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.
● 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 $22,942 thousand and $20,997 thousand for the years ended December 31, 2023 and 2022, respectively. As of December
31, 2023, we had an accumulated deficit of $175,573 thousand. 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 our financial resources and efforts to the research and development of potential
product candidates. All our product candidates are in the development stage, 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 clinical studies of
our product candidates, including the potential Phase 3 clinical trials of MAT2203, and conduct additional preclinical and clinical trials
to further validate and expand our LNC Platform, 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. 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 debt securities, excluding restricted cash, of $13,756 thousand as of
December 31, 2023 will enable us to fund our operating expenses and capital expenditure requirements into the third quarter of 2024,
but not beyond. 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. 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.
As
of December 31, 2023, we had outstanding options to purchase an aggregate of 46,707,934 shares of our common stock at a weighted average
exercise price of $0.83 per share. The exercise of such outstanding options will result in dilution of the value of our shares.
Our
operating history to date may make it difficult to evaluate the success of our business 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.
Risks
Related to Product Development, Regulatory Approval, Manufacturing and Commercialization
We
are early in our development efforts, which may not be successful.
Because
we are still in the clinical stage of our development efforts and are in the process of determining the overall clinical development
path for our current and future product candidates, the timing and costs of the regulatory paths we will follow. 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 product candidates. The success of MAT2203 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 any of our product candidates will receive regulatory approval, without which we will not be able to market any
of our product candidates. Any delay in the approval process will harm our business.
We
expect to invest most of our capital in the development of our LNC Platform. 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 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 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 in recent 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, considering 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, the loss of which 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 and certain of the patents that we have exclusively licensed from Rutgers. The loss of access to these
patents 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 intellectual property that 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 needed for the clinical development our
MAT2203 product candidates. We have entered into an agreement with Patheon, a wholly owned subsidiary of ThermoFisher, to prepare for
the commercial manufacture of MAT2203. If we do not develop a long-term 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 enough 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.
If
we are unable to successfully commercialize our products our ability to generate revenue will be limited.
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. 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 several 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, our business, financial condition, and results of operations may be
adversely affected.
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 maintain orphan drug designation or exclusivity for our anti-infective product candidates.
We
have received orphan drug designation for MAT2203 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 regulatory or marketing exclusivity, which precludes
the FDA or the EMA from approving another marketing application for the same indication for that drug during that time. 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 maintained or granted. If we are unable to maintain 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 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 for certain indications and we may be eligible
for designation of future 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 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 MAT2203 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 MAT2203 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 MAT2203 or such
other product candidate will depend on several 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
MAT2203 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 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, even if regulatory approval is obtained.
At
present, we have no sales or marketing personnel. 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 MAT2203 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 MAT2203 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 MAT2203 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 MAT2203 under Section 505(b)(2) of the FDCA or if we are required to generate additional data related
to safety and efficacy 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 MAT2203 include efforts to minimize the data we will be required to generate to obtain marketing
approval for this product candidate and therefore reduce the development time. We intend to rely on the history of efficacy of amphotericin
B, and although we met with the FDA in 2019, 2021 and again in 2022 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. The timeline for filing and review of our
NDA for MAT2203 is based on our plan to submit the NDA 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.
If
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 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 several 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 MAT2203 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 MAT2203 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, 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 any product candidate, 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 MAT2203 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 AEs 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. 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 AEs 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 MAT2203 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.
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.
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. 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.
Changes
in health care law and implementing regulations may have a material adverse effect on us.
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 or regulate
post approval activities, and affect our ability to profitably sell any product candidates for which we obtain marketing approval.
Among
policy makers and payors in the United States and elsewhere, there is significant interest in promoting changes in healthcare systems
with the stated goals of containing healthcare costs, improving quality and/or expanding access. In the United States, the pharmaceutical
industry has been a particular focus of these efforts and has been significantly affected by major legislative initiatives. For example,
in the United States, the Patient Protection and Affordable Care Act of 2010 (“ACA”) substantially changed the way health
care is financed by both governmental and private insurers and significantly affects the pharmaceutical industry. Many provisions of
the ACA impact the biopharmaceutical industry, including that in order for a biopharmaceutical product to receive federal reimbursement
under the Medicare Part B and Medicaid programs or to be sold directly to U.S. government agencies, the manufacturer must extend discounts
to entities eligible to participate in the drug pricing program under the Public Health Services Act, or PHS.
Additionally,
the Inflation Reduction Act of 2022, which took effect in 2023, includes policies that are designed to have a direct impact on drug prices
and reduce drug spending by the federal government. This legislation contains substantial drug pricing reforms, including the establishment
of a drug price negotiation program within the U.S. Department of Health and Human Services that would require manufacturers to charge
a negotiated “maximum fair price” for certain selected drugs covered by Medicare or pay an excise tax for noncompliance,
the establishment of rebate payment requirements on manufacturers of certain drugs payable under Medicare Parts B and D to penalize price
increases that outpace inflation, and requires manufacturers to provide discounts on Part D drugs.
Legislative,
administrative, and private payor efforts to control drug costs span a range of proposals, including drug price negotiation, Medicare
Part D redesign, drug price inflation rebates, international mechanisms, generic drug promotion and anticompetitive behavior, manufacturer
reporting, and reforms that could impact therapies utilizing the accelerated approval pathway. We cannot predict the ultimate content,
timing or effect of any changes to the ACA, the Inflation Reduction Act, or other federal and state healthcare policy reform efforts
including those aimed at drug pricing. There is no assurance that federal or state health care reform will not adversely affect our future
business and financial results, and we cannot predict how future federal or state legislative, judicial or administrative changes relating
to healthcare policy will affect our business.
We
cannot be sure whether additional legislative changes will be enacted, or whether government regulations, guidance or interpretations
will be changed, or what the impact of such changes would be on the marketing approvals, sales, pricing, or reimbursement of our drug
candidates or products, if any, may be. We expect that these and other healthcare reform measures that may be adopted in the future,
may result in more rigorous coverage criteria and in additional downward pressure on the price that we receive for any approved drug.
Any reduction in reimbursement from Medicare or other government programs may result in a similar reduction in payments from private
payors. The implementation of cost containment measures or other healthcare reforms may prevent us from being able to generate revenue,
attain profitability, or commercialize our drugs.
In
addition, FDA regulations and guidance may be revised or reinterpreted by the FDA in ways that may significantly affect our business
and our products. Any new regulations or guidance, or revisions or reinterpretations of existing regulations or guidance, may impose
additional costs or lengthen FDA review times for our product candidates. We cannot determine how changes in regulations, statutes, policies,
or interpretations when and if issued, enacted, or adopted, may affect our business in the future. Such changes could, among other things,
require:
● additional clinical trials to be conducted prior to obtaining approval;
● changes to manufacturing methods;
● recalls, replacements, or discontinuance of one or more of our products; and
● additional recordkeeping.
Such
changes would likely require substantial time and impose significant costs or could reduce the potential commercial value of our product
candidates. In addition, delays in receipt of or failure to receive regulatory clearances or approvals for any other products would harm
our business, financial condition, and results of operations.
Reimbursement
rates may vary according to the use of the product and the clinical setting in which it is used, may be based on payments allowed for
lower-cost products that are already reimbursed, may be incorporated into existing payments for other products or services, and may reflect
budgetary constraints and/or imperfections in Medicare or Medicaid data used to calculate these rates. Net prices for products may be
reduced by mandatory discounts or rebates required by government health care programs. Such legislation, or similar regulatory changes
or relaxation of laws that restrict imports of products from other countries, could reduce the net price we receive for any future marketed
products. As a result, our future products might not ultimately be considered cost-effective. We cannot be certain that reimbursement
will be available for any of our product candidates. Also, we cannot be certain that reimbursement policies will not reduce the demand
for, or the price paid for, any future products. If reimbursement is not available or is available on a limited basis, we may not be
able to successfully commercialize any product candidates that we develop.
Our
future growth depends, in part, on our ability to penetrate foreign markets, where we would be subject to additional regulatory burdens
and other risks and uncertainties.
Our
future profitability will depend, in part, on our ability to commercialize our product candidates in foreign markets for which we intend
to rely on collaborations with third parties. If we commercialize MAT2203 or any other product candidates that we may develop in foreign
markets, we would be subject to additional risks and uncertainties, including:
● import or export licensing requirements;
● longer accounts receivable collection times;
● longer lead times for shipping;
● language barriers for technical training;
● reduced protection of intellectual property rights in some foreign countries;
● foreign currency exchange rate fluctuations; and
Foreign
sales of our product candidates could also be adversely affected by the imposition of governmental controls, political and economic instability,
trade restrictions and changes in tariffs, any of which may adversely affect our results of operations.
If