10-K
1
form10-k.htm
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
10-K
For
the fiscal year ended December 31, 2020
For
the transition period from ____________ to ____________
Commission
file number 001-36457
PROVECTUS
BIOPHARMACEUTICALS, INC.
(Exact
name of registrant as specified in its charter)
10025
Investment Drive, Suite 250, Knoxville, TN 37932
(Address
of principal executive offices) (Zip Code)
866-594-5999
(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
None N/A N/A
Securities
registered pursuant to Section 12(g) of the Act:
Common
Stock, par value $0.001 per share
(Title
of class)
Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. [ ]
Yes [X] 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 [X] 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. [X] 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). [X] 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 [X] Smaller reporting company [X]
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 Act). [ ] Yes [X] No
The
aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at
which the common equity was last sold as of June 30, 2020 was $16,529,509 (computed on the basis of $0.044 per share).
The
number of shares outstanding of the registrant’s common stock, par value $0.001 per share, as of February 28,
2021 was 403,557,037.
DOCUMENTS
INCORPORATED BY REFERENCE
The
information required by Part III is incorporated by reference to portions of the definitive proxy statement to be filed within
120 days after December 31, 2020, pursuant to Regulation 14A under the Securities Exchange Act of 1934 in connection with the
2021 annual meeting of stockholders.
TABLE
OF CONTENTS
PART I
ITEM 1. BUSINESS 2
ITEM 1A. RISK FACTORS 8
ITEM 1B. UNRESOLVED STAFF COMMENTS 15
ITEM 2. PROPERTIES 15
ITEM 3. LEGAL PROCEEDINGS 15
ITEM 4. MINE SAFETY DISCLOSURES 15
PART II
ITEM 6. SELECTED FINANCIAL DATA 17
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 23
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA 24
ITEM 9A. CONTROLS AND PROCEDURES 25
ITEM 9B. OTHER INFORMATION 25
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE 26
ITEM 11. EXECUTIVE COMPENSATION 26
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES 26
PART IV
ITEM 15. EXHIBIT AND FINANCIAL STATEMENT SCHEDULES 27
SIGNATURES 31
CAUTIONARY
NOTE REGARDING FORWARD LOOKING STATEMENTS
This
Annual Report on Form 10-K contains “forward-looking statements” as defined under U.S. federal securities laws. These
statements reflect management’s current knowledge, assumptions, beliefs, estimates, and expectations. These statements also
express management’s current views of future performance, results, and trends and may be identified by their use of terms
such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “goal,”
“intend,” “may,” “plan,” “predict,” “project,” “should,”
“strategy,” “will,” and other similar terms. While we believe that the expectations reflected in our forward-looking
statements are reasonable, we can give no assurance that such expectations will prove correct. Forward-looking statements are
subject to risks and uncertainties that could cause our actual results to differ materially from the future results, performance,
or achievements expressed in or implied by any forward-looking statement we make. Some of the relevant risks and uncertainties
that could cause our actual performance to differ materially from the forward-looking statements contained in this report are
discussed below under the heading “Risk Factors” and elsewhere in this Annual Report on Form 10-K. We caution investors
that these discussions of important risks and uncertainties are not exclusive, and our business may be subject to other risks
and uncertainties which are not detailed there. Investors are cautioned not to place undue reliance on our forward-looking statements.
We make forward-looking statements as of the date on which this Annual Report on Form 10-K is filed with the U.S. Securities and
Exchange Commission (the “SEC”), and we assume no obligation to update the forward-looking statements after the date
hereof whether as a result of new information or events, changed circumstances, or otherwise, except as required by law.
PART
I
ITEM 1. BUSINESS.
General
Provectus
Biopharmaceuticals, Inc., a Delaware corporation (together with its subsidiaries, “Provectus” or the “Company”),
is a clinical-stage biotechnology company developing immunotherapy medicines for different diseases, with the aims of maximizing
the curative impact of these medicines and achieving immunity from treated disease. These investigational drugs are based on an
entire, wholly-owned, family of small molecules called halogenated xanthenes (“HXs”); our lead HX molecule
is named rose bengal disodium (“RBD”). Former scientists from the U.S. Department of Energy’s Oak Ridge
National Laboratory founded Provectus in 2002, identifying and advancing RBD’s dark-effect therapeutic potential
and developing RBD and HXs into proprietary molecules. Starting in 2017, new science and business leadership pivoted and then
expanded drug discovery and development, targeting global patient populations in a number of disease areas and indications made
viable by RBD’s immunotherapeutic potential and new routes of administration.
Science
RBD possesses an
innovative physical chemistry science with broad-spectrum prophylactic and therapeutic medical applications. The prerequisite
mechanistic step for these immunotherapies is direct contact between RBD and disease that may lead to disease death repair, RBD
treatment-specific innate immune activation, and disease-specific functional adaptive immune response. RBD displays
consistent mechanistic behavior across different indications of a disease and across different disease areas, with the
potential to be a multi-disease treatment platform and a universal contributor to different medical treatments.
Drug
Discovery and Development Strategy
New company leadership has
a compelling vision of accessible and affordable, safe, broad-spectrum small molecule immunotherapies. Provectus’ legacy
intralesional (IL) oncology clinical program was pivoted and enhanced to pursue U.S. Food and Drug Administration (“FDA”)
and/or Australia’s Therapeutics Good Administration (“TGA”) regulatory advancement for rare or refractory cancers
of the skin and cancers of the liver in both single-agent and combination therapy settings.
Drug development was expanded to pursue
proof-of-concept of systemic RBD administration. Routes of administration and target diseases being developed
include oral (“PO”) hematology in relapsed and refractory adult and pediatric leukemias, and PO
oncology for prophylactic and/or therapeutic RBD in high-risk adult solid tumor cancers. Drug discovery into RBD
treatment has also been deepened to explore different disease areas. Target diseases include virology, such as SARS-CoV-2
(COVID-19); microbiology, such as antibiotic-resistant gram-negative bacteria; ophthalmology, such as diseases of the cornea;
and dermatology, such as combination therapy with systemic biologics for psoriasis and atopic dermatitis.
RBD
and HX Intellectual Property (“IP”)
RBD, the active pharmaceutical ingredient
(API) in our current investigational immunotherapy medicines, is a systemically-active, environmentally-adaptive stable,
and selective small molecule. RBD has a nominal formula of 4,5,6,7-tetrachloro-2’,4’,5’,7’-tetraiodofluorescein
disodium. Rose bengal drug substance (“RB DS”) is produced by Provectus’ Quality-by-Design (“QbD”)
manufacturing process, which avoids the formation of uncontrolled impurities generally (and also proprietarily) known to be present
in commercial-grade rose bengal, and follows International Council for Harmonisation of Technical Requirements for Pharmaceuticals
for Human Use (“ICH”) Guidelines for pharmaceutical ingredients and current Good Manufacturing Practices (“cGMP”)
regulations. Multiple Provectus cGMP RB DS lots have surpassed multi-year stability testing.
The
Company’s science and molecules are currently protected by global intellectual property that includes composition of matter,
manufacturing methods and techniques, pharmaceutical synthesis standards, trade secrets, and concomitant combination therapy use
for different disease areas.
U.S.
Patents
We hold a number of patents covering the technologies
we have developed and are continuing to develop for the production of investigational drugs and other technologies. All patents
material to an understanding of the Company are included in the table below:
U.S. Patent No. Title Issue Date Expiration Date
International
Patents
The
Indian Patent Office granted the Company’s patent application on May 29, 2020 for the combination of investigational
autolytic cancer immunotherapy PV-10 and systemic immunomodulatory therapy, such as immune checkpoint blockade. Pfizer, Inc. is
a co-assignee on this patent.
The Japan Patent Office granted the
Company’s patent application on October 5, 2020 for ex vivo enhancement of immune cell activity for cancer immunotherapy
with small molecule ablative compound. H. Lee Moffitt Cancer Center is a co-assignee on this patent.
PV-10
Product Pipeline
PV-10
is an injectable pharmaceutical formulation of RBD and registration study-ready investigational drug product (“PV-10
DP”). Multiple lots of PV-10 DP have surpassed multi-year stability testing, respectively. PV-10 DP is shipped,
stored, and used at room temperature. Provectus has developed two clinical-stage formulations of PV-10: an IL administration for
oncology (10% RBD) for the treatment of cancers of the skin and cancers of the liver, and topical (“top.”) application
for dermatology (0.01% RBD) for the treatment of inflammatory dermatoses (psoriasis, atopic dermatitis, and actinic keratosis).
A third formulation is under development for a currently proprietary disease area. Research into new routes of RBD administration
and formulations of PV-10 is ongoing, including PO, intranasal (“IN”), top., and/or intravenous (“IV”)
for hematology, oncology, virology, microbiology, and/or ophthalmology.
2020
Activity
Data
from the Company’s clinical trial of PV-10 as a single-agent and in combination with immune checkpoint blockade for the
treatment of primary or metastatic tumors of the liver (NCT00986661) was uploaded to the SIR 2020 ePoster Gallery of the canceled
Society of Interventional Radiology (“SIR”) 2020 Annual Scientific Meeting, held March 28-April 2, 2020 in Seattle,
Washington: “Oncolytic immunotherapy of hepatic tumors with intralesional rose bengal disodium.”
Data
from ongoing preclinical study of PV-10 was presented at the American Association for Cancer Research (“AACR”) 2020
Virtual Annual Meeting II, held online June 22-24, 2020: “Association of heat shock proteins as chaperone for STING:
A potential link in a key immune activation mechanism revealed by the novel anti-cancer agent PV-10.”
Updated
data from the first cohort of the Company’s autolytic cancer immunotherapy PV-10 were published as an abstract as part of
the American Society of Clinical Oncology (“ASCO”) 2020 Virtual Scientific Program, held online May 29-31, 2020: “Cohort
1 results of a phase I study of autolytic immunotherapy of metastatic neuroendocrine neoplasms using intralesional rose bengal
disodium.”
Updated
data from the Company’s expansion cohort of patients with uveal melanoma metastatic to the liver (“mUM”) in
its Phase 1 cancers of the liver “basket study” of PV-10 were presented at ASCO: “Percutaneous hepatic injection
of rose bengal disodium (PV-10) in metastatic uveal melanoma.”
The
Company expanded its sponsored research program with Aru Narendran, MD, PhD, Professor, Departments of Pediatrics, Oncology, Biochemistry
& Molecular Biology, and Physiology & Pharmacology at the Cumming School of Medicine of the University of Calgary in Calgary,
Alberta, Canada. Under ongoing collaboration with Provectus, the Narendran research team has produced preliminary findings that
show oral dosing of RBD is effective and well tolerated in an in vivo pediatric leukemia murine model. Data from this work
are currently being prepared for publication. As part of the sponsored research expansion, the Narendran team would investigate
oral dosing of RBD in in vivo murine models for the treatment of refractory adult solid tumors that are high-risk phenotypes
and have high metastatic potential. These cancer types will include head and neck, breast, pancreatic, liver, and colorectal.
The
Company initiated a new sponsored research program with Michio Kurosu, PhD, Professor, Department of Pharmaceutical Sciences at
the College of Pharmacy of the University of Tennessee Health Science Center (“UTHSC”) in Memphis, Tennessee to investigate
RBD targeting of multi-drug resistant (“MDR”) bacteria. Dr. Kurosu’s team would undertake in vitro studies
on the spectrum of RBD activity against drug-susceptible and drug-resistant bacterial strains, synergistic activity of combinations
of RBD and FDA-approved antibiotics for Gram-negative bacteria, the mutation frequency of
RBD against bacterial strains, measuring spontaneous bacterial mutations for RBD and these combinations, and gene analyses of
mutant bacterial strains to understand resistance mechanisms.
Two-year
landmark survival, response, and safety data from the Company’s Phase 1b/2 study of PV-10 in combination with KEYTRUDA (pembrolizumab)
for the treatment of advanced cutaneous melanoma in patients naive to immune checkpoint blockade (CB) was presented at the European
Society for Medical Oncology (“ESMO”) Virtual Congress 2020, held online from September 19-21, 2020: “A phase
1b study of rose bengal disodium and anti-PD-1 in metastatic cutaneous melanoma: results in patients naïve to immune checkpoint
blockade.”
Preliminary
response, safety, and immune correlative data from the Company’s Phase 1b/2 study of PV-10 in combination with KEYTRUDA for the treatment of advanced cutaneous melanoma in patients refractory to immune checkpoint blockade was also
presented at ESMO: “A phase 1b study of rose bengal disodium and anti-PD-1 in metastatic cutaneous melanoma: initial
results in patients refractory to checkpoint blockade.”
In
October, the Company announced completion of enrollment
of 12 patients into Provectus’ Phase 1 study of PV-10 for the treatment of symptomatic mNET refractory to somatostatin analogs
(“SSAs”) and peptide receptor radionuclide therapy (“PRRT”).
Non-clinical
data from ongoing research on PV-10 as a single-agent and in combination with gemcitabine chemotherapy for the treatment of pancreatic
cancer at the Society for Immunotherapy of Cancer’s (“SITC”) 35th Anniversary Annual Meeting &
Pre-Conference Programs (“SITC 2020”), held online from November 9-14, 2020: “Intralesional injection of
rose bengal augments the efficacy of gemcitabine chemotherapy against pancreatic tumors.”
Updated
preliminary patient response, safety, and immune correlative data, as well as new preliminary PV-10-treated lesion response data,
from the Company’s ongoing Phase 1b/2 study of PV-10 in combination with KEYTRUDA for the treatment of advanced
cutaneous melanoma in patients refractory to CB was presented at Melanoma Bridge 2020, held online from December 3-5, 2020. The
oral presentation, entitled “Response for combination of PV-10 autolytic immunotherapy and immune checkpoint blockade
in checkpoint-refractory patients,” was presented by Dr. Jonathan Zager, Chief Academic Officer at Moffitt Cancer Center,
and a surgical oncologist and Senior Member in Moffitt’s Departments of Cutaneous Oncology and Sarcoma.
Competition
In
general, the pharmaceutical and biotechnology industries are competitive, characterized by steady and sometimes disruptive advances
in products and technology. A number of companies have developed and continue to develop products that address the areas we have
targeted. Some of these companies are pharmaceutical companies and biotechnology companies that are international in scope and
very large in size, while others are small companies that have been successful in one or more areas we are targeting. Existing
or future pharmaceutical, device, or other competitors may develop products that accomplish similar functions to our technologies
in ways that may be less expensive, receive faster regulatory approval, or receive greater market acceptance than our products.
Many of our competitors have been in existence longer than we have, have greater capital resources, broader internal structure
for research, development, manufacturing and marketing, and may be further along in their respective product cycles.
Federal
Regulation of Therapeutic Products
All
of the prescription drug candidates we currently contemplate developing will require approval by the FDA prior to sales within
the U.S. and by comparable international governmental healthcare regulatory agencies prior to sale outside the U.S. The FDA and
comparable international agencies impose substantial requirements on the manufacturing and marketing of pharmaceutical products.
These agencies and other entities regulate, among other things, research and development activities and the testing, manufacturing,
quality control, safety and effectiveness claims, labeling, storage, record keeping, approval, advertising, and promotion of our
prescription drug candidates. While we attempt to minimize and avoid significant regulatory bars when formulating our products,
some degree of regulation from these regulatory agencies is unavoidable.
The
regulatory process required by the FDA, through which our prescription drug candidates must successfully pass before they may
be marketed in the U.S., generally involves pre-clinical laboratory and animal testing, submission of an application that must
become effective before clinical trials may begin, adequate and well-controlled human clinical trials to establish the safety
and efficacy of the product for its intended indication, and FDA approval to market a given product for a given indication after
the appropriate application has been filed. For pharmaceutical products, pre-clinical tests include laboratory evaluation of the
product, its chemistry, formulation and stability, as well as in vitro and animal studies to assess the potential safety
and efficacy of the product. We will require sponsored work to be conducted in compliance with pertinent local and international
regulatory requirements, including those providing for Institutional Review Board approval, national governing agency approval,
and patient informed consent, using protocols consistent with ethical principles stated in the Declaration of Helsinki and other
internationally recognized standards and delineated by ICH Good Clinical
Practice (“GCP”) standards.
If
the FDA is satisfied with the results and data from pre-clinical tests, it will authorize human clinical trials. Human clinical
trials traditionally are conducted in three sequential phases which may overlap. Each of the three phases involves testing and
study of specific aspects of the effects of the investigational product on human subjects, including testing for safety, dosage
tolerance, side effects, absorption, metabolism, distribution, excretion, and clinical efficacy.
Phase
1 clinical trials include the initial introduction of an investigational new drug into humans, or via a new route of administration
or new organ system if previously investigated in humans. These studies are closely monitored and may be conducted in patients
but may also be conducted in healthy volunteer subjects. These studies are designed to determine the metabolic and pharmacologic
actions of the drug in humans, the side effects associated with increasing doses, and, if possible, to gain early evidence on
effectiveness. While the FDA can cause us to end clinical trials at any phase due to safety concerns, Phase 1 clinical trials
are primarily concerned with safety issues. We also attempt to obtain sufficient information about the drug candidate’s
pharmacokinetics and pharmacological effects during Phase 1 clinical trials to permit the design of scientifically valid, Phase
2 studies.
Phase
1 studies also evaluate drug metabolism, structure-activity relationships, and the mechanism of action in humans. These studies
also determine which investigational drugs are used as research tools to explore biological phenomena or disease processes. The
total number of subjects included in Phase 1 studies varies with the drug but is generally in the range of 10 to 80.
Phase
2 clinical trials include early controlled clinical studies conducted to obtain preliminary data on the effectiveness of the drug
for a particular indication or indications in patients with the disease or condition. This phase of testing also helps determine
the common short-term side effects and risks associated with the drug. Phase 2 studies are often randomized controlled studies
that are closely monitored and conducted in a relatively small number of patients, usually involving up to several hundred people.
Phase
3 studies are expanded controlled and uncontrolled trials. They are performed after preliminary evidence suggesting effectiveness
of the drug has been obtained in Phase 2 and are intended to gather definitive information about effectiveness and safety that
is needed to evaluate the overall benefit-risk relationship of the drug. Phase 3 studies also provide an adequate basis for extrapolating
the results to the general population and transmitting that information in the physician labeling. Phase 3 studies usually include
several hundred to several thousand people.
We
have established a core clinical development team and have been working with external and FDA-experienced consultants to assist
us in developing product-specific development and approval strategies, preparing the required submittals, guiding us through the
regulatory process, and providing input into the design and site selection of human clinical studies.
The
testing and approval process requires substantial time, effort, and financial resources, and we may not obtain FDA approval on
a timely basis, if at all. Success in preclinical or early-stage clinical trials does not assure success in later-stage clinical
trials. The FDA or research institution conducting the trials may suspend clinical trials or may not permit trials to advance
from one phase to another at any time for various reasons, including a finding that the subjects or patients are being exposed
to an unacceptable health risk. Once issued, the FDA may withdraw a prescription drug approval if we do not comply with pertinent
regulatory requirements and standards or if problems are identified after the product reaches the market. If the FDA grants approval
of a prescription drug candidate, the approval may impose limitations, including limits on the indicated uses for which we may
market a drug product. In addition, the FDA may require additional testing and surveillance programs to monitor the safety and/or
effectiveness of approved drug products that have been commercialized, and the agency has the power to prevent or limit further
marketing of a product based on the results of these post-marketing programs. Further, later discovery of previously unknown problems
with a drug product may result in restrictions on the product, including withdrawal from the market.
Marketing
our prescription drug candidates abroad will require similar regulatory approvals by equivalent national authorities and is subject
to similar risks. To expedite development, we may pursue some or all of our initial clinical testing and approval activities outside
the U.S., and in particular in those countries where our prescription drug candidates may have substantial medical and commercial
relevance. In some such cases, any resulting drug products may be brought to the U.S. after substantial offshore experience is
gained. Accordingly, we intend to pursue any such development in a manner consistent with U.S. and ICH standards so that the resultant
development data is maximally applicable for potential global approval.
Board
of Director Change
On
July 11, 2020, the Company announced that Jan Koe had resigned from the Board of Directors (the “Board”). His resignation
was not due to any disagreement with the Company on any matter relating to the Company’s operations, policies or practices.
Mr. Koe’s resignation was contemplated by the Amended and Restated Definitive Financing Commitment Term Sheet effective
as of March 19, 2017, entered into between the Company and a group of the Company’s stockholders (the “PRH Group”),
which set forth the terms on which the PRH Group would provide financing to the Company (the “2017 Term Sheet”).
On
July 20, 2020, the Company added Webster Bailey to fill this vacant spot on the Board.
Human
Capital Resources
We
have two full-time employees. We also engage independent contractors, who currently serve as COO, director of clinical operations,
senior scientist, clinical research associates, project manager, information technology manager, controller, patient advocacy
manager, and database manager.
We
believe the Company’s success depends on its ability to attract, develop and retain key personnel. The skills, experience
and industry knowledge of key employees and contractors significantly benefit our operations and performance. The Company’s
Board of Directors and management oversee various employee and contractor initiatives.
Employee
health and safety in the workplace is one of the Company’s core values. The COVID-19 pandemic has underscored for us the
importance of keeping our employees and contractors safe and healthy. In response to the pandemic, the Company has taken actions
aligned with the World Health Organization and the Centers for Disease Control and Prevention to protect its workforce so they
can more safely and effectively perform their work.
Available
Information
Our
website is located at www.provectusbio.com. We make available free of charge through this website our annual reports on
Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports filed with or furnished
to the SEC pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”),
as soon as reasonably practicable after they are electronically filed with or furnished to the SEC. Reference to our website does
not constitute incorporation by reference of the information contained on the site and should not be considered part of this document.
The
SEC maintains an Internet site that contains reports, proxy and information statements and other information regarding issuers
that file electronically with the SEC as we do. The website is http://www.sec.gov.
ITEM 1A. RISK FACTORS.
Our
business and its future performance may be affected by various factors, the most significant of which are discussed below.
We
are a clinical-stage drug company, have no prescription drug products approved for commercial sale, have incurred substantial
losses, and expect to incur substantial losses and negative operating cash flow for the foreseeable future.
We
are a clinical-stage drug company that has no prescription drug products approved for commercial sale. We have never generated
any substantial revenues and may never achieve substantial revenues or profitability. As of December 31, 2020, we have incurred
net losses of approximately $240 million in the aggregate since inception in January 2002. We expect to incur substantial losses
and negative operating cash flow for the foreseeable future. We may never achieve or maintain profitability, even if we succeed
in developing and commercializing one or more of our prescription drug candidates. We also expect to continue to incur significant
operating expenditures and anticipate that our operating and capital expenses may increase substantially in the foreseeable future
as we continue to develop and seek regulatory approval for our prescription drug candidates PV-10 and PH-10, implement additional
internal systems and infrastructure, and hire additional personnel.
We
also expect to experience negative operating cash flow for the foreseeable future as we fund our operating losses and any future
capital expenditures. As a result, we will need to generate significant revenues in order to achieve and maintain profitability.
We may not be able to generate these revenues or achieve profitability in the future. Our failure to achieve or maintain profitability
could negatively impact the value of our common stock.
We
need additional capital to conduct our operations and commercialize and/or further develop our prescription drug candidates in
2021 and beyond, and our ability to obtain the necessary funding is uncertain.
We
need additional capital in 2021 and beyond to continue developing and seeking to commercialize our drug product candidates. We
intend to continue with the development of PV-10 and PH-10 on the basis of historical, ongoing, and prospective clinical study
and/mechanism, of action results.
We
have based our estimate of capital needs on assumptions that may prove to be wrong, and we cannot assure you that estimates and
assumptions will remain unchanged. On December 31, 2019, our Board approved a Definitive Financing Term Sheet (the “2020
Term Sheet”), which set forth the terms under which we will use our best efforts to arrange for financing of a maximum of
$20,000,000 (the “2020 Financing”). We intend to acquire additional funding through the 2020 Financing. We may also
seek capital from public or private equity or debt financings or other financing sources that may be available. As of December
31, 2020, we have raised $3,325,000 through the 2020 Financing.
Such
additional financing may not be available on acceptable terms, or at all. As discussed in more detail below, additional equity
financing could result in significant dilution to stockholders. Further, in the event that additional funds are obtained through
licensing or other arrangements, these arrangements may require us to relinquish rights to some of our products, product candidates,
and technologies that we would otherwise seek to develop and commercialize ourselves. If sufficient capital is not available,
we may be required to delay, reduce the scope of, or eliminate one or more of our programs, any of which could have a material
adverse effect on our business and may impair the value of our patents and other intangible assets.
There
is substantial doubt as to our ability to continue as a going concern.
Our
cash and cash equivalents were $97,231 at December 31, 2020, compared with $590,706 at December 31, 2019. We continue to incur
significant operating losses and management expects that significant on-going operating expenditures will be necessary to successfully
implement our business plan and develop and market our products. These circumstances raise substantial doubt about our ability
to continue as a going concern for a period of one year from the date that the consolidated financial statements included elsewhere
in this Annual Report on Form 10-K are issued. Implementation of our plans and our ability to continue as a going concern will
depend upon our ability to develop PV-10 and PH-10, and to raise additional capital.
Management
believes that we have access to capital resources through possible public or private equity offerings, including the 2020 Financing,
exchange offers, debt financings, corporate collaborations or other means. If we are unable to raise sufficient capital, we will
not be able to pay our obligations as they become due.
Our
investigational drug product candidates are at an early to mid-stage of development and may never obtain U.S. or international
regulatory approvals required for us to commercialize our investigational drug product candidates.
We
will need approval of the FDA to commercialize our investigational drug product candidates in the U.S. and approvals from FDA-equivalent
regulatory authorities in international jurisdictions to commercialize our investigational drug product candidates there.
We
are continuing to pursue clinical development of our most advanced drug product candidates, PV-10 and PH-10, for use as treatments
for specific disease indications. The continued and further development of these drug product candidates will require significant
additional research, formulation and manufacturing development, and pre-clinical and extensive clinical testing prior to their
regulatory approval and commercialization. Pre-clinical and clinical studies of our drug product candidates may not demonstrate
the safety and efficacy necessary to obtain regulatory approvals. Pharmaceutical and biotechnology companies have suffered significant
setbacks in advanced clinical trials, even after experiencing promising results in earlier trials. Pharmaceutical products that
appear to be promising at early stages of development may not reach the market or be marketed successfully for a number of reasons,
including a product may be found to be ineffective or have harmful side effects during subsequent pre-clinical testing or clinical
trials, a product may fail to receive necessary regulatory clearance, a product may be too difficult to manufacture on a large
scale, a product may be too expensive to manufacture or market, a product may not achieve broad market acceptance, others may
hold proprietary rights that will prevent a product from being marketed, and others may market equivalent or superior products.
Satisfaction
of the FDA’s regulatory requirements typically takes many years, depends upon the type, complexity and novelty of the product
candidate and requires substantial resources for research, development and testing. We cannot predict whether our research and
clinical approaches will result in drugs that the FDA considers safe for humans and effective for indicated uses. The FDA has
substantial discretion in the drug approval process and may require us to conduct additional nonclinical and clinical testing
or to perform post-marketing studies. The approval process may also be delayed by changes in government regulation, future legislation
or administrative action or changes in FDA policy that occur prior to or during our regulatory review. Delays in obtaining regulatory
approvals may delay commercialization of, and our ability to derive revenues from, our prescription drug candidates, impose costly
procedures on us, and diminish any competitive advantages that we may otherwise enjoy.
Our
research and product development efforts may not be successfully completed and may not result in any successfully commercialized
drug products. Further, after commercial introduction of a new drug product, discovery of problems through adverse event reporting
could result in restrictions on the product, including withdrawal from the market and, in certain cases, civil or criminal penalties.
Even
if we comply with all FDA requests, we cannot be sure that we will ever obtain regulatory clearance for any of our drug product
candidates. Failure to obtain FDA approval of any of our prescription drug candidates will severely undermine our business by
reducing our number of salable drug products and, therefore, corresponding revenues.
In
international jurisdictions, we must receive approval from the appropriate regulatory authorities before we can commercialize
our prescription drug candidates. International regulatory approval processes generally include all of the risks associated with
the FDA approval procedures described above.
Before
obtaining regulatory approval for the sale of our drug product candidates, including PV-10 and PH-10, we must conduct additional
clinical trials to demonstrate the safety and efficacy of our drug product candidates. Clinical testing is expensive, difficult
to design and implement, can take many years to complete and is uncertain as to timing and outcome. Competition in clinical development
has made it difficult to enroll patients at an acceptable rate in some of our clinical trials. Advances in medical technology
could make our prescription drug candidates obsolete prior to completion of clinical testing. A failure of one or more of our
clinical trials may occur at any stage of testing. The outcome of pre-clinical testing and early clinical trials may not be predictive
of the success of later clinical trials, and interim results of a clinical trial do not necessarily predict final results. Moreover,
pre-clinical and clinical data are often susceptible to varying interpretations and analyses, and many companies that have believed
their product candidates performed satisfactorily in pre-clinical studies and clinical trials have nonetheless failed to obtain
marketing approval for their products. Product candidates in later stages of clinical trials may fail to show the desired safety
and efficacy characteristics despite having progressed satisfactorily through pre-clinical studies and initial clinical testing.
A number of companies in the pharmaceutical and biotechnology industries, including those with greater resources and experience,
have suffered significant setbacks in Phase 3 clinical development, even after seeing promising results in earlier clinical trials.
Our
research and development expenses may increase in connection with expanding clinical trials of our product candidates in existing
indications and undertaking clinical trials of our product candidates in new indications. Because successful development of our
drug product candidates is uncertain, we are unable to estimate the actual funds required to complete research and development
and commercialize our products under development.
Negative
or inconclusive results of our future clinical trials of PV-10 and PH-10, or any other clinical trial we conduct, could cause
the FDA to require that we repeat or conduct additional clinical studies. Despite the results reported in earlier clinical trials
for PV-10 and PH-10, we do not know whether any clinical trials we may conduct will demonstrate adequate efficacy and safety to
result in regulatory approval to market our product candidates. If later stage clinical trials do not produce favorable results,
our ability to obtain regulatory approval for our product candidates, may be adversely impacted.
Delays
in clinical trials are common and have many causes, and any delay could result in increased costs to us and jeopardize or delay
our ability to obtain regulatory approval.
Our
planned or ongoing clinical trials may not begin on time, have an effective design, enroll a sufficient number of subjects, or
be completed on schedule, if at all. Events which may result in delays or unsuccessful completion of clinical trials, including
our future clinical trials, include inability to raise funding, initiate or continue a trial, delays in obtaining regulatory approval
to commence a trial, delays in reaching agreement with the FDA or other regulatory authorities on final trial design, imposition
of a clinical hold following an inspection of our clinical trial operations or trial sites by the FDA or other regulatory authorities,
delays in reaching agreement on acceptable terms with prospective contract research organizations (“CROs”) and clinical
trial sites, delays in obtaining required institutional review board (“IRB”) approval at each site, delays in recruiting
suitable patients to participate in a trial, delays in having subjects complete participation in a trial or return for post-treatment
follow-up, delays caused by subjects dropping out of a trial, delays caused by clinical sites dropping out of a trial, time required
to add new clinical sites or to obtain regulatory approval and open sites in geographic regions beyond the sites initially planned,
and delays by our contract manufacturers to produce and deliver sufficient supply of clinical trial materials.
In
addition, we may experience a number of unforeseen events during clinical trials for our prescription drug candidates, including
PV-10 and PH-10, that could delay or prevent the commencement and/or completion of our clinical trials, including regulators or
institutional review boards may not authorize us or our investigators to commence a clinical trial or conduct a clinical trial
at a prospective trial site, the clinical study protocol may require one or more amendments delaying study completion, clinical
trials of our product candidates may produce negative or inconclusive results, and we may decide, or regulators may require us
to conduct additional clinical trials or abandon product development programs, the number of subjects required for clinical trials
of our product candidates may be larger than we anticipate, subjects may drop out of these clinical trials at a higher rate than
we anticipate and enrollment in these clinical trials may be significantly slower than we anticipated requiring us to expand the
geographic scope of enrollment of patients, clinical investigators or study subjects may fail to comply with clinical study protocols,
trial conduct and data analysis errors may occur, including, but not limited to, data entry and/or processing errors, our third-party
contractors may fail to comply with regulatory requirements or meet their contractual obligations to us in a timely manner, or
at all, we might have to suspend or terminate clinical trials of our prescription drug candidates for various reasons, including
a finding that the subjects are being exposed to unacceptable health risks, regulators or institutional review boards may require
that we or our investigators suspend or terminate clinical research for various reasons, including noncompliance with regulatory
requirements, the cost of clinical trials of our prescription drug candidates may be greater than we anticipate, the supply or
quality of our clinical trial materials or other materials necessary to conduct clinical trials of our prescription drug candidates
may be insufficient or inadequate, and our prescription drug candidates may have undesirable side effects or other unexpected
characteristics, causing us or our investigators to suspend or terminate the trials.
Moreover,
we or the FDA may suspend our clinical trials at any time if it appears we are exposing participants to unacceptable health risks
or if the FDA finds deficiencies in our submissions or the conduct of these trials. If initiation or completion of any of our
clinical trials for our product candidates, are delayed for any of the above reasons or other reasons, our development costs may
increase, the approval process could be delayed, any periods during which we may have the exclusive right to commercialize our
prescription drug candidates may be reduced and our competitors may bring drug products to market before us. Any of these events
could impair our ability to generate revenues from drug product sales and impair our ability to generate regulatory and commercialization
milestones and royalties, all of which could have a material adverse effect on our business.
The
results of our clinical trials may not support acceptable label claims concerning our prescription drug candidates.
Even
if our clinical trials are completed as planned, we cannot be certain that their results will support acceptable label claims
concerning our drug product candidates. Success in pre-clinical testing and early clinical trials does not ensure that later clinical
trials will be successful, and we cannot be sure that the results of later clinical trials will replicate the results of prior
clinical trials and pre-clinical testing. The clinical trial process may fail to demonstrate that our prescription drug candidates
are safe for humans or effective for indicated uses.
This
failure could cause us to abandon a prescription drug candidate and may delay development of other prescription drug candidates.
Any delay in, or termination of, our clinical trials will delay our ability to commercialize our prescription drug candidates
and generate product revenues. In addition, we anticipate that our clinical trials will involve only a small patient population.
Accordingly, the results of such trials may not be indicative of future results over a larger patient population.
Physicians
and patients may not accept and use our prescription drug candidates.
Even
if the FDA approves our drug product candidates, physicians and patients may not accept and use them. Acceptance and use of our
drug products will depend upon a number of factors including perceptions by members of the healthcare community, including physicians,
about the safety and effectiveness of our drug products, availability of reimbursement for our drug products from government or
other healthcare payers, and effectiveness of marketing and distribution efforts by us and our licensees and distributors, if
any.
Because
we expect sales or licensure of our prescription drug candidates, if approved, to generate substantially all of our revenues for
the foreseeable future, the failure of any of these drugs to find market acceptance would harm our business and could require
us to seek additional financing.
We
have no sales, marketing or distribution capabilities for our prescription drug candidates.
We
currently have no sales, marketing or distribution capabilities. Our future success depends, in part, on our ability to enter
into and maintain collaborative relationships, the collaborator’s strategic interest in the prescription drug products under
development and such collaborator’s ability to successfully market and sell any such drug products. There can be no assurance
that we will be able to establish or maintain relationships with third party collaborators or develop in-house sales and distribution
capabilities. To the extent that we depend on third parties for marketing and distribution, any revenues we receive will depend
upon the efforts of such third parties, and there can be no assurance that such efforts will be successful. In addition, there
can also be no assurance that we will be able to market and sell our prescription drug candidates in the U.S. or internationally.
Competition
in the prescription pharmaceutical and biotechnology industries is intense.
Other
pharmaceutical and biotechnology companies and research organizations currently engage in or have in the past engaged in research
efforts related to treatment of cancer and dermatological conditions, which may compete with our clinical trials for patients
and investigator resources, cause lower enrollment than anticipated, and could lead to the development of drug products or treatment
therapies that could compete directly with our drug product candidates that we are seeking to develop and market.
Many
companies are also developing novel therapies to treat cancer and dermatological conditions and, in this regard, are our competitors.
Many of the pharmaceutical companies developing and marketing these competing products have greater financial resources and expertise
than we do in research and development, manufacturing, preclinical and clinical testing, obtaining regulatory approvals, and marketing.
Smaller
companies may also prove to be competitors, particularly through collaborative arrangements with larger and more established companies
that may compete with our efforts to establish similar collaborative arrangements. Academic institutions, government agencies,
and other public and private research organizations may also conduct research, seek patent protection, and establish collaborative
arrangements for research, clinical development, and marketing of prescription drug candidates similar to ours. These companies
and institutions compete with us in recruiting and retaining qualified scientific and management personnel as well as in acquiring
technologies complementary to our drug development programs.
In
addition to the above factors, we expect to face competition in product efficacy and safety, the timing and scope of regulatory
consents, availability of resources, reimbursement coverage, price, and patent position, including potentially dominant patent
positions of others.
Since
our prescription drug candidates PV-10 and PH-10 have not yet been approved by the FDA or introduced to the marketplace, we cannot
estimate what competition these prescription drug candidates might face when they are finally introduced, if at all. We cannot
assure you that these prescription drug candidates will not face significant competition for other approved drug products, investigational
drug products, and generic equivalents.