ITEM 1A. RISK FACTORS.
An
investment in our common stock involves a high degree of risk. You should carefully consider the risks described below before making
an investment decision in our securities. These risk factors are effective as of the date of this Form 10-K and shall be deemed to be
modified or superseded to the extent that a statement contained in our future filings modifies or replaces such statement. All of these
risks may impair our business operations. The forward-looking statements in this Form 10-K involve risks and uncertainties and actual
results may differ materially from the results we discuss in the forward-looking statements. If any of the following risks actually occur,
our business, financial condition or results of operations could be materially adversely affected. In that case, the trading price of
our stock could decline, and you may lose all or part of your investment.
Risk
Factor Summary
The
below summary of risk factors provides an overview of many of the risks we are exposed to in the normal course of our business activities.
As a result, the below summary risks do not contain all of the information that may be important to you, and you should read the summary
risks together with the more detailed discussion of risks set forth following this section as well as elsewhere in this Annual Report.
Additional risks, beyond those summarized below or discussed elsewhere in this Annual Report, may apply to our activities or operations
as currently conducted or as we may conduct them in the future or in the markets in which we operate or may in the future operate. Consistent
with the foregoing, we are exposed to a variety of risks, including risks associated with the following:
Risks
Related to Our Business
●
We have incurred significant losses since our inception and expect to continue to experience losses for the foreseeable future.
●
We will need to raise additional capital in the future to complete the development and commercialization of our product candidates and
operate our business.
●
We were denied funding from the Biomedical Advanced Research and Development Authority (“BARDA”) and we may be unable to
win any government contracts, grants, agreement or other funding in the future. Even if we are successful in obtaining such contracts,
grants, agreements or other funding, we cannot assure the success of our NT-CoV2-1 vaccine product candidate, that it will be approved
by the FDA or other public health regulatory authority or that any funding provided will be sufficient to complete development and successful
commercialization.
●
We may rely on government funding and collaboration with government entities for our vaccine development, which adds uncertainty to our
research and development efforts and may impose requirements that increase the costs of development, commercialization and production
of any programs developed under those government-funded programs.
●
We have limited vaccine-specific research, development, manufacturing, testing, regulatory, commercialization, sales, distribution, and
marketing experience, and we may need to invest significant financial and management resources to establish these capabilities. Despite
such investments and our best efforts, our strategic acquisition of Noachis Terra may turn out to be unsuccessful.
●
We have limited financial resources and we may not be able to maintain our current level of operations or be able to fund the further
development of our new NT-CoV2-1 vaccine product candidate.
●
Our vaccine product candidate is at the pre-clinical stage and has not been approved for sale. We have not conducted substantial research
and development for a vaccine product candidate, and we may be unable to produce a vaccine that successfully prevents the virus in a
timely and economical manner, if at all.
●
The market opportunities for our vaccine product candidate may be smaller than we believe them to be. Moreover, any pandemic threat may
abate, the underlying virus may mutate, or alternative vaccines or technologies may be adopted, before our vaccines achieve regulatory
approval.
●
If we are unable to successfully develop our product candidates, our operating results and competitive position could be harmed. Research
and development involves a lengthy and complex process, and we may not be successful in our efforts to develop and commercialize our
product candidates. The further development and ultimate commercialization of product candidates for SARS-CoV-2 and COVID-19, as well
as our other product candidates, are keys to our strategy.
●
If we are successful in producing a vaccine against SARS-CoV-2, we may need to devote significant resources to its scale-up and development,
including for use by the U.S. government or other foreign authorities. Moreover, government involvement may limit the commercial success
of our vaccine product candidate.
●
Our product candidates, if approved, will face significant competition and our failure to compete effectively may prevent us from achieving
significant market penetration.
●
Because our vaccine product development efforts depend on new and rapidly evolving technologies, we cannot be certain that our efforts
will be successful.
●
Our SARS-CoV-2 vaccine product candidate may face competition from biosimilars approved through an abbreviated regulatory pathway.
●
We may be unable to refine a method to produce MU1140 homologs in large-scale commercial quantities. If we cannot, we will be unable
to generate significant revenues from sales of a MU1140 homolog product candidate.
●
Our success will depend on our ability to obtain regulatory approval of our product candidate under our Lantibiotics Program and its
successful commercialization.
●
We may choose not to continue developing or commercializing any of our product candidates at any time during development or after approval,
which would reduce or eliminate our potential return on investment for those product candidates.
●
We have limited experience in the conduct of clinical trials. We have never initiated a vaccine-related clinical trial. We have never
obtained approval of any product candidates. We may be unable to undertake any of those actions successfully.
●
We cannot assure you that the market and consumers will accept our products or product candidates. If they do not, we will be unable
to generate significant revenues from our products or product candidates and our business, financial condition and results of operations
will be materially adversely affected.
●
Failure to obtain marketing approval in international jurisdictions would prevent our product candidates from being marketed abroad.
●
We will need to further increase the size and complexity of our organization in the future, and we may experience difficulties in executing
our growth strategy and managing our growth.
●
If our manufacturers and suppliers in general fail to meet our requirements and the requirements of regulatory authorities, our research
and development may be materially adversely affected.
●
We rely on the significant experience and specialized expertise of our senior management and scientific team and the loss of any of our
key personnel or our inability to successfully hire their successors could harm our business.
●
We need to hire and retain additional qualified scientists and other highly skilled personnel to maintain and grow our business.
●
If any of our product candidates are shown to be ineffective or harmful in humans, we will be unable to generate revenues from these
product candidates.
●
Because we are new to vaccine development, we must identify vaccines for development with our technologies and establish successful third-party
relationships.
●
We intend to seek licensing partners to cover a portion of the costs associated with obtaining regulatory approval for, and manufacturing
and marketing of, our product candidates. If we are unable to obtain agreements with third parties to fund these costs, we will have
to fund such costs ourselves or we may be unable to extract any value from these technologies.
●
We might not be successful at acquiring, investing in or integrating businesses, entering into joint ventures or divesting businesses.
●
We may face product liability exposure, and if successful claims are brought against us, we may incur substantial liability if our insurance
coverage for those claims is inadequate.
●
We may be adversely affected by natural disasters, pandemics and other catastrophic events, and by man-made problems such as terrorism,
that could disrupt our business operations and our business continuity and disaster recovery plans may not adequately protect us from
a serious disaster.
●
Our ability to use our net operating loss carryforwards and certain other tax attributes may be limited, each of which could harm our
business.
●
Our auditor has previously expressed substantial doubt about our ability to continue as a going concern and absent additional financing
we may be unable to remain a going concern.
Risks
Related to Our Intellectual Property and Data Security and Privacy
●
Our vaccine research and development efforts are to a large extent dependent upon our intellectual property and biologicals materials
license with the NIAID, the NIH, and the NRC(“Licensors”).
●
We may incur additional expenses and obligations in connection with our NIH and NRC licenses (“Licenses Agreements”).
●
The intellectual property covered by our License Agreements concerns patent applications and provisional applications. We cannot assure
investors that any of the currently pending or future patent applications will result in granted patents, nor can we predict how long
it will take for such patents to be granted.
●
We cannot prevent the Licensors or other companies, including our competitors, from licensing the same intellectual property and biological
materials that we have licensed or from otherwise duplicating our business model and operations.
●
Our Lantibiotic Development program development efforts are to a large extent dependent upon our intellectual property and is based on
early-stage technology in its field.
●
We may be subject to claims challenging the inventorship of our patents and other intellectual property.
●
Changes in patent law or patent jurisprudence could diminish the value of patents in general, thereby impairing our ability to protect
our product candidates.
●
If we are unable to protect our trademarks or other intellectual property from infringement, our business prospects may be harmed.
●We
may not be able to protect our intellectual property rights throughout the world.
●
If we fail to comply with our obligations under our intellectual property license agreements, we could lose our license rights that are
important to our business and development of our product candidates.
●
If we are sued for infringing intellectual property rights of third parties, it will be costly and time-consuming and an unfavorable
outcome in that litigation could have a material adverse effect on our business.
●
We may become involved in lawsuits to protect or enforce our patents or other intellectual property or the patents of our licensors,
which could be expensive and time-consuming.
●
Our success will depend on our ability to partner or sub-license our product candidates and their subsequent successful commercialization.
●
If our intellectual property rights do not adequately protect our products or product candidates, or if third parties claim we are infringing
their intellectual property rights, others could compete against us more directly or we could be subject to significant litigation. Such
results could prevent us from marketing our products or product candidates and hurt our profitability.
●
Our business and operations would suffer in the event of cybersecurity/information systems risk.
●
We may incur costs of addressing a cybersecurity incident.
●
Our business and operations would suffer in the event of failures in our internal computer systems or those of our collaborators.
Risks
Related to Government Regulations
●
Our product candidates are subject to substantial government regulation, including the regulation of nonclinical testing and clinical
trials. If we are unable to obtain regulatory approval for our product candidates, we will be unable to generate revenues.
●
We may be unable to obtain regulatory approval for our SARS-CoV-2 vaccine product candidate, or other early-stage product candidates
under applicable regulatory requirements. The FDA and foreign regulatory bodies have substantial discretion in the approval process,
including the ability to delay, limit or deny approval of product candidates. The delay, limitation or denial of any regulatory approval
would adversely impact commercialization, our potential to generate revenue, our business and our operating results.
●
Delays or difficulties in the enrollment of patients in clinical trials may result in additional costs and delays in our ability to generate
significant revenues, and may delay or prevent our receipt of any regulatory approvals necessary to commercialize our planned and future
products.
●
Any product candidates that we commercialize will be subject to ongoing and continued regulatory review.
●
Our product candidates may cause serious or undesirable side effects or possess other unexpected properties that could delay or prevent
their regulatory approval, limit the commercial profile of approved labeling or result in post-approval regulatory action.
●
If any of our product candidates are approved for marketing and we are found to have improperly promoted off-label uses, or if physicians
misuse our products or use our products off-label, we may become subject to prohibitions on the sale or marketing of our products, product
liability claims and significant fines, penalties and sanctions, and our brand and reputation could be harmed.
●
We may also be subject to healthcare laws, regulation and enforcement and our failure to comply with those laws could adversely affect
our business, operations and financial condition.
●
Our employees, independent contractors, principal investigators, consultants, vendors and CROs may engage in misconduct or other improper
activities, including noncompliance with regulatory standards and requirements.
●
Even if our current product candidates or any future product candidates obtain regulatory approval, they may fail to achieve the broad
degree of health care payers, physician and patient adoption and use necessary for commercial success.
●
If we are unable to achieve and maintain coverage and adequate levels of reimbursement for any of our product candidates for which we
receive regulatory approval, or any future products we may seek to commercialize, their commercial success may be severely hindered.
●
If our products do not receive favorable third-party reimbursement, or if new restrictive legislation is adopted, market acceptance of
our products may be limited and we may not generate significant revenues.
Risks
Related to Coronavirus Disease (COVID-19)
●
Our business is subject to risks arising from public health crises, epidemic or pandemic diseases, such as the recent global outbreak
of the coronavirus disease (COVID-19).
●
Our ability to conduct clinical trials may be impeded, delayed, limited or prevented entirely due to the spread of COVID-19, the imposition
of government restrictions and the concurrent disruptions to ordinary business activities globally.
●
Our business involves international components, and we are exposed to various global and local risks related to the coronavirus disease
2019 (COVID-19) that could have a material adverse effect on our financial condition and results of operations.
●
Macroeconomic pressures in the markets in which we operate, including, but not limited to, the effectives of the coronavirus disease
(COVID-19) may alter the ways in which we conduct our business operations and manage our financial capacities.
●
Economic uncertainty may adversely affect our access to capital, cost of capital and ability to execute our business plan as scheduled.
●
Inadequate funding for the FDA, the SEC and other government agencies in light of the coronavirus pandemic could hinder their ability
to hire and retain key leadership and other personnel, prevent new products and services from being developed or commercialized in a
timely manner or otherwise prevent those agencies from performing normal business functions on which the operation of our business may
rely, which could negatively impact our business.
Risks
Related to Our Common Stock
●
The issuance of additional equity securities by us in the future would result in dilution to our existing common shareholders.
●
Our financial results could vary significantly from quarter to quarter and are difficult to predict.
●
Our Series A and Series B preferred stock, if not converted into common stock, has a distribution and liquidation preference senior to
our common stock in liquidation which could negatively affect the value of our common stock and impair our ability to raise additional
capital.
●
The conversion of our Series A Preferred Stock, and Series B Preferred Stock and the exercise of currently outstanding warrants and options
could result in significant dilution to the holders of our common stock.
●
Certain provisions of our articles of incorporation, bylaws, executive employment agreements and stock option plan may prevent a change
of control of our company that a shareholder may consider favorable.
●
The price and volume of our common stock has been volatile and fluctuates substantially, which could result in substantial losses for
stockholders.
●
We may be subject to securities litigation, which is expensive and could divert management attention.
●
Future sales or issuances of our common stock in the public markets, or the perception of such sales, could depress the trading price
of our common stock.
●
The requirements of being a public company may strain our resources, divert management’s attention and affect our ability to attract
and retain qualified members for our Board of Directors.
●
If we fail to maintain an effective system of internal controls, we may not be able to accurately report our financial results or prevent
fraud which could subject us to regulatory sanctions, harm our business and operating results and cause the trading price of our stock
to decline.
●
We will continue to incur significant costs as a result of and devote substantial management time to operating as a public company listed
on the NYSE American.
●
If securities or industry analysts publish research or publish inaccurate or unfavorable research about our business, our stock price
and trading volume could decline.
●
We may issue debt or debt securities convertible into equity securities, any of which may be senior to our common stock as to distributions
and in liquidation, which could negatively affect the value of our common stock.
●
We are a “smaller reporting company” and, as a result of the reduced disclosure and governance requirements applicable to
smaller reporting companies, our common stock may be less attractive to investors.
●
We have never paid cash dividends on our capital stock, and we do not anticipate paying any cash dividends in the foreseeable future.
Risks
Related to Our Business
We
have incurred significant losses since our inception and expect to continue to experience losses for the foreseeable future.
We
have incurred significant net losses and negative cash flow in each year since our inception, including net losses of approximately $15.7
million and $26.4 million for the years ended December 31, 2021, and 2020, respectively. As of December 31, 2021, our accumulated deficit
was approximately $171.3 million. We have devoted a significant amount of our financial resources to research and development, including
our nonclinical development activities and clinical trials, as well as licensing and acquisitions related to our product candidates.
We expect that the costs associated with our plans to continue pre-clinical research, contract manufacturing and file an IND for our
vaccine product candidate and the research and development of our product candidates in the area of lantibiotics (“Lantibiotics
Program”) will increase the level of our overall expenses significantly going forward. Additionally, our License Agreements also
requires the payment of certain recurring and performance-based royalties that may negatively impact our financial capabilities. As a
result, we expect to continue to incur substantial net losses and negative cash flow for the foreseeable future. These losses and negative
cash flows have had, and will continue to have, an adverse effect on our shareholders’ equity and working capital. Because of the
numerous risks and uncertainties associated with product development and commercialization, we are unable to accurately predict the timing
or amount of substantial expenses or when, or if, we will be able to generate the revenue necessary to achieve or maintain profitability.
We
will need to raise additional capital in the future to complete the development and commercialization of our product candidates and operate
our business.
Developing
and commercializing biopharmaceutical products, including conducting nonclinical studies and clinical trials and establishing manufacturing
capabilities, is expensive, and the progress of our efforts to develop and commercialize our product candidates, including our acquisition
of a vaccine product candidate, can cause us to use our limited, available capital resources faster than we currently anticipate. Our
actual costs may ultimately vary from our current expectations, which could materially impact our use of capital and our forecast of
the period of time through which our financial resources will be adequate to support our operations. Our current cash, cash equivalents
and short-term investments are not sufficient to fully implement our business strategy and sustain our operations beyond the end of the
current year, 2022. Accordingly, we will need to seek additional sources of financing and such additional financing may not be available
on favorable terms, if at all. Until we can generate a sufficient amount of product revenue, if ever, we expect to finance future cash
needs through public or private equity offerings, debt financings or corporate or government collaboration and licensing arrangements.
If we do not succeed in raising additional funds on acceptable terms, we may be unable to complete existing nonclinical and planned clinical
trials or obtain approval of our product candidates from the FDA and other regulatory authorities. We expect capital outlays and operating
expenditures to increase over the next several years as we continue our research and development activities. Specifically, we need to
raise additional capital to, among other things:
● expand our clinical laboratory operations;
● fund our clinical validation study activities;
● expand our research and development activities; and
● finance our capital expenditures and general and administrative expenses.
Our
present and future funding requirements will depend on many factors, including:
● competing vaccines and technological and market developments;
● changes in regulatory policies or laws that affect our operations.
Additional
capital may not be available on satisfactory terms, or at all. Furthermore, if we raise additional funds by issuing equity securities,
dilution to our existing stockholders would result. Any equity securities issued also may provide for rights, preferences or privileges
senior to those of holders of our common stock. If we raise additional funds by issuing debt securities, these debt securities would
have rights, preferences and privileges senior to those of holders of our common stock, and the terms of the debt securities issued could
impose significant restrictions on our operations. If we raise additional funds through collaborations and licensing arrangements, we
might be required to relinquish significant rights to our technologies or our products under development, or grant licenses on terms
that are not favorable to us, which could lower the economic value of those programs to us. If adequate funds are not available, we may
have to scale back our operations or limit our research and development activities, which may cause us to progress at a slower pace,
or not at all, and our business could be adversely affected.
In
addition, we could be forced to discontinue product development and commercialization of one or more of our product candidates, and/or
forego licensing attractive business opportunities.
We
were denied funding from the Biomedical Advanced Research and Development Authority (“BARDA”) and we may be unable to win
any government contracts, grants, agreement or other funding in the future. Even if we are successful in obtaining such contracts, grants,
agreements or other funding, we cannot assure the success of our NT-CoV2-1 vaccine product candidate, that it will be approved by the
FDA or other public health regulatory authority or that any funding provided will be sufficient to complete development and successful
commercialization.
From
time to time, we may apply for contracts, grants, agreements or other funding from government agencies, academic institutions and non-profit
organizations. Such contracts or grants can be highly attractive because they provide capital to fund the ongoing development of our
technologies and vaccine candidates without diluting our stockholders. However, significant competition exists for these contracts, grants,
agreements or other funding. Entities offering such contracts, grants, agreements or other funding may have requirements to apply for
or to otherwise be eligible to receive such contracts, grants, agreements or other funding that our competitors may be able to satisfy
that we cannot. In addition, such entities have limited funding available to award and may make arbitrary decisions as to whether to
offer contracts or make grants, to whom the contracts or grants will be awarded and the size of the contracts or grants to each awardee.
Even if we are able to satisfy the award requirements, we may not be a successful awardee. Therefore, we may not be able to win any contracts
or grants in a timely manner, if at all. For example, we applied for BARDA funding in connection with our license with the NIH and received
notification that are request for BARDA funding had been denied.
Even
if we receive a financing through one of the aforementioned mechanisms, the success of our NT-CoV2-1 vaccine product candidate cannot
be assured solely by our ability to obtain such financing, nor can it assure that any vaccine product candidate so financed will succeed
in clinical trials and receive regulatory approval from the FDA or other public health regulatory authorities. Moreover, we cannot guarantee
that our receipt of such financing will obviate the need for future financial resources to support the further development of our NT-CoV2-1
vaccine product candidate, as additional development activities may be needed, and the vaccine approval and development process can be
costly and unpredictable. We have no control over the resources and funding that government agencies may devote to these agreements,
which may be subject to annual renewal and which generally may be terminated by the government agencies at any time. Accordingly, our
receipt of such funding cannot be relied upon solely as an indicator or guarantee of the success of our NT-CoV2-1 vaccine product candidate.
We
may rely on government funding and collaboration with government entities for our vaccine development, which adds uncertainty to our
research and development efforts and may impose requirements that increase the costs of development, commercialization and production
of any programs developed under those government-funded programs.
Because
we anticipate the resources necessary to develop our new NT-CoV2-1 vaccine product candidate will be substantial, we may explore funding
and development collaboration opportunities with the U.S. government and its agencies. For example, we may continue to apply for certain
grant funding from BARDA, the NIH or other government agencies to further the research, development, manufacture, testing, and regulatory
approval of our NT-CoV2-1 vaccine product candidate. We have no control or input over whether an application for BARDA grant funding
or any other funding will be accepted or approved, in full or in part, and we cannot provide investors with any assurances that we will
receive such funding.
Similar
to the requirements imposed by our new NIH license, contracts and grants funded by the U.S. government and its agencies, contain provisions
that reflect the government’s substantial rights and remedies, many of which are not typically found in commercial contracts, including
powers of the government to:
● audit contract-related costs and fees, including allocated indirect costs;
● control and potentially prohibit the export of products;
In
addition, government contracts and grants, ordinarily contain additional requirements that may increase our costs of doing business,
reduce our profits, and expose us to liability for failure to comply with these terms and conditions, including the following:
● specialized accounting systems unique to government contracts and grants;
If
we received such grants or agreements, we may not have the right to prohibit the U.S. government from using certain technologies developed
by us, and we may not be able to prohibit third-parties, including our competitors, from using those technologies in providing products
and services to the U.S. government. Further, under such agreements we could be subject to obligations to and the rights of the U.S.
government set forth in the Bayh-Dole Act of 1980, meaning the U.S. government may have rights in certain inventions developed under
these government-funded agreements, including a non-exclusive, non-transferable, irrevocable worldwide license to use inventions for
any governmental purpose. In addition, the U.S. government could have the right to require us to grant exclusive, partially exclusive,
or nonexclusive licenses to any of these inventions to a third party if it determines that: (i) adequate steps have not been taken to
commercialize the invention; (ii) government action is necessary to meet public health or safety needs; or (iii) government action is
necessary to meet requirements for public use under federal regulations, also referred to as “march-in rights.” Although
the U.S. government’s historic restraint with respect to these rights indicates they are unlikely to be used, any exercise of the
march-in rights could harm our competitive position, business, financial condition, results of operations, and prospects. In the event
we would be subject to the U.S. government’s exercise such march-in rights, we may receive compensation that is deemed reasonable
by the U.S. government in its sole discretion, which may be less than what we might be able to obtain in the open market.
Additionally,
as is the case under our new NIH license, the U.S. government requires that any products embodying any invention generated through the
use of U.S. government funding be manufactured substantially in the United States. The license with the NRC also contains similar manufacturing
requirements which may conflict with the NIH license. The manufacturing preference requirement can be waived if the owner of the intellectual
property can show that reasonable but unsuccessful efforts have been made to grant licenses on similar terms to potential licensees that
would be likely to manufacture substantially in the United States or that under the circumstances domestic manufacture is not commercially
feasible. This preference for U.S. manufacturers may limit our ability to contract with non-U.S. manufacturers for products covered by
such intellectual property. Obligations relating to manufacturing preferences and vaccine availability in Canada are included in the
NRC license agreement.
Although
we will need to comply with some of these obligations in relation to our NIH license, not all of the aforementioned obligations may be
applicable to us unless and only to the extent that we receive a government grant, contract or other agreement. However, as an organization,
we are relatively new to government contracting and new to the regulatory compliance obligations that such contracting entails. If we
were to fail to maintain compliance with those obligations, we may be subject to potential liability and to termination of our contracts,
including the NIH license, which may have a materially adverse effect on our ability to develop our NT-CoV2-1 vaccine product candidate.
We
have limited vaccine-specific research, development, manufacturing, testing, regulatory, commercialization, sales, distribution, and
marketing experience, and we may need to invest significant financial and management resources to establish these capabilities. Despite
such investments and our best efforts, our strategic acquisition of Noachis Terra may turn out to be unsuccessful.
As
part of our business strategy, we monitor and analyze strategic acquisition opportunities that we believe will be strategic fits for
the Company and beneficial to the Company’s shareholders. As demonstrated by our acquisition of Noachis Terra in May of 2020, we
may acquire companies, businesses, products and technologies that complement, augment or transform our existing business. However, such
acquisitions could involve numerous risks that may prevent us from fully realizing the benefits that we anticipated as a result of such
transactions.
Prior
to our acquisition of Noachis Terra, we had little-to-no experience in the development and commercialization of vaccines. Although, in
connection with the acquisition, we added experienced vaccine researchers and consultants and appointed an experienced vaccine industry
professional to our board of directors, given our size and current pre-clinical stage of development, we still have limited vaccine-specific
research, development, manufacturing, testing, regulatory, commercialization, sales, distribution, and marketing experience. To successfully
develop our NT-CoV2-1 vaccine product candidate, we will need to dedicate significant amounts of our limited financial and management
resources to bolster our expertise in this area. Our success depends significantly on the continued contributions of our executive officers,
financial, scientific and technical personnel and consultants, and on our ability to attract additional personnel.
During
our operating history, many essential responsibilities have been assigned to a relatively small number of individuals, and we currently
depend heavily upon the efforts and abilities of our management team. However, as we advance into vaccine development, the demands on
our key employees will expand and we will need to recruit additional qualified employees or consultants for our Company. The competition
for such qualified personnel is intense, particularly in light of the demand for vaccines or other treatment for SARS-CoV-2 and/or COVID-19.
The loss of services of any of our existing consultants or our inability to attract additional personnel to fill critical positions could
adversely affect our ability to efficiently develop our NT-CoV2-1 vaccine product candidate. The loss or unavailability of the services
of any of these individuals could have a material adverse effect on our business, prospects, financial condition and results.
Alternatively,
or in addition to the above, we may enter into strategic alliances or partnership with other vaccine industry entities to utilize their
research, development, manufacturing, testing, regulatory or commercialization skills, but we may be unable to enter into such agreements
on favorable terms, if at all. If our future strategic collaborators do not commit sufficient resources to our alliances or partnerships
and the progress of our vaccine development, if any, and we are unable to develop the necessary capabilities on our own, we may be unable
to advance the development of our NT-CoV2-1 vaccine product candidate to the point of commercialization, even if we obtain regulatory
approval. We will be competing with many companies that currently have existing, extensive and well-funded operations, and without a
significant internal team or the support of a third party to perform essential functions related to vaccine research, development, manufacturing,
testing, regulatory approval, and commercialization, we may be unable to compete successfully against these more established companies
and our NT-CoV2-1 vaccine product candidate may fail.
Any
failure by us to effectively limit such risks as we implement our strategic acquisition could have a material adverse effect on our business,
financial condition or results of operations and cause the price of our securities to fall.
We
have limited financial resources and we may not be able to maintain our current level of operations or be able to fund the further development
of our new NT-CoV2-1 vaccine product candidate.
To
date, Oragenics has never developed a vaccine product candidate, and we cannot assure investors that we will be able to successfully
develop a vaccine to prevent SARS-CoV-2 or COVID-19 with our current resources and capabilities. Because our new NT-CoV2-1 vaccine product
candidate is in early stages of development, and contemplates nasal administration it will require extensive pre-clinical and clinical
testing, and we will need significant additional funding to conduct such research and testing. We do not expect to generate revenue from
product sales, licensing fees, royalties, milestones, contract research or other sources of funds in amounts sufficient to fully fund
our operations for the foreseeable future, and we will therefore use our cash resources, and expect to require additional funds, to maintain
our existing operations, continue our research and development programs, commence future pre-clinical studies and clinical trials for
our NT-CoV2-1 vaccine product candidate, and to seek regulatory approvals.
We
anticipate seeking such additional funds through a combination of public or private equity or debt financings, as well as potential collaborations,
strategic alliances and marketing, distribution or licensing arrangements and non-dilutive funding from government and nongovernment
funding entities, as well as other sources to further the research, development, manufacturing, testing, and regulatory approval of vaccine
product candidates. While we may continue to apply for contracts or grants from academic institutions, nonprofit organizations and governmental
entities, we may not be successful. Adequate additional funding may not be available to us on acceptable terms, if at all. If we cannot
raise the additional funds required for our anticipated operations or to support our development efforts, we may be required to delay
significantly, reduce the scope of or eliminate one or more of our research or development programs, downsize our organization, or seek
alternative measures to avoid insolvency, including arrangements with collaborative partners or others that may require us to relinquish
rights to certain of our technologies or our vaccine candidate. If we raise additional funds through future offerings of shares of our
common stock or other debt or equity securities, such offerings would cause dilution of current stockholders’ percentage ownership
in the Company, which could be substantial. Additionally, future offerings also could have a material and adverse effect on the price
of our common stock.
Our
vaccine product candidate is at the pre-clinical stage and has not been approved for sale. We have not conducted substantial research
and development for a vaccine product candidate, and we may be unable to produce a vaccine that successfully prevents the virus in a
timely and economical manner, if at all.
Our
NT-CoV2-1 vaccine development program is in the early stages of research and development, and currently includes only one product candidate,
which is in the pre-clinical stage. Limited data exist regarding the safety and efficacy of our vaccine product candidate, and we must
conduct a substantial amount of additional research, development and clinical testing before any regulatory authority will approve our
vaccine product candidate. The success of our efforts to develop and commercialize our product candidates could fail for a number of
reasons. For example, we could experience delays in product development and clinical trials or unsatisfactory clinical trial results.
In
addition, adverse events, or the perception of adverse events, relating to a vaccine product candidate administered intranasally and
delivery technologies may negatively impact our ability to develop commercially successful products. For example, pharmaceutical companies
have been subject to claims that the use of some pediatric vaccines has caused personal injuries, including brain damage, central nervous
system damage and other ailments. Regardless of the veracity of or the data supporting these claims, these and other claims may influence
public perception of the use of vaccine product candidates and could result in greater governmental regulation, stricter labeling requirements
and potential regulatory delays in the testing or approval of our potential vaccine product candidate. Such greater government regulation
could have a material effect on our ability to develop and market our NT-CoV2-1 vaccine product candidate.
We
have not conducted substantial research on the NT-CoV2-1 vaccine product candidate and we lack experience in the research, development,
manufacture, regulatory approval, marketing, commercialization and implementation of a vaccine product candidate. Also, uncertainties
exist surrounding the longevity and severity of COVID-19 as a global health concern. The success of our efforts to develop and commercialize
our product candidates could fail for a number of reasons. Accordingly, we may be unable to produce a vaccine that successfully targets
SARS-CoV-2 in a timely and economical manner, if at all.
For
example, we expect to commit significant financial resources and personnel to the development of our NT-CoV2-1 vaccine product candidate,
which may cause delays in or otherwise negatively impact our other product candidate development program. The outcome of any research
and development program is highly uncertain. Only a small fraction of biotechnology and vaccine development programs ultimately result
in commercial products or even product candidates and a number of events could delay our development efforts and negatively impact our
ability to obtain regulatory approval for, and to manufacture, market and sell, a nasally administered vaccine. Additionally, our ability
to develop an effective vaccine will depend on our ability to work on an accelerated timeline, with uncertain access to financial resources
beyond those that we currently possess, and in competition with a significant number of better-funded and more experienced vaccine-development
companies. Moreover, if the COVID-19 pandemic is effectively contained or the risk of further spread is diminished or eliminated before
we can successfully develop, manufacture and commercialize NT-CoV2-1, we may be unable to identify strategic partners willing to work
with and support us in our development efforts and, even if we obtain regulatory approval, the market that we anticipate for this product
candidate may not exist or may be much smaller than we previously anticipated. Alternatively, even if a market exists, our vaccine product
candidate could be found to be ineffective or unsafe, or otherwise fail to receive necessary regulatory clearances. Our vaccine product
candidate, even if safe and effective, could be difficult to manufacture on a large scale or uneconomical to market, or our competitors
could develop superior products more quickly and efficiently or more effectively market their competing products. Accordingly, our inability
to develop a commercially-successful vaccine product will materially harm our business. In addition, other parties are currently producing
and administering approved vaccines for the treatment for SARS-CoV-2 or under the FDA’s Emergency Use Authorization and other competitive
vaccines are expected to seek such authorization as well. Such competitive vaccines already in the market may also lead to the diversion
of governmental and nongovernmental resources away from us and toward our competitors.
The
market opportunities for our vaccine product candidate may be smaller than we believe them to be. Moreover, any pandemic threat may abate,
or alternative vaccines or technologies may be adopted, before our vaccines achieve regulatory approval.
The
primary area of focus for our future research and product development activities is the development of a nasally administered vaccine
candidate to prevent SARS-CoV-2 and the disease it principally causes, COVID-19. Our current projections of both the number of people
who are or will be affected by this disease, as well as the subset of people who may be affected by this disease and who have the potential
to benefit from immunity through our NT-CoV2-1 vaccine product candidate, are based on estimates. These estimates have been derived from
a variety of sources, including scientific literature, surveys of clinics, patient foundations, or market research, and may prove to
be incorrect. Further, because coronaviruses have evolved in recent decades and research on SARS-CoV-2 and COVID-19 are continuously
changing due to the complicated nature of the virus, new studies may change the estimated incidence or prevalence of COVID-19. The number
of clinical trial participants in the United States, Europe, and elsewhere may turn out to be lower than expected, potential clinical
trial participants may not be otherwise amenable to treatment with our products, or new clinical trial participants may become increasingly
difficult to identify or gain access to, all of which would adversely affect our ability to conduct the research and development necessary
to complete the vaccine product candidate.
Moreover,
the threat of the COVID-19 pandemic outbreak may subside before we are able to complete research and development for our NT-CoV2-1 vaccine
product candidate, obtain regulatory approval for the vaccine product candidate and realize any return on our investment in the research
and development. Other organizations some of which are currently broadly administering vaccines under the FDA approval, or Emergency
Use Authorization authority, may obtain licenses for their own pandemic vaccines, or government health organizations may acquire adequate
stockpiles of pandemic vaccines or adopt other technologies or strategies to prevent or limit outbreaks before our NT-CoV2-1 vaccine
product candidate reaches the marketplace. We may not achieve a return on our investment before the threat of the COVID-19 pandemic subsides
or a competing product is adopted.
If
we are unable to successfully develop our product candidates, our operating results and competitive position could be harmed. Research
and development involves a lengthy and complex process, and we may not be successful in our efforts to develop and commercialize our
product candidates. The further development and ultimate commercialization of product candidates for SARS-CoV-2 and COVID-19, as well
as our other product candidates, are keys to our strategy.
A
key element of our business strategy is to discover, develop, validate and commercialize a vaccine product candidate to provide immunity
from SARS-CoV-2, which we aim to market globally to both public and private payers. Additionally, our focus concerns the development
of a portfolio of additional antibiotic product candidates to combat multi drug resistant organism, or MDRO, outbreaks and the associated
costs to patients, inpatient facilities and the health care industry. We cannot assure you that we will be able to successfully complete
development of, or commercialize any or all of our planned future product candidates, or that they will be clinically usable. The product
development process involves a high degree of risk and may take up to several years or more. Our new product development efforts may
fail for many reasons, including:
● our recent entry into the vaccine research and development industry;
● failure of future tests at the research or development stages;
● lack of clinical validation data to support effectiveness;
● lack of commercial acceptance by the health care marketplace.
Few
research and development projects result in commercial products, and success in early clinical trials often is not replicated in later
trials. At any point, we may abandon development of products in favor of the development or acquisition of new products, or we may be
required to expend considerable resources repeating clinical studies or trials, which would adversely impact the timing for generating
potential revenues from those new products. In addition, as we advance the development of new products through to the commercialization
stage, we will have to make additional investments in our sales and marketing operations, which may be prematurely or unnecessarily incurred
if the commercial launch of a product is abandoned or delayed.
If
we are successful in producing a vaccine against SARS-CoV-2, we may need to devote significant resources to its scale-up and development,
including for use by the U.S. government or other foreign authorities. Moreover, government involvement may limit the commercial success
of our vaccine product candidate.
Because
the COVID-19 outbreak has been classified as a pandemic by public health authorities, it is possible that one or more government entities
may take actions that directly or indirectly have the effect of abrogating some of our rights or opportunities with respect to the research,
development and commercialization of our NT-CoV2-1 vaccine product candidate. We have not manufactured a pandemic vaccine to date, but
if we were to do so, the economic value of such a vaccine to us could be limited by such government action or inaction. Various government
entities, including the U.S. government, are offering, but may not continue to offer, incentives, grants and contracts to encourage additional
investment by commercial organizations into preventative and therapeutic agents against SARS-CoV-2 and/or COVID-19, which may have the
effect of increasing the number of competitors and/or providing advantages to known competitors. Accordingly, there can be no assurance
that we will be able to successfully establish a competitive market share for our NT-CoV2-1 vaccine product candidate.
In
the event that any of the pre-clinical research or, if an IND is accepted by the FDA, the Phase 1 clinical trials for our SARS-CoV-2
vaccine product candidate are perceived to be successful, we may need to work toward the large-scale technical development, manufacturing
scale-up and larger scale deployment of this potential vaccine through a variety of U.S. government-sponsored mechanisms, such as an
Expanded Access Program or an Emergency Use Authorization program. In this case we may need to divert significant resources to this program,
which would require diversion of resources from our other existing product candidate programs. In addition, since the path to licensure
of any vaccine against SARS-CoV-2 is unclear, and widely-used vaccines in circulation in the United States and other countries could
impact our receipt of marketing approval. Unexpected safety issues in these circumstances could lead to significant reputational damage
for us and our technology platform going forward and other issues, including delays in our other programs, the need for re-design of
our clinical trials and the need for significant additional financial resources.
Our
product candidates, if approved, will face significant competition and our failure to compete effectively may prevent us from achieving
significant market penetration.
The
pharmaceutical industry is characterized by rapidly advancing technologies, intense competition and a strong emphasis on developing proprietary
therapeutics. Numerous companies are engaged in the development, patenting, manufacturing and marketing of healthcare products competitive
with those that we are developing. We face competition from a number of sources, such as pharmaceutical companies, including generic
drug companies, biotechnology companies and academic and research institutions, many of which have greater financial resources, marketing
capabilities, sales forces, manufacturing capabilities, research and development capabilities, clinical trial expertise, intellectual
property portfolios, experience in obtaining patents and regulatory approvals for product candidates and other resources than us. Some
of the companies that offer competing products also have a broad range of other product offerings, large direct sales forces and long-term
customer relationships with our target physicians, which could inhibit our market penetration efforts. In addition, certain of our product
candidates, if approved, may compete with other products, for a share of some patients’ discretionary budgets and for physicians’
attention within their clinical practices.
We
anticipate that, if we obtain regulatory approval of our product candidates, we will face significant competition from other approved
therapies and may need to compete with unregulated, unapproved and off-label treatments. Certain of our product candidates, if approved,
will present novel therapeutic approaches for the approved indications and will have to compete with existing therapies, some of which
are widely known and accepted by physicians and patients. To compete successfully in this market, we will have to demonstrate that the
relative cost, safety and efficacy of our approved products, if any, provide an attractive alternative to existing and other new therapies.