ITEM 1A. RISK FACTORS 17
ITEM 1B. UNRESOLVED STAFF COMMENTS 53
ITEM 2. PROPERTIES 53
ITEM 3. LEGAL PROCEEDINGS 53
ITEM 4. MINE SAFETY DISCLOSURES 53
PART II
ITEM 6. SELECTED FINANCIAL DATA 55
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 71
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA 71
ITEM 9A. CONTROLS AND PROCEDURES 71
ITEM 9B. OTHER INFORMATION 72
ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS 72
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE 73
ITEM 11. EXECUTIVE COMPENSATION 80
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES 91
PART IV
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES 92
INDEX TO EXHIBITS 93
SIGNATURES 96
CONSOLIDATED FINANCIAL STATEMENTS F-1
Introductory
Comment
Throughout
this Annual Report on Form 10-K, the terms “we,” “us,” “our,” “our company,” “Lixte,”
the “Company” and the “Registrant” refer to Lixte Biotechnology Holdings, Inc., a Delaware corporation, and Lixte
Biotechnology, Inc., a Delaware corporation, our wholly-owned subsidiary.
FORWARD-LOOKING
STATEMENTS
This
Annual Report on Form 10-K (the “Report”) contains certain forward-looking statements. For example, statements regarding
our financial position, business strategy and other plans and objectives for future operations, and assumptions and predictions about
future product demand, supply, manufacturing, costs, marketing and pricing factors are all forward-looking statements. These statements
are generally accompanied by words such as “intend,” “anticipate,” “believe,” “estimate,”
“potential(ly),” “continue,” “forecast,” “predict,” “plan,” “may,”
“will,” “could,” “would,” “should,” “expect” or the negative of such terms
or other comparable terminology. We believe that the assumptions and expectations reflected in such forward-looking statements are reasonable,
based on information available to us on the date hereof, but we cannot assure you that these assumptions and expectations will prove
to have been correct or that we will take any action that we may presently be planning. However, these forward-looking statements are
inherently subject to known and unknown risks and uncertainties. Actual results or experience may differ materially from those expected
or anticipated in the forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited
to, regulatory policies, competition from other similar businesses, and market and general policies, competition from other similar businesses,
and market and general economic factors. This discussion should be read in conjunction with the consolidated financial statements and
notes thereto included in this Report.
If
one or more of these or other risks or uncertainties materialize, or if our underlying assumptions prove to be incorrect, actual results
may vary materially from what we project. Any forward-looking statement you read in this Report reflects our current views with respect
to future events and is subject to these and other risks, uncertainties and assumptions relating to our operations, results of operations,
growth strategy, and liquidity. All subsequent forward-looking statements attributable to us or individuals acting on our behalf are
expressly qualified in their entirety by this paragraph. You should specifically consider the factors identified in this Report, which
would cause actual results to differ before making an investment decision. We are under no duty to update any of these forward-looking
statements after the date of this Report or to conform these statements to actual results.
PART
I
ITEM
1. BUSINESS
Company
Overview
We
are a drug discovery company that uses biomarker technology to identify enzyme targets associated with serious common diseases and then
designs novel compounds to attack those targets. Our product pipeline is primarily focused on inhibitors of protein phosphatases, used
alone and in combination with cytotoxic agents and/or x-ray and immune checkpoint blockers, and encompasses two major categories of compounds
at various stages of pre-clinical and clinical development that we believe have broad therapeutic potential not only for cancer but also
for other debilitating and life-threatening diseases.
We
have developed two series of pharmacologically active drugs, the LB-100 series and the LB-200 series. We believe that the mechanism by
which compounds of the LB-100 series affect cancer cell growth is different from cancer agents currently approved for clinical use. Lead
compounds from each series have activity against a broad spectrum of common and rarer human cancers in cell culture systems. In addition,
compounds from both series have anti-cancer activity in animal models of glioblastoma multiforme, neuroblastoma, and medulloblastoma,
all cancers of neural tissue. Lead compounds of the LB-100 series also have activity against melanoma, breast cancer and sarcoma in animal
models and enhance the effectiveness of commonly used anti-cancer drugs in animal models. The enhancement of anti-cancer activity of
these anti-cancer drugs occurs at doses of LB-100 that do not significantly increase toxicity in animals. It is therefore hoped that,
when combined with standard anti-cancer regimens against many tumor types, our compounds will improve therapeutic benefit without enhancing
toxicity in humans.
Our
activities are subject to significant risks and uncertainties, including the need for additional capital, as described below. We have
not yet commenced any revenue-generating operations, do not have positive cash flows from operations, and are dependent on periodic infusions
of equity capital to fund our operating requirements.
Description
of Business; Research; Clinical Trial Activities
Our
primary focus is developing new treatments for human cancers for which better therapies are urgently needed.
Our
drug discovery process is based on discerning clues to potential new targets for disease treatments reported in the increasingly large
body of literature identifying the molecular variants which characterize human cancers and other non-cancer disorders. We design drugs
for which there are existing data suggesting that they may affect the altered pathways of the cancer cell and may be given safely to
humans. We seek to rapidly arrive at patentable structures through analysis of the literature rather than screening of thousands of structures
for activity against a particular biochemical pathway.
This
approach has led to the development of two classes of drugs for the treatment of cancer, consisting of protein phosphatase inhibitors
(PTase-i), designated by us as the LB-100 series of compounds, and histone deacetylase inhibitors (HDACi), designated by us as the LB-200
series of compounds.
The
LB-100 series consists of novel structures which have the potential to be first in their class and may be useful in the treatment of
not only several types of cancer but also vascular and metabolic diseases. The LB-200 series contains compounds which have the potential
to be the most effective in its class and may be useful for the treatment of chronic hereditary diseases, such as Gaucher’s disease,
in addition to cancer and neurodegenerative diseases.
We
have demonstrated that lead compounds of both the LB-100 series and the LB-200 are active against a broad spectrum of human cancers in
cell culture and against several types of human cancers in animal models. The research on these compounds was initiated in 2006 under
a Cooperative Research and Development Agreement or CRADA with the National Institute of Neurologic Disorders and Stroke or NINDS of
the National Institutes of Health or NIH dated March 22, 2006 that was subsequently extended through a series of amendments until it
terminated on April 1, 2013.
Effective
treatment of brain tumors depends upon the ability of compounds to penetrate a physiological barrier known as the “blood-brain
barrier” which protects the brain from exposure to potentially toxic substances in the blood. Because there is no certainty that
our compounds will be active against tumors confined to the brain, the LB-100 compounds have been studied against a variety of common
and rare cancer types and have been shown to potentiate the activity of standard anti-cancer drugs in animal models of breast and pancreatic
cancer, melanoma, pheochromocytomas and sarcomas. Because the LB-100 compounds appear to exert their ability to improve the effectiveness
of different forms of chemotherapy and radiation therapy by inhibiting a process upon which most, if not all, cancer cell types depend
on to survive treatment, we believe the LB-100 series of compounds may be useful against most, if not all, cancer types.
The
LB-200 series consists of histone deacetylase inhibitors (HDACi). Many pharmaceutical companies are also developing drugs of this type,
and at least two companies have HDACi approved for clinical use, in both cases for the treatment of a type of lymphoma. Despite this
significant competition, we have demonstrated that our HDACi have broad activity against many cancer types, have neuroprotective activity,
and have anti-fungal activity. In addition, these compounds have low toxicity. LB-200 has not yet advanced to the clinical stage and
would require additional capital to fund further development. Accordingly, because of our focus on the clinical development of LB-100
and analogs for cancer therapy as described below in more detail, we have decided not to actively pursue the pre-clinical development
of our LB-200 series of compounds at this time. At this time, we intend to only maintain our composition of matter patents for LB-200.
Collaborations
with leading academic research centers in the United States, Europe and Asia have established the breadth of activity of LB-100 in pre-clinical
models of several major cancers. There is considerable scientific interest in LB-100 because it exerts its activity by a novel mechanism
and is the first of its type to be evaluated so broadly in multiple animal models of cancer and now in human beings. LB-100 is one of
a series of serine/threonine phosphatase (s/t ptase) inhibitors designed by us. The s/t ptases are ubiquitous enzymes that regulate many
cell signaling networks important to cell growth, division and death. The s/t ptases have long been appreciated as potentially important
targets for anti-cancer drugs. However, because of the multi- functionality of these enzymes, it had been widely held that pharmacologic
inhibitors of s/t ptases would be too toxic to allow their development as anti-cancer treatments, but we have shown that this is not
the case. LB-100 was well-tolerated at doses associated with objective regression (significant tumor shrinkage) and/or the arresting
of tumor progression in patients with progressive cancers.
Pre-clinical
studies showed that LB-100 itself inhibits a spectrum of human cancers and that combined with standard cytotoxic drugs and/or radiation,
LB-100 potentiates their effectiveness against hematologic and solid tumor cancers without enhancing toxicity. Given at very low doses
in animal models of cancer, LB-100 markedly increased the effectiveness of a PD-1 blocker, one of the widely used new immunotherapy drugs.
This finding raises the possibility that LB-100 may further expand the value of the expanding field of cancer immunotherapy.
We
completed a Phase 1 clinical trial of LB-100 to evaluate its safety that showed it is associated with antitumor activity in humans at
doses that are readily tolerable. Responses included objective regression (tumor shrinkage) lasting for 11 months of a pancreatic cancer
and cessation of growth (stabilization of disease) for 4 months or more of 9 other progressive solid tumors out of 20 patients who had
measurable disease. As Phase 1 clinical trials are fundamentally designed to determine safety of a new compound in humans, we were encouraged
by these results. The next step is to demonstrate in Phase 2 clinical trials the efficacy of LB-100 in one or more specific tumor types,
against which the compound has well documented activity in pre-clinical models.
Clinical
Trial Agreements
Moffitt
Cancer Center Clinical Trial Research Agreement
Effective
August 20, 2018, we entered into a Clinical Trial Research Agreement with the Moffitt Cancer Center and Research Institute Hospital Inc.,
Tampa, Florida, effective for a term of five years, unless terminated earlier by us pursuant to 30 days written notice. Pursuant to the
Clinical Trial Research Agreement, Moffitt agreed to conduct and manage a Phase 1b/2 clinical trial to evaluate the therapeutic benefit
of our lead anti-cancer clinical compound LB-100 to be administered intravenously in patients with low or intermediate-1 risk myelodysplastic
syndrome (MDS).
In
November 2018, the Company received approval from the U.S. Food and Drug Administration for its Investigational New Drug Application
(“IND”) to conduct a Phase 1b/2 clinical trial to evaluate the therapeutic benefit of LB-100 in patients with low and intermediate-1
risk MDS who have failed or are intolerant of standard treatment. Patients with MDS, although usually older, are generally well except
for severe anemia requiring frequent blood transfusions. This Phase 1b/2 clinical trial utilizes LB-100 as a single agent in the treatment
of patients with low and intermediate-1 risk MDS, including patients with del(5q) myelodysplastic syndrome (del5qMDS) failing first line
therapy. The bone marrow cells of patients with del5qMDS are deficient in PP2A by virtue of an acquired mutation and are especially vulnerable
to further inhibition of PP2A by LB-100. The clinical trial began at a single site in April 2019 and the first patient was entered into
the clinical trial in July 2019. A total enrollment of 41 patients is planned. An interim analysis will be done after the first 21 patients
are entered. If there are 3 or more responders but fewer than 7, an additional 20 patients will be entered. If at any point there are
7 or more responders, this will be sufficient evidence to support continued development of LB-100 for the treatment of low and intermediate-1
risk MDS. Recruitment has been slow and the Covid-19 pandemic has further reduced recruitment of patients into the protocol. At the current
rate of accrual, the clinical trial is expected to be completed by June 30, 2025. However, with additional funds, the Company would consider
adding two additional MDS centers to the Phase 2 portion of the study to accelerate patient accrual.
Spanish
Sarcoma Group Collaboration Agreement
Effective
July 31, 2019, the Company entered into a Collaboration Agreement for an Investigator-Initiated Clinical Trial with the Spanish Sarcoma
Group (Grupo Español de Investigación en Sarcomas or “GEIS”), Madrid, Spain, to carry out a study entitled
“Randomized phase I/II trial of LB-100 plus doxorubicin vs. doxorubicin alone in first line of advanced soft tissue sarcoma”.
The purpose of this clinical trial is to obtain information with respect to the efficacy and safety of LB-100 combined with doxorubicin
in soft tissue sarcomas. Doxorubicin is the global standard for initial treatment of advanced soft tissue sarcomas (“ASTS”).
Doxorubicin alone has been the mainstay of first line treatment of ASTS for over 40 years, with little therapeutic gain from adding cytotoxic
compounds to or substituting other cytotoxic compounds for doxorubicin. In animal models, LB-100 consistently enhances the anti-tumor
activity of doxorubicin without apparent increases in toxicity.
GEIS
has a network of referral centers in Spain and across Europe that have an impressive track record of efficiently conducting innovative
studies in ASTS. The Company agreed to provide GEIS with a supply of LB-100 to be utilized in the conduct of this clinical trial, as
well as to provide funding for the clinical trial. The goal was to enter approximately 150 patients in this clinical trial over a period
of two years. As advanced sarcoma is a very aggressive disease, the design of the study assumes a median progression free survival (PFS,
no evidence of disease progression or death from any cause) of 4.5 months in the doxorubicin arm and an alternative median PFS of 7.5
months in the doxorubicin plus LB-100 arm to demonstrate a statistically significant decrease in relative risk of progression or death
by adding LB-100. There is a planned interim analysis of the primary endpoint when approximately 50% of the 102 events required for final
analysis is reached.
The
Company had previously expected that this clinical trial would commence during the quarter ended June 30, 2020. However, during July
2020, the Spanish regulatory authority advised the Company that although it had approved the scientific and ethical basis of the protocol,
it required that the Company manufacture new inventory of LB-100 under current Spanish pharmaceutical manufacturing standards. These
regulations were adopted subsequent to the production of the Company’s existing LB-100 inventory.
A
new batch of LB 100 has been prepared and is now undergoing the multitude of analytical studies of the formulated product necessary to
gain approval for use in the European Union. Regulatory reviews by the European Union have been delayed, as a result of which the final
review of the clinical product by Spanish regulatory authorities will also be delayed. Accordingly, the clinical trial is now estimated
to begin during the quarter ending June 30, 2022 and be completed by June 30, 2025.
The
interim analysis of this clinical trial could indicate either inferiority or superiority of LB-100 plus doxorubicin as compared to doxorubicin
alone. A positive study would have the potential to change the standard therapy for this disease after four decades of failure to improve
the marginal benefit of doxorubicin alone.
In
order to manufacture a new inventory supply of LB-100 for the GEIS clinical trial, the Company has engaged a number of vendors to carry
out the multiple tasks needed to make and gain approval of a new clinical product for investigational study in Spain. These tasks include
the synthesis under good manufacturing practices (GMP) of the active pharmacologic ingredient (API), with documentation of each of the
steps involved by an independent auditor. The API is then transferred to a vendor that prepares the clinical drug product, also under
GMP conditions documented by an independent auditor. The clinical drug product is then sent to a vendor to test for purity and sterility,
provide appropriate labels, store the drug, and distribute the drug to the clinical centers for use in the clinical trials. A formal
application documenting all steps taken to prepare the clinical drug product for clinical use must be submitted to the appropriate regulatory
authorities for review and approval before being used in a clinical trial.
On
November 2, 2021, the Company entered into a Development Agreement with Famar Health Care Services Madrid SA to prepare a new batch of
clinical LB-100 for use in clinical trials to be conducted in the European Union.
NCI
Pharmacologic Study
In
May 2019, the National Cancer Institute (NCI) initiated a glioblastoma (GBM) pharmacologic clinical trial. During the fourth quarter
of 2019, the NCI enrolled the first two patients of a planned eight patient pharmacologic study of the ability of LB-100 to enter the
brain and penetrate recurrent brain tumors in patients where surgical removal of the cancers is indicated (clinical trials registry NCT03027388).
This study is being conducted and funded by the NCI under a Cooperative Research and Development Agreement, with the Company being required
to provide the LB-100 clinical compound.
Primary
malignant brain tumors (gliomas) are very challenging to treat. Radiation combined with the chemotherapeutic drug temozolomide has been
the mainstay of therapy of the most aggressive gliomas (glioblastoma multiforme or GBM) for decades, with some further benefit gained
by the addition of one or more anti-cancer drugs, but without major advances in overall survival for the majority of patients. In animal
models of GBM, the Company’s novel protein phosphatase inhibitor, LB-100, has been found to enhance the effectiveness of radiation,
temozolomide chemotherapy treatments and immunotherapy, raising the possibility that LB-100 may improve outcomes of standard GBM treatment
in the clinic. Although LB-100 has proven safe in patients at doses associated with apparent anti-tumor activity against several human
cancers arising outside the brain, the ability of LB-100 to penetrate tumor tissue arising in the brain is not known. Unfortunately,
many drugs potentially useful for GBM treatment do not enter the brain in amounts necessary for anti-cancer action.
The
NCI study is designed to determine the extent to which LB-100 enters recurrent malignant gliomas. Patients having surgery to remove one
or more tumors will receive one dose of LB-100 prior to surgery and have blood and tumor tissue analyzed to determine the amount of LB-100
present and to determine whether the cells in the tumors show the biochemical changes expected to be present if LB-100 reaches its molecular
target. The goal is to obtain data in up to eight patients. As a result of the innovative design of the NCI study, data from so few patients
should be sufficient to provide a sound rationale for conducting a larger clinical trial to determine the effectiveness of adding LB-100
to the standard treatment regimen for GBMs.
The
neurosurgical unit at the NCI, which had been closed due to the Covid-19 epidemic, has reopened, and patient accrual has resumed. Patient
entry remains at two, with the goal to enter eight patients before analyzing results. There is an urgent need to improve therapy for
this type of aggressive brain tumor. If the NCI study shows that LB-100 does penetrate the brain, a clinical study of LB-100 in combination
with standard therapy for GBM, the drug temozolomide and radiation, both of which have been well documented in pre-clinical studies to
be significantly enhanced by LB-100, would be of significant interest to neuro-oncologists frustrated by decades of limited advances
in therapy for this common brain tumor in adults.
Clinical
Research Support Agreement with City of Hope National Medical Center
Effective
January 18, 2021, the Company executed a Clinical Research Support Agreement with the City of Hope National Medical Center, an NCI-designated
comprehensive cancer center, and City of Hope Medical Foundation (collectively, “City of Hope”), to carry out a Phase 1b
clinical trial of LB-100, the Company’s first-in-class protein phosphatase inhibitor, combined with a standard regimen for treatment
of untreated extensive- stage disease small cell lung cancer (ED-SCLC). LB-100 will be given in combination with carboplatin, etoposide
and atezolizumab, an FDA-approved but marginally effective regimen, to previously untreated ED-SCLC patients. The dose of LB-100 will
be escalated with the standard fixed doses of the 3-drug regimen to reach a recommended Phase 2 dose (RP2D). Patient entry will be expanded
so that a total of 12 patients will be evaluable at the RP2D to confirm the safety of the LB-100 combination and to look for potential
therapeutic activity as assessed by objective response rate, duration of overall response, progression-free-survival and overall survival.
The
clinical trial was initiated on March 9, 2021, with patient accrual expected to take approximately two years to complete. If LB-100 does
potentiate the benefit of the standard regimen, some evidence could be noted at 12 months into the clinical trial, but an assessment
of potential increased activity is likely to require at least 24 months. The Company is currently seeking to add two additional centers
to increase the rate of accrual. The Company expects this clinical trial to be completed by June 30, 2024.
This
clinical trial is based upon a target of 42 enrollees. If a significant number of patients fail during the dose-escalation process, an
increase of up to 12 patients would likely be necessary. The Company currently expects that enrollment in this clinical trial will range
from approximately 18 to 30 enrollees, with 24 enrollees as the most likely number. Should fewer than 42 enrollees be required, the Company
has agreed to compensate City of Hope on a per enrollee basis
Clinical
Trial Monitoring Agreements
Moffitt.
On September 12, 2018, the Company finalized a work order agreement with Theradex Systems, Inc. (“Theradex”), an international
contract research organization (“CRO”), to monitor the Phase 1b/2 clinical trial being managed and conducted by Moffitt.
The clinical trial began in April 2019 and the first patient was entered into the clinical trial in July 2019. At the current rate of
accrual, the clinical trial is expected to be completed by June 30, 2025.
City
of Hope. On February 5, 2021, the Company signed a new work order agreement with Theradex to monitor the City of Hope investigator-initiated
clinical trial in small cell lung cancer in accordance with FDA requirements for oversight by the sponsoring party.
Patent
and License Agreements
On
March 22, 2018, the Company entered into a Patent Assignment and Exploitation Agreement with INSERM TRANSFERT SA, acting as delegatee
of the French National Institute of Health and Medical Research, for the assignment to the Company of INSERM’S interest in United
States Patent No. 9,833,450 entitled “Oxabicyloheptanes and Oxabicycloheptenes for the Treatment of Depressive and Stress Disorders”,
which was filed with the United States Patent and Trademark Office in the name of INSERM and the Company as co-owners on February 19,
2015 and granted on May 12, 2017, and related patent applications and filings. INSERM is a French public institution dedicated to research
in the field of health and medicine that had previously entered into a Material Transfer Agreement with the Company to allow INSERM to
conduct research on the Company’s proprietary compound LB-100 and/or its analogs for the treatment of depressive or stress disorders
in humans. Pursuant to the Agreement, the Company has agreed to make certain milestone payments to INSERM aggregating up to $1,750,000
upon achievement of development milestones and up to $6,500,000 upon achievement of commercial milestones. The Company also agreed to
pay INSERM certain commercial royalties on net sales of products attributed to the Agreement. The Company’s initial plan was to
complete the validation process to evaluate LB-100 for the treatment of depressive or stress disorders in humans within three years;
however, the exploitation of this patent for the treatment of depressive and stress disorders in humans will require substantial additional
capital and/or a joint venture or other type of business arrangement with a pharmaceutical company with substantially greater capital
and business resources than those available to the Company. As there can be no assurances that the Company will be able to obtain the
capital or business resources necessary to focus on the exploitation of this patent, it is uncertain as to when, if at all, the Company
may reach any of the development or commercialization milestones under the Agreement. As of December 31, 2021 and 2020, no amounts were
due under this agreement.
Effective
August 20, 2018, the Company entered into an Exclusive License Agreement with Moffitt. Pursuant to the License Agreement, Moffitt granted
the Company an exclusive license under certain patents owned by Moffitt (the “Licensed Patents”) relating to the treatment
of MDS and a non-exclusive license under inventions, concepts, processes, information, data, know-how, research results, clinical data,
and the like (other than the Licensed Patents) necessary or useful for the practice of any claim under the Licensed Patents or the use,
development, manufacture or sale of any product for the treatment of MDS which would otherwise infringe a valid claim under the Licensed
Patents. The Company was obligated to pay Moffitt a non-refundable license issue fee of $25,000 after the first patient is entered into
a Phase 1b/2 clinical trial to be managed and conducted by Moffitt. The clinical trial began at a single site in April 2019 and the first
patient was entered into the clinical trial in July 2019. The Company is also obligated to pay Moffitt an annual license maintenance
fee of $25,000 commencing on the first anniversary of the Effective Date and every anniversary thereafter until the Company commences
payment of minimum royalty payments. The Company has also agreed to pay non-refundable milestone payments to Moffitt, which cannot be
credited against earned royalties payable by the Company, based on reaching various clinical and commercial milestones aggregating $1,897,000,
subject to reduction by 40% under certain circumstances relating to the status of Valid Claims, as such term is defined in the License
Agreement. During the years ended December 31, 2021 and 2020, the Company recorded charges to operations of $24,999 and $25,001, respectively,
in connection with its obligations under the License Agreement. As of December 31, 2021, no milestones had yet been attained.
The
Company will be obligated to pay Moffitt earned royalties of 4% on worldwide cumulative net sales of royalty-bearing products, subject
to reduction to 2% under certain circumstances, on a quarterly basis, with a minimum royalty payment of $50,000 in the first four years
after sales commence, and $100,000 in year five and each year thereafter, subject to reduction by 40% under certain circumstances relating
to the status of Valid Claims, as such term is defined in the License Agreement. The Company’s obligation to pay earned royalties
under the License Agreement commences on the date of the first sale of a royalty-bearing product, and shall automatically expire on a
country-by-country basis on the date on which the last valid claim of the Licensed Patents expires, lapses or is declared invalid, and
the obligation to pay any earned royalties under the License Agreement shall terminate on the date on which the last valid claim of the
Licensed Patents expires, lapses, or is declared to be invalid in all countries.
Other
Significant Agreements and Contracts
On
December 24, 2013, the Company entered into an agreement with NDA Consulting Corp. for consultation and advice in the field of oncology
research and drug development. As part of the agreement, NDA also agreed to cause its president, Dr. Daniel D. Von Hoff, M.D., to become
a member of the Company’s Scientific Advisory Committee. The term of the agreement was for one year. The agreement has been automatically
renewed for additional one-year terms on its anniversary date since 2014.
Effective
September 14, 2015, the Company entered into a Collaboration Agreement with BioPharmaWorks, pursuant to which the Company engaged BioPharmaWorks
to perform certain services for the Company. Those services included, among other things: (a) assisting the Company to (i) commercialize
its products and strengthen its patent portfolio, (ii) identify large pharmaceutical companies with potential interest in the Company’s
product pipeline, and (iii) prepare and deliver presentations concerning the Company’s products; (b) at the request of the Board
of Directors, serving as backup management for up to three months should the Company’s Chief Executive Officer and scientific leader
be temporarily unable to carry out his duties; (c) being available for consultation in drug discovery and development; and (d) identifying
providers and overseeing tasks relating to clinical use and commercialization of new compounds.
BioPharmaWorks
was founded in 2015 by former Pfizer scientists with extensive multi-disciplinary research and development and drug development experience.
The Collaboration Agreement was for an initial term of two years and automatically renews for subsequent annual periods unless terminated
by a party not less than 60 days prior to the expiration of the applicable period.
Effective
August 12, 2020, the Company entered into a Master Service Agreement with the Foundation for Angelman Syndrome Therapy (FAST) to collaborate
in supporting pre-clinical studies of the potential benefit of LB-100 in a mouse model of Angelman Syndrome (AS) as reported in The Proceedings
of The National Academy of Science (Wang et al, June 3, 2019). The pre-clinical studies will be conducted at The University of California
- Davis under the direction of Dr. David Segal, an internationally recognized leader in AS research. If the pre-clinical studies confirm
that LB-100 reduces AS signs in rodent models, the Company has agreed to enter into discussions with FAST with respect to possible collaborations
to most efficiently assess the benefit of LB-100 in patients with AS, which is a rare disease affecting an estimated one out of 12,000
to one out of 20,000 persons in the United States. The genetic cause of AS, reduced function of a specific maternal gene called Ube3,
has been understood for some time, but the molecular abnormality resulting from the genetic lesion has now been shown to be increased
concentrations of protein phosphatase 2A (PP2A), a molecular target of the Company’s investigational compound, LB-100. The Company
has agreed to provide FAST with a supply of LB-100 to be utilized in the conduct of this study, which is initially expected to be completed
within three years. Conditioned on FAST’s completion of this study, the Company has agreed to pay FAST five percent (5%) of all
proceeds, as defined in the Master Service Agreement, received by the Company, up to a maximum of $250,000 from the exploitation of the
study results.
The
research team at the University of California, Davis recently completed their pre-clinical study of the potential benefit of LB-100 in
a mouse model of AS, and the results are currently under review by FAST. The preliminary analysis indicates that the positive results
previously reported by Chinese investigators were not confirmed in the US model. The Company is awaiting input from FAST as to whether
it intends to continue to pursue pre-clinical studies of LB 100.
On
October 8, 2021, the Company entered into a Development Collaboration Agreement with the Netherlands Cancer Institute, Amsterdam (NKI),
one of the world’s leading comprehensive cancer centers, and Oncode Institute, Utrecht, a major independent cancer research center,
to identify the most promising drugs to be combined with LB-100, and potentially LB-100 analogues, to be used to treat a range of cancers,
as well as to identify the specific molecular mechanisms underlying the identified combinations. The Company has agreed to fund the study
and provide a sufficient supply of LB-100 to conduct the study. The study is expected to take approximately two years to conduct.
Potential
Future Clinical Trials
Presented
below is a clinical trial that we would currently consider conducting over the next few years. We expect that this potential clinical
trial, and the details thereof, will change over time as we obtain more clinical information on LB-100. Our ability to conduct this clinical
trial, and possibly other clinical trials, is subject to the availability of sufficient additional financial resources.
The
Phase 1b/2 clinical trial in LB-100 plus a PD-1 inhibitor in yet to be specified solid tumors would require additional financing in excess
of that currently budgeted to fund a Phase 1b/2 clinical trial in myelodysplastic syndrome that began in April 2019, and/or partnering
relationships with other pharmaceutical companies, in order for us to undertake and complete such clinical studies. From time to time,
we engage discussions with various parties with respect to the financing of these clinical studies, although there can be no assurances
that we will be able to obtain such financing and/or partnering relationships on acceptable terms or at all. Our longer-term objective
is to secure one or more strategic partnerships with pharmaceutical companies with major programs in cancer research and drug development.
Intellectual
Property
Our
products will ultimately be based on our intellectual property and are expected to be covered by our patents. These patents now cover
sole rights to the composition and synthesis of the LB-100 and LB-200 series of drugs, with coverage of the LB-200 series now limited
to those patents issued in the United States. Joint patent applications with the NIH have been filed for the treatment of glioblastoma
multiforme, medulloblastoma, and neuroblastoma. We have also filed patent applications for the use of certain homologs of both series
of drugs for the treatment of neurodegenerative diseases such as Alzheimer’s Disease and Parkinson’s Disease, Amyotrophic
Lateral Sclerosis (ALS, or Lou Gehrig’s Disease), stroke, and traumatic brain injury, and patent applications for the use of homologs
of the LB-200 series for the treatment of serious systemic fungal infections and for the treatment of common fungal infections of the
skin and nails.
Patent
applications for the LB-100 series (oxabicycloheptanes and heptenes) and the LB-200 series (histone deacetylase inhibitors; HDACi) have
been filed in the United States and internationally under the Patent Cooperation Treaty. Patents for composition of matter and for several
uses of both the LB-100 series and the LB-200 series have been issued in the United States, Mexico, Australia, Japan, China, Hong Kong,
Canada, Germany, France, the United Kingdom, and by the European Patent Office and the Eurasian Patent Office. For the LB-200 series,
only patents issued in the United States are being maintained.
The
Company strives to protect and enhance the proprietary technology, inventions, and improvements that are commercially important to the
development of its business, including seeking, maintaining, and defending its patent rights. The Company also relies on trade secrets
relating to its proprietary pipeline of product candidates and on know-how and continuing technological innovation to develop and strengthen
its pipeline. The Company intends to rely on regulatory protection afforded by regulatory agencies through data exclusivity, market exclusivity,
and patent term extensions, where available.
The
Company’s success will depend in large part on its ability to obtain and maintain patent and other proprietary protection for commercially
important technology, inventions and know-how related to its business; defend and enforce its patents; preserve the confidentiality of
its trade secrets; and operate without infringing valid and enforceable patents or proprietary rights of third parties. The Company’s
ability to stop third parties from making, using, selling, offering to sell, or importing our technology may depend on the extent to
which the Company has rights under valid and enforceable licenses, patents, or trade secrets that cover these activities. In some cases,
enforcement of these rights may depend on cooperation of the joint owners of our jointly owned patents and patent applications.
With
respect to both the Company’s solely and jointly owned intellectual property, the Company cannot be sure that patents will be granted
on any of its pending patent applications or on any patent applications filed solely or jointly by the Company in the future; we cannot
be sure that any of the Company’s existing patents or any patents that may be granted to us in the future will be commercially
useful in protecting the Company’s commercial products or therapeutic method; and the Company cannot be sure that an agency or
court would determine that the Company’s solely or jointly owned patents are valid and enforceable.
A
descriptive summary of the patent portfolio for the Company’s most important clinical programs involving the development of LB-100
is presented below, followed by a detailed listing of each domestic and international patent that has been issued. Lixte Biotechnology,
Inc. is the Company’s wholly-owned Delaware subsidiary. The projected patent expiration dates noted below assume that that all
required maintenance or annuity fees for the patents are timely paid and that a court or agency does not determine that the patents are
invalid or unenforceable.
LB-100.
The Company’s lead compound LB-100 is covered by U.S. Patent Nos. 8,822,461 and 7,998,957, which are solely owned by Lixte Biotechnology,
Inc. These patents are projected to expire in 2030 or 2028, exclusive of any available patent term extension. Counterpart non-U.S. patents
are projected to expire in 2028. Pharmaceutical compositions of LB-100 are covered by U.S. Patent Nos. 10,532,050, 10,023,587 and 8,822,461,
which are solely owned by Lixte Biotechnology, Inc. These patents and their non-U.S. counterparts are projected to expire in 2034 or
2028, exclusive of any available patent term extension.
LB-100
Combination Therapy with a Checkpoint Inhibitor. LB-100 combination therapy with a checkpoint inhibitor for treating gliomas
is covered by pending U.S. and non-U.S. patent applications. These patent applications are jointly owned by Lixte Biotechnology, Inc.
and The United States of America, as represented by the Secretary, Department of Health and Human Services. Patents issuing from these
patent applications are projected to expire in 2037, exclusive of any patent term extension.
LB-100
Combination Therapy with Carboplatin, Etoposide or Atezolizumab. LB-100 combination therapy with carboplatin, etoposide or atezolizumab
for treating small-cell lung cancer is covered by an international patent application that is solely owned by Lixte Biotechnology, Inc.
Patents issuing from this patent application are projected to expire in 2041, exclusive of any patent term extension.
LB-100
Combination Therapy with Other Investigational Compounds. LB-100 combination therapy with one of several other investigational
compounds for treating a wide-array of cancers is covered by a U.S. provisional patent application that is jointly owned by Lixte Biotechnology,
Inc. and Stichting Het Nederlands Kanker Instituut – Antoni Van Leeuwenhoek Ziekenhuis. Patents issuing from counterpart nonprovisional
applications are projected to expire in 2043, exclusive of any patent term extension.
LB-100
Therapeutic Methods. Administration of LB-100 for treating myelodysplastic syndrome is covered by U.S. Patent Nos. 10,434,100
and 10,071,094, which are jointly owned by Lixte Biotechnology, Inc. and H. Lee Moffitt Cancer Center and Research Institute, Inc. These
patents and their non-U.S. counterparts are projected to expire in 2035, exclusive of any patent term extension. Administration of LB-100
for treating breast cancer, colon cancer, large cell lung cancer, adenocarcinoma of the lung, small cell lung cancer, stomach cancer,
liver cancer, ovary adenocarcinoma, pancreas carcinoma, prostate carcinoma, promyelocytic leukemia, chronic myelocytic leukemia or acute
lymphocytic leukemia, is covered by U.S. Patent No. 9,079,917, which is solely owned by Lixte Biotechnology, Inc. This patent and its
non-U.S. counterparts are projected to expire in 2028, exclusive of any patent term extension.
LB-100
Prodrugs. The Company’s LB-100 prodrugs are covered by U.S. Patent Nos. 10,618,908, 9,988,394, 8,822,461, 8,227,473 and
7,998,957, which are solely owned by Lixte Biotechnology, Inc. These patents and their non-U.S. counterparts are projected to expire
in 2036, 2030 or 2028, exclusive of any patent term extension. Pharmaceutical compositions of LB-100 prodrugs are covered by U.S. Patent
Nos. 11,236,102, 10,532,050, 10,023,587, 8,822,461, 8,227,473 and 7,998,957, which are solely owned by Lixte Biotechnology, Inc. These
patents and their non-U.S. counterparts are projected to expire in 2034, 2030 or 2028, exclusive of any patent term extension.
Our
portfolio of domestic and international patents issued is summarized below. We have additional domestic and international patents pending.
LB-100
Series of Compounds - Phosphatase Inhibitors – Composition and Use in Cancer Treatment
Oxabicycloheptanes
and Oxabicycloheptenes, Their Preparation and Use
LB-100
and LB-200 Series of Compounds – Use in Treatment of Multiple CNS Diseases
Neuroprotective
Agents for the Prevention and Treatment of Neurodegenerative Diseases
Oxabicycloheptanes
and Oxabicycloheptenes for the Treatment of Reperfusion Injury
Oxabicycloheptanes
and Oxabicycloheptenes for the Treatment of Depressive and Stress Disorders
HDAC
Inhibitors
Oxabicycloheptanes
and Oxabicycloheptenes for the Treatment of Diabetes
Formulations
of Oxabicycloheptanes and Oxabicycloheptenes
Process
of Synthesizing 3-(4-Methylpiperazine-1-Carbonyl)-7-Oxabicyclo [2.2.1] Heptane-2-Carboxylic Acid
Protein
Phosphatase 2A Inhibitors for Treating Myelodysplastic Syndromes
Oxabicycloheptane
Prodrugs
The
Market
Anti-Cancer
Drugs
We
have developed two series of pharmacologically active drugs, the LB-100 series and the LB-200 series. We believe that the mechanism by
which compounds of the LB-100 series affect cancer cell growth is different from cancer agents currently approved for clinical use. Lead
compounds from each series have activity against a broad spectrum of common and rarer human cancers in cell culture systems. In addition,
compounds from both series have anti-cancer activity in animal models of glioblastoma multiforme, neuroblastoma, and medulloblastoma,
all cancers of neural tissue. Lead compounds of the LB-100 series also have activity against melanoma, breast cancer and sarcoma in animal
models and enhance the effectiveness of commonly used anti-cancer drugs in animal models. The enhancement of anti-cancer activity of
these anti-cancer drugs occurs at doses of LB-100 that do not significantly increase toxicity in animals. It is therefore hoped that
when combined with standard anti-cancer regimens against many tumor types, our compounds will improve therapeutic benefit without enhancing
toxicity in humans.
Marketing
Plan
Our
primary goal to date has been to take our primary compound, LB-100, through Phase 2 clinical trials. Because of the novelty and spectrum
of activity of LB-100, we believe it is reasonably likely we may find a partner in the pharmaceutical industry with interest in this
compound at some stage of its clinical development. However, we would prefer to delay the partnering/licensing decision until the potential
value of our products are augmented by demonstrating there is no impediment to clinical evaluation and a therapeutic dose level is determined
in clinical trials. Demonstration of clinical usefulness would be expected to substantially increase the value of our product.
Research
and Development
Further
development of lead compounds in addition to LB-100 will require pharmacokinetic/ pharmacodynamic characterization (i.e., how long a
drug persists in the blood and how long the drug is active at the intended target) and large animal toxicologic evaluation under conditions
meeting FDA requirements. Most anti-cancer drugs fail in development because of unacceptable toxicity. However, by analogy with mechanistically
related compounds, there is good reason to believe that lead compounds in addition to LB-100 will be able to be given to humans safely
by routes and at doses resulting in concentration of drug producing anti-cancer activity in animal models.
One
of our most valuable resources is our scientific team, a coalition of various experts brought together through contracts and other collaborative
arrangements. The team has expertise in cancer biology, proteomics (cancer biomarkers), medicinal and synthetic chemistry, pharmacology,
clinical oncology and drug evaluation. In a relatively short period of time and at low cost, this group has developed lead compounds
of two different classes of drugs that are positioned for development as new treatments for several types of cancer.
Product
Development
We
are subject to FDA regulations as it conducts clinical trials. Additionally, any product for which we obtain marketing approval, along
with the manufacturing processes, post-approval clinical data and promotional activities for such product, will be subject to continual
review and periodic inspections by the FDA and other regulatory bodies. Even if regulatory approval of a product is granted, the approval
may be subject to limitations on the indicated uses for which the product may be marketed or contain requirements for costly post-marketing
testing and surveillance to monitor the safety or efficacy of the product. Later discovery of previously unknown problems with our products,
including unanticipated adverse events or adverse events of unanticipated severity or frequency, manufacturer or manufacturing processes,
or failure to comply with regulatory requirements, may result in restrictions on such products or manufacturing processes, withdrawal
of the products from the market, voluntary or mandatory recall, fines, suspension of regulatory approvals, product seizures, injunctions
or the imposition of civil or criminal penalties.
Competition
The
life sciences industry is highly competitive and subject to rapid and profound technological change. Our present and potential competitors
include major pharmaceutical companies, as well as specialized biotechnology and life sciences firms in the United States and in other
countries. Most of these companies have considerably greater financial, technical and marketing resources than we do. Additionally, mergers
and acquisitions in the pharmaceutical and biotechnology industries may result in even more resources being concentrated in our competitors.
Our existing or prospective competitors may develop processes or products that are more effective than ours or be more effective at implementing
their technologies to develop commercial products faster. Our competitors may succeed in obtaining patent protection and/or receiving
regulatory approval for commercializing products before we do. Developments by our competitors may render our product candidates obsolete
or non-competitive.
We
also experience competition from universities and other research institutions, and we are likely to compete with others in acquiring
technology from those sources. There can be no assurance that other organizations will not develop technologies with significant advantages
over those that we are seeking to develop. Any such development could harm our business.
We
compete with universities and other research institutions engaged in research in these areas. Many of our competitors have greater technical
and financial resources than we do.
Our
ability to compete successfully is based on numerous factors, including:
If
we are unable to distinguish our products from competing products, or if competing products reach the market first, we may be unable
to compete successfully with current or future competitors.
Employees
and Human Capital Resources
As
of March 11, 2022, we had three full-time officer/employees and one part-time officer/employee. The Company relies to a significant extent
on outside consultants and advisors with various technical skills and expertise that the Company can draw on as necessary to conduct
its research and development and clinical trial programs. We consider our relationship with our employees to be good. Our future performance
depends significantly upon the continued service of our key personnel and our ability to attract highly skilled employees. We provide
our employees with opportunities for equity ownership.
Facilities
As
of March 11, 2022, we do not operate any facilities. We contract out research and development activities, drug production, and drug storage
to various commercial laboratories, drug manufacturers and storage facilities.
Government
Regulation
Our
business is subject to the regulations of the FDA as it conducts clinical trials. Clinical trials are research studies to answer specific
questions about new therapies or new ways of using known treatments. Clinical trials determine whether new drugs or treatments are both
safe and effective and the FDA has determined that carefully conducted clinical trials are the fastest and safest way to find treatments
that work in people.
The
FDA also requires that an independent review body consider the benefits and risks of a clinical trial and grant approval for the proposed
study including selecting of initial doses, plans for escalation of dose, plans for modification of dose if toxicity is encountered,
plans for monitoring the wellbeing of individuals participating in the study, and for defining and measuring, to the extent possible,
any untoward effects related to drug administration. Serious adverse effects, such as life-threatening toxicities and death, are immediately
reportable to the review body and to the FDA. To minimize risk when studying a new drug, the initial dose is well below that expected
to cause any toxicity. No more than three patients are entered at a given dose. In general, a dose is not escalated within an individual
patient. Once safety is established by the absence of toxicity or low toxicity in a group of three patients, a planned higher dose is
then evaluated in a subsequent group of three individuals and so on until dose-limiting toxicity is encountered. The dose level producing
definite but acceptable toxicity is then selected as the dose level to be evaluated in Phase 2 trials. Thus, the goal of Phase 1 studies
is to determine the appropriate dose level for evaluation of drug efficacy in patients with the same type of tumor at comparable stages
of progression for which no beneficial treatment is established.
In
addition to regulations imposed by the FDA, depending on our future activities, we may become subject to regulation under various federal
and state statutes and regulations, such as the Occupational Safety and Health Act, the Environmental Protection Act, the Toxic Substances
Control Act, the Research Conservation and Recovery Act, national restrictions on technology transfer, and import, export and customs
regulations. From time to time, other federal agencies and congressional committees have indicated an interest in implementing further
regulation of biotechnology applications. We are not able to predict whether any such regulations will be adopted or whether, if adopted,
such regulations will apply to our business, or whether we or our collaborators would be able to comply with any applicable regulations.
In
addition, as we intend to market our products in international markets, we may be required to obtain separate regulatory approvals from
the European Union and many other foreign jurisdictions. Approval by the FDA does not ensure approval by regulatory authorities in other
countries, and approval by one foreign regulatory authority does not ensure approval by regulatory authorities in other foreign countries
or by the FDA. We may not be able to file for regulatory approvals and may not receive necessary approvals to commercialize our products
in any market.
Legal
Proceedings
We
may be involved from time to time in ordinary litigation, negotiation, and settlement matters that will not have a material effect on
our operations or finances. We are not currently party to any material legal proceedings, and we are not aware of any pending or threatened
litigation against us.
ITEM
1A. RISK FACTORS
The
following risk factors, together with the other information presented in this document, including the financial statements and the notes
thereto, should be considered by investors.