Item 1A. Risk
Factors
Investing in our common stock involves a high
degree of risk. You should consider carefully the risks and uncertainties described below, together with all of the other information
in this report, including the section titled “Management’s Discussion and Analysis of Financial Condition and Results of
Operations” and our financial statements and related notes, before making a decision to invest in our common stock. Our business,
results of operations, financial condition and prospects could also be harmed by risks and uncertainties that are not presently known
to us or that we currently believe are not material. If any of the risks actually occur, our business, platform, reputation, brand, results
of operations, financial condition and prospects could be materially and adversely affected. In such event, the market price of our common
stock could decline, and you could lose all or part of your investment.
Risks Related to Our Finances and Capital Requirements
Our limited operating history may make
it difficult for you to evaluate the success of our business to date and to assess our future viability.
We are a clinical stage biopharmaceutical company
with a limited operating history. We were incorporated in Delaware in July 2020 and commenced operations in May 2021. Our operations
to date have been limited to organizing and staffing our company, business planning, raising capital, identifying, investigating, licensing
and evaluating potential product candidates, and establishing arrangements with third parties for the manufacture of initial quantities
of our lead product candidate and component materials. Our lead product candidate is in early clinical development, and our second drug
candidate is in preclinical development. We have not yet demonstrated our ability to successfully initiate, conduct or complete any clinical
trials, obtain marketing approvals, manufacture a commercial-scale product or arrange for a third party to do so on our behalf, or conduct
sales, marketing and distribution activities necessary for successful product commercialization. Consequently, any predictions about
our future success or viability may not be as accurate.
We will need to transition at some point from
a company with a research and development focus to a company capable of supporting commercial activities related to the full product
life cycle. We may not be successful in such a transition.
We have incurred losses since inception
and anticipate that we will continue to incur losses for the foreseeable future. We may never achieve or maintain profitability.
Investment in biopharmaceutical product development
is a highly speculative undertaking and entails substantial upfront capital expenditures and significant risk that our current or potential
future product candidates will fail to demonstrate adequate efficacy or an acceptable safety profile, gain regulatory approval and become
commercially viable. We are still in the early stages of development of our product candidates and initiated our first clinical trial
in December 2021. We have no products approved for commercial sale and have not generated any revenue from product sales to date.
We continue to incur significant research and development and other expenses related to our ongoing operations. In addition, as a business
with a limited operating history, we may encounter unforeseen expenses, difficulties, complications, delays and other known and unknown
factors, such as the COVID-19 pandemic.
We have incurred losses in each period since
we commenced operations. Since inception through the end of December 31, 2021, we had an accumulated deficit of $12.9 million. Those
losses mainly include the following: (1) In June 2021, in connection with the exclusive licensing agreement related to our
lead product candidate, NXP800, we paid an upfront payment of $3.5 million, and (2) In September 2021, in connection with the
exclusive licensing agreement related to NXP900, we also paid an upfront payment of $3.5 million. We expect to continue to incur significant
losses for the foreseeable future, and we expect these losses to increase substantially if and as we continue our research and development
efforts and submit IND applications for our lead product candidate; conduct preclinical studies and clinical trials for our current and
future product candidates; seek marketing approvals for any current or future product candidate that successfully completes clinical
trials; experience any delays or encounter any issues with any of the above; establish a sales, marketing and distribution infrastructure
and scale-up manufacturing capabilities to commercialize any current or future product candidates for which we may obtain regulatory
approval; obtain, expand, maintain, enforce and protect our intellectual property portfolio; hire additional clinical, regulatory and
scientific personnel; and operate as a public company.
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Our lead product candidate, NXP800, is in clinical
development and our second product candidate, NXP900, is in the preclinical stage of development. Both product candidates will require
additional preclinical studies, clinical development, regulatory review and approval, substantial investment, access to sufficient clinical
and commercial manufacturing capacity and significant marketing efforts before we can generate any revenue from product sales. The Phase
1 study for NXP800 started in December 2021 and NXP900 has yet to enter clinical trials. To date, we have not generated any revenue
from our product candidates. Our ability to generate revenue will depend on a number of factors, including, but not limited to:
➢ patient demand for our current or future product candidates, if approved; and
Many of the factors listed above are beyond our
control and could cause us to experience significant delays or prevent us from obtaining regulatory approvals or commercializing our
current and future product candidates. Even if we can commercialize any current or future product candidates, we may not achieve profitability
soon after generating product sales, if ever.
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We will require substantial additional
funding. Raising additional capital may cause dilution to our existing stockholders, or require us to relinquish proprietary rights.
If we are unable to raise capital as needed, we may be compelled to delay, reduce or eliminate our product development programs or commercialization
efforts.
We expect our expenses to increase in parallel
with our ongoing activities, particularly as we continue our discovery and preclinical development activities to identify new product
candidates and initiate clinical trials of, and seek marketing approval for, any of our current or future product candidates. In addition,
if we obtain marketing approval for any of our current or future product candidates, we expect to incur significant commercialization
expenses related to product sales, marketing, manufacturing, 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. We cannot be certain that additional funding will be available on acceptable terms, or at all. Until
such time, if ever, as we can generate substantial product revenue, we expect to finance our operations through a combination of public
or private equity offerings, debt financings, governmental funding, collaborations, strategic partnerships and alliances or marketing,
distribution or licensing arrangements with third parties. To the extent that we raise additional capital through the sale of equity
or convertible debt securities, your ownership interest will be diluted, and the terms of these securities may include liquidation or
other preferences that adversely affect your rights as a stockholder. Debt financing and preferred equity financing, if available, 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.
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 capital when needed
or on attractive terms, we could be forced to delay, reduce or eliminate our discovery and preclinical development programs or any future
commercialization efforts.
Major public health issues, and specifically
the pandemic caused by the coronavirus COVID-19 outbreak, could have an adverse effect on our clinical trials, financial condition, results
of operations, and other aspects of our business.
In March 2020, the World Health Organization
declared the outbreak of COVID-19 to be a pandemic. The COVID-19 pandemic is having widespread, rapidly evolving, and unpredictable impacts
on global society, economies, financial markets, and business practices. During 2021, there was a wide distribution of several vaccinations
and medicines to overcome the pandemic. We have shifted our operations to co-exist along with the pandemic, including encouragement of
vaccinations to all of our employees worldwide.
The uncertainty to which the COVID-19 pandemic
impacts the Company’s business, affects management’s judgment and assumptions relating to accounting estimates in a variety
of areas that depend on these estimates and assumptions. COVID-19 did not have a material influence on these estimates and judgements
since the Company began operations in 2021.
The Company continues to face relative uncertainty
as to the remaining intensity and duration of and the nature and timeline for recovery from the COVID-19 pandemic going forward and how
all of that impacts the Company, including the extent to which potentially permanent changes clinical trial operations have been caused
by the pandemic. The Company has taken the approach of managing the pandemic (to the extent that it continues to remain a significant
factor) via strengthening its balance sheet and cash assets and avoiding debt while focusing on cost controls. Some factors from the
COVID-19 outbreak or any outbreak caused by any variant of COVID-19 that may delay or otherwise adversely affect our clinical trial programs,
as well as adversely impact our business generally, include:
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We currently rely on third parties for certain
functions or services in support of our clinical trials and key areas of our operations. If these third parties themselves are adversely
impacted by restrictions resulting from the COVID-19 outbreak, we will likely experience delays and/or realize additional costs. As a
result, our ability to commence and complete clinical trials in timely fashion, obtain regulatory approvals for, and to commercialize,
our current and future product candidates may be delayed or disrupted.
Risks
Related to the Development of our Product Candidates
Our discovery and preclinical development
approach focuses on the development of precision medicines for patients with genetically defined cancers and may never lead to marketable
products.
The patient populations for our product candidates
and potential future product candidates are limited to those with specific target mutations and may not be completely defined but are
substantially smaller than the general treated cancer population and we will need to screen and identify these patients with the targeted
mutations. Successful identification of patients is dependent on several factors, including achieving certainty as to how specific genetic
alterations respond to our current product candidates or any future product candidate and, if necessary, developing companion diagnostics
to identify such genetic alterations. Furthermore, even if we are successful in identifying patients, we cannot be certain that the resulting
patient populations for each mutation will be large enough to allow us to successfully obtain approval for each mutation type and commercialize
our products and achieve profitability. In addition, even if our approach is successful in showing clinical benefit by downregulating
the HSF1 pathway in tumors harboring an ARID1a mutation or alteration, we may never successfully identify additional oncogenic mutations
for other genes. We do not know if our approach of treating patients with genetically defined cancers will be successful; and if our
approach is unsuccessful, our business will suffer.
We are very early in our development efforts
and are substantially dependent on our lead product candidate, NXP800. If we are unable to advance NXP800, NXP900 or any of our other
future product candidates through preclinical and clinical development, obtain regulatory approval and ultimately commercialize NXP800,
NXP900 or any of our other future product candidates, or experience significant delays in doing so, our business will be materially harmed.
NXP800, our lead product candidate, is only now
starting to be tested in human subjects. Our ability to generate product revenues will depend heavily on the successful clinical development
and eventual commercialization of NXP800 or future product candidates. Our second drug candidate, NXP900, has begun IND-enabling studies
or similar studies required by a foreign regulatory agency. Depending on the results of these IND-enabling studies, we may not be able
to submit an IND application with the FDA or a similar submission with a foreign regulatory agency and, therefore, may not be able to
conduct clinical trials for NXP900. In addition, our drug development programs may contemplate the development of companion diagnostics,
which are assays or tests to identify an appropriate patient population. Companion diagnostics are subject to regulation as medical devices
and must themselves receive marketing authorization from the FDA or certain other foreign regulatory agencies before they may be marketed.
If a companion diagnostic is essential to the safe and effective use of any of our current and future product candidates, the FDA must
conclude that the companion diagnostic meets the applicable standard for safety and effectiveness or for substantial equivalence for
use with our product candidates before either the product candidates or companion diagnostic may be marketed in the United States.
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Negative results in the development of our lead
product candidate may also prevent or delay our ability to continue or conduct clinical programs or receive regulatory approvals for
our other future product candidates. For example, although we believe, based on preclinical studies of OCCC models that demonstrated
tumor growth inhibition, that this cancer type might be particularly sensitive to NXP800, this may not prove true in clinical testing
for any or all of the target indications. Moreover, anti-tumor activity may be different in each tumor type that we plan to evaluate
in clinical trials. Therefore, even though we plan to potentially pursue tumor-agnostic clinical development of NXP800, the tumor response
may be low in patients with some cancers compared to others. As a result, we may be required to discontinue development of NXP800 for
patients with those tumor types and/or mutations due to insufficient clinical benefit, while continuing development in a more limited
population of patients. Consequently, in order to obtain regulatory approval, we may have to reach agreement with the FDA on defining
the optimal patient population, study design and size, any of which may require significant additional resources and delay our clinical
trials and ultimately the approval, if any, of any of our other future product candidates.
We may experience setbacks that could delay or
prevent regulatory approval of, or our ability to commercialize, our current or future product candidates, including:
➢ high drop-out rates of subjects from clinical trials;
➢ greater than anticipated clinical trial costs;
➢ inability to compete with other therapies;
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➢ trial results taking longer than anticipated;
In addition, because we have limited financial
and personnel resources and are focusing primarily on developing our lead product candidate, we may forgo or delay pursuit of other future
product candidates that may prove to have greater commercial potential and may fail to capitalize on viable commercial products or profitable
market opportunities. If we do not accurately evaluate the commercial potential or target market for a future product candidate, we may
relinquish valuable rights to those future product candidates through collaboration, licensing, or other royalty arrangements in cases
in which it would have been more advantageous for us to retain sole development and commercialization rights to such future product candidates.
Clinical drug development involves a lengthy
and expensive process with uncertain outcomes, clinical trials are difficult to design and implement, and any of our clinical trials
could produce unsuccessful results or fail at any stage in the process.
Clinical trials conducted on humans are expensive
and can take many years to complete, and outcomes are inherently uncertain. Failure can occur at any time during the process. Additionally,
any positive results of preclinical studies and early clinical trials of a drug candidate may not be predictive of the results of later-stage
clinical trials, such that drug candidates may reach later stages of clinical trials and fail to show the desired safety and efficacy
traits despite having shown indications of those traits in preclinical studies and early-stage clinical trials. A number of companies
in the pharmaceutical industry have suffered significant setbacks in advanced clinical trials due to lack of efficacy or adverse safety
profiles, notwithstanding promising results in preclinical studies or earlier phases of clinical trials. Therefore, the results of any
future clinical trials we conduct may not be successful.
Clinical trials may be delayed, suspended or
prematurely terminated because costs are greater than we anticipate or for a variety of reasons, such as:
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➢ inability to monitor patients adequately during or after treatment;
We rely and plan to continue to rely on CROs,
contract manufacturing organizations (“CMOs”) and clinical trial sites to ensure the proper and timely conduct of our clinical
trials. Although we have and expect that we will have agreements in place with CROs and CMOs governing their contracted activities and
conduct, we will have limited influence over their actual performance. As a result, we ultimately do not and will not have control over
a CRO’s or CMO’s compliance with the terms of any agreement it may have with us, its compliance with applicable regulatory
requirements, or its adherence to agreed-upon time schedules and deadlines, and a future CRO or CMO’s failure to perform those
obligations could subject any of our clinical trials to delays or failure.
Further, we may also encounter delays if a clinical
trial is suspended or terminated by us, by any IRB or ethics committee, by a Data Safety Monitoring Board, or by the FDA or European
Medicines Agency (“EMA”), or other regulatory authority. A suspension or termination may be due to a number of factors, including
failure to conduct the clinical trial in accordance with regulatory requirements, inspection of the clinical trial operations or trial
site by the FDA, EMA or other regulatory authorities, exposing participants to health risks caused by unforeseen safety issues or adverse
side effects, development of previously unseen safety issues, failure to demonstrate a benefit from using a drug candidate, or changes
in governmental regulations or administrative actions. Therefore, we cannot predict with any certainty the schedule for commencement
or completion of any currently ongoing, planned or future clinical trials.
Many of the factors that cause, or lead to, a
delay in the commencement or completion of clinical trials may also ultimately lead to the denial of marketing approval for our current
or future product candidates.
If we experience delays in the commencement or
completion of, or suspension or termination of, any clinical trial for our drug candidates, the commercial prospects of the drug candidate
could be harmed, and our ability to generate product revenues from the drug candidate may be delayed or eliminated. In addition, any
delays in completing our clinical trials will increase our costs, slow down our drug candidate development and approval process and jeopardize
regulatory approval of our drug candidates and our ability to commence sales and generate revenues. The occurrence of any of these events
could harm our business, financial condition, results of operations and prospects significantly.
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Difficulty in enrolling patients could
delay or prevent clinical trials of our current or future product candidates.
Identifying and qualifying patients to participate
in clinical studies of our current or future product candidates is critical to our success. The timing of completion of our clinical
studies depends in part on the speed at which we can recruit patients to participate in testing our current or future product candidates
and we may experience delays in our clinical trials if we encounter difficulties in enrollment. Further, because we are focused on patients
with specific indications and genetic mutations, our ability to enroll eligible patients may be limited and may result in slower enrollment
than we anticipate. Our clinical trials will compete with other clinical trials for current or future product candidates that are in
the same therapeutic areas as our current or future product candidates, which may reduce the number and types of patients available to
us.
Clinical trials may be subject to delays as a
result of patient enrollment taking longer than anticipated or greater than anticipated subject withdrawal. We may not be able to initiate
or continue clinical trials for our current or future product candidates if we are unable to locate and enroll a sufficient number of
eligible patients to participate in these trials as required by the FDA or foreign regulatory authorities. We cannot predict how successful
we will be at enrolling subjects in future clinical trials. The enrollment of patients depends on many factors, including:
➢ patient eligibility and exclusion criteria defined in the protocol;
➢ the proximity of patients to clinical trial sites;
➢ the design of the trial;
If we are unable to locate and enroll sufficient
eligible patients to participate, as required by the FDA or similar regulatory authorities, we may be unable to initiate or continue
clinical trials for our current or future product candidates. If necessary, we intend to engage third parties to develop companion diagnostics
for use in our clinical trials. If such third parties are unsuccessful, our difficulty in identifying patients with the targeted genetic
mutations for our clinical trials would be increased. If we are unable to include patients with the targeted genetic mutations or patients
with well-defined serious unmet medical needs, we may be unable to participate in the FDA’s expedited review and development programs,
including breakthrough therapy designation and fast track designation, or otherwise seek to accelerate clinical development and regulatory
timelines.
Our preclinical studies and clinical trials
may fail to demonstrate adequately the safety, potency, purity, efficacy or any other necessary pharmacological properties of any of
our current or future product candidates, which would prevent or delay development, regulatory approval and commercialization.
Before obtaining regulatory approvals for the
commercial sale of our current or future product candidates, including NXP800 and NXP900, we must demonstrate through lengthy, complex
and expensive preclinical studies and clinical trials that our current or future product candidates are both safe and effective for use
in each target indication. Preclinical and clinical testing is expensive and can take many years to complete, and its outcome is inherently
uncertain. Failure can occur at any time during the preclinical study and clinical trial processes, and, because our current product
candidates are in an early stage of development, there is a high risk of failure.
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The results of preclinical studies and early
clinical trials of our current or future product candidates may not be predictive of the results of later-stage clinical trials. Although
product candidates may demonstrate promising results in preclinical studies and early clinical trials, they may not prove to be effective
in subsequent clinical trials. Additionally, while we initiated the first clinical trial for NXP800 in December 2021, clinical trials
for any of our current or future product candidates, as is the case with all oncology drugs, it is likely that there may be side effects
associated with their use. Results of our trials could reveal a high and unacceptable severity and prevalence of these or other side
effects. In such an event, our trials could be suspended or terminated, and the FDA or comparable foreign regulatory authorities could
order us to cease further development of or deny approval of our current or future product candidates for any or all targeted indications.
Drug-related side effects could also affect patient recruitment into the study or patient willingness to remain in the study and therefore
affect our ability to complete clinical trials. Drug-related side effects could also result in potential product liability claims. Any
of these occurrences may harm our business, financial condition and prospects significantly.
The FDA and comparable foreign regulatory
authorities may not accept data from any preclinical or clinical trials we may conduct in foreign countries.
The FDA’s acceptance of data generated
for patients recruited outside the United States from clinical trials conducted in whole or in part outside the United States may be
subject to certain conditions, if accepted at all.
Although the FDA has the authority to accept
foreign data as part or even the sole basis for marketing approval, the FDA generally does not approve an application on the basis of
foreign data alone unless (i) the data is applicable to the U.S. population and U.S. medical practice, (ii) the trials were
performed by clinical investigators of recognized competence and pursuant to GCP regulations, and (iii) the FDA’s clinical
trial requirements were met. Many foreign regulatory authorities have similar approval requirements. In addition, any clinical study
conducted in whole or in part outside of the United States would be subject to the applicable local laws of the jurisdiction where the
trial was conducted. We cannot guarantee that the FDA or comparable foreign regulatory authority will accept data from trials conducted
in whole or in part outside of the United States, which may result in the need for additional trials.
We may not be able to submit IND applications
to commence additional clinical trials on the timelines we expect, and even if we are able to, the FDA may not permit us to proceed.
Our CTA for NXP800 with the MHRA was approved
and an IND submission for NXP800 to the FDA is expected in the second quarter of 2022. However, if we experience manufacturing delays
or any other delays, we may be unable to file additional CTAs, IND applications or other clinical research authorizations for other
product candidates on our expected timelines. Moreover, while we have obtained MHRA approval of the CTA, we cannot be sure that submission
of an IND application will result in the FDA allowing our planned clinical trials to begin, or that, once begun, issues will not arise
that suspend or terminate such clinical trials. Any failure to file CTAs, IND applications or other clinical research authorizations
will adversely impact our expected timelines to obtain regulatory acceptance for the commencement of our trials and may prevent us from
completing our clinical trials or commercializing our products on a timely basis, if at all.
We currently have no marketing and sales
organization and have limited experience in marketing products. If we are unable to establish marketing and sales capabilities or enter
into agreements with third parties to market and sell any approved product candidates, we may not be able to generate product revenue.
We will have to compete with other pharmaceutical
and biotechnology companies to recruit, hire, train and retain marketing and sales personnel. If we are unable or decide not to establish
internal sales, marketing, and distribution capabilities, we may pursue arrangements with third-party sales, marketing, and distribution
collaborators regarding the sales and marketing of our products, if approved.
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There can be no assurance that we will be able
to develop in-house sales and distribution capabilities or establish or maintain relationships with third-party collaborators to commercialize
any product in the United States or overseas.
We face substantial competition, which
may result in others discovering, developing or commercializing products before or more successfully than we do.
While we believe that our scientific knowledge,
technology, and development expertise provide us with competitive advantages, we face potential competition from many different sources,
including major pharmaceuticals, specialty pharmaceuticals and biotechnology companies, academic institutions and government agencies,
and public and private research institutes that conduct research, development, manufacturing, and commercialization. Many of our competitors
have significantly greater financial resources and expertise in research and development, manufacturing, preclinical testing, regulatory
approvals, and product marketing than we do. Our competitors may compete with us in recruiting and retaining qualified scientific and
management personnel and establishing clinical trial sites and patient recruitment for clinical trials, as well as in acquiring technologies
complementary to, or necessary for, our programs. As a result, our competitors may discover, develop, license, or commercialize products
earlier or more successfully than we do.
If our product candidates, NXP800 and NXP900,
are approved for the indications for which we are currently conducting or planning preclinical and clinical trials, they will likely
compete with competitor drugs and other drugs that are currently in development. The availability of reimbursement from government and
other third-party payors will also significantly affect the pricing and competitiveness of our products. Our competitors may also obtain
FDA or other regulatory approval for their products more rapidly than we do, which could result in our competitors establishing a strong
market position before we are able to enter the market.
Risks Related to Government Regulation
Denial
of or delay in our receipt of required regulatory approvals may prevent or delay commercialization of our current or future product candidates
and our ability to generate revenue may be materially impaired.
The research, testing, manufacturing, labeling,
approval, sale, marketing and distribution of drug products are, and will remain, subject to extensive regulation by the FDA in the United
States and by the respective regulatory authorities in other countries where regulations differ. We will not be permitted to market our
current or future product candidates in the United States until we receive the respective approval of an NDA from the FDA, or in any
foreign countries until we receive the requisite approval from the respective regulatory authorities in such countries. The time required
to obtain regulatory approval, if any, by the FDA, EMA and comparable foreign authorities is unpredictable, but typically takes many
years following the commencement of clinical trials and depends upon numerous factors, including the substantial discretion of the regulatory
authorities and the type, complexity and novelty of the product candidates involved. Regulatory authorities have substantial discretion
in the approval process and may refuse to accept any application or may decide that our data are insufficient for approval and require
additional nonclinical studies or clinical trials.
Obtaining regulatory approval requires the submission
of extensive nonclinical and clinical data and supporting information to regulatory authorities for each therapeutic indication to establish
the product candidate’s safety and efficacy. Securing regulatory approval also requires the submission of information about the
product manufacturing process, and in many cases the inspection of manufacturing, processing, and packaging facilities by the regulatory
authorities. Our current or future product candidates may not be effective, may be only moderately effective or may prove to have undesirable
or unintended side effects, toxicities or other characteristics that may preclude our obtaining marketing approval or prevent or limit
commercial use, or there may be deficiencies in cGMP compliance by us or by our CMOs that could result in the candidate not being approved.
Moreover, we have not obtained regulatory approval for any drug candidate in any jurisdiction and it is possible that none of our existing
drug candidates or any drug candidates we may seek to develop in the future will ever obtain regulatory approval.
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Our drug candidates could fail to receive, or
could be delayed in receiving, regulatory approval for many reasons, including any one or more of the following:
The time and expense of the approval process,
as well as the unpredictability of future clinical trial results and other contributing factors, may result in our failure to obtain
regulatory approval to market NXP800, NXP900 or any other drug candidates we may seek to develop in the future, which would significantly
harm our business, results of operations and prospects. In such case, we may also not have the resources to conduct new clinical trials
and/or we may determine that further clinical development of any such drug candidate is not justified and may discontinue any such programs.
In addition, even if we were to obtain regulatory
approval in one or more jurisdictions, regulatory authorities may approve any of our drug candidates for fewer or more limited indications
than we request, may not approve prices we may propose to charge for our products, may grant approval contingent on the performance of
costly post-marketing clinical trials (referred to as “conditional” or “accelerated” approval depending on the
jurisdiction), or may approve a drug candidate with a label that does not include the labeling claims necessary or desirable for the
successful commercialization of that drug candidate. Any of the foregoing circumstances could materially harm the commercial prospects
for our drug candidates.
Obtaining and maintaining regulatory approval
of our current or future product candidates in one jurisdiction does not mean that we will be successful in obtaining regulatory approval
of our current or future product candidates in other jurisdictions.
Obtaining and maintaining regulatory approval
of any of our current or future product candidates in one jurisdiction does not guarantee that we will be able to obtain or maintain
regulatory approval in any other jurisdiction, while a failure or delay in obtaining regulatory approval in one jurisdiction may have
a negative effect on the regulatory approval process in other jurisdictions. For example, even if the FDA grants regulatory approval
of a product candidate, similar foreign regulatory authorities must also approve the manufacturing, marketing and promotion of the product
candidate in those countries. Drug product approval procedures vary among jurisdictions and can involve requirements and administrative
review periods different from, and greater than, those in the United States, including additional preclinical studies or clinical trials
as clinical trials conducted in one jurisdiction may not be accepted by regulatory authorities in other jurisdictions. In many jurisdictions
outside the United States, a product candidate must be approved for reimbursement before it can be approved for sale in that jurisdiction.
In some cases, the price that we intend to charge for our products is also subject to approval.
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We may also submit marketing applications in
other countries. Regulatory authorities in jurisdictions outside of the United States have requirements for approval of product candidates
with which we must comply prior to marketing in those jurisdictions. Obtaining similar foreign regulatory approvals and compliance with
similar foreign regulatory requirements could result in significant delays, difficulties and costs for us and could delay or prevent
the introduction of our products in certain countries. We do not have any product candidates approved for sale in any jurisdiction, including
international markets, and we do not have experience in obtaining regulatory approval in international markets. If we fail to comply
with the regulatory requirements in international markets and/or receive applicable marketing approvals, our target market will be reduced
and our ability to realize the full market potential of our current or future product candidates will be harmed.
Even if we receive regulatory approval
of our current or future product candidates, we will be subject to ongoing regulatory obligations and continued regulatory review, which
may result in significant additional expense and we may be subject to penalties if we fail to comply with regulatory requirements or
experience unanticipated problems with our current or future product candidates.
If any of our current or future product candidates
are approved, activities such as the manufacturing, labeling, packaging, storage, advertising, promotion, sampling, and record keeping
for the products will be subject to extensive and ongoing regulatory requirements. These requirements include submissions of safety and
other post-marketing information and reports, registration, as well as ongoing compliance with cGMP regulations. Drug manufacturers and
any CMOs responsible for any product manufacturing processes are required to comply with extensive FDA and comparable foreign regulatory
authority requirements, including ensuring that quality control and manufacturing procedures conform to cGMP regulations and any applicable
foreign equivalents. As such, we and our CMOs will be subject to continual review and inspections to assess compliance with cGMP and
adherence to commitments made in any NDA, other marketing application, and previous responses to inspection observations. Accordingly,
we and others with whom we work must continue to expend time, money, and effort in all areas of regulatory compliance, including manufacturing,
production and quality control.
The FDA or a comparable foreign regulatory authority
may also impose requirements for costly post-marketing nonclinical studies or clinical trials (often called “Phase 4 trials”)
and post-marketing surveillance to monitor the safety or efficacy of the product. If we or a regulatory authority discover previously
unknown problems with a product, such as adverse events of unanticipated severity or frequency, production problems or issues with the
facility where the product is manufactured or processed, such as product contamination or significant not-compliance with applicable
cGMP regulations, a regulator may impose restrictions on that product, the manufacturing facility or us. If we or our third-party providers,
including our CMOs, fail to comply fully with applicable regulations, then we may be required to initiate a recall or withdrawal of our
products.
Later discovery of previously unknown problems
with our current or future product candidates, including adverse events of unanticipated severity or frequency, or with our third-party
manufacturers or manufacturing processes, or failure to comply with regulatory requirements, may result in the following, among other
things:
➢ restrictions on the labeling or marketing of a product;
➢ restrictions on product distribution or use;
➢ requirements to conduct post-marketing studies or clinical trials;
➢ withdrawal of the product from the market;
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➢ product recalls;
➢ fines, restitution or disgorgement of profits or revenues;
➢ suspension or withdrawal of marketing approvals;
➢ suspension of any of our ongoing clinical trials;
➢ consent decrees, injunctions or the imposition of civil or criminal penalties.
In addition, regulatory authorities’ policies
(such as those of the FDA or EMA) may change and additional government regulations may be enacted that could prevent, limit or delay
regulatory approval of our current or future product candidates. If we are slow or unable to adapt to changes in existing requirements
or the adoption of new requirements or policies, or if we are otherwise not able to maintain regulatory compliance, we may lose any marketing
approval that we may have obtained, which would adversely affect our business, prospects and ability to achieve or sustain profitability.
Non-compliance with European Union requirements
regarding safety monitoring or pharmacovigilance can also result in significant financial penalties. Similarly, failure to comply with
the European Union’s requirements regarding the protection of personal information can also lead to significant penalties and sanctions.
The FDA’s policies may change and additional
government regulations may be enacted that could prevent, limit or delay marketing approval of our current or future product candidates.
If we are slow or unable to adapt to changes in existing requirements or the adoption of new requirements or policies, or if we are not
able to maintain regulatory compliance, this may adversely affect, or even lead to the rescission of, the marketing approval that we
may have obtained, which would adversely affect our business, prospects and ability to achieve or sustain profitability.
A variety of risks associated with marketing
our current or future product candidates internationally could materially adversely affect our business.
We plan to seek regulatory approval of our current
or future product candidates outside of the United States and expect that we will be subject to additional risks related to operating
in foreign countries including: differing regulatory requirements; unexpected changes in tariffs, trade barriers, price and exchange
controls; economic weakness, including inflation, or political instability in particular foreign economies and markets; compliance with
tax, employment, immigration and labor laws for employees living or traveling abroad; foreign currency fluctuations that result in increased
operating expenses, reduced revenue, and other obligations incident to doing business in another country; potential liability under the
Foreign Corrupt Practices Act of 1977 or comparable foreign regulations; and challenges enforcing our contractual and intellectual property
rights, especially in countries that do not recognize intellectual property rights to the same extent as the United States.
The insurance coverage and reimbursement
status of newly approved products is uncertain. Our current or future product candidates may become subject to unfavorable pricing regulations,
third-party coverage and reimbursement practices, or healthcare reform initiatives, which would harm our business. Failure to obtain
or maintain adequate coverage and reimbursement for new or current products could limit our ability to market those products and decrease
our ability to generate revenue.
Adverse pricing limitations may hinder our ability
to recoup our investment in one or more of our current or future product candidates, even if any such current or future product candidate
we may develop obtains marketing approval.
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Our ability to successfully commercialize any
current or future product candidates will depend in part on the coverage and reimbursement for the products and related treatments from
government health administration authorities and third-party payors, such as private health insurers and health maintenance organizations.
These organizations decide which medications they will pay for and establish reimbursement levels. If coverage and adequate reimbursement
is not available, or the approved reimbursement amount is not high enough, we may be unable to establish or maintain pricing sufficient
to generate a return on our investment and may be unable to successfully commercialize our current or future product candidates. Reimbursement
by a third-party payor may depend upon a number of factors, including, but not limited to, the third-party payor’s determination
that use of a product is a covered benefit under its health plan, safe, effective and medically necessary, appropriate for the specific
patient, cost-effective, and neither experimental nor investigational. If coverage and adequate reimbursement is not available, or the
approved reimbursement amount is not high enough, we may be unable to establish or maintain pricing sufficient to generate a return on
our investment and may be unable to successfully commercialize our current or future product candidates.
A primary trend in the U.S. healthcare industry
and elsewhere is cost containment. Government authorities and third-party payors have attempted to control costs by limiting coverage
and the amount of reimbursement for particular medications. In general, the prices of medicines under such systems are substantially
lower than in the United States.
There is also significant uncertainty related
to the insurance coverage and reimbursement of newly approved products, and coverage may be more limited than the purposes for which
the medicine is approved by the FDA or comparable foreign regulatory authorities. In the United States, the principal decisions about
reimbursement for new medicines are typically made by CMS. As a result, the coverage determination process is often a time consuming
and costly process that may require us to provide scientific and clinical support for the use of our products to each payor separately,
with no assurance that coverage and adequate reimbursement will be applied consistently or obtained in the first instance. It is difficult
to predict what CMS will decide with respect to reimbursement for fundamentally novel products such as ours. Reimbursement agencies in
Europe may be more conservative than CMS. Our inability to promptly obtain coverage and profitable payment rates from both government-funded
and private payors for any approved products we may develop could have a material adverse effect on our operating results, our ability
to raise capital needed to commercialize our current or future product candidates, and our overall financial condition.
Healthcare legislative measures and changes
in policies, funding, staffing and leadership at the FDA and other agencies could hinder or prevent the commercial success of our products.
In the United States, there have been a number
of legislative and regulatory changes to the healthcare system that could affect our future results of operations and the future results
of operations of our potential customers.
In recent years, there has been heightened governmental
scrutiny over the manner in which biopharmaceutical manufacturers set prices for their marketed products, which has resulted in several
recent government inquiries as well as federal and state legislation designed to, among other things, increase drug price transparency,
review the relationship between pricing and manufacturer patient programs, reduce the cost of drugs under Medicare, and reform government
reimbursement for drug products. Congress and the executive branch have each indicated that they will continue to seek new legislative
and/or administrative measures to control drug costs, making this area subject to ongoing uncertainty. At the state level in the United
States, legislatures have also increasingly passed legislation and implemented regulations designed to control drug product pricing.
While we cannot predict what impact these laws
or policies will have in general or specifically on any product we may commercialize in the future, such efforts by the government and
payors may result in downward pressure on reimbursement, which could negatively affect market acceptance of new products. Any rebates,
discounts, taxes costs or regulatory or systematic changes on healthcare may have a significant effect on our profitability in the future.
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Given recent federal and state government initiatives
directed at lowering the total cost of healthcare, the executive branch, Congress and state legislatures will likely continue to focus
on healthcare reform and the reform of the Medicare and Medicaid programs. While we cannot predict the full outcome of any such government
action or legislation, it may harm our ability to market our products and generate revenues.
Furthermore, regulatory authorities’ assessment
of the data and results required to demonstrate safety and effectiveness can change over time and can be affected by many factors, such
as the emergence of new information, including on other products, changing policies and agency funding, staffing and leadership. We cannot
be sure whether future changes to the regulatory environment will be favorable or unfavorable to our business prospects.
Our future relationships with customers
and third-party payors in the United States and elsewhere may be subject to applicable anti-kickback, fraud and abuse, false claims,
transparency, health information privacy and security and other healthcare laws and regulations, which could expose us to criminal sanctions,
civil penalties, contractual damages, reputational harm, administrative burdens, diminished profits and future earnings.
Healthcare providers, physicians and third-party
payors in the U.S. and elsewhere will play a primary role in the recommendation and prescription of any current or future product candidates
for which we obtain marketing approval. Our future arrangements with third-party payors and customers may expose us to broadly applicable
fraud and abuse and other healthcare laws and regulations, including, without limitation, the federal Anti-Kickback Statute and the federal
False Claims Act, which may constrain the business or financial arrangements and relationships through which we sell, market and distribute
any current or future product candidates for which we obtain marketing approval. In addition, we may be subject to transparency laws
and patient privacy regulation by the federal and state governments and by governments in foreign jurisdictions in which we conduct our
business. The applicable federal, state and foreign healthcare laws and regulations that may affect our ability to operate include, but
are not necessarily limited to:
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In November 2020, HHS finalized significant
changes to the regulations implementing the Anti-Kickback Statute, as well as the Physician Self-Referral Law and the civil monetary
penalty rules regarding beneficiary inducements, with the goal of offering the healthcare industry more flexibility and reducing
the regulatory burden associated with those fraud and abuse laws, particularly with respect to value-based arrangements among industry
participants.
Efforts to ensure that our business arrangements
with third parties will comply with applicable healthcare laws and regulations may involve substantial costs. It is possible that governmental
authorities will conclude that our business practices may not comply with current or future statutes, regulations or case law involving
applicable fraud and abuse or other healthcare laws and regulations. If our operations are found to be in violation of any of these laws
or any other governmental regulations that may apply to us, we may be subject to significant civil, criminal and administrative penalties,
including, without limitation, damages, fines, imprisonment, exclusion from participation in government healthcare programs, such as
Medicare and Medicaid, and the curtailment or restructuring of our operations, which could have a material adverse effect on our businesses.
If any of the physicians or other healthcare providers or entities with whom we expect to do business, including our collaborators, is
found not to be in compliance with applicable laws, it may be subject to criminal, civil or administrative sanctions, including exclusions
from participation in government healthcare programs, which could also materially affect our businesses.
If we fail to comply with environmental,
health and safety laws and regulations, we could become subject to fines or penalties or incur costs that could have a material adverse
effect on the success of our business.
We are subject to numerous environmental, health
and safety laws and regulations, including those governing laboratory procedures and the handling, use, storage, treatment and disposal
of hazardous materials and wastes. Our operations may involve the use of hazardous and flammable materials, including chemicals and biological
and radioactive materials. Our operations also may produce hazardous waste products. We currently contract with third parties for the
conduct of our manufacturing efforts and preclinical studies and clinical trials and such third parties are responsible for disposal
of these materials and wastes. However, we cannot eliminate our risk of contamination or injury from these materials. In the event of
contamination or injury resulting from our use of hazardous materials, we could be held liable for any resulting damages, and any liability
could exceed our resources. We also could incur significant costs associated with civil or criminal fines and penalties.
Although we maintain workers’ compensation
insurance to cover us for costs and expenses we may incur due to injuries to our employees resulting from the use of hazardous materials,
this insurance may not provide adequate coverage against potential liabilities. We do not maintain insurance for environmental liability
or toxic tort claims that may be asserted against us in connection with our storage or disposal of biological, hazardous or radioactive
materials.
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Risks Related to our Intellectual Property
We currently hold a license to certain
intellectual property rights relating to our lead product candidate, NXP800 and to NXP900, as well as intellectual property rights relating
to other compounds that modulate HSF1 and the SRC and YES1 kinases. If we are unable to maintain patent and other intellectual property
protection for NXP800 and NXP900, and to obtain and maintain patent and other intellectual property protections for our other current
or future product candidates and technology, or if the scope of intellectual property protection obtained or maintained is not sufficiently
broad, our competitors could develop and commercialize products and technology similar or identical to ours, and our ability to commercialize
NXP800, NXP900 or any other current or future product candidates or technology may be adversely affected.
Our success depends in large part on our ability
to obtain and maintain patent and other intellectual property protection in the United States and other countries with respect to our
current or future product candidates, including NXP800 and NXP900, their respective components, formulations, combination therapies,
methods used to manufacture them and methods of treatment and development that are important to our business, as well as successfully
defending these patents against third-party challenges. If we do not adequately protect our intellectual property rights, or if the intellectual
property rights we are able to obtain are insufficiently broad and exclusive, competitors may be able to erode or negate any competitive
advantage we may have, which could harm our business and ability to achieve profitability.
We intend to rely upon a combination of patents,
patent applications, confidentiality agreements, trade secret protection and license agreements to protect the intellectual property
related to our current or future product candidates and technologies. Any disclosure to or misappropriation by third parties of our confidential
proprietary information could enable competitors to quickly duplicate or surpass our technological achievements, thus eroding our competitive
position in our market. We, or any current or future partners, collaborators, or licensees, may fail to identify patentable aspects of
inventions made in the course of development and commercialization activities before it is too late to obtain patent protection on them.
We may be also unable to exclusively license relevant technology and associated intellectual property developed by others. Therefore,
we may miss potential opportunities to establish our patent position.
If we are unable to secure additional patent
protection or maintain existing or future patent protection with respect to NXP800, NXP900, or any other proprietary products and technology
we develop, our business, financial condition, results of operations, and prospects would be materially harmed.
We currently hold a license to certain intellectual
property rights relating to NXP800, including its composition of matter and to other compounds that modulate HSF1. In addition, we hold
a license to certain intellectual property relating to NXP900, including its composition of matter and to other compounds that inhibit
the SRC and YES1 kinases.
In May 2021, we licensed one patent family
covering the composition of matter for NXP800, including two issued U.S. patents covering the composition of matter for NXP800, as well
as methods for using and making NXP800. Additionally, patents have been issued in major markets, including the U.S., the European Union,
and Japan. The statutory expiration for the issued U.S. patents in this family is October 2034, without considering any patent extensions
that may or may not be possible.
We have licensed a patent family directed to
additional compounds that modulate HSF1. A patent from this family has been granted in the U.S., and has a statutory expiration of April 2036,
without considering any patent extensions that may or may not be possible.
We have also licensed a patent family directed
to deuterated compounds that modulate HSF1. Any U.S. patent that grants from this family would have a statutory expiration of October 2037,
without considering any patent extensions or patent disclaimers that may or may not be possible.
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As of August 26, 2021, we licensed one patent
family covering the composition of matter for NXP900, which has been granted in the U.S., EU, Japan, China and is pending in the United
Kingdom and Canada. The statutory expiration for patents in this patent family is April 2036, without considering any possible patent
term extension.
If the scope of our patent protection, whether
now or in the future, with respect to NXP800, NXP900 or our future product candidates and technology is not sufficiently broad, we will
be unable to prevent others from using our technology or from developing or commercializing technology and products similar or identical
to ours or other competing products and technologies. Any failure to obtain or maintain patent protection, through our own patents or
through in-licensing, with respect to NXP800, NXP900 and our future product candidates would have a material adverse effect on our business,
financial condition, results of operations and prospects.
Even if they are unchallenged, our patent applications,
if issued, and any patents we may own or in-license now or in the future, may not provide us with any meaningful protection or prevent
competitors from designing around our patent claims to circumvent any patents we may own or in-license in the future by developing similar
or alternative technologies or therapeutics in a non-infringing manner. If the patent protection provided by our patent applications
or any patents we may pursue with respect to our current or future product candidates is not sufficiently broad to impede competition,
our ability to successfully commercialize our current or future product candidates could be negatively affected, which would harm our
business.
Additionally, we cannot be certain that the claims
in our patent applications covering composition of matter (or other related aspects) of our current or future product candidates or technology
will be considered patentable by the USPTO, or by patent offices in foreign countries, or that the claims in any issued patents we may
own or in-license in the future will be considered patentable by courts in the United States or foreign countries.
The issuance of a patent does not foreclose challenges
to its inventorship, scope, validity or enforceability. Therefore, our owned and in-licensed patents may be challenged in the courts
or patent offices in the United States and elsewhere. Such challenges may result in loss of exclusivity or freedom to operate or in patent
claims being narrowed, invalidated, or held unenforceable, in whole or in part. Successful patent challenges could limit our ability
to stop others from using or commercializing similar or identical technology and products, or limit the duration of the patent protection
of our technology and products. Given the amount of time required for the development, testing and regulatory review of new product candidates,
patents protecting such product candidates might expire before or shortly after such product candidates are commercialized. As a result,
our owned and in-licensed patents may not provide us with sufficient rights to exclude others from commercializing products similar or
identical to ours.