drug therapy to treat OLP, which is a chronic immune-mediated mucosal disease
characterized by ulcerative lesions in the oral cavity. To date, upon review of relevant FDA public data resources on approved
drugs and biologics, we are not aware of any other liposomal products developed to treat OLP. Patients are currently treated with
off-label steroids for managing painful, erosive or ulcerative lesions. Yet, there are virtually no steroids formulated for topical
drug delivery to lesions in the mouth. For severe and difficult-to-treat lesions, systemic steroids, and other immunosuppressive
agents (e.g., hydroxychloroquin) are often needed, even though OLP is localized. Creams, gels and ointments do not adhere to oral
mucosa and are easily swallowed, while mouthwashes and steroid inhalers have extremely short contact time with lesions. For severe
and difficult-to-treat lesions, systemic steroids are often needed, even though OLP is localized. As a result, we believe there
is great unmet medical need for this disease.
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We believe that our approach of using metastable
liposomal tacrolimus as a treatment for OLP, which has not yet been approved by the FDA, is novel. Tacrolimus has been used as
an off-label oral treatment of OLP, and it has been shown to be effective based on systematic review and meta-analysis (Sun et
al., 2019), which we believe is indicative of a rationale for using tacrolimus to treat OLP. Twenty-one trials involving 965 patients
were included in this meta-analysis that concluded, in part, that treatment with tacrolimus may be an alternative approach when
OLP does not respond to the standard protocols.
Background on OLP
OLP is a chronic T-cell-mediated mucosal
disease that affects more than 1% of the global population, or more than 6 million people in the U.S. and Europe, according to
González-Moles et. al., Oral Diseases 27(4):813-828 May 2021, “Worldwide prevalence of oral lichen planus:
A systematic review and meta-analysis.” OLP is generally divided into three clinical subtypes: reticular, atrophic or erythematous,
and erosive and/or ulcerative. Although lichen planus can be found on other areas of the body, such as with cutaneous lichen planus
(“LP”), OLP has a chronic course, with little chance for spontaneous resolution, and most therapies that are currently
available are palliative rather than curative. Based on peer-reviewed medical literature, OLP has a prevalence ranging from 1-2%,
and females twice as likely as men to have the disease. The age on onset is generally between 30-60 years. Although cutaneous LP
is associated with approximately 15% of OLP cases, OLP is associated with approximately 75% of patients with cutaneous LP.
Symptoms vary, but the disease is typically
characterized by white reticular changes, erythema and painful ulcerative lesions in the oral cavity, accompanied by inflammation
and severe pain. The precise cause is unknown, although an autoreactive immune process is suspected by most experts in the field.
OLP is most frequently located bilaterally on the buccal mucosa (the inside lining of the cheeks and floor of the mouth), but can
also appear on the tongue, palatal mucosa, gingiva and lips. Because of the long-lasting nature of the disease and painful symptoms,
which can be spontaneous or triggered by acidic, crunchy and spicy food, patients require ongoing care and monitoring. Patients
with OLP also have an approximately 1% likelihood of being diagnosed with oral cancer as a result of OLP (between 0.4% to 5% over
a 20-year period, with an annual rate between 0.2% to 0.5%), making early detection and treatment imperative.
Some cases of OLP are caused by a hypersensitivity
reaction to mercury and formaldehyde or medications such as ACE inhibitors, thiazide diuretics, beta blockers, gold salts, sulfasalazine,
sulfonylureas and penicillamine. The new biologic agents such as TNF alpha inhibitors may also cause lichen planus-like eruptions.
Patients with hypothyroidism, including Hashimoto thyroiditis, also develop OLP and it is unclear whether it is thyroid disease
that predisposes an individual to OLP, or whether the drugs used to treat such disease also cause OLP. Hepatitis C virus infection
has also been associated with the development of OLP in southern European countries. As mentioned above, we are not aware of any
approved treatments for OLP, and we do not believe that current treatments are sufficiently effective.
LP-310’s Mechanisms of Action
LP-310 contains the API tacrolimus, like
LP-10. Recent studies have highlighted that OLP pathophysiology is initiated by cellular-mediated immunity, most importantly, the
increased production of T-helper 1(Th1) cytokines (Chamani et al., 2015). The oral mucosa is the primary site of tissue damage
in the pathophysiology of OLP (Alrashdan et al., 2016). For a discussion of the tacrolimus API, on which LP-310 relies for its
delivery to the oral cavity, and the effect tacrolimus has on T-lymphocyte activation, see “– LP-10’s Mechanisms
of Action – Tacrolimus” above. We believe that our application of the liposomal tacrolimus to the oral cavity to
address OLP could exploit this mechanism with a high local and low systemic distribution.
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LP-310’s Addressable Market
LP-310 is not currently approved for any
indication; however, if clinical development is successful and we receive marketing approval for LP-310, based upon the economics
of existing oral cavity drug products, we project that the treatment of OLP will cost approximately $4,000 annually per patient.
Most OLP patients are treated by dentists, who are relatively accessible compared to other medical specialists (in the United States
there are approximately 200,000 dentists and ear, nose and throat physicians). Currently, dentists routinely recommend and prescribe
instill agents as oral rinses and the procedure is simple and easy to teach. Given the absence of FDA approved treatment of OLP,
we estimate revenue of approximately $4,000 per course of therapy, resulting in a total addressable market that exceeds $980 million.
These estimates are based on the prices of other brand intravesical products as well as our preliminary estimates of the potential
for reduction in medical expenditures associated with intractable cases.
LP-310’s Regulatory Status
On April 8, 2021, we successfully completed