10-K
1
tm2024737-1_10k.htm
FORM 10-K
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
x ANNUAL
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT
OF 1934
FOR THE FISCAL YEAR ENDED JUNE 30, 2020
NANOVIRICIDES, INC.
(Name of Business Issuer in Its Charter)
1 CONTROLS DRIVE, SHELTON, CONNECTICUT,
06484
(Address of principal executive offices)
203-937-6137
(Issuer’s telephone number, including
area code)
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF
THE ACT: NONE
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF
THE ACT:
COMMON STOCK, PAR VALUE $0.001 PER SHARE NYSE AMERICAN
(Title of Class) (Name of exchange on which registered)
Indicate by check mark if the registrant
is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes ̈ No x
Indicate by a check mark if the registrant
is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
Yes ̈ No x
Indicate by check mark whether the registrant
(1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
Yes x No ̈
Indicate by check mark whether the registrant
has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation
S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required
to submit such files).
Yes x No ̈
Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference
in Part III of this Form 10-K or any amendment to this Form 10-K. x
Indicate by check mark whether the Company
is a larger accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth
company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting
company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer ̈ Accelerated filer ̈
Non-accelerated filer x Smaller reporting company x
Emerging growth company ̈
If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for
complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ̈
Indicate by check mark whether the registrant
is a shell company (as defined in Rule 12b-2 of the Exchange Act.).
Yes ̈
No x
As of October 14, 2020, there were
approximately 10,654,000 shares of common stock of the registrant issued and outstanding.
The aggregate market value of the
voting stock held on December 31, 2019 by non-affiliates of the registrant was approximately $8,246,000 based on the
closing price of $2.51 per share, as reported on the NYSE American on December 31, 2019, the last business day of the
registrant’s most recently completed fiscal second quarter (calculated by excluding all shares held by executive
officers, directors and holders known to the registrant of five percent or more of the voting power of the registrant’s
common stock, without conceding that such persons are “affiliates” of the registrant for purposes of the federal
securities laws).
TABLE OF CONTENTS
PART I
Item 1. Business 3
Item 1A Risk Factors 52
Item 1B Unresolved Staff Comments 74
Item 2. Properties 74
Item 3. Legal Proceedings 74
Item 4. Mine Safety Disclosures 74
PART II
Item 6. Selected Financial Data 80
Item 7A Quantitative and Qualitative Disclosures About Market Risk 91
Item 8. Financial Statements and Supplementary Data 91
Item 9A. Controls and Procedures 91
Item 9B. Other Information 92
PART III
Item 10. Directors, Executive Officers, Promoters and Corporate Governance. 93
Item 11. Executive Compensation 96
Item 14. Principal Accountant Fees and Services 103
PART IV
Item 15. Exhibits, Financial Statement Schedules 104
Page 2 of 106
PART I
SPECIAL NOTE ON FORWARD-LOOKING STATEMENTS
The information in this report contains
forward-looking statements. All statements other than statements of historical fact made in this report are forward looking. In
particular, the statements herein regarding industry prospects and future results of operations or financial position are forward-looking
statements. These forward-looking statements can be identified by the use of words such as “believes,” “estimates,”
“could,” “possibly,” “probably,” anticipates,” “projects,” “expects,”
“may,” “will,” or “should,” “designed to,” “designed for,” or other
variations or similar words. No assurances can be given that the future results anticipated by the forward-looking statements will
be achieved. Forward-looking statements reflect management’s current expectations and are inherently uncertain. Our actual
results may differ significantly from management’s expectations.
Although these forward-looking statements
reflect the good faith judgment of our management, such statements can only be based upon facts and factors currently known to
us. Forward-looking statements are inherently subject to risks and uncertainties, many of which are beyond our control. As a result,
our actual results could differ materially from those anticipated in these forward-looking statements as a result of various factors,
including those set forth below under the caption “Risk Factors.” For these statements, we claim the protection of
the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. You should not
unduly rely on these forward-looking statements, which speak only as of the date on which they were made. They give our expectations
regarding the future but are not guarantees. We undertake no obligation to update publicly or revise any forward-looking statements,
whether as a result of new information, future events or otherwise, unless required by law.
ITEM 1: BUSINESS
Organization and Nature of Business
NanoViricides, Inc. (the “Company,”
“we,” or “us”) was incorporated in Nevada on April 1, 2005. Our corporate offices are located at 1
Controls Drive, Shelton, Connecticut 06484 and our telephone number is (203) 937-6137. Our Website is located at http://www.Nanoviricides.com.
We do not incorporate by reference into this Annual Report the information on or accessible through our website, and you should
not consider it part of this Annual Report.
On September 25, 2013, the Company’s
common stock began trading on the New York Stock Exchange American under the symbol, “NNVC”.
We are a development stage company with
several drugs in various stages of pre-clinical development, including late stage IND-enabling non-clinical studies. We have no
customers, products or revenues to date, and may never achieve revenues or profitable operations.
NanoViricides is one of a few biopharma
companies that has its own cGMP-compliant manufacturing facility. The Company intends to produce its drugs for clinical trials
in this facility. The Company has the capability to produce sufficient drugs for about 1,000 patients in a single batch of production,
depending upon dosage. This production capacity is anticipated to be sufficient for first-in-human use in the current SARS-CoV-2
pandemic for our anti-coronavirus drug in development, as well as for the anticipated clinical trials of NV-HHV-101 skin cream
for the treatment of shingles. NV-HHV-101 has completed IND-enabling studies and an IND is in preparation (see below).
The Company has developed several anti-coronavirus drug candidates. Of these, the Company recently nominated one for further safety-toxicology
studies, with other candidates continuing development as further advanced future candidates or as back-up candidates. This strategy
of developing multiple candidates for a given indication is a normal risk-minimization strategy that the Company employs.
Page 3 of 106
The Nanoviricide Platform Technology in Brief
The Company develops its class of drugs,
that we call nanoviricides®, using a platform technology. This approach enables rapid development of new drugs against a number
of different viruses. A nanoviricide is a “biomimetic” - it is designed to “look like” the cell surface
to the virus. The nanoviricide® technology enables direct attacks at multiple points on a virus particle. It is believed that
such attacks would lead to the virus particle becoming ineffective at infecting cells. Antibodies in contrast attack a virus particle
at only a maximum of two attachment points per antibody. In addition, the nanoviricide technology also simultaneously enables attacking
the rapid intracellular reproduction of the virus by incorporating one or more active pharmaceutical ingredients (APIs) within
the core of the nanoviricide. The nanoviricide® technology is the only technology in the world, to the best of our
knowledge, that is capable of both (a) attacking extracellular virus, thereby breaking the reinfection cycle, and simultaneously
(b) disrupting intracellular production of the virus, thereby enabling complete control of a virus infection.
The Company’s technology relies on copying the human cell-surface
receptor to which the virus binds, and making small chemicals that are called “ligands” that will bind to the virus
in the same fashion as the cognate receptor. These ligands are chemically attached to a nanomicelle, to create a nanoviricide®.
It is anticipated that when a virus comes
in contact with the nanoviricide, not only would it land on the nanoviricide surface, binding to the copious number of ligands
presented there, but it would also get entrapped because the nanomicelle polymer would turn around and fuse with the virus lipid
envelop, harnessing a well known biophysical phenomenon called “lipid-lipid mixing”. In a sense, a nanoviricide drug
acts against viruses like a “venus-fly-trap” flower does against insects. Unlike antibodies that tag the virus and
require the human immune system to take over and complete the task of dismantling the virus, a nanoviricide is a nanomachine that
is designed to not only binds to the virus but also complete the task of rendering the virus particle ineffective.
Our lead program in this fiscal year has
been NV-HHV-101 skin cream for the treatment of shingles rash. In addition, we began working on developing a treatment for SARS-CoV-2
virus infection that causes COVID-19 spectrum of diseases, since about January 2020, and accelerated this program since March 2020,
in response to the epidemic that has now become a long-lasting global pandemic. We continued to work on the Shingles NV-HHV-101
drug project as the primary project, and the Coronavirus project as a secondary project throughout the reported fiscal year.
Fiscal Year 2019-2020 in Review
Lead Drug Program: NV-HHV-101 Skin
Cream for the Treatment of Shingles Rash
NV-HHV-101 is our lead drug candidate in
the HerpeCideTM program. It has advanced as a skin cream through pre-clinical development stages and at present it is at the
IND application stage, with the design of clinical protocols, clinical site selection, and preparing for clinical trials, in process.
On Aug 5, 2019 we reported that NV-HHV-101
has been found to be safe and well tolerated at all dosage levels in the clinical observation portion of the GLP Safety/Toxicology
study of NV- HHV-101 as a dermal treatment. The in-life stage of the first part of the GLP Safety/Toxicology studies was completed.
Both the non-GLP and GLP Safety/Toxicology studies were conducted by BASi, Evansville, IN, a Contract Research Organization
that is specialized in IND-enabling safety/toxicology studies.
On December 9, 2019, we further reported
the current status of NV-HHV-101 in a press release, as discussed at the Annual Shareholders’ Meeting held on December 7,
2019. The in-life animal studies portions of the required GLP safety/toxicology studies were already completed then and resulting
blood samples were sent by the contract research organization, BASi, to other laboratories for different analyses.
The Company had also sent the NV-HHV-101 drug product for other required testing to different laboratories. Most of the studies
were already completed by the external collaborators and the Company was then awaiting draft reports from the completed studies
to guide the IND application drafting.
Page 4 of 106
The Company has received reports from various
external laboratories and has integrated them into appropriate sections of the IND application for NV-HHV-101. The Company has
also substantially completed the Chemistry, Manufacture, and Controls section of the IND filing as of date of this Annual Report.
Thereafter, having successfully completed the pre-clinical IND-enabling drug development studies, the Company began discussions
with clinical sites and retained consultants for the design of the clinical program for NV-HHV-101, which needs to be included
in an IND. Thus the IND application is substantially complete, except for the clinical trial design that was still being performed
with the help of consultants.
However, the COVID-19 epidemic expanded across the US, and also
globally, since March 2020, and did not show signs of abating rapidly. It became apparent that this epidemic would have a significant
impact on any new clinical trials for other viruses such as for our shingles treatment development. The impact would be in terms
of the ability to recruit and retain patients, as well as in the design of the clinical trial in presence of COVID-19 related
contingencies, and most importantly, in the interpretation of the resulting datasets. The Company therefore determined that it
was better to wait for resolution of the COVID-19 epidemic prior to entering into NV-HHV-101 clinical trials.
Our NV-HHV-101 drug is thus in the IND
stage and we intend to file the IND soon after the COVID-19 epidemic situation resolves. Assuming an IND application is approved
by the US FDA, we will then be able to commence clinical trials in this program.
Importantly, NV-HHV-101 has shown broad-spectrum
activity against HSV-1 (cause of “cold sores”), HSV-2 (cause of “genital ulcers”), and VZV (the varicella-zoster
virus, that causes chickenpox in children and immune-compromised humans, and shingles in adults). Our other HerpeCide program candidates
in progress at present are based on NV-HHV-101, thereby maximizing return on investments and shareholder value.
The market size for the treatment of shingles is estimated at
approximately one billion dollars by various estimates. These estimates take into account the Shingrix® vaccine as well as
existing vaccines. About 500,000 to 1 million cases of shingles occur every year in the USA alone.
The market size for our immediate target
drugs in the HerpeCideTM program is variously estimated at billions to tens of billions of dollars. The Company believes that
its dermal topical cream for the treatment of shingles rash will be its first drug heading into clinical trials in the HerpeCide
program. The Company believes that additional topical treatment candidates in the HerpeCideTM program, namely, HSV-1 "cold
sores" treatment, and HSV-2 "genital ulcers" treatment are expected to follow the shingles candidate into IND-enabling
development and then into human clinical trials.
In addition, our newly engaged program
for development of a broad-spectrum anti-coronavirus drug treatment has progressed well and we have fully engaged into this program
as of this writing.
Our New Coronavirus Drug Development
Program
Since January 2020, the
Company began working on developing a treatment for the SARS-CoV-2 virus (then known as 2019-nCoV virus) infection that
causes COVID-19 spectrum of diseases. Our efforts were at that time boot-strapped upon existing work being performed for our
Shingles treatment drug candidate and earlier work that we had performed on developing drug candidates for MERS-Coronavirus
in 2014, and for SARS-Coronavirus in 2012. Although we had designed and made drug candidates for MERS-CoV, these candidates
were not tested as the global efforts quickly shifted to the Ebola epidemic in the 2014-2015 timeframe. For the SARS-CoV-2
drug development program, we had a good head start because the structure of the first SARS-CoV and its interaction with the
human receptor ACE2 had been solved. SARS-CoV-2 uses the same receptor, ACE2, as does SARS-CoV, and another coronavirus,
namely h-CoV-NL63. Also it was found that SARS-CoV antibodies were cross-reacting with SARS-CoV-2.
We have achieved several milestones in
our newly instituted drug development program against SARS-CoV-2 since beginning these efforts.
Page 5 of 106
Very quickly, in January 2020, we
developed anti-viral ligands capable of binding to the SARS-CoV spike protein (i.e. S1 antigen) at the same site where this viral
spike protein binds to the human ACE2 cellular receptor protein as a doorway to enter and infect the cell. We perform design of
such anti-viral ligands using molecular modeling tools. We continued to evolve these developments further as the program progressed.
We already had some of the lead chemicals or their fragments for these newly designed ligands in our existing chemicals and ligands
library. We used the same polymer backbone as used for NV-HHV-101 to speed up the development, and attached the different test
anti-coronavirus ligands to the polymer backbone using covalent chemical linkages, resulting in new anti-coronavirus nanoviricides
test compounds.
Viral mutations lead to viruses escaping
drugs such as antibodies and small chemicals in the field. In spite of mutations, the virus binds to the same site on the same
cellular receptor in the same fashion. We develop small chemical ligands that are designed to bind to the virus protein at the
same binding area, mimicking the cellular receptor. Thus, even if the virus mutates, the nanoviricide drugs so designed would continue
to work, provided they mimic the cellular receptor adequately and successfully.
The Company also developed anti-coronavirus
assays for testing these compounds in our own BSL2 certified Virology laboratory very quickly. These cell culture assays employ
known less threatful, circulating human coronaviruses. Of these, coronavirus hCoV-NL63 uses the same ACE2 receptor, but causes
a milder disease with similar pathological manifestations, as do SARS-CoV-1 and -2. HCoV-NL63 is known to cause severe lower respiratory
tract infections in young children leading to hospitalization. The symptoms are generally less severe than SARS-CoV-2 but are similar.
In most cases, hCoV-NL63 causes relatively mild disease, often associated with croup, bronchiolitis, and lower respiratory tract
disease in children, and is considered to cause some of the common colds in adults. Thus, the clinical manifestation of hCoV-NL63
infection in pediatric patients is similar to that of SARS-CoV-2, although much less severe. SARS-CoV-2 causes clinically similar
milder forms of disease in most patients, but moderate to severe disease requiring hospitalizations in about 15-20% of infected
persons. These similarities imply that hCoV-NL63 should be a reasonable model virus for antiviral cell culture and animal studies
in BSL2 environment in the course of antiviral drug development for SARS-CoV-2. Thus NL63 serves as a good surrogate for SARS-CoV-2
drug development. Another coronavirus we are testing against, namely hCoV-229E, uses a different but somewhat related receptor
(in terms of biophysics). Investigating against both of these strains would allow us to examine which of the test candidates have
more broad-spectrum effectiveness against coronaviruses. However, there can be no assurance that successful results against these
forms of coronaviruses will lead to similar results against SARS-CoV-2. There can be no assurance that even successful results
against SARS-CoV-2 itself will lead to successful clinical trials or a successful pharmaceutical product. This is true of every
drug development effort against SARS-CoV-2. The effectiveness of a drug against SARS-CoV-2 will need to be evaluated in human clinical
trials.
We confirmed in a press release on January 30,
2020, that we had begun working on developing a broad-spectrum anti-coronavirus drug for the treatment of SARS-CoV-2 and other
coronaviruses.
On March 16, 2020, we reported in
a press release that we had completed synthesis of certain test candidates that we had designed, and that we had completed development
of anti-Coronavirus assays for testing such novel candidates, in our own laboratories.
On May 12, 2020, in a press
release, we reported that we had successfully developed drug candidates that demonstrated very high anti-viral effectiveness
in cell culture studies against multiple human coronaviruses. Two of the tested nanoviricides drug candidates were highly
effective in cell culture assays against multiple coronaviruses that infect humans. In particular, they were several-fold
more effective than favipravir (aka T-705), against the tested viruses. Favirpravir is a broad-spectrum nucleoside-like
analog drug that is in clinical testing against SARS-CoV-2, originally developed by Fujifilm. We tested these drug candidates
for anti-viral effectiveness against two distinctly different, unrelated coronaviruses that cause human disease, namely
hCoV-NL63, and hCoV-229E. The assays evaluated the reduction caused by the drug candidate in cell death upon viral infection,
formally known as cytopathic effects (CPE) assays.
Page 6 of 106
We found that the same two nanoviricides
drug candidates were highly effective against hCoV-NL63, the coronavirus that uses the same cellular receptor as SARS-CoV-2, as
well as another coronavirus, namely hCoV-229E, that causes seasonal common colds in humans. HCoV-229E uses the APN (Aminopeptidase-N)
membrane protein on human cells as its receptor to enter cells, different from the ACE2 receptor used by hCoV-NL63 and SARS-CoV-2.
ACE2 and APN may be considered to belong to a common superfamily of enzyme membrane proteins in terms of biophysics. The various
receptors used by different coronaviruses all appear to fall in the broad family of membrane-associated serine proteases. As a
family, they share several structural features. Their substrate specificities are dictated by specific amino acid residues and
their positions.
We believe the fact that these nanoviricides
anti-coronavirus drug candidates are highly effective against two distinctly different coronaviruses that use different cellular
receptors is very significant. Specifically, it provides substantial confidence and scientific rationale that even if the SARS-CoV-2
coronavirus mutates, the nanoviricides can be expected to continue to remain effective. In contrast, it is generally thought that
SARS-CoV-2 may be able to escape antibodies being developed as drugs. Antibodies are known to become ineffective upon viral mutations.
We believe that broad-spectrum anti-coronavirus
drugs such as its nanoviricides drug candidates would be expected to provide the ideal solution for combatting COVID-19, provided
that the candidates show effectiveness in human clinical trials.
On May 20, 2020, we reported in a
press release that strong effectiveness against infection by an ACE2-utilizing coronavirus in an animal model was observed for
our test drug candidates in development against SARS-CoV-2 to treat COVID-19 spectrum of diseases. In this lethal, direct-lung-infection
model, animals in all groups infected with hCoV-NL63 developed lung disease which later led to multi-organ failures, a clinical
pathology resembling that of the SARS-CoV-2. Reduction in loss of body weight at day 7 was used as the primary indicator of drug
effectiveness. Rats were infected directly into lungs with lethal amounts of hCoV-NL63 virus particles and then different groups
were treated separately with five different nanoviricides test drug candidates, remdesivir as a positive control, and the vehicle
as a negative control. The treatment was intravenous by tail-vein injection.
Animals treated with the five different
nanoviricides showed significantly reduced body weight loss. The body weight loss was only 3.9% for the best nanoviricide candidate,
ranging to 11.2% for the potentially least effective one, as compared to 20% in the vehicle-treated control group, in female animals
(n=5 in each group). Male animals treated with the same nanoviricides also showed significantly reduced body weight loss. The body
weight loss in male animals was 8.0% for the best nanoviricide candidate and ranged up to 10.9% for the potentially least effective
one, as compared to 25% in the vehicle-treated control group (n=5 in each group). In comparison, remdesivir treatment led to a
body weight loss of 15.2% in females and 18.6% in males in this study. Remdesivir is known to be rapidly metabolized in native
animal models, and its effectiveness was evaluated in specially constructed serum esterase negative mice in published literature.
Importantly, this study demonstrated that our drug candidates were highly effective in a native animal model of lethal coronavirus
lung infection, which may be considered more stringent than the clinical condition in human patients. Smaller numbers mean less
loss in body weight compared to starting body weight in the group, and indicate greater drug effectiveness.
The striking difference in weight loss
between the two sexes in this animal model was remarkable. It has been widely reported that men are more likely to suffer severe
infection and fatalities from SARS-CoV-2 than women in the current pandemic. This feature was replicated in our animal model study
indicating that biological sex differences are the driver of the differences in the severity of infection by the coronaviruses
that utilize the ACE2 receptor.
The strong effectiveness of nanoviricide
test drug candidates in this model is consistent with the effectiveness observed in cell culture studies against infection of both
hCoV-NL63, which was used in this study, and hCoV-229E, another circulating coronavirus that uses a distinctly different receptor,
namely APN.
Thus this study corroborated the cell-culture
effectiveness and provided confidence that these nanoviricides drug candidates may be expected to result in a clinical candidate
to be pursued in human clinical trials.
Subsequent to the reporting period, on
July 8, 2020, we reported in a press release that excellent safety and tolerability of the drug candidates in development
against SARS-CoV-2 to treat COVID-19 spectrum of diseases was observed in an animal model. Three different drug candidates
at three different dosage levels (low, medium, and high) and vehicle control were administered to separate groups of mice intravenously
in this non-GLP Safety-Tolerability study. Sixteen mice in each group (8 males, 8 females), were administered one of the three
drug candidates at one of the three dose levels, and additionally, one group was administered vehicle control, for seven days by
daily tail-vein intravenous infusion in this blinded study with additional evaluations on 8th day. This non-GLP safety/tolerability
study was conducted under GLP-like conditions by AR BioSystems, Inc., Tampa, FL.
Page 7 of 106
There were no clinical signs of
immune or allergic reactions such as itching, biting, twitching, rough coat, etc. Further, there were no observable
changes in any organs including large intestine or colon on post mortem in gross histology. The only reportable changes
observed were, in the high dosage groups of two of the three drug candidates tested, associated with the non-absorption of
water, in the colon. This is consistent with the clinical observation of loosened stools in the same groups. In clinical
usage, the drug candidates are not anticipated to be administered in such high levels. The objective of this study was to
discover the dosage level at which such an effect may occur. Loose or very loose stools at very high dosages in such a study
is an expected and acceptable side effect of the polyethylene glycol (PEG) moiety, which we believe forms the backbone of the
nanoviricides drug candidates. PEG is used prior to colonoscopy in humans to promote loose stools and internal
cleaning of the intestines, by causing non-absorption of water.
Clinical observations and gross post-mortem
studies showed that the tested drug candidates were safe and well tolerated, thereby clearing the path for further development
towards a treatment for SARS-CoV-2 infection that has caused the current COVID-19 pandemic.
On the basis of these studies, we have
developed a strategy for drug development with the goal of creating the most effective medicine to obtain regulatory approval for
emergency use in the COVID-19 pandemic in the shortest timeline feasible, after having achieved proof of concept of broad-spectrum
anti-coronavirus effectiveness of test candidates. To this end, we have worked to harness the full power of the nanoviricide platform,
which (1) enables attacking the virus particle blocking infection by itself as described above, as well as (2) enables
protection and delivery of other payload drug(s) that can interfere with the replication of the virus inside cells.
A curative treatment for a virus such
as SARS-CoV-2 coronavirus would require a multi-faceted attack that shuts down (i) the ability of the virus to infect
host cells, and simultaneously, (ii) the ability of the virus to multiply inside the host cells. The nanoviricide®
platform enables direct multi-point attack on the virus that is designed to disable the virus and its ability to infect new
cells. At the same time, a nanoviricide is also capable of carrying payload in its “belly” (inside the micelle)
that can be chosen to affect the ability of the virus to replicate. The nanoviricide is designed to protect the payload from
metabolism in circulation. Thus, the nanoviricide platform provides an important opportunity to develop a curative treatment
against SARS-CoV-2, the cause of COVID-19 spectrum of pathologies.
We have previously stated that we are currently working on developing
the “first generation” nanoviricides nanomedicines that block the re-infection cycle of the virus towards drug approvals,
as in the case of NV-HHV-101. We had also stated that in a second generation later on we planned on harnessing the full power of
the nanoviricides nanomedicine platform towards creating second generation drugs that also encapsulated payload to additionally
block the replication cycle of the virus, thereby effectively creating cures against viruses that do not integrate into human cells
or form latent reservoirs.
We accelerated the development of a
second generation nanoviricide against COVID-19 given that a well known drug that affects the replication cycle is already
available and is the only direct-acting antiviral currently authorized in the USA, albeit for emergency use, namely
remdesivir. While highly effective in cell cultures, the clinical effectiveness of remdesivir is known to be limited by the
rapid metabolism it undergoes in the bloodstream upon infusion. We believe that by encapsulating remdesivir into our
nanoviricide, it may undergo limited metabolism thereby improving its effectiveness.
On September 16, 2020, we announced that we had nominated
a clinical drug candidate, identified as NV-CoV-1-R for further development. The candidate is made up of a nanoviricide that we
have found to possess broad-spectrum anti-coronavirus activity, now identified as NV-CoV-1, and remdesivir encapsulated inside
the core of NV-CoV-1. NV-CoV-1 itself is designed to attack the virus particles themselves, and possibly would also attack infected
cells that display the virus antigen S-protein, while sparing normal (uninfected) cells that do not display the S-protein. Additionally,
remdesivir is widely understood to attack the replication cycle of the virus inside cells. Thus the combined attack enabled by
NV-CoV-1-R on the virus could prove to be a cure for the infection and the disease, provided that the necessary dosage level can
be attained without undue adverse effects. Human clinical trials will be required to determine the safety and effectiveness of
NV-CoV-1-R.
Page 8 of 106
Remdesivir is a well-known antiviral drug
(developed by Gilead) that has been approved for emergency use treatment of SARS-CoV-2 infection or COVID-19 in several countries.
NV-CoV-1 is a novel agent that is being used as an adjuvant to remdesivir in creating NV-CoV-1-R, to improve the overall effectiveness.
It is well known that remdesivir suffers from rapid metabolism in circulation that breaks down the prodrug to its nucleoside form
which is not readily phosphorylated. The Company anticipates that encapsulation in NV-CoV-1 may protect remdesivir from this rapid
metabolism. If this happens, the effective level and stability of remdesivir in the body would increase. This increase may lead
to increased effectiveness if there are no adverse effects. Such increased effectiveness, if found, may also allow reduction in
the required dosage of remdesivir in the encapsulated form, i.e. as NV-CoV-1-R. In this sense, NV-CoV-1 can be viewed to act as
an adjuvant that enhances the effect of remdesivir, a known antiviral against SARS-CoV-2.
We also continue to work on additional
variants of drug candidates that we have found to be effective against coronaviruses in cell culture studies, with and without
encapsulated payload drugs. We thus guard against the risk of unknown effects in the drug development process.
Thus we believe we have made significant
progress in developing novel drug candidates against SARS-CoV-2 under the severe time pressure of the pandemic. We plan on GLP
Safety/Pharmacology studies, a pre-IND filing with the US FDA for guidance, and thereafter an IND application for our clinical
drug candidate against COVID-19. We are working on these activities as rapidly as possible. We believe that we are developing highly
effective drug candidates against coronaviruses that we anticipate should be able to enter and succeed in human clinical trials.
However, we cannot provide timelines because of extreme dependence on external collaborators for these activities.
Financings
As of June 30, 2020, we had cash and cash equivalents of
approximately $13.7 million and prepaid expenses of approximately $.3 million. In addition, the Company had approximately $9.5
million in property and equipment, net of accumulated depreciation.
On December 16, 2019, the Company entered
into an Open End Mortgage Note (the “Note”) with Dr. Anil Diwan, the Company’s founder, Chairman, President and
CEO to loan the Company up to $2,000,000 in two tranches of $1,000,000 (the “Loan”). The Note bears interest at a rate
of 12% per annum and is secured by a mortgage granted against the Company’s headquarters. Dr. Anil Diwan received 10,000
shares of the Company’s Series A preferred stock as a loan origination fee. As of June 30, 2020, the Company has drawn down
$1.1 million on this loan. On April 30, 2020, the Company and Dr. Diwan have mutually agreed to extend the maturity date of the
Note, at the Company’s option, to May 15, 2021, with the rest of the terms remaining the same.
On December 17, 2019, the Company entered
into a Deferred Expense Exchange Agreement with TheraCour Pharma, Inc. (“TheraCour”), whereby the Company and TheraCour
agreed to exchange 100,000 shares of Series A preferred stock with a fair value of $392,669 for $250,000 previously deferred development
fees owed to TheraCour. The Company recognized a loss on the exchange of $142,669 during the year ended June 30, 2020. Dr. Diwan
is principal shareholder of TheraCour.
Page 9 of 106
These two transactions together provided
a much needed cash infusion of up to $2.3 million to the Company at a critical time. There were no agents or brokers in these transactions
and no commissions or agency fees were paid other than legal and regulatory fees. Dr. Diwan, being a party with interest,
recused himself from, and was not present at, the discussions and negotiations of the independent members of Company’s Board
of Directors on both of these transactions.
On January 24, 2020, the Company announced
in a press release that it had completed an underwritten public offering (the “Offering”) with gross proceeds of $8,625,000
before deducting underwriting discounts and other estimated offering expenses. The Offering included 2,500,000 shares of the Company’s
common stock, and 375,000 additional shares from the exercise of the underwriter’s option to purchase to cover over-allotments
at the public offering price of $3.00 per share. No warrants were issued in this Offering. The net proceeds to the Company after
deducting offering costs was $7,457,575.
On May 26, 2020, the Company announced it had raised $10,220,000
in gross proceeds from the sale of 1,400,000, shares of common stock, at a price of $7.30 per share, in a previously announced
registered direct offering (the “May Offering”). No warrants were issued in this May Offering. The net proceeds
to the Company were $9,219,400 after deducting placement agent fees and other costs. The May Offering closed on May 22, 2020.
With these financings and continued control
of expenditures, the Company ended the current fiscal year with approximately $13.7 million in cash and cash equivalents, and $9.5
million in property and equipment net of accumulated depreciation. As of June 30, 2020 the Company had a mortgage note payable-related
party of approximately $1.1 million and a loan payable of approximately $60,000 that will mature on December 15, 2020.
Page 10 of 106
On July 8, 2020, subsequent to the date of the reporting period,
the Company entered into an underwriting agreement (the “Underwriting Agreement”) with Kingswood Capital Markets, a
Division of Benchmark Investments, Inc. (“Kingswood”). The offering was consummated on July 10, 2020, whereby the Company
sold 1,369,863 shares of Common Stock and a fully exercised Underwriters’ over-allotment option of 205,479 additional shares
the public offering price of $7.30 per share. No warrants were issued in this Offering. The net proceeds to the Company from the
offering was approximately $10.53 million after deducting underwriting discounts and commissions and other estimated offering expenses
payable by the Company.
On July 31, 2020, the Company entered into an At Market Issuance
Sales Agreement (the “Sales Agreement”) with B. Riley Securities, Inc. and Kingswood Capital Markets, a division of
Benchmark Investments, Inc. (each a “Sales Agent” and collectively, the “Sales Agents”), pursuant to which
the Company may offer and sell, from time to time, through or to the Sales Agents, shares of Common Stock (the “Placement
Shares”), having an aggregate offering price of up to $50 million (the “ATM Offering”). Sales pursuant to the
Sales Agreement will be made only upon instructions by the Company to the Sales Agents, and the Company cannot provide any assurances
that it will issue any Shares pursuant to the Sales Agreement. Actual sales will depend on a variety of factors to be determined
by the Company from time to time, including (among others) market conditions, the trading price of the Company’s Common Stock,
capital needs and determinations by the Company of the appropriate sources of funding for the Company. The Company is not obligated
to make any sales of Common Stock under the Sales Agreement and the Company cannot provide any assurances that it will issue any
shares pursuant to the Sales Agreement. The Company will pay a commission rate of up to 3.5% of the gross sales price per share
sold and agreed to reimburse the Sales Agents for certain specified expenses, including the fees and disbursements of its legal
counsel in an amount not to exceed $50,000 and have agreed to reimburse the Sales Agents an amount not to exceed $2,500 per quarter
during the term of the Sales Agreement for legal fees to be incurred by the Sales Agents. The Company has also agreed pursuant
to the Sales Agreement to provide each Sales Agent with customary indemnification and contribution rights.
The Company thus believes that it is
in a strong financial position now and can undertake the COVID-19 clinical program, and also, when opportune, reengage the
NV-HHV-101 clinical program. The Company also believes that additional non-dilutive financing will be available under the
COVID-19 program upon advancing it further toward or into human clinical trials. The Company also believes that due to
the pandemic, it will be possible to rapidly take our anti-coronavirus drug into human clinical trials under the COVID-19
regulatory pathways of the US FDA.
Corporate
Events - Intellectual Property
The Company’s drug development business
model was formed in May 2005 with a license to the patents and intellectual property held by TheraCour that enabled creation
of drugs engineered specifically to combat viral diseases in humans. This exclusive license from TheraCour serves as a foundation
for our intellectual property. TheraCour is a privately owned company, controlled by Anil R. Diwan, PhD, principal developer of
the polymeric-micelle based nanomedicines technologies. TheraCour licenses its intellectual property from AllExcel, Inc.,
a company that is owned and controlled by Dr. Diwan. The Company has a worldwide exclusive license to this technology for
several drugs with specific targeting mechanisms for the treatment of a number of human viral diseases including HSV-1, HSV-2,
and VZV.
On November 4, 2019, the Company announced
in a press release that it has completed the process of licensing the VZV (shingles and chickenpox virus) field for drug development
and commercialization from TheraCour. The Company executed this license agreement for VZV with TheraCour on November 1, 2019
(the “Agreement”). Under this Agreement, NanoViricides has obtained a world-wide, exclusive, sub-licensable, license
to use, promote, offer for sale, import, export, sell and distribute drugs that treat Varicella Zoster Virus infections, using
TheraCour’s proprietary as well as patented technology and intellectual property. The discovery of ligands and polymer materials
as well as formulations, the chemistry and chemical characterization, as well as process development and related work will be performed
by TheraCour under the same compensation terms as prior agreements between the parties, with no duplication of costs allowed. NanoViricides
did not pay any upfront licensing fee under the Agreement. The Company will pay a first milestone payment to TheraCour upon the
grant of approval of an Investigational New Drug application (IND), of 75,000 shares of the Company’s Series A preferred
stock. A second milestone payment will be due upon completion of Phase I human clinical trials in the cash amount of $1.5 million.
A third milestone payment will be payable to TheraCour upon completion of Phase II human clinical trials in the cash amount of
$2.5 million, and a fourth milestone payment will be due upon completion of Phase III human clinical trials in the cash amount
of $5 million. However, NanoViricides shall have no obligation to continue clinical trials beyond Phase I. Upon commercialization,
NanoViricides will pay royalties of 15% of Net Sales to TheraCour, as defined in the Agreement. The Agreement contemplates that
the parties will enter into a separate Manufacturing and Supply Agreement for the commercial manufacture and supply of the drug
products if and when NanoViricides intends to engage into commercialization of the drugs. The Agreement provides that the Manufacturing
and Supply agreement would be on customary and reasonable terms, on a cost-plus basis, using a market rate based on then-current
industry standards, and include customary backup manufacturing rights. Dr. Diwan recused himself in the Board’s discussions
on the VZV license agreement.
Page 11 of 106
On June 9, 2020, the Company reported
in a press release that it has signed a Memorandum of Understanding (“MoU”) with respect to anti-viral treatments
for coronavirus derived human infections (the “Field”) with TheraCour. The MoU specifically provides a limited, exclusive
license to all research and development in the Field for further research and development purposes towards human clinical trials.
Dr. Diwan recused himself in the Board’s discussions on the MoU, and recuses himself from the Company’s discussions
regarding the license agreements as well. McCarter & English, LLP advised the NanoViricides Board of Directors and DuaneMorris,
LLP advised TheraCour on this MoU. These law firms are expected to continue as attorneys for the parties for the negotiation of
the license predicated in the MoU. The Board of the Company has since retained an independent consultant for the evaluation of
the assets in order to develop the full license agreement. The Company intends to perform the regulatory filings and own all the
regulatory licenses for the drugs it is currently developing. The Company will develop these drugs in part via subcontracts to
TheraCour, the exclusive source for these nanomaterials.
The Company believes that it currently does not need a license
for the use of remdesivir in developing the novel nanoviricide drug candidates that encapsulate remdesivir. The Company has undertaken
encapsulation of remdesivir into certain of its drug candidates for the treatment of coronavirus because we believe that this encapsulation
would result in substantial patient benefits. However, the Company believes that our anti-coronavirus drug candidates have shown
significant anti-coronavirus activity in cell culture and animal studies, and therefore are expected to be viable drugs against
human coronavirus infections by themselves, without encapsulating remdesivir. At present, the Company believes that to develop
them as independent, we will need to also use the approved remdesivir treatment as standard of care in addition to the new nanoviricide
drug candidate in the human clinical trial treatment arm. It may be possible that encapsulation would improve the pharmacokinetics
of remdesivir and thereby improve its effectiveness when in encapsulated form. These possibilities can only be evaluated in a human
clinical trial. We believe that any license for the use of remdesivir encapsulation in our novel drugs, if necessary, will be feasible
in the interests of resolving the pandemic. The Company would also be willing to collaborate with Gilead Sciences, Inc., the developer
of remdesivir, for developing the encapsulated drug. There is currently no collaboration agreement with Gilead Sciences, Inc.,
nor any assurance that such an agreement can be reached. The Company is currently developing its anti-coronavirus drugs independently,
on its own.
Page 12 of 106
Investor Outreach
During the reporting period and thereafter,
the Company has made significant efforts in its investor outreach programs. The Company has retained Tradigital, Inc. as its
investor relations firm. In addition, the Company has presented at various investor conferences. The Company has also been interviewed
on national and investor-oriented channels, unsolicited, due to our engagement in COVID-19 drug development efforts.
On October 3, 2019, the Company reported
in a press release that Dr. Diwan, Company’s President, Chairman and CEO was interviewed by broadcast journalist Christine
Corrado of Proactive Investors, a leading multi-media news organization, investor portal and events management business with offices
in New York, Sydney, Toronto, Frankfurt, and London.
On February 4, 2020, the Company reported
in a press release that Dr. Diwan was interviewed on the Kennedy show on Fox Business News (FBN), on January 23, 2020.
The Company has licensed a copy of the video excerpt from FBN and it is available on the Company’s website (www.nanoviricides.com)
under the heading “NanoViricides In the News”, by clicking on “Dr. Anil Diwan on Fox Business - 01/23/2020
- By - Kennedy”.
On February 10, 2020, the Company reported in a press release
that Dr. Diwan was interviewed on the Stuart Varney show on Fox Business News (FBN), on January 28, 2020. The Company
has licensed a copy of the video excerpt from FBN and it is available on the Company’s website (www.nanoviricides.com), home
page, under the heading “Dr. Anil Diwan on Fox Business - 01/28/2020”.
Dr. Diwan participated as a panelist
on a virtual panel discussion entitled, “COVID-19: Current Pipeline and Innovations for Therapeutics and Vaccine”,
organized by BioCT, an association of biotechnology and pharmaceutical businesses in Connecticut, on April 8, 2020. The panel
was moderated by Dr. Mostafa Analoui, Executive Director, Venture Development & Technology Incubation Program (TIP),
Office of the Vice President for Research, University of Connecticut, Storrs, CT. A transcript of the panel discussion is available
at https://www.youtube.com/watch?v=WpTP_wnEZKw&feature=youtu.be.
On April 13, 2020, the Company reported
that Dr. Diwan and key staff members at the Company’s Shelton, CT headquarters were interviewed by broadcast journalist
Christine Corrado of Proactive Investors on March 27, 2020, remotely, from their New York office.
On April 22, 2020, Dr. Diwan, presented
a corporate update focused on the COVID-19 and shingles programs at the Planet Microcap Virtual Showcase 2020.
Page 13 of 106
On June 30, 2020, the Company reported
in a press release that it has been added to the Russell Microcap® Index effective after the U.S. markets opened
on Monday, June 29, 2020. Membership in the Russell Microcap® Index, which remains in place for one year, means
automatic inclusion in the appropriate growth and value style indexes. FTSE Russell determines membership for its Russell indexes
primarily by objective, market-capitalization rankings and style attributes. Russell indexes are widely used by investment managers
and institutional investors for index funds and as benchmarks for active investment strategies. Approximately $9 trillion in assets
are benchmarked against Russell’s US indexes. Russell indexes are part of FTSE Russell, a leading global index provider.
Inclusion of NanoViricides in the Russell Microcap Index may be expected to increased participation in the NNVC stock positions
of investment managers and institutional investors that purchase, follow or employ this index.
Subsequent to the reporting period, Dr.
Diwan, was invited to participate in the “B. Riley FBR Virtual Infectious Disease Summit – Therapeutics Day”
on Tuesday, July 21, 2020. The Conference was organized by B. Riley FBR, Inc. (https://brileyfbr.com/). Dr. Diwan
participated in Panel #3 at 2020 at 2:10 p.m. ET, entitled “Taming the Severe Disease Presentations”.
Dr. Diwan provided a further update on its programs at
the LD500 Virtual Conference on September 3rd, 2020, as reported by the Company in a press release issued on September
4, 2020.
Thus we have made strong progress in drug
development, despite engaging into a novel drug program against coronaviruses in response to the current pandemic, as well as financing
and leadership building in the reported year.
The Company’s primary focus has shifted
to bringing its broad-spectrum anti-coronavirus drug into human clinical trials as soon as possible, in response to the current
pandemic, as detailed above.
Our other lead program, namely NV-HHV-101
skin cream for treatment of shingles rash, is now in IND-ready stage, with clinical trial design and clinical trial selection as
the remaining steps prior to filing an IND. Shingles is caused by reactivation of VZV (Varicella-Zoster Virus), which causes chickenpox
in children. Several additional indications in the HerpeCideTM program, including skin creams for the treatment of “genital
ulcers” (HSV-2), and for the treatment of “cold sores” (HSV-1”) are expected to follow the shingles candidate
into clinical development. In addition, the Company has drug candidates in development against severe influenzas (including bird
flu), HIV, Dengue, Ebola/Marburg and other viruses at different preclinical stages. According to a 2014 market report prepared
by Jain PharmaBiotech (“Jain”), entitled “Antiviral Thereapeutics, Technologies, Markets & Companies,”
the overall market size for our potential drugs is estimated to be between $40~65 Billion by 2023. This broad pipeline is enabled
by our unique post-immunotherapeutic “bind-encapsulate-destroy” technology platform.
Page 14 of 106
We are a development-stage company with
the goal of commercializing special purpose nanomedicine for anti-viral drugs based on a novel, first-in-class mechanism. The Company's
novel nanoviricide® class of drug candidates are designed to specifically attack enveloped virus particles, on the same sites
that they use to bind to cells and dismantle them. Our unique biomimetic approach promises that a virus cannot escape our nanoviricide
drugs due to mutations, if the virus-binding ligands perform as designed.
The Company’s drug candidates are
licensed from TheraCour, and are developed by TheraCour for the Company on the
basis of several patents, patent applications, provisional patent applications, and other proprietary intellectual property held
by TheraCour. Unlike usual pharma industry licenses that are specified for single chemical entities or for groups of similar chemical
entities, our licenses are specified for the vertical application field of use, thereby providing us with a large universe of diverse
development candidates under the same umbrella. The Company has exclusive licenses from TheraCour for drug candidates derived from
and based on TheraCour’s technologies for several viruses. In 2005, the Company obtained a license from TheraCour for the
treatment of the following human viral diseases: Human Immunodeficiency Virus (HIV/AIDS), Influenza including Asian Bird Flu
Virus (INF), Herpes Simplex Virus (HSV-1 and HSV-2), Hepatitis C Virus (HCV), Hepatitis B Virus (HBV), and Rabies. Thereafter,
on February 15, 2010, the Company entered into an Additional License Agreement with TheraCour granting the Company the exclusive
licenses for technologies developed by TheraCour for the additional virus types for Dengue viruses (DENV), Japanese Encephalitis
(JEV), West Nile Virus (WNV), viruses causing viral Conjunctivitis (a disease of the eye) and Ocular Herpes Keratitis, and Ebola/Marburg
viruses. While herpes simplex viruses were already specified as licensed previously, the term “ocular herpes keratitis”
was added to this additional license agreement at the specific request of the Company for clarity only. In addition, the Company
completed the process of licensing the VZV (shingles, chicken pox virus) field from TheraCour in November 2019. The Company
and TheraCour have executed a Memorandum of Understanding which already provides a limited development license to the Company for