Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
A
For the fiscal year ended December 31, 2021
Or
For the transition period from to
Commission File Number 001-36304
PHIO PHARMACEUTICALS CORP.
(Exact name of registrant as specified in its charter)
257 Simarano Drive, Suite 101, Marlborough,
Massachusetts01752
(Address of principal executive offices and Zip
Code)
(508) 767-3861
(Registrant’s telephone number, including
area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Trading Symbol(s) Name of each exchange on which registered
Common Stock, par value, $0.0001 per share PHIO The Nasdaq Capital Market
Securities registered pursuant to Section 12(g)
of the Act:
None.
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 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 (§ 232.405 of this chapter)
during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒Yes☐ 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 an emerging growth company. See the definitions
of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging
growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer ☐ Accelerated filer ☐
Non-accelerated filer ☒ 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 management’s assessment of the effectiveness of its internal control 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 registrant’s
common stock, $0.0001 par value per share (“Common Stock”), held by non-affiliates of the registrant, based on the closing
sale price of the registrant’s Common Stock on June 30, 2021, was $30,488,446. Shares of Common Stock held by each officer
and director and by each person who is known to own 10% or more of the outstanding Common Stock have been excluded in that such persons
may be deemed to be affiliates of the registrant. This determination of affiliate status is not necessarily a conclusive determination
for other purposes.
As of March 11, 2022, the registrant had
13,534,996 shares of Common Stock outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Portions
of the Definitive Proxy Statement to be filed for Phio Pharmaceuticals Corp.’s 2022 Annual Meeting of Stockholders are incorporated
by reference into Part III of this Annual Report on Form 10-K.
TABLE OF CONTENTS
PHIO PHARMACEUTICALS CORP.
ANNUAL REPORT ON FORM 10-K
For the Fiscal Year Ended December 31,
2021
Page
PART I.
Item 1. BUSINESS 2
Item 1A. RISK FACTORS 17
Item 1B. UNRESOLVED STAFF COMMENTS 30
Item 2. PROPERTIES 30
Item 3. LEGAL PROCEEDINGS 30
Item 4. MINE SAFETY DISCLOSURES 30
PART II.
Item 6. RESERVED 31
Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 39
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA 40
Item 9A. CONTROLS AND PROCEDURES 41
Item 9B. OTHER INFORMATION 42
Item 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS 42
PART III.
Item 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE 43
Item 11. EXECUTIVE COMPENSATION 43
Item 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES 43
PART IV.
Item 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES 44
Signatures 48
i
FORWARD-LOOKING STATEMENTS
This Annual Report on Form 10-K contains forward-looking
statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by
words such as “intends,” “believes,” “anticipates,” “indicates,” “plans,”
“expects,” “suggests,” “may,” “would,” “should,” “potential,”
“designed to,” “will,” “ongoing,” “estimate,” “forecast,” “target,”
“predict,” “could,” and similar references, although not all forward-looking statements contain these words. Forward-looking
statements are neither historical facts nor assurances of future performance. These statements are based only on our current beliefs,
expectations and assumptions regarding the future of our business, future plans and strategies, projections, anticipated events and trends,
the economy and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties,
risks and changes in circumstances that are difficult to predict and many of which are outside of our control. Our actual results may
differ materially from those indicated in the forward-looking statements as a result of a number of important factors, including, but
not limited to:
· the price of our common stock has been and may continue to be volatile.
The risks set forth above are not exhaustive and
additional factors, including those identified in this Annual Report on Form 10-K under the heading “Risk Factors,” for reasons
described elsewhere in this Annual Report on Form 10-K and in other filings Phio Pharmaceuticals Corp. periodically makes with the Securities
and Exchange Commission, could adversely affect our business and financial performance. Therefore, you should not rely unduly on any of
these forward-looking statements. Forward-looking statements contained in this Annual Report on Form 10-K speak as of the date hereof
and Phio Pharmaceuticals Corp. does not undertake to update any of these forward-looking statements to reflect a change in its views or
events or circumstances that occur after the date of this report.
PART I
Unless otherwise noted, (1) the term “Phio”
refers to Phio Pharmaceuticals Corp. and our subsidiary, MirImmune, LLC and (2) the terms “Company,” “we,”
“us” and “our” refer to the ongoing business operations of Phio and MirImmune, LLC, whether conducted through
Phio or MirImmune, LLC.
ITEM 1. BUSINESS
Overview
Phio Pharmaceuticals Corp. (“Phio,”
“we,” “our” or the “Company”) is seeking to address the biggest challenges in
immuno-oncology by creating new pathways to a cancer-free future for patients. We are developing therapeutics that leverage our INTASYLTM
technology to target both tumor and immune cells by regulating genes to strengthen a patient’s immune system while weakening tumor
defense mechanisms. With our INTASYL self-delivering RNAi technology, we aim to bring the benefits of RNA therapeutics into cancer care
where other modalities may fall short.
Our Development Pipeline
We
are developing a pipeline of immuno-oncology therapies using our INTASYL technology that has the ability to attack cancers in multiple
ways. Our INTASYL-based therapeutics are used to: (1) strengthen immune cells, for example those administered as part of adoptive cell
therapy (“ACT”), and (2) directly modify cells in the tumor microenvironment (the “TME”) to weaken
a tumor’s defense. These two strategies allow for multiple therapeutic applications of our INTASYL products.
In
contrast to other RNA technologies and platforms, the self-delivering nature of our INTASYL platform makes it ideally suited for use with
ACT treatments, as well as for direct therapeutic use. By using INTASYL technology during the manufacturing of ACT cell products we can
improve the phenotype and function of these cells, potentially leading to better therapeutic outcomes. Multiple inhibitory mechanisms
restrain immune cells from effectively eradicating tumors, including immune checkpoints, reduced cell fitness and cell persistence. Furthermore,
the immunosuppressive TME can pose a formidable barrier to immune cell infiltration and function. By using INTASYL based drugs administered
directly, we can also reprogram cells in the TME to help overcome these immunosuppressive mechanisms.
INTASYL Use To Improve Adoptive Cell Therapy Products
ACT consists of the administration of immune cells
with antitumor properties to patients to fight cancer after growing the cells in a lab to large numbers. These cells can be derived from
unmodified (i.e. naturally occurring) immune cells, immune cells isolated from resected tumors or genetically engineered immune cells
that recognize tumor cells. These cells have several shortcomings that inhibit their full therapeutic potential in patients with solid
tumors.
There are several types of ACT, including: a.)
non-engineered cell therapy in which immune cells are grown from the patient’s tumor or blood, such as tumor infiltrating lymphocytes
(“TILs”), or from donor blood or tissue such as natural killer (“NK”) cells, dendritic cells (“DC”)
and macrophages, and b.) genetically engineered immune cells that are genetically modified to recognize specific tumor proteins and to
remain in an activated state (such as T cell receptor technology (“TCRs”), chimeric antigen receptor (“CAR”)
T cells, or CAR-NK cells).
Multiple
inhibitory mechanisms restrain immune cells used in ACT from effectively eradicating tumors, including immune checkpoints, reduced cell
fitness and cell persistence, and other barriers to immune cell infiltration and function mainly in solid tumors. When used in ACT, we
believe our INTASYL compounds can improve immune cell function, differentiation and metabolism, in order to make these immune cells more
effective without the need for additional complicated manufacturing steps and/or genetic engineering.
Our
approach builds on well-established methodologies of ACT and involves the treatment of immune cells with our INTASYL compounds ex
vivo while they are grown in the lab and before administering them to the patient. In contrast to other RNA technologies, our
INTASYL compounds do not require a delivery vehicle to penetrate into the cells, therefore we are able to enhance the function of these
cells by merely adding our INTASYL compounds during the expansion process and without the need for genetic engineering, complex delivery
vehicles or formulations, or additional complex manufacturing steps, which in themselves may be detrimental to the cells. By adding INTASYL
to the cell culture media used during the cell expansion, we can reduce or eliminate the expression of genes that make the immune cells
less effective. For example, with our INTASYL compounds, we can reduce the expression of immunosuppressive proteins by the therapeutic
immune cells, potentially enabling them to overcome tumor resistance mechanisms and thus improving their ability to destroy the tumor
cells. In various types of immune cells tested to date, INTASYL treatment results in potent silencing with close to 100% transfection
efficiency and while maintaining cell viability and cell growth rate. After expanding these cells and enhancing them with INTASYL ex
vivo, they are returned to the patient for treatment.
The
table below sets forth the Company’s pipeline for its INTASYL product candidates for use in ACT:
Our lead product
candidate, and our most advanced program being developed by the Company in ACT, is PH-762. PH-762 is an INTASYL compound that activates
immune cells to better recognize and kill cancer cells by reducing the expression of the checkpoint protein PD-1, a clinically validated
target for immunotherapy. Checkpoint proteins, such as PD-1, normally act as a type of “off switch” that prevent T cells,
immune cells that protect the body from cancer cells and infections, from attacking certain cells in the body, such as cancer cells. The
expression of PD-1 enables the cancer cell to evade the T cell. Reducing the expression of PD-1 can thereby reduce the ability of cancer
cells to avoid T cell detection.
Data has shown that PH-762 silences PD-1 checkpoint
expression in T cells, thereby removing the “off switch” and enabling T cells to overcome tumor resistance mechanisms, and
thus improving their ability to destroy tumor cells. Preclinical studies show that PH-762 can silence the expression of PD-1 in target
human T cells in a potent and durable manner and can increase their tumor cell-killing ability. Patient derived T cells treated with PH-762,
in comparison to untreated T cells, were shown to have increased tumor killing potency against tumor cells of the same patient. As a result,
we believe that PH-762 in ACT is well-positioned to enhance therapeutic responses in cancer.
In March 2021, the Company announced that it entered
into a clinical development collaboration with AgonOx, Inc. (“AgonOx”), a private company developing a pipeline of
novel immunotherapy drugs targeting key regulators of the immune response to cancer, in which the companies will collaborate on the development
of novel T cell-based therapies using PH-762 and AgonOx’s “double positive” TIL (“DP TIL”) technology.
Per the terms of the clinical development agreement, AgonOx will receive financial support from Phio to conduct a clinical trial in ACT
with their DP TIL technology and PH-762, and Phio will be entitled to certain future development milestones and sales-based royalty payments
from AgonOx’s DP TIL technology. AgonOx has demonstrated that their DP TIL enriched cell populations have increased tumor killing
activity when compared to TILs that were not enriched prior to expansion. Preclinical data from our research collaboration with AgonOx
has shown that treating DP TILs with PH-762 increases the tumor killing activity of the DP TILs even further (a two-fold increase). As
a result, we expect the use of PH-762 treated DP TILs to enhance therapeutic responses in cancer. Based on these data, our clinical development
collaboration will focus on conducting a clinical study for PH-762 treated DP TILs. The Company expects to start the clinical trial evaluating
the use of PH-762 and DP TILs in ACT in the second quarter of 2022.
PH-762 use
in ACT is not limited to TILs, but can also be used on other forms of T cell-based cell therapy. We recently presented in
vivo data showing that PH-762 significantly enhanced the antitumor efficacy of HER2-targeted
CAR-T cells (“HER2CART”) in solid tumors. Compared to untreated HER2CART
cells, HER2CART cells treated with PH-762 showed a statistically significant and durable inhibition of tumor growth. Analysis of the PH-762
treated HER2CART cells isolated from the tumors suggest that PH-762 enhances CAR-T function through multiple mechanisms including enhanced
efficiency, degranulation and promotion of memory/stem populations. We believe that this data provides proof of concept for the application
of PD-1 checkpoint silencing with INTASYL in CAR-T cells prior to ACT to enhance the therapeutic efficacy of CAR-T cell therapy in solid
tumors.
Our second product candidate in development for
use in ACT is PH-894. PH-894 is an INTASYL compound that silences the epigenetic protein BRD4, which is an intracellular regulator of
gene expression that impacts cell differentiation, and hence, cell function. Like other epigenetic targets, BRD4 is a protein that has
been shown to be difficult to target with current drug modalities. Since BRD4 is an intracellular protein, antibody therapies cannot be
used and small molecule inhibitors tested to date typically lack the required specificity. As our INTASYL compounds can target intracellular
proteins as well as extracellular proteins with a high level of specificity, we believe that PH-894 has significant potential. In collaboration
with the Karolinska Institutet in Sweden, PH-894 has been shown to improve T cell function and persistence by differentiating T cells
into a more active state (stem-cell like memory phenotype). We have demonstrated that the application of PH-894 is shown to silence BRD4
in human T cells during expansion for ACT, which has the potential to confer superior anti-tumor activity.
Our INTASYL compound PH-804 is also being developed
for use in ACT. PH-804 targets the suppressive immune receptor TIGIT, which is a checkpoint protein present on immune cells, such as T
cells and NK cells. Similar to PD-1, cancer cells can suppress the activity of these immune cells by activating TIGIT. This triggers an
“off switch,” resulting in tumor immune evasion, which can be prevented by blocking or silencing TIGIT. PH-804 provides powerful
dose-dependent silencing of TIGIT that can be seen in both T cells and NK cells and we have shown that PH-804 can silence the expression
of TIGIT in these cells, overcoming their “off switch” and thereby becoming “weaponized” to kill cancer cells.
Direct Therapeutic Use of INTASYL Towards the Tumor Microenvironment
Cancer cells
have evolved natural defenses that can suppress the immune system surrounding the tumor, in an area called the tumor microenvironment,
which decreases the effectiveness of many traditional immunotherapies. Reprogramming different cell types in the TME, such as cancer cells
and immune cells, may overcome these natural tumor defenses and decrease resistance to immunotherapy. An optimal treatment therapy should
have the ability to address targets both inside and on the surface of tumor and immune cells, creating multiple ways to prevent tumors
from evading immune detection. Our INTASYL compounds can target both intracellular and extracellular targets, and are also being developed
for use as direct therapeutics to reprogram the TME, for example, by in situ transfection and activation of immune cells
in the TME. Therefore, INTASYL-based drug therapy is a novel way of fighting cancer by reprogramming the cells in the TME to make cancer
more responsive to a patient’s immune system and to other anti-cancer drugs.
The
table below sets forth the Company’s pipeline for its direct-to-tumor INTASYL product candidates:
Our most advanced program
being developed by the Company in our direct to tumor therapy programs, is PH-762. We have shown that we can reprogram the TME with PH-762
and achieve local activation of immune cells. Preclinical studies conducted by the Company showed that local administration of PH-762
through intratumoral injection resulted in potent anti-tumoral effects. Treated animals showed a complete and statistically significant
inhibition of tumor growth, whereas placebo treated animals displayed exponential tumor growth. Recently announced in vivo data
showed that intratumoral treatment with PH-762 inhibits tumor growth in a dose dependent fashion in PD-1 responsive and refractory models.
Furthermore, on target efficacy was supported by modulation of immune cell populations toward anti-tumor phenotypes. Importantly, local
administration of PH-762 resulted in activity against distal untreated tumors, indicative of a systemic anti-tumor response. The Company
believes this data further supports the potential for PH-762 to provide a strong local immune checkpoint blockade without the dose immune-related
adverse effects seen with systemic antibody therapy.
In January 2022, the Company was granted
clinical trial authorization (CTA) by the French National Agency for the Safety of Medicines and Health
Products to proceed with our first-in-human clinical trial for PH-762 to treat patients with melanoma at the Gustave
Roussy Institute, one of the largest cancer centers in Europe. This first clinical trial with PH-762 will be a Phase 1b study
to evaluate the safety, tolerability, pharmacokinetics and anti-tumor activity of PH-762 in a neoadjuvant setting in subjects with
advanced melanoma. Currently, there are no neoadjuvant treatment options approved for these patients. The clinical study will
feature a dose escalation of PH-762 monotherapy and is designed to allow for a data driven evaluation of the recommended Phase 2
dose. The Company expects to start patient enrollment in the first quarter of 2022.
Our second direct to tumor product candidate
is PH-894. In a study conducted in collaboration with the Karolinska Institutet, we demonstrated that PH-894 resulted in a strong,
concentration dependent and durable silencing of BRD4 in T cells, and in various cancer cells. Data published with PH-894 in a
hepatocellular carcinoma model showed potent and statistically significant anti-tumoral effects when administered locally. These
data show that our PH-894 compound can reprogram T cells and other cells in the TME to provide enhanced immunotherapeutic activity.
Recent in vivo data showed that local administration of PH-894 also resulted in a systemic anti-tumor response, similar to
PH-762. PH-894 shows the power of our INTASYL compounds to modulate the expression of intracellular and/or commonly considered
“undruggable” targets, a limitation for small molecule and antibody therapies. The Company currently expects to finalize
investigational new drug (“IND”)-enabling studies for PH-894 in the second half of
2022.
We are also investigating the use of INTASYL to
target multiple genes in a single formulation. New study data showed that PH-3861, a dual-targeting INTASYL towards PD-1 and BRD4, elicited
complete cure of tumors in an in vivo hepatoma model and outperformed the efficacy of the small molecule and antibody
control treatments toward the same targets. In addition, local INTASYL therapy was shown to induce a systemic anti-tumor response with
clearance of untreated distal tumors. The animals which showed complete cure of their tumors were then rechallenged over two months after
the original treatment of PH-3861 by re-implanting hepatoma cancer cells at a different location to the original tumor. All of the mice
that were rechallenged with new tumors were cured again without requiring further treatment, while tumors grew steadily in the control
group as expected. We believe that these data demonstrate that local administration of PH-3861 provides a durable and systemic anti-tumor
immune response that can combat tumor growth.
Our INTASYL Platform
Our development efforts are based on our broadly
patented INTASYL technology platform. Our INTASYL compounds do not require a delivery vehicle to penetrate into tissues and cells and
are designed to “silence” or down-regulate the expression of a specific gene which is over-expressed in cancer.
Diseases are often related to the wrong protein
being made, excessive amounts of a specific protein being made, or the correct protein being made but at the wrong location or time. Overall,
RNA is involved in the synthesis, regulation and expression of proteins. RNA interference (“RNAi’) is a biological
process in which specific RNA molecules inhibit gene expression or translation into proteins. RNAi offers a novel approach to drug development
because RNAi compounds can be designed to silence any one of the thousands of human genes, many of which are “undruggable”
by other modalities. The potential of RNAi as a powerful drug development platform has been shown by several RNAi based drugs becoming
approved over the last few years.
The first design of RNAi compounds to be pursued
for the development of human therapeutics were short, double-stranded RNAs that included limited modifications, known as small-interfering
RNA (“siRNA”). Since the initial discovery of RNAi, drug delivery has been the primary challenge in developing RNAi-based
therapeutics. One solution to the delivery problem involves encapsulation of siRNA into lipid-based formulations, such as liposomes, to
improve cellular uptake. Another approach is to use chemical conjugations of a ligand, such as GalNAC, for cell specific delivery limited
to hepatocytes. We have developed an alternative approach where delivery and drug-like properties are built directly into the RNAi compound
itself, whereby the RNAi uptake is neither dependent on complex formulation nor limited to addressing a specific cell type. These novel
compounds are termed self-delivering RNAi compounds, or INTASYL.
Our INTASYL compounds are hybrid oligonucleotide
compounds that the Company believes combines the beneficial properties of both conventional RNAi and antisense technologies. In an attempt
to combine the best properties of both technologies, INTASYL compounds have a single-stranded phosphorothioate region, a short duplex
region, and contain a variety of nuclease-stabilizing and lipophilic chemical modifications. The combination of these features allows
INTASYL compounds to achieve efficient spontaneous cellular uptake and potent, long-lasting intracellular activity.
The key to therapeutic success with RNAi lies in
delivering intact RNAi compounds to the target tissue and the interior of the target cells. To accomplish this, our chemically synthesized
INTASYL compounds are optimized for stability and efficacy and have unique properties that improve tissue and cell uptake.
We
believe that our INTASYL platform uniquely positions the Company in the field of immuno-oncology for the following reasons:
· Results in a sustained, or long-term, effect in vivo;
· Favorable clinical safety profile of INTASYL with local administration;
· Readily manufactured under current good manufacturing practices.
Intellectual Property
We protect our proprietary information by means
of United States and foreign patents, trademarks and copyrights. In addition, we rely upon trade secret protection and contractual arrangements
to protect certain of our proprietary information and products. We have pending patent applications that relate to potential drug targets,
compounds we are developing to modulate those targets, methods of making or using those compounds and proprietary elements of our drug
discovery platform.
Much of our technology and many of our processes
depend upon the knowledge, experience and skills of key scientific and technical personnel. To protect our rights to our proprietary know-how
and technology, we require all employees, as well as our consultants and advisors when feasible, to enter into confidentiality agreements
that require disclosure and assignment to us of ideas, developments, discoveries and inventions made by these employees, consultants and
advisors in the course of their service to us.
We have also obtained rights to various patents
and patent applications under licenses with third parties, which require us to pay royalties, milestone payments, or both. The degree
of patent protection for biotechnology products and processes, including ours, remains uncertain, both in the United States and in other
important markets, because the scope of protection depends on decisions of patent offices, courts and lawmakers in these countries. There
is no certainty that our existing patents or others, if obtained, will afford us substantial protection or commercial benefit. Similarly,
there is no assurance that our pending patent applications or patent applications licensed from third parties will ultimately be granted
as patents or that those patents that have been issued or are issued in the future will stand if they are challenged in court. We assess
our license agreements on an ongoing basis and may from time to time terminate licenses to technology that we do not intend to employ
in our technology platforms, or in our product discovery or development activities.
Patents and Patent Applications
We are actively seeking protection for our intellectual
property and are prosecuting a number of patents and pending patent applications covering our compounds and technologies. A combined
summary of these patents and patent applications is set forth below in the following table:
Pending Applications Issued Patents
Our portfolio includes 122 issued patents, 85 of
which cover our INTASYL platform. There are 17 patent families broadly covering both the composition and methods of use of our self-delivering
platform technology and uses of our INTASYL compounds targeting immune checkpoint, cellular differentiation and metabolism targets for
ex vivo cell-based cancer immunotherapies. These patents are scheduled to expire between 2029 and 2040. Furthermore, there are
69 patent applications, encompassing what we believe to be important new RNAi compounds and their use as therapeutics, chemical modifications
of RNAi compounds that improve the compounds’ suitability for therapeutic uses (including delivery) and compounds directed to specific
targets (i.e., that address specific disease states). The patents and any patents that may issue from these pending patent applications
will, if issued, be set to expire between 2022 and 2040, not including any patent term extensions that may be afforded under the Federal
Food, Drug, and Cosmetic Act (“FFDCA”) (and the equivalent provisions in foreign jurisdictions) for any delays incurred
during the regulatory approval process relating to human drug products (or processes for making or using human drug products).
Key Intellectual
Property License Agreements
As we develop our own proprietary compounds, we
continue to evaluate our in-licensed portfolio as well as the field for new technologies that could be in-licensed to further enhance
our intellectual property portfolio and unique intellectual property position.
Advirna LLC. On September 24, 2011, we entered
into an agreement with Advirna, LLC (“Advirna”) pursuant to which Advirna assigned to us its existing patent and technology
rights related to the INTASYL technology and we granted back to Advirna a license for use of the assigned patent and technology rights
outside of human therapeutics and diagnostics. Under the terms of the agreement, in April 2012, the Company issued to Advirna shares of
common stock equal to 5% of the Company’s fully-diluted shares outstanding at the time of issuance and paid a one-time milestone
payment of $350,000 in 2014 upon the issuance of the first patent under the agreement. The Company also pays to Advirna an annual maintenance
fee of $100,000 and is required to pay a low single-digit royalty on any license revenue received by the Company with respect to future
licensing of the assigned Advirna patent and technology rights. To date, royalties owed to Advirna have been minimal.
Our rights under the Advirna agreement will expire
upon the later of: (i) the expiration of the last-to-expire of the “patent rights” (as defined therein) or (ii) the
abandonment of the last-to-be abandoned of such patents, unless earlier terminated in accordance with the provisions of the agreement.
We may terminate the Advirna agreement at any time upon 90 days’ written notice to Advirna, and Advirna may terminate the agreement
upon 90 days’ prior written notice in the event that we cease using commercially reasonable efforts to research, develop, license
or otherwise commercialize the patent rights or “royalty-bearing products” (as defined therein), provided that we may refute
such claim within such 90-day period by showing budgeted expenditures for the research, development, licensing or other commercialization
consistent with other technologies of similar stage of development and commercial potential as the patent rights or royalty-bearing products.
Further, either party at any time may provide to the other party written notice of a material breach of the agreement. If the other party
fails to cure the identified breach within 90 days after the date of the notice, the aggrieved party may terminate the agreement by written
notice to the party in breach.
Research and Development
Our research and development expense primarily
consists of compensation and benefits for research and development personnel, facility-related expenses, supplies, external services,
costs to acquire technology licenses, expenses associated with preclinical and clinical development activities and other operating costs.
Total research and development expense for the
years ended December 31, 2021 and 2020 was $8,886,000 and $3,716,000, respectively.
Competition
The biotechnology and pharmaceutical industries,
including the immuno-oncology field, are a constantly evolving landscape with rapidly advancing technologies and significant competition.
There are a number of competitors in the immuno-oncology field including large and small pharmaceutical and biotechnology companies, academic
institutions, government agencies and other private and public research organizations.
A variety of cell-based autologous and allogeneic
approaches are being researched and developed for the treatment of cancer. We believe that competitors developing TIL-based and NK cell-based
therapies in this field, our initial areas of focus in ACT, include, but are not limited to, Acepodia Inc., Achilles Therapeutics plc,
AgonOx, Inc., Artiva Biotherapeutics, Inc., Caribou Biosciences, Inc., Century Therapeutics, Inc., Cytovia Therapeutics, Inc., Editas
Medicine, Inc., Fate Therapeutics, Inc., Gamida Cell Ltd., Glycostem Therapeutics B.V., Instil Bio, Inc., Iovance Biotherapeutics, Inc.,
KSQ Therapeutics, Inc., Lyell Immunopharma, Inc., MiNK Therapeutics, Inc., Nkarta, Inc., ImmunityBio, Inc., NKGen Biotech, Inc., ONK Therapeutics
Limited, Sanofi S.A., Shoreline Biosciences, Inc., Sorrento Therapeutics, Inc., SQZ Biotechnologies Company, Takeda Pharmaceutical Company
Limited and Turnstone Biologics Corp. All of these companies are larger than us and have greater financial resources and human capital
to develop competing products.
A number of companies have taken the direct therapeutic
approach to modulating gene expression in the field of immuno-oncology and are conducting research and development. We believe that competitors
in this field include, but are not limited to, Portage Biotech Inc., Cytovation ASA, Targovax ASA, Lytix Biopharma AS, Checkmate Pharmaceuticals,
Inc., Idera Pharmaceuticals, Inc., SillaJen, Inc., Duet Therapeutics, a wholly owned subsidiary of Scopus Biopharma Inc., OncoSec Medical
Incorporated and Philogen S.p.A.
Government Regulation
Review
and Approval of Drugs in the United States
The United States and many other countries
extensively regulate the preclinical and clinical testing, manufacturing, labeling, storage, record-keeping, advertising, promotion, export,
marketing and distribution of drugs and biologic products. The U.S. Food and Drug Administration (“FDA”) regulates
pharmaceutical and biologic products under the FFDCA, the Public Health Service Act and other federal statutes and regulations.
To obtain approval of our future product candidates
from the FDA, we must, among other requirements, submit data supporting safety and efficacy for the intended indication as well as detailed
information on the manufacture and composition of the product candidate. In most cases, this will require extensive laboratory tests and
preclinical and clinical trials. The collection of these data, as well as the preparation of applications for review by the FDA involve
significant time and expense. The FDA also may require post-marketing testing to monitor the safety and efficacy of approved products
or place conditions on any approvals that could restrict the therapeutic claims and commercial applications of these products. Regulatory
authorities may withdraw product approvals if we fail to comply with regulatory standards or if we encounter problems at any time following
initial marketing of our products.
The first stage of the FDA approval process for
a new biologic or drug involves completion of preclinical studies and the submission of the results of these studies to the FDA. These
data, together with proposed clinical protocols, manufacturing information, analytical data and other information submitted to the FDA
in an investigational new drug (“IND”) application, must become effective before human clinical trials may commence.
Preclinical studies generally involve FDA regulated laboratory evaluation of product characteristics and animal studies to assess the
efficacy and safety of the product candidate.
After the IND becomes effective, a company may
commence human clinical trials. These are typically conducted in three sequential phases, but the phases may overlap. Phase 1 trials consist
of testing the product candidate in a small number of patients or healthy volunteers, primarily for safety at one or more doses. Phase
2 trials, in addition to safety, evaluate the efficacy of the product candidate in a patient population somewhat larger than Phase 1 trials.
Phase 3 trials typically involve additional testing for safety and clinical efficacy in an expanded population at multiple test sites.
A company must submit to the FDA a clinical protocol, accompanied by the approval of the Institutional Review Board (“IRB”)
at the institutions participating in the trials, prior to commencement of each clinical trial.
To obtain FDA marketing authorization, a company
must submit to the FDA the results of the preclinical and clinical testing, together with, among other things, detailed information on
the manufacture and composition of the product candidate, in the form of a new drug application (“NDA”), or, in the
case of a biologic, a biologics license application (“BLA”).
The amount of time taken by the FDA for approval
of an NDA or BLA will depend upon a number of factors, including whether the product candidate has received priority review, the quality
of the submission and studies presented, the potential contribution that the compound will make in improving the treatment of the disease
in question and the workload at the FDA.
The FDA may, in some cases, confer upon an investigational
product the status of a fast track product. A fast track product is defined as a new drug or biologic intended for the treatment of a
serious or life-threatening condition that demonstrates the potential to address unmet medical needs for this condition. The FDA can base
approval of an NDA or BLA for a fast track product on an effect on a surrogate endpoint, or on another endpoint that is reasonably likely
to predict clinical benefit. If a preliminary review of clinical data suggests that a fast track product may be effective, the FDA may
initiate review of entire sections of a marketing application for a fast track product before the sponsor completes the application.
We anticipate that our products will be manufactured
by our strategic partners, licensees or other third parties. Before approving an NDA or BLA, the FDA will inspect the facilities at which
the product is manufactured and will not approve the product unless the manufacturing facilities are in compliance with the FDA’s
current good manufacturing practice regulations (“cGMP”), which are regulations that govern the manufacture, holding
and distribution of a product. Manufacturers of biologics also must comply with the FDA’s general biological product standards.
Our manufacturers also will be subject to regulation under the Occupational Safety and Health Act, the Nuclear Energy and Radiation Control
Act, the Toxic Substance Control Act and the Resource Conservation and Recovery Act and other applicable environmental statutes. Following
approval, the FDA periodically inspects drug and biologic manufacturing facilities to ensure continued compliance with the cGMP. Our manufacturers
will have to continue to comply with those requirements. Failure to comply with these requirements subjects the manufacturer to possible
legal or regulatory action, such as suspension of manufacturing or recall or seizure of product. Adverse patient experiences with the
product must be reported to the FDA and could result in the imposition of marketing restrictions through labeling changes or market removal.
Product approvals may be withdrawn if compliance with regulatory requirements is not maintained or if problems concerning safety or efficacy
of the product occur following approval.
The labeling, advertising, promotion, marketing
and distribution of a drug or biologic product also must be in compliance with FDA and Federal Trade Commission requirements which include,
among others, standards and regulations for off-label promotion, industry sponsored scientific and educational activities, promotional
activities involving the internet, and direct-to-consumer advertising. We also will be subject to a variety of federal, state and local
regulations relating to the use, handling, storage and disposal of hazardous materials, including chemicals and radioactive and biological
materials. In addition, we will be subject to various laws and regulations governing laboratory practices and the experimental use of
animals. In each of these areas, as above, the FDA has broad regulatory and enforcement powers, including the ability to levy fines and
civil penalties, suspend or delay issuance of product approvals, seize or recall products and deny or withdraw approvals.
We will also be subject to a variety of regulations
governing clinical trials and sales of our products outside the United States. Whether or not FDA approval has been obtained, approval
of a product candidate by the comparable regulatory authorities of foreign countries and regions must be obtained prior to the commencement
of marketing the product in those countries. The approval process varies from one regulatory authority to another and the time may be
longer or shorter than that required for FDA approval. In the European Union, Canada and Australia, regulatory requirements and approval
processes are similar, in principle, to those in the United States.
Review
and Approval of Drugs in the European Union Including France
In order to market any pharmaceutical product outside
of the United States, a company must also comply with numerous and varying regulatory requirements of other countries and jurisdictions
governing, among other things, research and development, testing, manufacturing, quality control, safety, efficacy, clinical trials, marketing
authorization, packaging, storage, record keeping, reporting, export and import, advertising and other promotional practices involving
pharmaceutical products, as well as commercial sales, distribution and post-approval monitoring and reporting of our products. Whether
or not it obtains FDA approval for a pharmaceutical product, the company would need to obtain the necessary approvals by the comparable
foreign regulatory authorities before it can commence clinical trials or marketing of the pharmaceutical product in those countries or
jurisdictions. The approval process ultimately varies between countries and jurisdictions and can involve additional product testing and
additional administrative review periods. The time required to obtain approval in other countries and jurisdictions might differ from
and be longer and far more difficult than that required to obtain FDA approval. Regulatory approval in one country or jurisdiction does
not ensure regulatory approval in another, but a failure or delay in obtaining regulatory approval in one country or jurisdiction may
negatively impact the regulatory process in others.
The United Kingdom (“UK”)
formally left the European Union (“EU”) on January 31, 2020 and the transition period, during which EU laws continued
to apply to the UK, expired on December 31, 2020. This means EU laws now only apply to the UK in respect of Northern Ireland as laid
out in the Protocol on Ireland and Northern Ireland. Following the end of the transition period, the EU and the UK concluded a trade
and cooperation agreement (“TCA”), which applied provisionally from January 1, 2021 and entered into force on May
1, 2021.
The TCA includes provisions affecting the life
sciences sector (including on customs and tariffs) but areas for further discussion between the EU and the UK remain. In addition, there
are some specific provisions concerning pharmaceuticals. These include the mutual recognition of Good Manufacturing Practice (“GMP”)
and issued GMP documents. The TCA does not, however, contain wholesale mutual recognition of UK and EU pharmaceutical regulations and
product standards.
Since January 1, 2021, the EU laws which have been
transposed into UK law through secondary legislation continue to be applicable in the UK as “retained EU law”. As there is
no general power to amend these regulations, the UK government has enacted the Medicines and Medical Devices Act 2021. The purpose of
the act is to enable the existing regulatory frameworks in relation to human medicines, clinical trials of human medicines, veterinary
medicines and medical devices to be updated. The powers under the act may only be exercised in relation to specified matters and must
safeguard public health.
Specified provisions of the Medicines and Medical
Devices Act 2021 entered into force on February 11, 2021. The remaining provisions came into effect within two months of February 11,
2021 or will otherwise come into effect as stipulated in subsequent statutory instruments. The Medicines and Medical Devices Act 2021
supplements the UK Medical Devices Regulations 2002 (UK Regulations), which are based on the EU Medical Devices Directive as amended to
reflect the UK’s post-Brexit regulatory regime. Notably, the UK Regulations do not include any of the revisions that have been made
by the EU Medical Devices Regulation (EU) 2017/745, which, since May 26, 2021, now applies in all EU Member States.
The UK’s Medicines and Healthcare products
Regulatory Agency (“MHRA”) conducted a comprehensive consultation between September and November 2021 on proposals
to develop a new UK regime for medical devices in the UK. The proposals include more closely aligning definitions for medical devices
and in vitro medical devices with internationally recognized definitions and changing the classification of medical devices according
to levels or risk. The proposals are intended to improve patient and public safety and increase the appeal of the UK market. The new regime
is planned to come into force on July 1, 2023, which will align with the date from which the UK is due to stop accepting CE marked medical
devices and require UKCA (UK Conformity Assessed) marking. It is envisaged that, in Northern Ireland, the amended regime could run in
parallel with any existing or future EU rules in accordance with the Protocol on Ireland and Northern Ireland.
Drug Development Process
The conduct of clinical trials is currently governed
by the EU Clinical Trials Directive 2001/20/EC (Clinical Trials Directive), and will be gradually replaced by the EU Clinical Trials Regulation
(EU) No. 536/2014 (“CTR”). The CTR introduces a complete overhaul of the existing regulation of clinical trials for
medicinal products in the EU. It entered into force on January 31, 2022.
Under the current regime, which will expire after
a transition period of one or three years, respectively, as outlined below in more detail, before a clinical trial can be initiated, it
must be approved in each EU Member State in which the clinical trial is to be conducted. The approval must be obtained from two separate
entities: the National Competent Authority (“NCA”) and one or more Ethics Committees. The NCA of the EU Member States
in which the clinical trial will be conducted must authorize the conduct of the trial, and the independent Ethics Committee must grant
a positive opinion in relation to the conduct of the clinical trial in the relevant EU Member State before the commencement of the trial.
Any substantial changes to the trial protocol or other information submitted with the clinical trial applications must be submitted to
or approved by the relevant NCA and Ethics Committees. Under the current regime all suspected unexpected serious adverse reactions to
the investigated drug that occur during the clinical trial must be reported to the NCA and to the Ethics Committees of the EU Member State
where they occur.
A more unified procedure applies under the new
CTR, which came into force on January 31, 2022. A sponsor is able to submit a single application for approval of a clinical trial through
a centralized EU clinical trials portal. One national regulatory authority (the reporting EU Member State proposed by the applicant) takes
the lead in validating and evaluating the application consult and coordinate with the other concerned Member States. If an application
is rejected, it may be amended and resubmitted through the EU clinical trials portal. If an approval is issued, the sponsor may start
the clinical trial in all concerned Member States. However, a concerned EU Member State may in limited circumstances declare an “opt-out”
from an approval and prevent the clinical trial from being conducted in such Member State. The CTR also aims to streamline and simplify
the rules on safety reporting, and introduces enhanced transparency requirements such as mandatory submission of a summary of the clinical
trial results to the EU Database. While Member States will work in CTIS immediately after the system has gone live, the CTR provides for
two transition periods for sponsors: For one year, until January 31, 2023, clinical trial sponsors can still choose whether to submit
an initial clinical trial application in line with the current system (Clinical Trials Directive) or via CTIS. From January 31, 2023,
submission of initial clinical trial applications via CTIS becomes mandatory, and by January 31, 2025, all ongoing trials approved under
the current Clinical Trials Directive will be governed by the new Regulation and have to be transitioned to CTIS.
Under both the current regime and the new CTR,
national laws, regulations, and the applicable Good Clinical Practice and Good Laboratory Practice standards must also be respected during
the conduct of the trials, including the International Council for Harmonization of Technical Requirements for Pharmaceuticals for Human
Use guidelines on Good Clinical Practice (“GCP”) and the ethical principles that have their origin in the Declaration
of Helsinki.
Marketing Authorization Procedures
In the EU and in Iceland, Norway and Liechtenstein
(together, the European Economic Area or “EEA”), after completion of all required clinical testing, pharmaceutical
products may only be placed on the market after obtaining a Marketing Authorization (“MA”). To obtain an MA of a drug
under European Union regulatory systems, an applicant can submit a Marketing Authorization Application (“MAA”) through,
amongst others, a centralized or decentralized procedure.
The centralized procedure provides for the grant
of a single MA by the European Commission (“EC”) that is valid for all EU Member States and, after respective national
implementing decisions, in the three additional EEA Member States. The centralized procedure is compulsory for specific medicinal products,
including for medicines developed by means of certain biotechnological processes, products designated as orphan medicinal products, advanced
therapy medicinal products (“ATMP”) and medicinal products with a new active substance indicated for the treatment
of certain diseases (AIDS, cancer, neurodegenerative disorders, diabetes, auto-immune and viral diseases).
For medicinal products containing a new active
substance not yet authorized in the EEA before May 20, 2004 and indicated for the treatment of other diseases, medicinal products that
constitute significant therapeutic, scientific or technical innovations or for which the grant of a MA through the centralized procedure
would be in the interest of public health at EU level, an applicant may voluntarily submit an application for a marketing authorization
through the centralized procedure.
Under the centralized procedure, the Committee
for Medicinal Products for Human Use (“CHMP”), established at the European Medicines Agency (“EMA”),
is responsible for conducting the initial assessment of a drug. The CHMP is also responsible for several post-authorization and maintenance
activities, such as the assessment of modifications or extensions to an existing marketing authorization. Under the centralized procedure,
the timeframe for the evaluation of an MAA by the EMA’s CHMP is, in principle, 210 days from receipt of a valid MAA. However, this
timeline excludes clock stops, when additional written or oral information is to be provided by the applicant in response to questions
asked by the CHMP, so the overall process typically takes a year or more, unless the application is eligible for an accelerated assessment.
Accelerated assessment might be granted by the CHMP in exceptional cases when a medicinal product is of major interest from the point
of view of public health and in particular from the viewpoint of therapeutic innovation. On request, the CHMP can reduce the time frame
to 150 days if the applicant provides sufficient justification for an accelerated assessment. The CHMP will provide a positive opinion
regarding the application only if it meets certain quality, safety and efficacy requirements. However, the EC has final authority for
granting the MA within 67 days after receipt of the CHMP opinion.
The decentralized procedure permits companies to
file identical MA applications for a medicinal product to the competent authorities in various EU Member States simultaneously if such
medicinal product has not received marketing approval in any EU Member State before. This procedure is available for pharmaceutical products
not falling within the mandatory scope of the centralized procedure.
The competent
authority of a single EU Member State, known as the reference EU Member State, is appointed to review the application and provide an assessment
report. Under this procedure, an applicant submits an application based on identical dossiers and related materials, including a draft
summary of product characteristics, and draft labeling and package leaflet, to the reference EU Member State and concerned EU Member States.
The reference EU Member State prepares a draft assessment report and drafts of the related materials within 120 days after receipt of
a valid application. Subsequently each concerned EU Member State must decide whether to approve the assessment report and related materials.
If an EU Member State cannot approve the assessment report and related materials on the grounds of potential serious risk to public health,
the disputed points are subject to a dispute resolution mechanism and may eventually be referred to the EC, whose decision is binding
for all EU Member States.
All new MAAs must include a Risk Management Plan
(“RMP”), describing the risk management system that the company will put in place and documenting measures to prevent
or minimize the risks associated with the product. The regulatory authorities may also impose specific obligations as a condition of the
MA. RMPs and Periodic Safety Update Reports (“PSURs”) are routinely available to third parties requesting access, subject
to limited redactions.
Marketing Authorizations have an initial duration
of five years. After these five years, the authorization may subsequently be renewed on the basis of a reevaluation of the risk-benefit
balance. Once renewed, the MA is valid for an unlimited period unless the EC or the national competent authority decides, on justified
grounds relating to pharmacovigilance, to proceed with only one additional five-year renewal. Applications for renewal must be made to
the EMA at least nine months before the five-year period expires.
Data and Market Exclusivity in the European Union
As in the United States, it may be possible to
obtain a period of market and/or data exclusivity in the European Union that would have the effect of postponing the entry into the marketplace
of a competitor’s generic, hybrid or biosimilar product (even if the pharmaceutical product has already received an MA) and prohibiting
another applicant from relying on the MA holder’s pharmacological, toxicological and clinical data in support of another MA for
the purposes of submitting an application, obtaining MA or placing the product on the market.
New medicinal products authorized in the European
Union, qualify for eight years of data exclusivity upon marketing authorization and an additional two years of market exclusivity. The
overall ten-year period of market exclusivity can be extended to a maximum of eleven years if, during the first eight years of those ten
years, the marketing authorization holder obtains an authorization for one or more new therapeutic indications which, during the scientific
evaluation prior to their authorization, are held to bring a significant clinical benefit in comparison with existing therapies.
The data exclusivity period prevents generic or
biosimilar applicants from relying on the preclinical and clinical trial data contained in the dossier of the reference medicinal product
when applying for a generic or biosimilar marketing authorization in the European Union during a period of eight years from the date on
which the reference product was first authorized in the European Union. The market exclusivity period prevents a successful generic or
biosimilar applicant from commercializing its product in the European Union until 10 years have elapsed from the initial authorization
of the reference product in the European Union.