Item 1A. Risk Factors
An
investment in our common stock is speculative and involves a high degree of risk, including a risk of loss of your entire investment.
You should carefully consider the risks described below and the other information in this Annual Report before purchasing shares
of our common stock. The risks and uncertainties described below are not the only ones facing us. Additional risks and uncertainties
may also adversely impair our business operations. If any of the events described in the risk factors below actually occur, our
business, financial condition or results of operations could suffer significantly. In such event, the value of our common stock
could decline, and you could lose all or a substantial portion of the money that you pay for our common stock.
Summary
of Risk Factors
● We are early in our development efforts, which may not be successful.
● We face competition from other biotechnology and pharmaceutical companies.
● An active public trading market for our common stock may not be sustained.
● Our share price has been and could remain volatile.
Risks
Related to Our Financial Position and Need for Additional Capital
We
have incurred significant losses since our inception. We expect to incur losses over the next several years and may never achieve
or maintain profitability.
We
have incurred significant operating losses in every year since inception and expect to incur net operating losses for the foreseeable
future. Our net loss was $22.4 million and $17.4 million for the years ended December 31, 2020 and 2019, respectively. As of December
31, 2020, we had an accumulated deficit of $107.5 million. We do not know whether or when we will become profitable. To date,
we have not generated any revenues from product sales and have financed our operations through private placements and public offerings
of our equity securities and, to a lesser extent, through funding from the Cystic Fibrosis Foundation, or CFF, and the National
Institutes of Health, or the NIH. We have devoted substantially all of our financial resources and efforts to the research and
development of potential product candidates. We are still in the early stages of development of our product candidates, and we
have not completed development of any product candidate. We expect to continue to incur significant expenses and operating losses
over the next several years. Our net losses may fluctuate significantly from quarter to quarter and year to year. Net losses and
negative cash flows have had, and will continue to have, an adverse effect on our stockholders’ deficit and working capital.
We anticipate that our expenses will increase substantially if and as we:
● seek to discover and develop additional product candidates;
● maintain, expand and protect our intellectual property portfolio;
● hire additional clinical, quality control and scientific personnel; and
Our
ability to become and remain profitable depends on our ability to generate revenue. We do not expect to generate significant revenue
until we are able to obtain marketing approval for, and successfully commercialize, one or more of our product candidates. This
will require us to be successful in a range of challenging activities, including completing preclinical testing and clinical trials
of our product candidates, discovering additional product candidates, obtaining regulatory approval for these product candidates,
manufacturing, marketing and selling any products for which we may obtain regulatory approval, satisfying any post-marketing requirements
and obtaining reimbursement for our products from private insurance or government payors. We are only in the preliminary stages
of most of these activities and have not yet commenced other of these activities. We may never succeed in these activities and,
even if we do, may never generate revenues that are significant enough to achieve profitability.
Because
of the numerous risks and uncertainties associated with pharmaceutical product development, we are unable to accurately predict
the timing or amount of increased expenses or when, or if, we will be able to achieve profitability. If we are required by the
U.S. Food and Drug Administration, or the FDA, or comparable non-U.S. regulatory authorities to perform studies in addition to
those currently expected, or if there are any delays in completing our clinical trials or the development of any of our product
candidates, our expenses could increase.
Even
if we do achieve profitability, we may not be able to sustain or increase profitability on a quarterly or annual basis. Our failure
to become and remain profitable would decrease the value of our company and could impair our ability to raise capital, expand
our business, maintain our research and development efforts, diversify our pipeline of product candidates or even continue our
operations. A decline in the value of our company could also cause you to lose all or part of your investment.
We
will need substantial additional funding. If we are unable to raise capital when needed, we could be forced to delay, reduce or
eliminate our product development programs or commercialization efforts.
We
expect our expenses to increase in connection with our ongoing activities, particularly as we conduct additional preclinical and
clinical studies of our ongoing Phase 2 clinical trial of MAT2203 in CM, our preclinical toxicology program for MAT2501, conduct
additional preclinical and clinical trials to further validate and expand our LNC platform delivery technology, continue research
and development, initiate clinical trials and, if development succeeds, seek regulatory approval of our product candidates. Our
expenses could further increase if we initiate new research and preclinical development efforts for other product candidates.
In addition, if we obtain regulatory approval for any of our product candidates, we expect to incur significant commercialization
expenses related to product manufacturing, marketing, sales and distribution. Furthermore, we expect to incur significant additional
costs associated with operating as a public company, particularly as we cease to qualify as an “emerging growth company.”
Accordingly, we will need to obtain substantial additional funding in connection with our continuing operations. If we are unable
to raise capital when needed or on attractive terms, we could be forced to delay, reduce or eliminate our research and development
programs or any future commercialization efforts.
We
believe that our existing cash, cash equivalents and marketable securities, including restricted cash, of approximately $59.0
million as of December 31, 2020, plus an additional approximately $5.6 million in net proceeds from the sale of our common stock
in January 2021, will enable us to fund our operating expenses and capital expenditure requirements into 2024. We have based this
estimate on assumptions that may prove to be wrong in the future, and we could use our capital resources sooner than we currently
expect. Changing circumstances could cause us to consume capital significantly faster than we currently anticipate, and we may
need to spend more money than currently expected because of circumstances beyond our control. Our future capital requirements,
both short-term and long-term, will depend on many factors, including:
● the extent to which we acquire or in-license other products and technologies;
● the costs of operating as a public company; and
● the effect of competing technological and market developments.
Identifying
potential product candidates and conducting preclinical testing and clinical trials is a time-consuming, expensive and uncertain
process that takes years to complete, and we may never generate the necessary data or results required to obtain regulatory approval
and achieve product sales. In addition, our product candidates, if approved, may not achieve commercial success. Our commercial
revenues, if any, will be derived from sales of products that we do not expect to be commercially available for many years, if
at all. Accordingly, we will need to continue to rely on additional financing to achieve our business objectives. Adequate additional
financing may not be available to us on acceptable terms, or at all. In addition, we may seek additional capital due to favorable
market conditions or strategic considerations, even if we believe we have sufficient funds for our current or future operating
plans.
Raising
additional capital may cause dilution to our stockholders, restrict our operations or require us to relinquish rights to our technologies
or product candidates.
Until
such time, if ever, as we can generate product revenues sufficient to achieve profitability, we expect to finance our cash needs
through a combination of public or private equity offerings, debt financings, government or other third-party funding, collaborations
and licensing arrangements. We do not have any committed external source of funds other than limited grant funding from the NIH
and the CFF. To the extent that we raise additional capital through the sale of common stock, convertible securities or other
equity securities, your ownership interest may be materially diluted, and the terms of these securities may include liquidation
or other preferences and anti-dilution protections that could adversely affect your rights as a common stockholder. Debt financing
and preferred equity financing, if available, would result in increased fixed payment obligations and may involve agreements that
include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital
expenditures or declaring dividends, that could adversely impact our ability to conduct our business. Securing additional financing
could require a substantial amount of time and attention from our management and may divert a disproportionate amount of their
attention away from day-to-day activities, which may adversely affect our management’s ability to oversee the development
of our product candidates.
If
we raise additional funds through collaborations, strategic alliances or marketing, distribution or licensing arrangements with
third parties, we may have to relinquish valuable rights to our technologies, future revenue streams, research programs or product
candidates or grant licenses on terms that may not be favorable to us. If we are unable to raise additional funds through equity
or debt financings when needed, we may be required to delay, limit, reduce or terminate our product development or future commercialization
efforts or grant rights to develop and market product candidates that we would otherwise prefer to develop and market ourselves.
Our
stockholders may be subject to substantial dilution by exercises of outstanding options and warrants, conversion of preferred
shares and by the future issuance of common stock to the former stockholders of Aquarius pursuant to the terms of the merger agreement.
As
of December 31, 2020, we had outstanding options to purchase an aggregate of 22,550,715 shares of our common stock at a weighted
average exercise price of $1.26 per share and warrants to purchase an aggregate of 1,327,810 shares of our common stock at a weighted
average exercise price of $0.55 per share. In addition, as of December 31, 2020, we had 4,361 shares of Series B Preferred Stock
outstanding. Each share of Series B Preferred Stock may be converted into 2,000 shares of common stock upon the earlier of (i)
the request of the holder (ii) the first FDA approval of one of our product candidates, (iii) June 19, 2021 and (iv) the consent
of the holders of a majority of the Series B then outstanding. The conversion of preferred shares and the exercise of such outstanding
options and the warrants, will result in dilution of the value of our shares. In addition, pursuant to the terms of the merger
agreement with Matinas BioPharma Nanotechnologies, Inc. (f/k/a Aquarius Biotechnologies, Inc.), we will be required to issue up
to an additional 3,000,000 shares of our common stock upon the achievement of certain milestones. The milestone consideration
consists of (i) 1,500,000 shares issuable upon the dosing of the first patient in a phase III trial sponsored by us for a product
utilizing the LNC platform delivery technology and (ii) 1,500,000 shares issuable upon FDA approval of the first NDA submitted
by us for a product utilizing the LNC platform delivery technology.
Our
operating history to date may make it difficult for you to evaluate the success of our business to date and to assess our future
viability.
We
commenced active operations in 2013 and our product candidates are in early stages of clinical development. We have not yet demonstrated
our ability to successfully obtain regulatory approvals for any of our product candidates, manufacture a commercial scale product,
or arrange for a third party to do so on our behalf, or conduct sales and marketing activities necessary for successful product
commercialization. Consequently, any predictions you make about our future success or viability may not be as accurate as they
could be if we had a longer operating history.
In
addition, we may encounter unforeseen expenses, difficulties, complications, delays and other known and unknown factors. Even
if we obtain regulatory approval, we will need to transition from a company with a research and development focus to a company
capable of supporting commercial activities. We may not be successful in such a transition.
We
expect our financial condition and operating results to continue to fluctuate significantly from quarter-to-quarter and year-to-year
due to a variety of factors, many of which are beyond our control. Accordingly, you should not rely upon the results of any quarterly
or annual periods as indications of future operating performance.
U.S.
federal income tax reform could materially affect our tax obligations and effective tax rate.
On
December 22, 2017, the Tax Cuts and Jobs Act, or the Tax Act, was signed into law, significantly reforming the tax code. The Tax
Act, among other things, includes changes to U.S. federal tax rates, imposes significant additional limitations on the deductibility
of interest, limits net operating loss (NOL) deductions, allows for the expensing of capital expenditures, puts into effect the
migration from a “worldwide” system of taxation to a territorial system and modifies or repeals many business deductions
and credits. The estimated impact of the Tax Act is based on our management’s current knowledge and assumptions, and recognized
impacts could be materially different from current estimates based on our actual results and our further analysis of the new law.
We
continue to examine the impact this tax reform legislation may have on our business. The Tax Act requires complex computations
not previously provided in U.S. tax law. As such, the application of accounting guidance for such items is currently uncertain.
Further, compliance with the Tax Act and the accounting for such provisions require accumulation of information not previously
required or regularly produced. As additional regulatory guidance is issued by the applicable taxing authorities, as accounting
treatment is clarified, as we perform additional analysis on the application of the law, and as we refine estimates in calculating
the effect, our final analysis, which will be recorded in the period completed, may be different from our current provisional
amounts, which could materially affect our tax obligations and effective tax rate.
Risks
Related to Product Development, Regulatory Approval, Manufacturing and Commercialization
We
are early in our development efforts, which may not be successful.
We
recently completed a head-to-head crossover study of LYPDISO vs. Vascepa and announced topline date in February of 2021. In 2017,
we completed two separate Phase 2 clinical trials of MAT2203. Because of the early stage of our development efforts, we are still
in the process of determining the overall clinical development path for our current and future product candidates. As a result,
the timing and costs of the regulatory paths we will follow, and marketing approvals remain uncertain. Our ability to generate
product revenue, which we do not expect will occur for many years, if ever, will depend heavily on the successful development
and eventual commercialization of our early-stage product candidates. The success of LYPDISO, MAT2203, MAT2501 and any other product
candidates we may develop will depend on many factors, including the following:
● successful completion of preclinical studies;
● successful enrollment in, and completion of, clinical trials:
● demonstrating safety and efficacy;
● receipt of marketing approvals from applicable regulatory authorities;
● effectively competing with other therapies;
● a continued acceptable safety profile of the products following approval; and
● enforcing and defending intellectual property rights and claims.
If
we do not accomplish one or more of these goals in a timely manner, or at all, we could experience significant delays or an inability
to successfully commercialize our product candidates, which would harm our business.
We
cannot be certain that LYPDISO, MAT2203 MAT2501 or any other product candidates that we may develop will receive regulatory approval,
and without regulatory approval we will not be able to market any of our product candidates. Any delay in the regulatory review
or approval of any of our product candidates will materially or adversely harm our business.
We
expect to invest most of our capital in the development of our LNC platform delivery technology. Our ability to generate revenue
related to product sales, which we do not expect will occur for at least the next several years, if ever, will depend on the successful
development and regulatory approval of one or more of our product candidates. All of our product candidates require regulatory
review and approval prior to commercialization. Any delays in the regulatory review or approval of our product candidates would
delay market launch, increase our cash requirements and result in additional operating losses. This failure to obtain regulatory
approvals would prevent our product candidate from being marketed and would have a material and adverse effect on our business.
The
process of obtaining FDA and other required regulatory approvals, including foreign approvals, often takes many years and can
vary substantially based upon the type, complexity and novelty of the products involved. Furthermore, this approval process is
extremely complex, expensive and uncertain. We may be unable to submit any new drug application, or an NDA, in the United States
or any marketing approval application in foreign jurisdictions for any of our products. If we submit an NDA including any amended
NDA or supplemental NDA, to the FDA seeking marketing approval for any of our product candidates, the FDA must decide whether
to accept or reject the submission for filing. We cannot be certain that any of these submissions will be accepted for filing
and reviewed by the FDA, or that the marketing approval application submissions to any other regulatory authorities will be accepted
for filing and review by those authorities. We cannot be certain that we will be able to respond to any regulatory requests during
the review period in a timely manner, or at all, without delaying potential regulatory action. We also cannot be certain that
any of our product candidates will receive favorable recommendations from any FDA advisory committee or foreign regulatory bodies
or be approved for marketing by the FDA or foreign regulatory authorities. In addition, delays in approvals or rejections of marketing
applications may be based upon many factors, including regulatory requests for additional analyses, reports, data and studies,
regulatory questions regarding data and results, changes in regulatory policy during the period of product development and the
emergence of new information regarding such product candidates.
Data
obtained from preclinical studies and clinical trials are subject to different interpretations, which could delay, limit or prevent
regulatory review or approval of any of our product candidates. Furthermore, regulatory attitudes towards the data and results
required to demonstrate safety and efficacy can change over time and can be affected by many factors, such as the emergence of
new information, including on other products, policy changes and agency funding, staffing and leadership. We do not know whether
future changes to the regulatory environment will be favorable or unfavorable to our business prospects.
In
addition, the environment in which our regulatory submissions may be reviewed changes over time. For example, average review times
at the FDA for NDAs have fluctuated over the last ten years, and we cannot predict the review time for any of our submissions
with any regulatory authorities. Review times can be affected by a variety of factors, including budget and funding levels and
statutory, regulatory and policy changes. Moreover, in light of widely publicized events concerning the safety risk of certain
drug products, regulatory authorities, members of the U.S. Government Accountability Office, medical professionals and the general
public have raised concerns about potential drug safety issues. These events have resulted in the withdrawal of drug products,
revisions to drug labeling that further limit use of the drug products and establishment of REMS measures that may, for instance,
restrict distribution of drug products. The increased attention to drug safety issues may result in a more cautious approach by
the FDA to clinical trials. Data from clinical trials may receive greater scrutiny with respect to safety, which may make the
FDA or other regulatory authorities more likely to terminate clinical trials before completion or require longer or additional
clinical trials that may result in substantial additional expense and a delay or failure in obtaining approval or may result in
approval for a more limited indication than originally sought.
We
depend in part on technology owned or licensed to us by third parties, and the loss of access to this technology would terminate
or delay the further development of our product candidates, injure our reputation or force us to pay higher royalties.
We
rely heavily on the LNC platform delivery technology that we have licensed from Rutgers. The loss of access to this technology
could materially impair our business and future viability, and could result in delays in developing, introducing or maintaining
our product candidates and formulations until equivalent technology, if available, is identified, licensed and integrated. In
addition, any defects in the technology we license could prevent the implementation or impair the functionality of our product
candidates or formulation, delay new product or formulation introductions or injure our reputation. If we are required to enter
into license agreements with third parties for replacement technology, we could be subject to higher royalty payments.
We
may not have or be able to obtain sufficient quantities of our products to meet our supply and clinical studies obligations and
our business, financial condition and results of operation may be adversely affected.
To
date, we have only developed limited in-house manufacturing capabilities for the LNC platform delivery technology needed for the
clinical development our MAT2203 product candidate and preclinical development of our MAT2501 product candidate. If we do not
develop a long-term in-house manufacturing capability for our LNC platform product candidates sufficient to produce product for
continued development and, if regulatory approval is obtained, then commercialization of these products, we will be dependent
on a small number of third-party manufacturers for the manufacture of our product candidates. We may not have long-term agreements
with any of these third parties, and if they are unable or unwilling to perform for any reason, we may not be able to locate alternative
acceptable manufacturers or formulators or enter into favorable agreements with them. Any inability to acquire sufficient quantities
of our products in a timely manner from these third parties could delay clinical trials and prevent us from developing our products
in a cost-effective manner or on a timely basis. In addition, manufacturers of our product candidates are subject to cGMP and
similar foreign standards and we would not have control over compliance with these regulations by our manufacturers. If one of
our contract manufacturers fails to maintain compliance, the production of our products could be interrupted, resulting in delays
and additional costs. In addition, if the facilities of such manufacturers do not pass a pre-approval or post-approval plant inspection,
the FDA will not grant approval and may institute restrictions on the marketing or sale of our products.
We
may be reliant on third party manufactures and suppliers to meet the demands of our clinical supplies. Delays in receipt of materials,
scheduling, release, custom’s control, and regulatory compliance issues may adversely impact our ability to initiate, maintain,
or complete clinical trials that we are sponsoring. Commercial manufacturing and supply agreements have not been established.
Issues arising from scale-up, environmental controls, public health crises, such as pandemics and epidemics, equipment requirements,
or other factors, may have an adverse impact on our ability to manufacture our product candidates.
Even
if we obtain regulatory approval for our product candidates, if we are unable to successfully commercialize our products, it will
limit our ability to generate revenue and will materially adversely affect our business, financial condition and results of operations.
Even
if we obtain regulatory approval for our product candidates, our long-term viability and growth depend on the successful commercialization
of products which lead to revenue and profits. Pharmaceutical product development is an expensive, high risk, lengthy, complicated,
resource intensive process. In order to succeed, among other things, we must be able to:
● identify potential drug product candidates;
● design and conduct appropriate laboratory, preclinical and other research;
● submit for and receive regulatory approval to perform clinical studies;
● select and recruit clinical investigators;
● select and recruit subjects for our studies;
● collect, analyze and correctly interpret the data from our studies;
● submit for and receive regulatory approvals for marketing; and
● manufacture the drug product candidates according to cGMP.
The
development program with respect to any given product will take many years and thus delay our ability to generate profits. In
addition, potential products that appear promising at early stages of development may fail for a number of reasons, including
the possibility that the products may require significant additional testing or turn out to be unsafe, ineffective, too difficult
or expensive to develop or manufacture, too difficult to administer, or unstable. Failure to successfully commercialize our products
will adversely affect our business, financial condition and results of operations.
If
our preclinical and clinical studies do not produce positive results, if our clinical trials are delayed or if serious side effects
are identified during such studies or trials, we may experience delays, incur additional costs and ultimately be unable to commercialize
our product candidates.
Before
obtaining regulatory approval for the sale of our product candidates, we must conduct, generally at our own expense, extensive
preclinical tests to demonstrate the safety of our product candidates in animals, and clinical trials to demonstrate the safety
and efficacy of our product candidates in humans. Preclinical and clinical testing is expensive, difficult to design and implement
and can take many years to complete. A failure of one or more of our preclinical studies or clinical trials can occur at any stage
of testing. We may experience numerous unforeseen events during, or as a result of, preclinical testing and the clinical trial
process that could delay or prevent our ability to obtain regulatory approval or commercialize our product candidates, including:
● the cost of our clinical trials may be greater than we anticipate;
In
addition, if we are required to conduct additional clinical trials or other testing of our product candidates beyond those that
we currently contemplate, if we are unable to successfully complete our clinical trials or other testing, if the results of these
trials or tests are not positive or are only modestly positive or if there are safety concerns, we may:
● have the product removed from the market after obtaining marketing approval.
Our
product development costs will also increase if we experience delays in testing or approvals. We do not know whether any preclinical
tests or clinical trials will be initiated as planned, will need to be restructured or will be completed on schedule, if at all.
Significant preclinical or clinical trial delays also could shorten the patent protection period during which we may have the
exclusive right to commercialize our product candidates. Such delays could allow our competitors to bring products to market before
we do and impair our ability to commercialize our products or product candidates.
If
we cannot enroll enough patients to complete our clinical trials, such failure may adversely affect our business, financial condition
and results of operations.
The
completion rate of clinical studies of our products is dependent on, among other factors, the patient enrollment rate. Patient
enrollment is a function of many factors, including:
● investigator identification and recruitment;
● regulatory approvals to initiate study sites;
● patient population size;
● the nature of the protocol to be used in the trial;
● patient proximity to clinical sites;
● eligibility criteria for the study;
● ability to obtain comparator drug/device.
We
believe our procedures for enrolling patients have been appropriate; however, delays in patient enrollment would increase costs
and delay ultimate commercialization and sales, if any, of our products. Such delays could materially adversely affect our business,
financial condition and results of operations.
We
may not be able to obtain or maintain orphan drug designation or exclusivity for our anti-infective product candidates.
We
have sought orphan drug designation for MAT2203 and MAT2501 in the United States and may seek additional orphan drug designation
for other product candidates. Regulatory authorities in some jurisdictions, including the United States and Europe, may designate
drugs for relatively small patient populations as orphan drugs. Under the Orphan Drug Act, the FDA may designate a product as
an orphan drug if it is a drug intended to treat a rare disease or condition, which is generally defined as a patient population
of fewer than 200,000 individuals in the United States. Generally, if a product with an orphan drug designation subsequently receives
the first marketing approval for the indication for which it has such designation, the product is entitled to a period of marketing
exclusivity, which precludes the FDA or the EMA from approving another marketing application for the same indication for that
drug during that time period. For a product that obtains orphan drug designation on the basis of a plausible hypothesis that it
is clinically superior to the same drug that is already approved for the same indication, in order to obtain orphan drug exclusivity
upon approval, clinical superiority of such product to this same drug that is already approved for the same orphan indication
must be demonstrated. The exclusivity period is seven years in the United States and ten years in Europe. The European exclusivity
period can be reduced to six years if a drug no longer meets the criteria for orphan drug designation or if the drug is sufficiently
profitable so that market exclusivity is no longer justified. Orphan drug exclusivity may be lost if the FDA or the EMA determines
that the request for designation was materially defective or if the manufacturer is unable to assure sufficient quantity of the
drug to meet the needs of patients with the rare disease or condition.
We
cannot assure you that the application for orphan drug designation of MAT2203, or any future application with respect to any other
product candidate, will be granted. If we are unable to obtain orphan drug designation in the United States, we will not be eligible
to obtain the period of market exclusivity that could result from orphan drug designation or be afforded the financial incentives
associated with orphan drug designation. Even if we obtain orphan drug exclusivity for a product, that exclusivity may not effectively
protect the product from competition because different drugs can be approved for the same condition. Even after an orphan drug
is approved, the FDA can subsequently approve the same drug for the same condition if the FDA concludes that the later drug is
clinically superior in that it is shown to be safer, more effective or makes a major contribution to patient care.
Any
Fast Track designation or grant of priority review status by the FDA may not actually lead to a faster development or regulatory
review or approval process, nor will it assure FDA approval of our product candidates. Additionally, our product candidates may
treat indications that do not qualify for priority review vouchers.
We
have received Fast Track designation for MAT2203 for the treatment of invasive candidiasis, the treatment of aspergillosis, the
prevention of invasive fungal infections due to immunosuppressive therapy and the treatment of cryptococcosis and may seek Fast
Track designation for some of our other product candidates or priority review of applications for approval of our product candidates
for certain indications. If a drug is intended for the treatment of a serious or life-threatening condition and the drug demonstrates
the potential to address unmet medical needs for this condition, the drug sponsor may apply for FDA Fast Track designation. If
a product candidate offers major advances in treatment, the FDA may designate it eligible for priority review. The FDA has broad
discretion whether or not to grant these designations, so even if we believe a particular product candidate is eligible for these
designations, we cannot assure you that the FDA would decide to grant them. Even if we do receive Fast Track designation or priority
review, we may not experience a faster development process, review or approval compared to conventional FDA procedures. The FDA
may withdraw Fast Track designation if it believes that the designation is no longer supported by data from our clinical development
program.
Any
breakthrough therapy designation granted by the FDA for our product candidates may not lead to a faster development or regulatory
review or approval process, and it does not increase the likelihood that our product candidates will receive marketing approval.
We
may seek a breakthrough therapy designation for some of our product candidates. A breakthrough therapy is defined as a drug that
is intended, alone or in combination with one or more other drugs, to treat a serious or life-threatening disease or condition,
and preliminary clinical evidence indicates that the drug may demonstrate substantial improvement over existing therapies on one
or more clinically significant endpoints, such as substantial treatment effects observed early in clinical development. For drugs
and biologics that have been designated as breakthrough therapies, interaction and communication between the FDA and the sponsor
of the trial can help to identify the most efficient path for clinical development while minimizing the number of patients placed
in ineffective control regimens. Drugs designated as breakthrough therapies by the FDA may also be eligible for accelerated approval
if the relevant criteria are met.
Designation
as a breakthrough therapy is within the discretion of the FDA. Accordingly, even if we believe one of our product candidates meets
the criteria for designation as a breakthrough therapy, the FDA may disagree and instead determine not to make such designation.
In any event, the receipt of a breakthrough therapy designation for a product candidate may not result in a faster development
process, review or approval compared to drugs considered for approval under conventional FDA procedures and does not assure ultimate
approval by the FDA. In addition, even if one or more of our product candidates qualify as breakthrough therapies, the FDA may
later decide that the products no longer meet the conditions for qualification or decide that the time period for FDA review or
approval will not be shortened.
Designation
of our product candidates as qualified infectious disease products is not assured and, in any event, even if granted, may not
actually lead to a faster development or regulatory review, and would not assure FDA approval of our product candidates.
We
have received a qualified infectious disease product, or QIDP, designation for MAT2203 and MAT2501 for certain indications and
we may be eligible for designation of certain of our product candidates as QIDPs. A QIDP is “an antibacterial or antifungal
drug intended to treat serious or life-threatening infections, including those caused by an antibacterial or antifungal resistant
pathogen, including novel or emerging infectious pathogens or certain “qualifying pathogens.” A product designated
as a QIDP will be granted priority review by the FDA and may qualify for “fast track” status. Upon the approval of
an NDA for a drug product designated by the FDA as a QIDP, the product is granted a period of five years of regulatory exclusivity
in addition to any other period of regulatory exclusivity for which the product is eligible. The FDA has broad discretion whether
or not to grant these designations, so even if we believe a particular product candidate is eligible for such designation or status,
the FDA could decide not to grant it. Moreover, even if we do receive such a designation, we may not experience a faster development
process, review or approval compared to conventional FDA procedures and there is no assurance that our product candidate, even
if determined to be a QIDP, will be approved by the FDA.
If
we are unsuccessful in identifying and developing additional product candidates, our potential for growth may be impaired.
Even
if we receive regulatory approval for LYPDISO, MAT2203, MAT2501 or any other product candidates we may develop, we still may not
be able to successfully commercialize such products and the revenue that we generate from its sales, if any, may be limited.
If
approved for marketing, the commercial success of LYPDISO, MAT2203, MAT2501 or any other product candidates we may develop will
depend upon its acceptance by the medical community, including physicians, patients and health care payors. The degree of market
acceptance of LYPDISO, MAT2203, MAT2501 or such other product candidate will depend on a number of factors, including:
● demonstration of clinical safety and efficacy of such product candidate;
● relative convenience and ease of administration;
● the prevalence and severity of any adverse effects;
● pricing and cost-effectiveness;
● limitations or warnings contained in FDA approved labeling;
If
LYPDISO, MAT2203, MAT2501 or any other product candidates we may develop is approved but does not achieve an adequate level of
acceptance by physicians, health care payors and patients, we may not generate sufficient revenue and we may not be able to achieve
or sustain profitability. Our efforts to educate the medical community and third-party payors on the benefits of such product
candidate may require significant resources and may never be successful.
In
addition, even if we obtain regulatory approvals, the timing or scope of any approvals may prohibit or reduce our ability to commercialize
such product candidate successfully. For example, if the approval process takes too long, we may miss market opportunities and
give other companies the ability to develop competing products or establish market dominance. Any regulatory approval we ultimately
obtain may be limited or subject to restrictions or post-approval commitments that render such product candidate not commercially
viable. For example, regulatory authorities may approve such product candidate for fewer or more limited indications than we request,
may not approve the price we intend to charge for such product candidate, may grant approval contingent on the performance of
costly post-marketing clinical trials, or may approve such product candidate with a label that does not include the labeling claims
necessary or desirable for the successful commercialization of that indication. Further, the FDA may place conditions on approvals
including potential requirements or risk management plans and the requirement for a Risk Evaluation and Mitigation Strategy (“REMS”)
to assure the safe use of the drug. If the FDA concludes a REMS is needed, the sponsor of the NDA must submit a proposed REMS;
the FDA will not approve the NDA without an approved REMS, if required. A REMS could include medication guides, physician communication
plans, or elements to assure safe use, such as restricted distribution methods, patient registries and other risk minimization
tools. Any of these limitations on approval or marketing could restrict the commercial promotion, distribution, prescription or
dispensing of such product candidate. Moreover, product approvals may be withdrawn for non-compliance with regulatory standards
or if problems occur following the initial marketing of the product. Any of the foregoing scenarios could materially harm the
commercial success of such product candidate.
We
currently have no sales and marketing organization. If we are unable to establish satisfactory sales and marketing capabilities,
we may not successfully commercialize any of our product candidates, if regulatory approval is obtained.
At
present, we have no sales or marketing personnel. In order to commercialize products that are approved for commercial sales, we
must either develop a sales and marketing infrastructure or collaborate with third parties that have such commercial infrastructure.
If we elect to develop our own sales and marketing organization, we do not intend to begin to hire sales and marketing personnel
until the time of NDA submission to the FDA at the earliest, and we do not intend to establish our own sales organization in the
United States until shortly prior to FDA approval of LYPDISO, MAT2203, MAT2501 or any of our other product candidates.
We
may not be able to establish a direct sales force in a cost-effective manner or realize a positive return on this investment.
In addition, we will have to compete with established and well-funded pharmaceutical and biotechnology companies to recruit, hire,
train and retain sales and marketing personnel. Factors that may inhibit our efforts to commercialize LYPDISO, MAT2203, MAT2501
or any of our other product candidates in the United States without strategic partners or licensees include:
If
we are not successful in recruiting sales and marketing personnel or in building a sales and marketing infrastructure, or if we
do not successfully enter into appropriate collaboration arrangements, we will have difficulty successfully commercializing LYPDISO,
MAT2203, MAT2501 or any other product candidates we may develop, which would adversely affect our business, operating results
and financial condition. Outside the United States, we may commercialize our product candidates by entering into collaboration
agreements with pharmaceutical partners. We may not be able to enter into such agreements on terms acceptable to us or at all.
In addition, even if we enter into such relationships, we may have limited or no control over the sales, marketing and distribution
activities of these third parties. Our future revenues may depend heavily on the success of the efforts of these third parties
If
we are unable to file for approval of LYPDISO, MAT2203 or MAT2501 under Section 505(b)(2) of the FDCA or if we are required to
generate additional data related to safety and efficacy in order to obtain approval under Section 505(b)(2), we may be unable
to meet our anticipated development and commercialization timelines.
Our
current plans for filing the NDAs for LYPDISO, MAT2203 and MAT2501 include efforts to minimize the data we will be required to
generate in order to obtain marketing approval for this product candidate and therefore reduce the development time. Based upon
written feedback received from the FDA in 2014 and written and verbal FDA feedback in August 2020, we believe this approach will
create the opportunity for us to leverage existing data developed with certain existing omega-3 fatty acids to create a streamlined
approach to potential approval for LYPDISO for the treatment of SHTG and potentially other indications. Likewise, we intend to
rely on the history of efficacy of amphotericin B, and although we met with the FDA in the first half of 2019 to discuss our development
plans for MAT2203, there is no assurance we will satisfy FDA’s requirements for approval of MAT2203 under a 505(b)(2) pathway.
We have not yet met with FDA to discuss the regulatory pathway for MAT2501. The timelines for filing and review of our NDAs for
LYPDISO, MAT2203 and MAT2501 are based on our plan to submit these NDAs under Section 505(b)(2) of the FDCA, which would enable
us to rely in part on data in the public domain or elsewhere. We have not yet filed an NDA under Section 505(b)(2) for any product
candidate. Depending on the data that may be required by the FDA for approval, some of the data may be related to products already
approved by the FDA. If the data relied upon is related to products already approved by the FDA and covered by third-party patents
we would be required to certify that we do not infringe the listed patents or that such patents are invalid or unenforceable.
As a result of the certification, the third-party would have 45 days from notification of our certification to initiate an action
against us.
In
the event that an action is brought in response to such a certification, the approval of our NDA could be subject to a stay of
up to 30 months or more while we defend against such a suit. Approval of our product candidates under Section 505(b)(2) may therefore
be delayed until patent exclusivity expires or until we successfully challenge the applicability of those patents to our product
candidates. Alternatively, we may elect to generate sufficient additional clinical data so that we no longer rely on data which
triggers a potential stay of the approval of our product candidates. Even if no exclusivity periods apply to our applications
under Section 505(b)(2), the FDA has broad discretion to require us to generate additional data on the safety and efficacy of
our product candidates to supplement third-party data on which we may be permitted to rely. In either event, we could be required,
before obtaining marketing approval for any of our product candidates, to conduct substantial new research and development activities
beyond those we currently plan to engage in order to obtain approval of our product candidates. Such additional new research and
development activities would be costly and time consuming.
We
may not be able to realize a shortened development timeline for any of our product candidates, and the FDA may not approve our
NDA based on their review of the submitted data. If our desired reference-listed drug containing products are withdrawn from the
market by the FDA for any safety reason, we may not be able to reference such products to support a 505(b)(2) NDA for our product
candidates, and we may need to fulfill the more extensive requirements of Section 505(b)(1). If we are required to generate additional
data to support approval, we may be unable to meet our anticipated development and commercialization timelines, may be unable
to generate the additional data at a reasonable cost, or at all, and may be unable to obtain marketing approval of our lead product
candidates.
We
face competition from other biotechnology and pharmaceutical companies and our operating results will suffer if we fail to compete
effectively.
The
biotechnology and pharmaceutical industries are intensely competitive and subject to rapid and significant technological change.
We have competitors in a number of jurisdictions, many of which have substantially greater name recognition, commercial infrastructures
and financial, technical and personnel resources than we have. We face competition from many different sources, including commercial
pharmaceutical and biotechnology enterprises, academic institutions, government agencies and private and public research institutions.
Established competitors may invest heavily to quickly discover and develop novel compounds that could make LYPDISO, MAT2203, MAT2501
or any other product candidates we may develop obsolete or uneconomical. Any new product that competes with an approved product
may need to demonstrate compelling advantages in efficacy, cost, convenience, tolerability and safety to be commercially successful.
Other competitive factors, including generic competition, which could force us to lower prices or result in reduced sales, particularly
those products that have been marketed by third parties for many years and are well accepted by physicians, patients and payers.
In addition, new products developed by others could emerge as competitors to LYPDISO, MAT2203, MAT2501 or any of our other product
candidates. If we are not able to compete effectively against our current and future competitors, our business will not grow,
and our financial condition and operations will suffer.
Further,
although we believe that our proprietary LNC platform delivery technology, experience and knowledge in our areas of focus provide
us with competitive advantages, potential competitors for MAT2203 could reduce our commercial opportunities.
Even
if we obtain marketing approval for LYPDISO, MAT2203, MAT2501 or any other product candidates that we may develop, we will be
subject to ongoing obligations and continued regulatory review, which may result in significant additional expense. Additionally,
our product candidates could be subject to labeling and other restrictions and withdrawal from the market and we may be subject
to penalties if we fail to comply with regulatory requirements or if we experience unanticipated problems with our future products.
Even
if we obtain United States regulatory approval of LYPDISO, MAT2203, MAT2501 or any other product candidates that we may develop,
FDA may still impose significant restrictions on its indicated uses or marketing or the conditions of approval or impose ongoing
requirements for potentially costly and time-consuming post-approval studies, and post-market surveillance to monitor safety and
efficacy. Our future products will also be subject to ongoing regulatory requirements governing the manufacturing, labeling, packaging,
storage, distribution, safety surveillance, advertising, promotion, recordkeeping and reporting of adverse events and other post-market
information. These requirements include registration with FDA, as well as continued compliance with current Good Clinical Practices
regulations, or cGCPs, for any clinical trials that we conduct post-approval. In addition, manufacturers of drug products and
their facilities are subject to continuous review and periodic inspections by the FDA and other regulatory authorities for compliance
with current good manufacturing practices, cGMP, requirements relating to quality control, quality assurance and corresponding
maintenance of records and documents.
FDA
has the authority to require a REMS, as part of an NDA or after approval, which may impose further requirements or restrictions
on the distribution or use of an approved drug, such as limiting prescribing to certain physicians or medical centers that have
undergone specialized training, limiting treatment to patients who meet certain safe-use criteria or requiring patient testing,
monitoring and/or enrollment in a registry.
With
respect to sales and marketing activities by us or any future partner, advertising and promotional materials must comply with
FDA rules in addition to other applicable federal, state and local laws in the United States and similar legal requirements in
other countries. In the United States, the distribution of product samples to physicians must comply with the requirements of
the U.S. Prescription Drug Marketing Act. Application holders must obtain FDA approval for product and manufacturing changes,
depending on the nature of the change. We may also be subject, directly or indirectly through our customers and partners, to various
fraud and abuse laws, including, without limitation, the U.S. Anti-Kickback Statute, U.S. False Claims Act, and similar state
laws, which impact, among other things, our proposed sales, marketing, and scientific/educational grant programs. If we participate
in the U.S. Medicaid Drug Rebate Program, the Federal Supply Schedule of the U.S. Department of Veterans Affairs, or other government
drug programs, we will be subject to complex laws and regulations regarding reporting and payment obligations. All of these activities
are also potentially subject to U.S. federal and state consumer protection and unfair competition laws. Similar requirements exist
in many of these areas in other countries.
In
addition, our product labeling, advertising and promotion would be subject to regulatory requirements and continuing regulatory
review. FDA strictly regulates the promotional claims that may be made about prescription products. In particular, a product may
not be promoted for uses that are not approved by FDA as reflected in the product’s approved labeling. If we receive marketing
approval for our product candidates, physicians may nevertheless legally prescribe our products to their patients in a manner
that is inconsistent with the approved label. If we are found to have promoted such off-label uses, we may become subject to significant
liability and government fines. FDA and other agencies actively enforce the laws and regulations prohibiting the promotion of
off-label uses, and a company that is found to have improperly promoted off-label uses may be subject to significant sanctions,
including revocation of its marketing approval. The federal government has levied large civil and criminal fines against companies
for alleged improper promotion and has enjoined several companies from engaging in off-label promotion. FDA has also requested
that companies enter into consent decrees of permanent injunctions under which specified promotional conduct is changed or curtailed.
If
we or a regulatory agency discovers previously unknown problems with a product, such as adverse events of unanticipated severity
or frequency, problems with the facility where the product is manufactured, or we or our manufacturers fail to comply with applicable
regulatory requirements, we may be subject to the following administrative or judicial sanctions:
● issuance of warning letters or untitled letters;
● clinical holds;
● suspension or withdrawal of regulatory approval;
● suspension of any ongoing clinical trials;
The
occurrence of any event or penalty described above may inhibit our ability to commercialize LYPDISO, MAT2203, MAT2501 or any of
our other product candidates and generate revenue. Adverse regulatory action, whether pre- or post-approval, can also potentially
lead to product liability claims and increase our product liability exposure.
We
are in the process of evaluating potential next steps in the development of LYPDISO.
Based
on the results of our ENANCE-IT study for LYPDISO, and given the significant time and cost associated with cardiovascular outcomes
clinical trials, we have initiated a process to identify a partner to advance development of LYPDISO and have allocated resources
away from a Phase 3 program for LYPDISO. However, there is no guarantee that we will identify a suitable partner for LYPDISO or
that we will be able to enter into a partnering agreement on favorable terms. In the event that we do not identify a suitable
partner, enter into a partnering agreement on favorable terms, or if a potential partner fails to satisfy its obligations to develop
and commercialize LIPDOSO, we may never realize the full or any value from LYPDISO.
Future
legislation, and/or regulations and policies adopted by the FDA may increase the time and cost required for us to conduct and
complete clinical trials of LYPDISO, MAT2203, MAT2501 and any other product candidates that we may develop.
FDA
has established regulations to govern the drug development and approval process, as have foreign regulatory authorities. The policies
of FDA and other regulatory authorities may change, and additional laws or government regulations may be promulgated that could
prevent, limit, delay but also accelerate regulatory review of our product candidates. For example, in December 2016, the Cures
Act was signed into law. The Cures Act, among other things, is intended to modernize the regulation of drugs and spur innovation,
but all of its provisions have yet to be implemented. Among other things, the Cures Act provides a new “limited population”
pathway for certain antibacterial and antifungal drugs, or LPAD, but FDA has not issued final guidance regarding the LPAD yet.
Additionally, in August 2017, FDA issued final guidance setting forth its current thinking with respect to development programs
and clinical trial designs for antibacterial drugs to treat serous bacterial diseases in patients with an unmet medical need.
We cannot predict what if any effect the Cures Act or any existing or future guidance from FDA will have on development of our
product candidates.
Healthcare
legislative or regulatory reform measures, including government restrictions on pricing and reimbursement, may have a negative
impact on our business and results of operations.
In
the United States and some foreign jurisdictions, there have been, and continue to be, several legislative and regulatory changes
and proposed changes regarding the healthcare system that could prevent or delay marketing approval of product candidates, restrict