UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
10-K
☒Annual Report under Section 13 or 15(d) of the Securities Exchange Act of 1934
For
the fiscal year ended December 31, 2021
or
☐
Transitional Report under Section 13 or 15(d) of the Securities Exchange Act of 1934
Commission
File Number 001-39531
Processa
Pharmaceuticals, Inc.
(Exact
name of registrant as specified in its charter)
7380
Coca Cola Drive, Suite 106,
Hanover,
Maryland21076
(443)776-3133
Securities
registered pursuant to Section 12(b) of the Exchange Act:
Title of Each Class Trading Symbol(s) Name of each exchange on which registered
Common Stock, $0.0001 par value per share PCSA The Nasdaq Stock Market LLC
Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No
☒
Indicate
by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No
☒
Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate
by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule
405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Yes ☒ No ☐
Indicate
by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting
company, or emerging growth company. See definition of “large accelerated filer,” “accelerated filer,” “smaller
reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer ☐ Accelerated filer ☐
Non-accelerated filer ☐ Smaller reporting company ☒
Emerging growth company ☐
If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate
by check mark whether the registrant has filed a report on and attestation to its managements’ assessment of the effectiveness
of its internal controls over financial reporting under Section 404(b) of the Sarbanes Oxley Act (15 U.S.C 7262(b)) by the registered
public accounting firm that prepared or issued its audit report ☐
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No
☒
The
aggregate market value of the voting and non-voting common equity held by non-affiliates on June 30, 2021, the last business day of the
most recently completed second quarter, based upon the closing price of Common Stock on such date as reported on Nasdaq Capital Market,
was approximately $95.4million.
The
number of outstanding shares of the registrant’s common stock as of March 24, 2022 was 15,843,621.
DOCUMENTS
INCORPORATED BY REFERENCE
Portions
of the Proxy Statement for the registrant’s 2022 Annual Meeting of Stockholders (the “Proxy Statement”) to be filed
within 120 days of the end of the fiscal year ended December 31, 2021 are incorporated by reference into Part III hereof. Except with
respect to information specifically incorporated by reference in this Form 10-K, the Proxy Statement is not deemed to be filed as a part
hereof.
Table
of Contents
Part I
Item 1. Business. 5
Item 1A. Risk Factors 29
Item 1B. Unresolved Staff Comments 45
Item 2. Properties. 46
Item 3. Legal Proceedings. 46
Item 4. Mine Safety Disclosures. 46
Part II
Item 6. [Reserved] 47
Item 7A. Quantitative and Qualitative Disclosures About Market Risk. 57
Item 8. Financial Statements and Supplementary Data F-1
Item 9. Changes in and Disagreements with Accountants 58
Item 9A. Controls and Procedures 58
Item 9B. Other Information 60
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspection 60
Part III
Item 10. Directors, Executive Officers and Key Employees 60
Item 11. Executive Compensation 60
Item 14. Principal Accounting Fees and Services 60
Part IV
Item 15. Exhibits, Financial Statement Schedules 60
GLOSSARY
OF CERTAIN SCIENTIFIC TERMS
The
medical and scientific terms used in this Annual Report on Form 10-K have the following meanings:
“Active
metabolite” means a drug that is processed by the body into an altered form which effects the body.
“Agonist”
means a chemical/drug that binds to a receptor in the body and activates that receptor to produce a biological response.
“Analog”
means a compound having a structure similar to that of an approved drug but differing from it with respect to a certain component of
the molecule which may cause it to have similar or different effects on the body.
“cGCP”
means current Good Clinical Practices. The FDA and other regulatory agencies promulgate regulations and standards, commonly referred
to as current Good Clinical Practices, for designing, conducting, monitoring, auditing and reporting the results of clinical trials to
ensure that the data and results are accurate and that the rights and welfare of trial participants are adequately protected.
“cGMP”
means current Good Manufacturing Practices. The FDA and other regulatory agencies promulgate regulations and standards, commonly referred
to as current Good Manufacturing Practices, which include requirements relating to quality control and quality assurance, as well as
the corresponding maintenance of records and documentation.
“CRO”
means Contract Research Organization.
“Deuterated
analog” means a small molecule in which one or more of the hydrogen atoms are replaced by deuterium.
“EMA”
means the European Medicines Agency.
“FDA”
means the Food and Drug Administration.
“FPI”
means First Patient In (enrolled into the clinical trial).
“IND”
means an Investigational New Drug Application. Before testing a new drug on human subjects, the company must file an IND with the FDA.
Information must be produced on the absorption, distribution, metabolism, and excretion properties of the drug and detailed protocols
for testing on human subjects must be submitted.
“Indication”
means a condition which makes a particular treatment or procedure advisable.
“Moiety”
means an active or functional part of a molecule.
“NDA”
means a New Drug Application submitted to the FDA. Under the Food, Drug, and Cosmetic Act of 1938, an NDA is submitted to the FDA enumerating
the uses of the drug and providing evidence of its safety.
“NL”
means Necrobiosis Lipoidica, a rare chronic and granulomatous disorder.
“Osteonecrosis”
means the death of bone cells due to decreased blood flow. It can lead to pain and collapse of areas of bone.
SPECIAL
NOTE REGARDING FORWARD-LOOKING STATEMENTS AND RISK FACTOR SUMMARY
This
Annual Report on Form 10-K contains forward-looking statements that involve risks and uncertainties. All statements other than statements
of historical facts contained in this Form 10-K are forward-looking statements. In some cases, you can identify forward-looking statements
by words such as “anticipate,” “believe,” “contemplate,” “continue,” “could,”
“estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “predict,”
“project,” “seek,” “should,” “target,” “will,” “would,” or the
negative of these words or other comparable terminology. We have based these forward-looking statements on our current expectations and
projections about future events and trends that we believe may affect our financial condition, results of operations, strategy, short-
and long-term business operations and objectives, and financial needs. These forward-looking statements are subject to a number of risks,
uncertainties and assumptions, including those described in “Risk Factors” and elsewhere in this Form 10-K. Moreover, we
operate in a very competitive and rapidly changing environment, and new risks emerge from time to time. It is not possible for our management
to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of
factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. In light of
these risks, uncertainties and assumptions, the forward-looking events and circumstances discussed in this Form 10-K may not occur, and
actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements. Given these
uncertainties, you should not place undue reliance on these forward-looking statements. These risks are discussed more fully in the “Risk
Factors” section of this Annual Report on Form 10-K. These risks include, but are not limited to, the following:
● our ability to obtain funding for our future operations;
● our ability to recruit and enroll suitable patients in our clinical trials;
● the pricing and reimbursement of our product candidates, if approved;
● developments relating to our competitors and our industry;
● our financial performance.
You
should not rely upon forward-looking statements as predictions of future events. Although we believe that the expectations reflected
in the forward-looking statements are reasonable as of the date of this Form 10-K, we cannot guarantee that the future results, levels
of activity, performance or events and circumstances reflected in the forward-looking statements will be achieved or occur. We undertake
no obligation to update publicly any forward-looking statements for any reason after the date of this Form 10-K to conform these statements
to new information, actual results or to changes in our expectations, except as required by law.
You
should read this Form 10-K and the documents that we reference in this Form 10-K and have filed with the SEC as exhibits with the understanding
that our actual future results, levels of activity, performance, and events and circumstances may be materially different from what we
expect.
In
this Form 10-K, “we,” “us”, “our”, “Processa” and “the Company” refer to
Processa Pharmaceuticals, Inc. and its subsidiary.
Part
I
Item
1. Business
Overview
Our
mission is to develop drug products that improve the survival and/or quality of life for patients with high unmet medical need conditions
for which few or no treatment options currently exist. We are a clinical-stage development company, not a discovery company, that seeks
to identify and develop drugs for patients who need better treatment options. In order to increase the probability of development success,
our pipeline only includes drugs which have previously demonstrated some efficacy in the targeted population or a drug with very similar
pharmacological properties that has been shown to be effective in the population.
Our
screening criteria for identifying and selecting new candidates include:
● addressing an unmet or underserved clinical need,
● having demonstrated evidence of efficacy in humans, and
In
many instances, these clinical candidates have significant pre-clinical and clinical data that we may leverage to high value inflection
points while de-risking the programs and adding in optionality to potential future indications. Our regulatory science approach developed
by our team over decades of work with regulatory authorities attempts to balance the “benefit/risk” equation to identify
a regulatory path with higher clinical benefit and/or lower clinical risk with shorter timelines to deliver better treatment options
to patients, physicians and caregivers.
Our
pipeline includes drugs that (i) already have clinical proof-of-concept data demonstrating the desired pharmacological activity in humans
or, minimally, clinical evidence in the form of case studies or clinical experience demonstrating the drug or a similar drug pharmacologically
can successfully treat patients with the targeted indication; (ii) target indications for which a single positive pivotal study demonstrating
efficacy might provide enough evidence that the clinical benefits of the drug and its approval outweighs the risks associated with the
drug or the present standard of care (e.g., some orphan indications, many serious life-threatening conditions, some serious quality of
life conditions); and/or (iii) target indications where the prevalence of the condition and the likelihood of patients enrolling in a
study meet the desired timeframe to demonstrate that the drug can, at some level, treat or potentially treat patients with the condition.
To
advance our mission, we have assembled an experienced and successful development team with a track record of drug approvals and successful
exits. Our team is experienced in developing drug products through all principal regulatory tiers from IND enabling studies to NDA submission.
The combined scientific, development and regulatory experience of our team members has resulted in more than 30 drug approvals by the
FDA, over 100 meetings with the FDA and involvement with more than 50 drug development programs, including drug products targeted to
patients who have an unmet medical need. Although we believe that the skills and experience of our team members in drug development and
commercialization is an important indicator of our future success, the past successes of our team members in developing and commercializing
pharmaceutical products does not guarantee that they will successfully develop and commercialize drugs in our current pipeline. In addition,
the growth in revenues of companies at which our executive officers and directors served in was due to many factors and does not guarantee
that they will successfully operate or manage us or that we will experience similar growth in revenues, even if they continue to serve
as executive officers and/or directors.
Our
ability to generate meaningful revenue from any products depends on our ability to out-license the drugs before or after we obtain FDA
NDA approval. Even if our products are authorized and approved by the FDA, it should be noted that the products must still meet the challenges
of successful marketing, distribution and consumer acceptance.
Our
Strategy
Our
strategy is to obtain and develop drugs that will not only treat patients with unmet medical need conditions but, with our regulatory
science approach, also have the potential to be more efficiently developed with a greater probability of development success than
what typically occurs in the biotech-pharma industry and a better return on investment given lower development costs, more efficient
development and high commercial value. Given the prior successes of our regulatory science approach, we have selected drugs
for our portfolio which may have greater chance for approval in a population of patients who desperately need better treatment options.
We have applied rigorous standards to identify drugs for our portfolio, namely:
Our
Team
Our
drug development efforts are guided by our knowledge and experience in applying rigorous regulatory science to decrease manageable risks,
costs and time toward achieving marketing authorization from regulatory authorities including the FDA. We have assembled a seasoned management
team and development team with extensive experience in developing therapies, including advancing product candidates from preclinical
research through clinical development and ultimately regulatory approval and commercialization. Our team is led by our Chairman and CEO
David Young, Pharm.D., Ph.D. who has extensive experience in research, regulatory approval and business development and who served at
Questcor for eight years, initially as an independent director and subsequently as its Chief Scientific Officer. Dr. Young’s guidance
led to the approval of Acthar in Infantile Spasms and the ultimate sale of Questcor in 2014.
Our
Drug Pipeline
We
currently have five drugs: four in various stages of clinical development (PCS499, PCS12852, PCS3117 and PCS6422) and one in nonclinical
development (PCS11T). We group our drugs into non-oncology (PCS499 and PCS12852) and oncology (PCS3117, PCS6422 and PCS11T). A summary
of each drug is provided below:
*
Cleared by FDA for Clinical Trial
PCS499
PCS499,
an oral tablet of a deuterated analog of one of the major metabolites of pentoxifylline (PTX or Trental®), is classified
by FDA as a new molecular entity. PCS499 and its metabolites act on multiple pharmacological targets that are important in a variety
of conditions. We have targeted ulcerative Necrobiosis Lipoidica (uNL) as our lead indication for PCS499. NL is a chronic, disfiguring
condition affecting the skin and tissue under the skin typically on the lower extremities with no currently approved FDA treatments.
NL presents more commonly in women than in men and occurs more often in people with diabetes. Ulceration has been reported to occur in
up to 30% of NL patients, which can lead to more severe complications, such as deep tissue infections and osteonecrosis threatening the
life of the limb. Approximately 65,000 people in the United States and more than 120,000 people outside the United States are affected
with uNL.
The
degeneration of tissue occurring at the NL lesion site may be caused by a number of pathophysiological changes, which make it extremely
difficult to develop effective treatments for this condition. Because PCS499 and its metabolites appear to affect most of the biological
pathways that contribute to the pathophysiology associated with NL, PCS499 may provide a novel treatment solution for NL.
On
June 18, 2018, the FDA granted orphan-drug designation for PCS499 for the treatment of NL. On September 28, 2018, the IND for PCS499
in NL became effective, such that we initiated and completed a Phase 2A multicenter, open-label prospective trial designed to determine
the safety and tolerability of PCS499 in patients with NL. The study initially had a six-month treatment phase and a six-month optional
extension phase. In December 2019, we informed patients and sites that the study would conclude after the treatment phase and there would
no longer be an extension phase. The first enrolled NL patient in this Phase 2A clinical trial was dosed on January 29, 2019 and the
study completed enrollment on August 23, 2019. The last patient visit took place in February 2020.
The
primary objective of the Phase 2A trial was to evaluate the safety and tolerability of PCS499 in patients with NL (ulcerated and non-ulcerated
patients) and to use the safety and efficacy data to design future clinical trials. Based on toxicology studies and healthy human volunteer
studies, we and the FDA agreed that a PCS499 dose of 1.8 grams/day would be the highest dose administered to NL patients in this Phase
2A trial. As anticipated, the PCS499 dose of 1.8 grams/day, 50% greater than the maximum tolerated dose of PTX, appeared to be well tolerated
with no serious adverse events (SAEs) reported. All adverse events (AEs) reported in the study were mild in severity. As expected, gastrointestinal
symptoms were the most frequent AEs and reported in four patients, all of which resolved within 1-2 weeks of starting dosing.
Two
of the twelve patients in the study presented with uNL and had ulcers for more than two months prior to dosing. At baseline, the
reference ulcer in one of the two patients measured 3.5 cm2 and had completely closed by Month 2 of treatment. The second
patient had a baseline reference ulcer of 1.2 cm2 which completely closed by Month 9 during the patient’s treatment
extension period. In addition, while in the trial, both patients also developed small ulcers at other sites, possibly related to contact
trauma, and these ulcers resolved within one month. The other ten patients, presenting with mild to moderate NL and did not have ulceration,
had more limited improvement of the NL lesions during treatment. Historically, 13 - 20% of all the patients with NL naturally progress
to complete healing over many years after presenting with NL. Although the natural healing of the uNL patients has not been evaluated
independently, medical experts who treat NL patients suggest that the natural progression of an open ulcerated wound to complete closure
may be significantly less than 13% over 1-2 years and probably close to 0% in patients with the larger ulcers.
On
March 25, 2020, we met with the FDA and discussed the clinical program, as well as the nonclinical and clinical pharmacology plans to
ultimately support the submission of the PCS499 New Drug Application (NDA) in the U.S. for the treatment of ulcers in NL patients. With
input from the FDA, we designed the next trial as a randomized, placebo-controlled Phase 2B study to evaluate the ability of PCS499 to
completely close ulcers in patients with NL and better understand the potential response of NL patients on drug and on placebo. We currently
have selected six clinical trial sites in the United States and are evaluating additional sites to add to our study. We had four sites
in Europe, but these sites were unable to recruit patients timely, largely due to COVID-19, so we decided to close them and concentrate
our efforts on recruiting patients within the United States.
We
began recruiting for the clinical trial in the first half of 2021. On May 19, 2021, we dosed our first patient in the randomized, placebo-controlled
trial and are planning to complete an interim analysis of the data from this trial by the end of 2022. After obtaining the results from
this Phase 2B study, we expect to have an end of Phase 2 meeting with the FDA to agree on the design of the Phase 3 study, with the intent
to define a Special Protocol Assessment for the Phase 3 study and to agree on the next steps to obtain approval.
PCS12852
On
August 19, 2020, we in-licensed PCS12852 (formerly known as YH12852) from Yuhan Corporation (“Yuhan”), pursuant to which
we acquired an exclusive license to develop, manufacture and commercialize PCS12852 globally, excluding South Korea.
PCS12852
is a novel, potent and highly selective 5-hydroxytryptamine 4 (5-HT4) receptor agonist. Other 5-HT receptor agonists with less 5-HT4
selectivity have been shown to successfully treat gastrointestinal (GI) motility disorders such as gastroparesis, chronic constipation,
constipation-predominant irritable bowel syndrome and functional dyspepsia. Less selective 5-HT4 agonists, such as cisapride, have been
either removed from the market or not approved because of the cardiovascular side effects associated with the drugs binding to other
receptors, especially receptors other than 5-HT4.
Two
clinical studies, both which have demonstrated the effectiveness of PCS12852 on GI motility, have been previously conducted by Yuhan
with PCS12852. In a Phase 1 trial (Protocol YH12852-101), the initial safety and tolerability of PCS12852 were evaluated after single
and multiple oral doses in healthy subjects. PCS12852 was shown to increase GI motility in this study, increasing stool frequency with
faster onset when compared to prucalopride, a less specific 5-HT4 agonist FDA-approved drug for the treatment of chronic idiopathic constipation.
Based on an increase of ≥1 spontaneous bowel movement (SBM)/week from baseline during 7-day multiple dosing, the PCS12852 dose group
had a higher percent of patients with an increase than the prucalopride group. All doses of PCS12852 were safe and well tolerated and
no SAEs occurred during the study. The most frequently reported AEs were headache, nausea and diarrhea which were temporal, manageable
and reversible within 24 hours. There were no clinically significant changes in platelet aggregation and ECG parameters including a change
in QTc prolongation in the study. In a Phase 1/2A clinical trial (Protocol YH12852-102), the safety, tolerability, gastric emptying rate
and pharmacokinetics of multiple doses of a PCS12852 immediate release (IR) formulation and a delayed release (DR) formulation were evaluated.
PCS12852 was safe and well tolerated after single and multiple administrations. The most frequent AEs for both the IR and DR formulations
of PCS12852 were headache, nausea and diarrhea, but the incidences of these AEs were comparable with those of the 2mg prucalopride group.
These AEs, which were transient and mostly mild in severity, are also commonly observed with other 5-HT4 agonists. Both formulations
of PCS12852 also increased the gastric emptying rate and increased GI motility.
Yuhan
had also conducted extensive toxicological studies for the product that demonstrated that the product is safe for use and can be moved
into Phase 2 studies.
We
received guidance from the FDA in the first half of 2021 and in October 2021 we received notice of safe to proceed for PCS12852 evaluation
in a Phase 2A randomized, placebo-controlled study in patients with gastroparesis. We anticipate beginning to enroll patients in the
first half of 2022, with expected completion in the first half of 2023. The purpose of the Phase 2A trial is to evaluate the safety,
efficacy and pharmacokinetics of two different dosing regimens for PCS12852. Data obtained from this study will be used to better design
a future Phase 2/3 efficacy study. Since patients with gastroparesis have an abnormal pattern of upper GI motility in the absence of
mechanical obstruction, the Phase 2A study was designed to evaluate the change in gastric emptying in patients with gastroparesis from
two different dosing regimens of PCS12852 compared to placebo. The only FDA-approved drug to treat gastroparesis is metoclopramide, a
dopamine D2 receptor antagonist that has documented serious side effects which limit dosing to no more than 12 weeks. Other 5-HT4 drugs
have been used clinically but the side effects, caused mainly by binding to other receptors, has resulted in these drugs not being a
viable option to treat patients with gastroparesis. It should be noted that PCS12852 is a highly specific 5-HT4 agonist that has been
shown in nonclinical studies to have a cardiovascular side effect only at concentrations greater than 1,000 times the maximum concentration
seen in humans.
PCS3117
On
June 16, 2021, we executed a License Agreement with Ocuphire Pharma, Inc. (“Ocuphire Agreement”) under which we received
a license to research, develop and commercialize PCS3117 (formerly RX-3117) globally, excluding Republic
of Singapore, China, Hong Kong, Macau and Taiwan.
PCS3117
is a novel, investigational, oral small molecule nucleoside compound. PCS3117 is an analog of the endogenous nucleoside, cytidine, and
an analog of the cancer drug gemcitabine. Once intracellularly activated (phosphorylated) by the enzyme UCK2, it is incorporated into
the DNA or RNA of cells and inhibits both DNA and RNA synthesis, which induces apoptotic cell death of tumor cells. PCS3117 has received
orphan drug designation from the FDA and the European Commission for the treatment of patients with pancreatic cancer.
Gemcitabine
is usually used as second line therapy for metastatic pancreatic cancer and non-small cell lung cancer, as well as used as second line
therapy for other types of cancer. The difference between PCS3117 and gemcitabine is how they are activated to cancer killing nucleotides.
PCS3117 also has additional pharmacological pathways which will result in cancer cell apoptosis. Since 45% - 85% of pancreatic cancer
and non-small cell lung cancer patients are inherently resistant or acquire resistance to gemcitabine, the differences between PCS3117
and gemcitabine could potentially provide a therapeutic alternative to patients who do not or will not respond to gemcitabine.
Resistance
to gemcitabine or PCS3117 is likely caused by:
● a change in ribonucleotide reductase activity, and
● non-genetic influences that alter gene expression.
PCS3117
has shown broad spectrum anti-tumor activity against over 100 different human cancer cell lines and efficacy in 17 different mouse xenograft
models. In preclinical trials, PCS3117 retained its anti-tumor activity in human cancer cell lines made resistant to the anti-tumor effects
of gemcitabine. In August 2012, the completion of an exploratory Phase 1 clinical trial of PCS3117 in cancer patients to investigate
the oral bioavailability, safety and tolerability of the compound was reported. In that study, oral administration of a 50 mg dose of
PCS3117 indicated an oral bioavailability of 56% and a plasma half-life (T1/2) of 14 hours. In addition, PCS3117 appeared
to be well tolerated in all subjects throughout the dose range tested.
Final
results from a Phase 1B clinical trial of PCS3117 were presented in June 2016 showing evidence of single agent activity. Patients in
the study had generally received four or more cancer therapies prior to enrollment. In this study, 12 patients experienced stable disease
persisting for up to 276 days and three patients showed evidence of tumor burden reduction. A maximum tolerated dose of 700 mg was identified
in the study. At the doses tested, PCS3117 appeared to be well tolerated with a predictable pharmacokinetic profile following oral administration.
In
March 2016, a multi-center Phase 2A clinical trial of PCS3117 in patients with relapsed or refractory pancreatic cancer was initiated
to further evaluate safety and efficacy. The study was designed as a two-stage study with 10 patients in stage 1 and an additional 40
patients in stage 2. According to pre-set criteria, if greater than 20% of the patients had an increase in progression free survival
of more than four months, or an objective clinical response rate and reduction in tumor size, additional pancreatic cancer patients would
be enrolled into stage 2. Secondary endpoints included time to disease progression, overall response rate and duration of response, as
well as pharmacokinetic assessments and safety parameters. In January 2018, the final data from this trial showed evidence of tumor shrinkage
in some patients with metastatic pancreatic cancer that was resistant to gemcitabine and who had failed on multiple prior treatments
was presented. In this study, 31% of patients experienced progression free survival for two months or more and five patients, or 12%,
had disease stabilization for greater than four months. Although the pre-set criteria of 20% of the patients having an increase in progression
free survival for four months was not met, some of the gemcitabine refractory patients did respond to PCS3117. However, an evaluation
of why patients were resistant to PCS3117 was not undertaken within the study.
In
November 2017, a Phase 2A trial of PCS3117 in combination with ABRAXANE in patients newly diagnosed with metastatic pancreatic cancer
was initiated. The multicenter, single-arm, open-label study was designed to evaluate PCS3117 in combination with ABRAXANE in first line
metastatic pancreatic cancer patients. In February 2019, the target enrollment of 40 evaluable patients in this trial was reached. An
overall response rate of 23% had been observed in 40 patients that had at least one scan on treatment. Preliminary and unaudited
data indicated that the median progression free survival for patients in the study was approximately 5.6 months. The most commonly reported
related adverse events were nausea, diarrhea, fatigue, alopecia, decreased appetite, rash, vomiting and anemia. Again, evaluation of
the cause of treatment resistance to PCS3117 was not undertaken.
In
order to identify patients who would more likely respond to PCS3117 than gemcitabine, we will be refining existing assays and developing
new assays of biological molecules (i.e., biomarkers) over the next 6-12 months that could help to identify which patients are more likely to respond to or activate PCS3117 over gemcitabine.
PCS6422
On
August 23, 2020, we in-licensed PCS6422 from Elion Oncology, Inc. (“Elion”), pursuant to which we acquired an exclusive license
to develop, manufacture and commercialize PCS6422 globally.
PCS6422
is an oral, potent, selective and irreversible inhibitor of dihydropyrimidine dehydrogenase (DPD), the enzyme that rapidly metabolizes
a common chemotherapy drug known as 5-FU, into inactive metabolites, such as α-fluoro-β-alanine (F-Bal). F-Bal is a metabolite
that has no anti-cancer activity but causes unwanted side effects, which notably leads to dose interruptions and significantly affect
a patient’s quality of life. F-Bal is thought to cause the neurotoxicity and Hand–Foot Syndrome (HFS) associated with 5-FU,
and greater formation of F-Bal appears to be associated with a decrease in the antitumor activity of 5-FU. HFS can affect activities
of daily living, quality of life, and requires dose interruptions/adjustments and even therapy discontinuation resulting in suboptimal
tumor effects. We believe that the inhibition of DPD by PCS6422 will significantly reduce 5-FU side effects related to a decrease in
F-Bal, although the timeframe and magnitude for DPD inhibition has been shown to vary, ranging from 2-14 days depending on the de novo
formation of DPD within a patient and the dosage regimen of PCS6422. With the inhibition of DPD, the level of the 5-FU anti-cancer metabolites
could also be potentially higher within cancer and normal cells leading to an improved efficacy profile and/or increased side effects
associated with these antimetabolites such as neutropenia. By combining capecitabine (oral pro-drug form of 5-FU) with PCS6422, the change
in 5-FU metabolism should result in an increase in the systemic exposure of 5-FU based on the 5-FU Area Under the Plasma Concentration
Curve (AUC) per mg of capecitabine dosed. This results in needing less capecitabine to kill cancer cells and treat each patient, making
the combination of PCS6422 and capecitabine (the “Next Generation Capecitabine”) more potent than current FDA approved capecitabine.
Fluoropyrimidines
(e.g., 5-FU, capecitabine) remain the cornerstone of treatment for many different types of cancers, either as monotherapy or in combination
with other chemotherapy agents by an estimated two million patients annually. Xeloda®, the brand name of capecitabine,
is an oral pro-drug of 5-FU and approved as first-line therapy for metastatic colorectal and breast cancer. However, its use is limited
by adverse effects such as the development of HFS in up to 60% of patients.
Elion
evaluated the potential for the combination of PCS6422 with capecitabine as a treatment of advanced gastrointestinal (GI) tumors. Nonclinical
efficacy data indicated that in colorectal cancer models, pretreatment with PCS6422 enhanced the antitumor activity of capecitabine.
PCS6422 dramatically increased the antitumor potency of capecitabine without increasing the toxicity. The antitumor efficacy of the combination
of PCS6422 and capecitabine was tested in several xenograft animal models with human breast, pancreatic and colorectal cancer cells.
These preclinical xenograft models demonstrate that PCS6422 potentiates the antitumor activity of capecitabine and significantly reduces
the dose of capecitabine required to be efficacious.
Other
DPD enzyme inhibitors (e.g. Gimeracil used in Teysuno® approved only outside the US) act as competitive reversible inhibitors. These
agents must be present when 5-FU or capecitabine are administered to inhibit 5-FU breakdown by DPD in order to improve the efficacy and
safety profiles of 5-FU. Given the reversible nature of their effect on DPD, over time 5-FU metabolism to F-Bal will return if the reversible
inhibitor is not present, decreasing the amount of 5-FU in the cancer cells and decreasing the potential cytotoxicity on the cancer cells.
There is also evidence that administering large amounts of DPD inhibitors directly with 5-FU may also decrease the antitumor effect of
the 5-FU. Because PCS6422 is an irreversible inactivator of DPD, it is dosed the day before capecitabine administration and its effect
on DPD can last longer than the reversible DPD inhibitors and beyond the time 5-FU exists in the cancer cell, even after PCS6422 has
been completely eliminated out of the body. We believe this can optimize the potential cytotoxic effect of the 5-FU nucleotide metabolites
and minimize the catabolism of 5-FU to F-Bal.
Prior
to Elion’s involvement, two multicenter Phase 3 studies were conducted in patients with colorectal cancer with PCS6422 administered
in 10-fold excess to 5-FU and administered with the 5-FU. Unfortunately, we believe the dose of PCS6422 during these trials was not optimal
and that PCS6422 was not administered early enough to irreversibly affect the DPD enzyme, thus the regimen tended to produce less antitumor
benefit than the control arm with the standard regimen of 5-FU/leucovorin (LV) without PCS6422. Later preclinical work suggested that
when PCS6422 was present at the same time as and in excess to 5-FU, it diminished the antitumor activity of 5-FU, which we believe supports
the proposed dosing PCS6422 several hours before 5-FU to allow PCS6422 to be cleared before the administration of 5-FU.
Elion
met with the FDA in 2019 and agreed upon the clinical development program required for the combination of PCS6422 and capecitabine as
first-line therapy for metastatic colorectal cancer when treatment with fluoropyrimidine therapy alone is preferred. On May 17, 2020,
an IND for the Phase 1B study was granted safe to proceed by the FDA. This Phase 1B study was designed to evaluate: i) the safety and
tolerability of PCS6422 and several doses of capecitabine in advanced GI tumor patients; ii) the pharmacokinetics of PCS6422, capecitabine,
5-FU and selected metabolites; iii) the activity of DPD over time after PCS6422 administration; and iv) the maximum tolerated dose in
up to 30 patients over multiple cycles. The study began patient recruitment in the second half of 2021. On August 2, 2021, we enrolled
the first patient in the study.
The
interim analysis of Cohorts 1 and 2 was recently conducted. DLTs, drug related adverse events of greater than 1 and hand-foot syndrome
were not observed in these patients. Also, this Next Generation Capecitabine effectively inhibited DPD enzyme activity 24-48 hours after
PCS6422 administration with <10% of 5-FU metabolized to F-Bal as compared to ~80% with the FDA approved capecitabine. Additionally,
5-FU potency based on the 5-FU AUC systemic exposure per mg of capecitabine dosed was 50 times greater with Next Generation Capecitabine.
The interim analysis showed, however, that the improved metabolic profile and increased potency was not sustained at Day 7 after PCS6422
single dose administration. In February 2022, we submitted a modified Phase 1B trial protocol to the FDA to not only determine the MTD
of capecitabine but also to further evaluate the timeline of DPD inhibition and de novo formation as a function of PCS6422 dosing.
We
anticipate that this additional data will allow us to select PCS6422 dosage regimens that will maintain DPD inhibition throughout capecitabine
dosing for each patient treated with this Next Generation Capecitabine. After interacting with the FDA and making protocol modifications,
we expect to restart the Phase 1B study in the second quarter of 2022 while defining the Next Generation Capecitabine regimens by the
end of 2022. Although we are making modifications to the existing Phase 1B protocol, we expect that our overall timeline has not changed
with a Phase 2B or 3 trial starting in 2023-2024 and NDA submission in 2027-2028.
PCS11T
On
May 24, 2020, we in-licensed PCS11T (formerly known as ATT-11T) from Aposense, Ltd. (“Aposense”), pursuant to which we were
granted Aposense’s patent rights and Know-How to develop and commercialize their next generation irinotecan cancer drug, PCS11T.
PCS11T
is a novel lipophilic anti-cancer pro-drug that is being developed for the treatment of the same solid tumors as prescribed for irinotecan.
This pro-drug is a conjugate of a specific proprietary Aposense molecule connected to SN-38, the active metabolite of irinotecan. The
proprietary molecule in PCS11T has been designed to allow PCS11T to bind to cell membranes to form an inactive pro-drug depot on the
cell with SN-38 preferentially accumulating in the membrane of tumors cells and the tumor core. This unique characteristic may make the
therapeutic window of PCS11T wider than other irinotecan products such that the antitumor effect of PCS11T could occur at a much lower
dose with a milder adverse effect profile than irinotecan. Despite the widespread use of commercially marketed irinotecan products in
the treatment of metastatic colorectal cancer and other cancers resulting in peak annual sales of approximately $1.1 billion, irinotecan
has a narrow therapeutic window and includes an FDA “Black Box” warning for both neutropenia and severe diarrhea. There is,
therefore, a substantial unmet need to overcome the limitations of the current commercially marketed irinotecan products, improving efficacy
and reducing the severity of treatment emergent AEs. We believe the potential wider therapeutic window of PCS11T will likely lead to
more patients responding with less side effects when on PCS11T compared to other irinotecan products.
Pre-clinical
studies conducted to date showed that PCS11T demonstrated tumor eradication at much lower doses than irinotecan across various tumor
xenograft models. PCS11T does not affect acetyl choline esterase (AChE) activity in human and rat plasma in vitro, which would suggest
that PCS11T will show an improved safety profile, compared to irinotecan, which is known for its cholinergic-related side effects.
We
are currently planning to manufacture the product at a GMP facility, conduct the required toxicological studies required to file the
IND in 2023 and initiate the Phase 1B study in oncology patients with solid tumors.
Manufacturing
and Clinical Supplies
We
do not own or operate, and currently have no plans to establish, any manufacturing facilities. We currently rely, and expect to continue
to rely, on multiple third party contract manufacturing organizations (CMOs), for the supply of cGMP-grade clinical trial materials and
commercial quantities of our product candidates and products, if approved. We require all of our CMOs to conduct manufacturing activities
in compliance with cGMP. We have assembled a team of experienced employees and consultants to provide the necessary technical, quality
and regulatory oversight of our CMOs.
We
anticipate that these CMOs will have the capacity to support both clinical supply and commercial-scale production, but we do not have
any formal agreements at this time with any of these CMOs to cover commercial production.
We
also may elect to pursue additional CMOs for manufacturing supplies of drug substance and finished drug product in the future. We believe
that our standardized manufacturing process can be transferred to a number of other CMOs for the production of clinical and commercial
supplies of our product candidates in the ordinary course of business.
Competition
Many
of our potential competitors may have significantly greater financial resources, a more established presence in the market, and more
expertise in research and development, manufacturing, pre-clinical and clinical testing, obtaining regulatory approvals and reimbursement,
and marketing approved products than we do. Mergers and acquisitions in the pharmaceutical, biotechnology and diagnostic industries may
result in even more resources being concentrated among a smaller number of our competitors. Smaller or early-stage companies may also
prove to be significant competitors, particularly through collaborative arrangements with large and established companies. These potential
competitors may also compete with us in recruiting and retaining top qualified scientific, sales, marketing and management personnel
and establishing clinical trial sites and patient registration for clinical trials, as well as in acquiring technologies complementary
to, or necessary for, our programs.
The
key competitive factors affecting each of our products, if approved, are likely to include the efficacy, safety, convenience and price
of the products relative to other approved products used on-label or off-label for each unmet medical need condition. Although preliminary
clinical data exists to support the possibility of improved efficacy and safety profiles for our drugs, more in-depth randomized, controlled
studies are required for our products to determine if our preliminary findings will support the approval in the designated unmet medical
need indication.
For
PCS499, there are currently no FDA-approved drugs for the treatment of patients with NL, and few drugs are used off-label for NL given
the lack of efficacy and/or side effect concerns.
For
PCS12852, the competitive factors will include establishing marketing penetration against the metoclopramide products (the only approved
drug to treat gastroparesis) and other 5-HT4 receptor agonists used off label. The market penetration will depend on the potential
for an improved safety profile due to the very selective 5-HT4 receptor binding by PCS12852 and similar or greater efficacy in the treatment
of gastroparesis.
For PCS3117, the competitive
factors will include establishing market penetration against other cytidine analogues, such as gemcitabine which is currently used as
first or second line chemotherapy either alone or in combination with other chemotherapy agents. The market penetration will depend on
the potential for an improved efficacy profile in patients who have developed tolerance to other agents.
For
PCS6422, the competitive factors will be related to the efficacy and safety of the product when used in combination with existing cytotoxic
drugs such as capecitabine and fluoropyrimidines compared to the efficacy and safety when these cytotoxic agents are administered without
PCS6422 or with reversible enzyme inhibitors. The market penetration will depend on how much improvement will occur in the efficacy and/or
safety profiles when administered in combination with PCS6422. Currently, there are no other reversible or irreversible enzyme inhibitor
products approved in the US and no irreversible enzyme inhibitors approved ex-US, which may make PCS6422 the first DPD irreversible inhibitor
available.
For
PCS11T, the competitive factors will include establishing marketing penetration against the existing irinotecan product (Camptosar®)
and the newer liposomal irinotecan product (Onivyde®). The establishment of that market will be based upon improved efficacy and/or
safety of PCS11T.
Our
commercial opportunity for any of our product candidates could be reduced or eliminated if our competitors develop and commercialize
products that are safer, more effective, less expensive, more convenient or easier to administer, or have fewer or less severe side effects,
than any products that we may develop. Our competitors also may obtain FDA, EMA or other regulatory approval for their products more
rapidly than we may obtain approval for ours, which could result in our competitors establishing a strong market position before we are
able to enter the market.
Intellectual
Property
Our
success will depend in large part on our ability and that of our licensors to:
● prosecute and defend our future patents, once obtained;
Although
we rely extensively on licensing patents from third parties, we intend to seek appropriate patent protection for product candidates in
our research and development programs, where applicable, and their uses by filing patent applications in the United States and other
selected countries. We intend for these patent applications to cover, where possible, claims for compositions of matter, medical uses,
processes for preparation and formulations.
Our
current patent portfolio consists of the number of patents related to our drug candidates licensed from each third-party licensor. In
addition to the international patents and/or international and U.S. patent applications licensed from our third-party licensors, we have
licensed at least the following number of U.S. patents:
CoNCERT Yuhan Aposense Elion Ocuphire Total
We
have filed a provisional patent for PCS6422 and are evaluating another patent for PCS499.
Besides
relying on patents, we may also rely on trade secrets, proprietary know-how and continuing innovation to develop and maintain our competitive
position, especially when we do not believe that patent protection is appropriate or can be obtained. In addition, we continuously evaluate
opportunities to obtain exclusivity through our regulatory filings with the FDA. We seek protection of these trade secrets, proprietary
know-how and any continuing innovation, in part, through confidentiality and proprietary information agreements. However, these agreements
may not provide meaningful protection for, or adequate remedies to protect, our technology in the event of unauthorized use or disclosure
of information. Furthermore, our trade secrets may otherwise become known to, or be independently developed by, our competitors.
License
Agreements
The
following descriptions of our license agreements are only summaries. You should also refer to the copies of such agreements which have
been filed as exhibits to this Annual Report.
License
Agreement with CoNCERT Pharmaceuticals, Inc.
On
October 4, 2017, Promet entered into a License Agreement with CoNCERT (“CoNCERT License Agreement”). On March 19, 2018, we,
Promet, and CoNCERT entered into an Amended Option Licensing Agreement (“March Amendment”) that, among other things, assigned
the CoNCERT Agreement from Promet to us and we exercised the exclusive commercial license option for the PCS499 compound from CoNCERT.
The
CoNCERT License Agreement provides us with an exclusive (including as to CoNCERT) royalty-bearing license to CoNCERT’s patent rights
and Know-How to develop, manufacture, use, sub-license and commercialize compounds (PCS499 and each metabolite thereof) and pharmaceutical
products with such compounds worldwide. We are required to pay CoNCERT royalties, on a product–by-product basis, on future worldwide
net sales, or pay a percentage of any sublicense revenue.
We
will incur royalty obligations to CoNCERT on a country-by-country and product-by-product basis that expire on a country-by-country and
product-by-product basis on the later of (i) expiration or invalidation of the last patent rights covering such product in such country
or (ii) the tenth anniversary of the date of the first commercial sale to a non-sublicensee third party of such product in such country.
We
are required to use commercially reasonable efforts, at our sole cost and expense, to develop and obtain regulatory approval for one
product in the U.S. and at least one other major market and, subject to obtaining regulatory approval in the applicable major market,
commercialize one product in the U.S. and at least one other major market. CoNCERT may terminate the agreement if, following written
notice and a 60 day opportunity to demonstrate a plan to cure, it believes that we are not using commercially reasonable efforts to develop
and obtain regulatory approval for one product in the U.S. and in at least one other major market for any consecutive nine month period.
The
term of the CoNCERT License Agreement continues in full force and effect until the expiration of the last royalty term. On a country-by-country