Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
For the fiscal year ended December 31, 2022
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 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 (§ 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.
☐
If securities are registered
pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing
reflect the correction of an error to previously issued financial statements. ☐
Indicate by check mark whether
any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of
the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate by check mark whether the registrant is a shell company (as
defined in Rule 12b-2 of the 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, 2022, was approximately $9.5 million. 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 9, 2023, the registrant had 1,150,582shares of Common Stock outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
None.
TABLE OF CONTENTS
PHIO PHARMACEUTICALS CORP.
ANNUAL REPORT ON FORM 10-K
For the Fiscal Year Ended December 31,
2022
Page
PART I.
Item 1. BUSINESS 2
Item 1A. RISK FACTORS 15
Item 1B. UNRESOLVED STAFF COMMENTS 27
Item 2. PROPERTIES 27
Item 3. LEGAL PROCEEDINGS 27
Item 4. MINE SAFETY DISCLOSURES 27
PART II.
Item 6. RESERVED 28
Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 36
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA 36
Item 9A. CONTROLS AND PROCEDURES 37
Item 9B. OTHER INFORMATION 38
Item 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS 38
PART III.
Item 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE 39
Item 11. EXECUTIVE COMPENSATION 41
Item 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES 48
PART IV.
Item 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES 49
Signatures 52
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, except as required by law.
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 a clinical stage biotechnology company whose
proprietary INTASYLTM self-delivering RNAi technology platform is designed to make immune cells more effective in killing tumor
cells. We are developing therapeutics that are designed to leverage INTASYL to precisely target specific proteins that reduce the body’s
ability to fight cancer, without the need for specialized formulations or drug delivery systems. We are committed to discovering and
developing innovative cancer treatments for patients by creating new pathways toward a cancer-free future.
INTASYL Platform
Overall, RNA is involved in the synthesis, regulation
and expression of proteins. RNA takes the instructions from DNA and turns those instructions into proteins within the body’s cells.
RNA interference, or RNAi, is a biological process that inhibits the expression of genes or the production of proteins. Diseases are often
related to the incorrect protein being made, excessive amounts of a specific protein being made, or the correct protein being made, but
at the wrong location or time. 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 considered “undruggable” by traditional therapeutics.
Our development efforts are based on our proprietary
INTASYL self-delivering RNAi technology platform. It is a patented platform from which specific patented compounds are developed. INTASYL
compounds are comprised of a unique sequence of chemically modified nucleotides (modified small interfering RNA, or siRNAs) that target
a broad range of cell types and tissues. The compounds are designed to effectively silence genes that tumors use to evade the immune system.
Since the initial discovery of RNAi, drug delivery
has been the primary challenge in developing RNAi-based therapeutics. Other siRNA technologies require cell targeting chemical conjugates
which limit delivery to specific cell types. INTASYL is based on proprietary chemistry that is designed to maximize the activity and adaptability
of the compound and is unique in that it can be delivered to any cell type or tissue without the need to modify the chemistry. This is
designed to eliminate the need for formulations or delivery systems (for example, nanoparticles or electroporation). This provides efficient,
spontaneous, cellular uptake with potent, long-lasting intracellular activity.
We
believe that our INTASYL platform provides the following benefits including, but not limited to:
· Ability to target a broad range of cell types and tissues;
· Ability to target both intracellular and extracellular protein targets;
· Efficient uptake by target cells, avoiding the need for assisted delivery;
· Sustained, or long-term, effect in vivo;
· Ability to target multiple genes in one drug product;
· Favorable clinical safety profile with local administration; and
· Readily manufactured under current good manufacturing practices.
Our Pipeline
INTASYL compounds are
designed to precisely target specific proteins that reduce the body’s ability to fight cancer, without the need for specialized
formulations or drug delivery systems, and are designed to make immune cells more effective in killing tumor cells. Our efforts are focused
on developing immuno-oncology therapeutics using our INTASYL platform. We have demonstrated preclinical activity against multiple gene
targets including PD-1, BRD4, CTLA-4, TIGIT and CTGF and have demonstrated preclinical efficacy in both direct-to-tumor injection and
adoptive cell therapy (“ACT”) applications with our INTASYL compounds.
The following table summarizes
our product pipeline. Below we provide important information and context regarding each compound.
PH-762
PH-762 is an INTASYL compound designed to reduce
the expression of cell death protein 1 (“PD-1”). PD-1 is a protein that inhibits T cells’ ability to kill cancer
cells and is a clinically validated target in immunotherapy. Decreasing the expression of PD-1 can thereby increase the capacity of T
cells, which protect the body from cancer cells and infections, to kill cancer cells.
Preclinical studies conducted by the Company have
demonstrated that direct-to-tumor application of PH-762 resulted in potent anti-tumoral effects and have shown that direct-to-tumor treatment
with PH-762 inhibits tumor growth in a dose dependent fashion in PD-1 responsive and refractory models. Importantly, direct-to-tumor administration
of PH-762 resulted in activity against distant untreated tumors, indicative of a systemic anti-tumor response. We believe these data further
support the potential for PH-762 to provide a strong local immune response without the dose immune-related adverse effects seen with systemic
antibody therapy.
PH-762 is currently being
evaluated in a Phase 1b dose escalation clinical trial in France that is expected to enroll up to 21 subjects with advanced melanoma.
PH-762 will be administered as a neoadjuvant monotherapy intratumorally once a week, for a total of four injections, across five escalating
dose levels. Dosing will be followed by tumoral excision after an additional two weeks. The primary study objectives are to evaluate the
safety and tolerability, and pharmacokinetics of PH-762; to determine the potential immunologic and pathologic tumor responses; and to
determine the recommended dose for later clinical trials. Safety data from the initial cohort of three subjects in the clinical trial
was evaluated by a Data Monitoring Committee in the first quarter of 2023. The safety data review disclosed no dose-limiting toxicity,
and no drug-related severe or serious adverse events, and the Data Monitoring Committee recommended proceeding to the enrollment of the
subsequent dose cohort. The next cohort is now open for enrollment of subjects.
In addition to the French
clinical trial, we expect to commence a U.S. Phase 1b clinical trial with PH-762 in the second half of 2023. The U.S. trial is expected
to focus on the application of PH-762 to treat cutaneous squamous cell carcinoma (“cSCC”) and other selected cutaneous
malignancies.
Due to INTASYL’s ease
of administration, we have shown that our compounds can easily be incorporated into current ACT manufacturing processes. In ACT, T cells
are usually taken from a patient's own blood or tumor tissue, grown in large numbers in a laboratory, and then given back to the patient
to help the immune system fight cancer. By treating T cells with our INTASYL compounds while they are being grown in the laboratory, we
believe our INTASYL compounds can improve these immune cells to make them more effective in killing cancer. Preclinical data generated
in collaboration with AgonOx, Inc. (“AgonOx”), a private company developing a pipeline of novel immunotherapy drugs
targeting key regulators of the immune response to cancer, demonstrated that treating AgonOx’s “double positive” tumor
infiltrating lymphocyte (“DP TIL”) with PH-762 increased by two-fold their tumor killing activity.
In March 2021, we entered
into a clinical co-development collaboration agreement (the “Clinical Co-Development Agreement”) with AgonOx to conduct
a Phase 1 clinical trial using DP TIL and PH-762. Under the Clinical Co-Development Agreement, we paid AgonOx $0.3 million as an upfront
payment in December 2022 and have agreed to provide up to $4 million in total financial support to AgonOx to conduct a Phase 1 clinical
trial of PH-762 treated DP TIL. Phio is also eligible to receive certain future development milestones and low single-digit sales-based
royalty payments from AgonOx’s licensing of its DP TIL technology.
PH-762 treated DP TILs are
expected to be evaluated in a Phase 1 clinical trial in the United States with up to 18 subjects with advanced melanoma and other advanced
solid tumors. The primary study objectives are to evaluate the safety and to study the potential for enhanced therapeutic benefit from
the administration of PH-762 treated DP TILs. Enrollment of subjects is expected to commence in the second quarter of 2023.
PH-762’s use in ACT
is not limited to TILs. We have presented preclinical data showing that PH-762 significantly enhanced the antitumor efficacy of HER2-targeted
chimeric antigen receptor (“CAR”) T cells (“HER2CART”) in solid tumors. Analysis of the PH-762 treated
HER2CART cells isolated from the tumors suggest that PH-762 enhances CAR-T cell function through multiple mechanisms including enhanced
efficiency, degranulation and promotion of memory/stem populations.
PH-894
PH-894 is an INTASYL compound that is designed
to silence BRD4, a protein that controls gene expression in both T cells and tumor cells, thereby effecting the immune system as well
as the tumor. Intracellular and/or commonly considered “undruggable” targets, such as BRD4, represent a challenge for small
molecule and antibody therapies. Therefore, what sets this compound apart is its dual mechanism: PH-894 suppression of BRD4 in T cells
results in T cell activation, and suppression of BRD4 in tumor cells results in tumors becoming more sensitive to being killed by T cells.
Preclinical studies conducted have demonstrated that
PH-894 resulted in a strong, concentration dependent and durable silencing of BRD4 in T cells and in various cancer cells. Similar to
PH-762, preclinical studies have also shown that direct-to-tumor application of PH-894 resulted in potent and statistically significant
anti-tumoral effects and demonstrated a systemic anti-tumor response. These preclinical data indicate that PH-894 can reprogram T cells
and other cells in the tumor microenvironment to provide enhanced immunotherapeutic activity. The Company has completed the investigational
new drug (“IND”)-enabling studies and is in the process of finalizing the study reports required for an IND submission
with PH-894. As a result of the reprioritization to advance the Company’s clinical trial with PH-762 in the U.S., the Company has
elected to defer the IND submission for PH-894.
Phio has also demonstrated in preclinical studies
that 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). Preclinical data indicates that silencing BRD4 with PH-894 may be used to improve the characteristics of CAR-T cell
products during the cell manufacturing process. These data demonstrate that PH-894 could enhance the activity of CAR-T cells by improving
the quality of the final CAR-T cell product by overcoming immunosuppression, reversing exhaustion, and preserving the characteristics
associated with cell persistence.
Other Compounds in Discovery
PH-804 is an INTASYL compound that is designed to target
TIGIT, a protein that inhibits the activity of Natural Killer (“NK”) cells. Preclinical studies conducted have demonstrated
that NK cells treated with PH-804 displayed increased activation and enhanced the ability of NK cells to kill cancer cells.
PH-109 is an INTASYL compound that is designed to suppress
the connective tissue growth factor (“CTGF”) protein, a protein that regulates a number of cellular functions and is
associated with poor prognosis in breast cancer. In a preclinical study, mice were treated with either the drug doxorubicin, a chemotherapeutic
which has a high toxicity profile, or with PH-109. In this study, PH-109 reduced tumor growth and reduced metastatic lung lesions, with
no evidence of toxicity as compared to the toxicity profile of doxorubicin.
Phio has developed an INTASYL compound that is designed
to target CTLA-4, a protein that inhibits the ability of T cells to kill tumor cells. The CTLA-4 targeting INTASYL compound demonstrated
dose-associated anti-tumor efficacy in two preclinical tumor models. Delivering CTLA-4 by intratumoral injection may avoid or minimize
the severe systemic adverse events associated with current CTLA-4 therapeutics.
We are also investigating the use of INTASYL to
target multiple genes in a single formulation. Unlike other combination approaches, we believe the INTASYL platform can target multiple
protein drug targets in a specific therapeutic dose, enhancing potency while maintaining a favorable tolerability and safety profile.
Preclinical data has shown that combining PH-762 and PH-894 in a single formulation elicited complete cure of tumors in a liver cancer
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 the clearance of distant untreated tumors. We believe that these
data demonstrate that the use of INTASYL to target multiple genes may provide a durable and systemic anti-tumor immune response that can
combat tumor growth.
Intellectual Property
INTASYL compounds have a single-stranded phosphorothioate
region, a short duplex region, and contain a variety of nuclease-stabilizing and lipophilic chemical modifications that we believe combines
the beneficial properties of both conventional RNAi and antisense technologies. 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.
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
United States 9 46
Our portfolio includes 119 issued patents, 87 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
47 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.
Advanced RNA Technologies, LLC (“Advirna”).
In September 2011, the Company entered into an agreement with Advirna, pursuant to which Advirna assigned to us its existing patent and
technology rights related to the INTASYL technology in exchange for an annual maintenance fee, a one-time milestone payment upon the future
issuance of the first patent with valid claims covering the assigned patent and technology rights and the issuance of shares of common
stock of the Company equal to 5% of the Company’s fully-diluted shares outstanding at the time of issuance. In 2012, we issued shares
of common stock of the Company to Advirna equal to 5% of our fully-diluted shares outstanding at the time of issuance and paid $350,000
to Advirna upon the issuance of the first patent in 2014. Additionally, we also pay to Advirna an annual maintenance fee of $100,000 and
are required to pay low single-digit royalties on any licensing revenue received by us with respect to future licensing of the assigned
Advirna patent and technology rights. To date, any royalties owed to Advirna under the agreement 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) included in the
agreement or (ii) the abandonment of the last-to-be abandoned of such patents, unless earlier terminated in accordance with the provisions
of the agreement. Further, the Company also granted back to Advirna a license under the assigned patent and technology rights for fields
of use outside human therapeutics.
Manufacturing and
Supply
We
do not have any manufacturing capability and therefore we currently rely on and intend to continue to rely on contract manufacturing organizations
to produce our product candidates in accordance with regulatory requirements.
We currently rely on and contract
with third parties for the manufacture of drug substances and drug products for use in our preclinical studies and clinical trials in
accordance with regulatory requirements. We intend that we will continue to rely on and contract with third parties to manufacture our
product candidates in the future.
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. Many of these companies are larger than us and
have greater financial resources and human capital to develop competing products.
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,
preclinical studies 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 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 of the FDA’s staff.
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 utilizing 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, failure to comply with the applicable requirements could result in administrative or judicial enforcement
action, which could include refusal to permit clinical trials, refusal to approve an application, withdrawal of an approval, issuance
of a warning letter, product recall, product seizure, suspension of production or distribution, fines, refusals of government contracts,
and restitution, disgorgement or civil or criminal penalties. Any agency or judicial enforcement action could have a material adverse
effect on us.
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 (the “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 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 (the “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, and will 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 (“CTIS”). 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 a MA of a drug
under EU 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 a 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 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 EU 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 a 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 EU during a period of eight years from the date on which the
reference product was first authorized in the EU. The market exclusivity period prevents a successful generic or biosimilar applicant
from commercializing its product in the EU until 10 years have elapsed from the initial authorization of the reference product in the
EU.
Post-approval Regulation
Similar to the United States, both marketing authorization
holders and manufacturers of pharmaceutical products are subject to comprehensive regulatory oversight by the EMA, the EC and/or the competent
regulatory authorities of the EU Member States.
The holder of an EU marketing authorization for
a pharmaceutical product must also comply with EU pharmacovigilance legislation and its related regulations and guidelines, which entail
many requirements for conducting pharmacovigilance, or the assessment and monitoring of the safety of pharmaceutical products.
Failure by us or by any of our third-party partners,
including suppliers, manufacturers and distributors to comply with EU laws and the EU Member State laws implementing Directive 2001/83/EC
on pharmaceutical products for human use and other core legislation relating to pharmaceutical products, and other EU Member State laws
that apply to the conduct of clinical trials, manufacturing approval, marketing authorization of pharmaceutical products and marketing
of such products, both before and after grant of marketing authorization, manufacturing of pharmaceutical products, statutory health insurance,
bribery and anti-corruption or with other applicable regulatory requirements may result in administrative, civil or criminal penalties.
These penalties could include delays or refusal to authorize the conduct of clinical trials or to grant marketing authorization, product
withdrawals and recalls, product seizures, suspension, withdrawal or variation of the marketing authorization, total or partial suspension
of production, distribution, manufacturing or clinical trials, operating restrictions, injunctions, suspension of licenses, fines and
criminal penalties.
European Union Data Laws
The collection and use of personal health data
and other personal information in the EU is governed by the provisions of the General Data Protection Regulation (“GDPR”),
which came into force in May 2018, and related implementing laws in individual EU Member States. In addition, following the UK’s
formal departure from the EU on January 31, 2020 and the end of the transition period on December 31, 2020, the United Kingdom has become
a “third country” for the purposes of EU data protection law. A “third country” is a country other than the EU
Member States and the three additional European Economic Area countries (Norway, Iceland and Liechtenstein) that have adopted a national
law implementing the GDPR. However, the TCA includes a provision, whereby the transfer of personal data from the EU to the UK will not
be considered as a transfer to a “third country” for a period of four months starting from the entry into force of the TCA.
This period will be extended by two further months, unless the EU or the UK objects. Under the GDPR, personal data can only be transferred
to third countries in compliance with specific conditions for cross-border data transfers. Appropriate safeguards are required to enable
transfers of personal data from the EU Member States. This status has a number of significant practical consequences, in particular for
international data transfers, competent supervisory authorities and enforcement of the GDPR. The GDPR increased responsibility and liability
in relation to personal data that we process.
The GDPR imposes a number of strict obligations
and restrictions on the ability to process (processing includes collection, analysis and transfer of) personal data, including health
data from clinical trials and adverse event reporting. The GDPR also includes requirements relating to the consent of the individuals
to whom the personal data relates, the information provided to the individuals prior to processing their personal data or personal health
data, notification of data processing obligations to the national data protection authorities and the security and confidentiality of
the personal data. The GDPR also prohibits the transfer of personal data to countries outside of the EU that are not considered by the
EU to provide an adequate level of data protection, except if the data controller meets very specific requirements. These countries include
the United States, and following the end of the six month period as laid out in the TCA, it may include the UK if no adequacy decision
is given prior to this. Following the Schrems II decision of the Court of Justice of the European Union on July 16, 2020, there is uncertainty
as to the general permissibility of international data transfers under the GDPR. In light of the implications of this decision we may
face difficulties regarding the transfer of personal data from the EU to third countries. The European Data Protection Board has adopted
draft recommendations for data controllers and processors who export personal data to third countries regarding supplementary measures
to ensure compliance with the GDPR when transferring personal data outside of the EU. These recommendations were submitted to public consultation
until December 21, 2020, however it is unclear when and in which form these recommendations will be published in final form.
Failure to comply with the requirements of the
GDPR and the related national data protection laws of the EU Member States may result in significant monetary fines, other administrative
penalties and a number of criminal offenses (punishable by uncapped fines) for organizations and in certain cases their directors and
officers as well as civil liability claims from individuals whose personal data was processed. Data protection authorities from the different
EU Member States may still implement certain variations, enforce the GDPR and national data protection laws differently, and introduce
additional national regulations and guidelines, which adds to the complexity of processing personal data in the EU. Guidance developed
at both EU level and at the national level in individual EU Member States concerning implementation and compliance practices are often
updated or otherwise revised.
There is, moreover, a growing trend towards required
public disclosure of clinical trial data in the EU which adds to the complexity of obligations relating to processing health data from
clinical trials. Such public disclosure obligations are provided in the new EU Clinical Trials Regulation, EMA disclosure initiatives
and voluntary commitments by industry. Failing to comply with these obligations could lead to government enforcement actions and significant
penalties against us, harm to our reputation, and adversely impact our business and operating results. The uncertainty regarding the interplay
between different regulatory frameworks, such as the Clinical Trials Regulation and the General Data Protection Regulation, further adds
to the complexity that we face with regard to data protection regulation.
New Legislation and Regulations
From time to time, legislation is drafted, introduced
and passed in the EU, its Member States and other states of Europe that could significantly change the statutory provisions governing