UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
10-K
For
the fiscal year ended December 31, 2023
For
the transition period from ____________ to ____________
Commission
file number 001-36457
PROVECTUS
BIOPHARMACEUTICALS, INC.
(Exact
name of registrant as specified in its charter)
800
S Gay St, Suite 1610, Knoxville, TN37929
(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 ☒ 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 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, 2023 was $45,528,616 (computed on the basis of $0.113 per share).
The
number of shares outstanding of the registrant’s common stock, par value $0.001 per share, as of March 27, 2024 was 419,522,119.
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, 2023, pursuant to Regulation 14A under the Securities Exchange Act of 1934 in connection with the 2024 annual meeting
of stockholders.
TABLE
OF CONTENTS
PART I
ITEM 1. BUSINESS 2
ITEM 1A. RISK FACTORS 8
ITEM 1B. UNRESOLVED STAFF COMMENTS 16
ITEM 1C. CYBERSECURITY 16
ITEM 2. PROPERTIES 16
ITEM 3. LEGAL PROCEEDINGS 16
ITEM 4. MINE SAFETY DISCLOSURES 16
PART II
ITEM 6. [RESERVED] 17
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 25
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA 26
ITEM 9A. CONTROLS AND PROCEDURES 27
ITEM 9B. OTHER INFORMATION 27
ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS 27
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE 28
ITEM 11. EXECUTIVE COMPENSATION 28
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES 28
PART IV
ITEM 15. EXHIBIT AND FINANCIAL STATEMENT SCHEDULES 29
SIGNATURES 32
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.
Risks
and uncertainties that could cause our actual results to materially differ from those described in forward-looking statements:
PART
I
ITEM 1. BUSINESS.
General
Provectus
Biopharmaceuticals, Inc., a Delaware corporation incorporated in 2002 (together with its subsidiaries, “Provectus” or
“the Company”), is a clinical-stage biotechnology company developing immunotherapy medicines for different diseases that
are based on a class of synthetic small molecule immuno-catalysts called halogenated xanthenes (“HXs”). Our lead HX
molecule is named rose bengal sodium (“RBS”).
The
Company’s proprietary, patented, pharmaceutical-grade RBS is the active pharmaceutical ingredient in the drug product candidates
of our current clinical development programs and the preclinical formulations of our current drug discovery programs. Importantly, our
pharmaceutical-grade RBS displays different therapeutic effects at different concentrations and can be formulated for delivery by different
routes of administration.
The
Company believes that RBS targets disease in a bifunctional manner. First, direct contact may lead to cell death or repair, depending
on the disease being treated and the concentration of the RBS utilized in the treatment. Second, multivariate immune signaling, activation,
and response may follow that may manifest as stimulatory, inhibitory, or both.
The
Company believes that it is the first entity to advance an RBS formulation into clinical trials for the treatment of a disease, such
as those trials reported on the clinical trials registry at ClinicalTrials.gov.
The
Company believes that it is the first and only entity to date to make pharmaceutical-grade RBS successfully, reproducibly, and consistently
at a purity of nearly 100%.
The
Company’s small molecule HX medical science platform comprises several different drug product candidates and preclinical pharmaceutical-grade
RBS formulations using different concentrations delivered by different routes of administration specific to each disease area and/or
indication. The Company’s HX medical science platform includes clinical development programs in oncology, dermatology, and ophthalmology;
in vivo proof-of-concept programs in oncology, hematology, wound healing, and animal health; and in vitro drug discovery
programs in infectious diseases and tissue regeneration and repair.
Intellectual
Property
U.S.
Patents
We
hold patents covering the HX medical science platform that we have developed and are continuing to develop for drug product candidates
and drug formulations in different disease areas. All patents awarded by the U.S. Patent and Trademark Office (“USPTO”) that
are material to an understanding of the Company are listed in the table below:
U.S. Patent No. Title Issue Date Expiration Date
We
received one patent allowance from the USPTO in 2023, U.S. patent application number 17/488,430 titled “Halogenated Xanthenes as
Vaccine Adjuvants.” Two patent applications were also published on the USPTO’s website:
International
Patents
In
2023, the Company received a patent award for Mexico for “Method of Ex Vivo Enhancement of Immune Cell Activity for Cancer
Immunotherapy With A Small Molecule Ablative Compound,” patent awards for Australia and Mexico for “Combination of Local
And Systemic Therapies for Enhanced Treatment of Dermatologic Conditions,” and patent awards for Australia, China, Europe, Hong
Kong, and Mexico for “In Vitro And Xenograft Anti-Tumor Activity Of A Halogenated-Xanthene Against Refractory Pediatric Solid Tumors.”
Clinical
Development and Drug Discovery
The
Company’s small molecule HX medical science platform includes:
Clinical
Development Programs
In
Vivo Proof-of-Concept Drug Discovery Programs
In
Vitro Drug Discovery Programs
2023
Activity
In
April, preclinical research on the Company’s pharmaceutical-grade rose bengal sodium drug substance against colistin-resistant
gram-negative bacteria was published in The Journal of Antibiotics, a medical periodical by Nature Portfolio for the Japan Antibiotics
Research Association: “Antibacterial effect of rose bengal against colistin-resistant gram-negative bacteria.”
In
June, the Company initiated a new sponsored research program with the University of Tennessee College of Veterinary Medicine to assess
the safety and preliminary efficacy of intralesional injection of a formulation of the Company’s pharmaceutical-grade RBS for canine
soft tissue sarcomas.
The
Company’s stockholders approved the proposals of the Board of Directors (“Board”) to seek the authority to undertake
a reverse stock split and an authorized share reduction.
In
July, the USPTO published the Company’s patent application entitled “Photodynamic Anti-Gram-Positive Bacterial Activity of
Pharmaceutical-Grade Rose Bengal” (publication no. 18/089,011).
In
August, the USPTO published the Company’s patent application entitled “Halogenated Xanthene-Containing Topical Anti-Gram-Positive
Bacterial Ophthalmic Composition and Method” (publication no. 18/089,134).
In
November, preclinical data from ongoing research on the potential use of PV-10 as an adjuvant in vaccines to help them work better was
the subject of a poster presentation at the Society for Immunotherapy of Cancer (SITC) 2023 annual meeting, held in San Diego, CA from
November 1-5: “The iodinated fluorescein derivative PV-10 enhances the antiviral activity of CD8+ T-Cells by inducing STING dimerization:
Implications for enhanced vaccine applications.”
The
Company provided updated data from an ongoing Phase 1 clinical trial of PV-10 for the treatment of uveal melanoma (UM) metastatic to
the liver (mUM) (NCT00986661).
The
Company also provided updated data from an ongoing Phase 1b/2 clinical trial of PV-10 in combination with standard of care immune checkpoint
blockade for the treatment of advanced cutaneous melanoma (NCT02557321).
In
December, the USPTO allowed patent application 17/488,430, titled “Halogenated Xanthenes as Vaccine Adjuvants.” The allowed
patent application covers the use of Provectus’s pharmaceutical-grade rose bengal sodium (RBS) drug substance as an adjuvant in
anticancer, antiviral, and possibly other vaccines to potentially make them work better by enhancing T-cell response.
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.
Supply
Chain
During
2023, we undertook extensive validation testing of our supply of prescription drug candidate PV-10.
Federal
Regulation of Therapeutic Products
All
the prescription drug candidates that we currently contemplate developing will require approval by the U.S. Food and Drug Administration
(“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 The International
Conference on Harmonisation (“ICH”) Good Clinical Practice 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.
Additional
Regulation
We
are subject to various federal, state, and local laws and regulations relating to the protection of the environment, human health, and
safety in the U.S. and in other jurisdictions in which we operate. If we violate these laws and regulations, we could be fined, criminally
charged, or otherwise sanctioned by regulators. Environmental laws and regulations are complex, change frequently and have become more
stringent over time. We believe that our operations currently comply in all material respects with applicable environmental laws and
regulations.
Human
Capital Resources
We
have four full-time employees who currently serve as CFO, CTO, senior scientist, and controller. We also engage independent contractors,
who currently serve as chief operations consultant, director of clinical operations, clinical research associates, and information technology 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 members of our Board of Directors, employees, and contractors significantly benefit our operations and performance.
The Company’s Board of Directors and management oversee various employee and contractor initiatives.
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.
The Company also intends to use press releases, the Company’s website and certain social media accounts as
a means of disclosing information and observations about the Company and its business, and for complying with the Company’s disclosure
obligations under Regulation FD: the Provectus Substack account (provectus.substack.com), the @ProvectusBio X account (twitter.com/provectusbio),
and the Company’s LinkedIn account (linkedin.com/company/provectus-biopharmaceuticals). The information and observations that the
Company posts through these social media channels may be deemed material. Accordingly, investors should monitor these social media channels
in addition to following the Company’s press releases, SEC filings, and website. The social media channels that the Company intends
to use as a means of disclosing the information described above may be updated from time to time.
The contents of the websites provided above are not intended to be incorporated by reference into this Annual Report
on Form 10-K or in any other report or document we file with the SEC. Further, our references to the URLs for these websites are intended
to be inactive textual references only.
ITEM 1A. RISK FACTORS.
Our
business and its future performance may be affected by various factors, the most significant of which are discussed below.
Risks
Related to Our Business
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, 2023, we have incurred net losses of approximately
$253 million in the aggregate since inception in January 2002. 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, develop our prescription drug formulation candidates, 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 and prescription
drug formulation candidates in 2024 and beyond, and our ability to obtain the necessary funding is uncertain.
We
need additional capital in 2024 and beyond to continue developing and seeking to commercialize our drug product candidates. We intend
to continue with the development of our prescription drug candidates and prescription drug formulation candidates on the basis of historical,
ongoing, and prospective clinical and preclinical study 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 August 13, 2021, the Board approved a Financing Term Sheet (the “2021 Term Sheet”), which sets
forth the terms under which the Company will use its best efforts to arrange for financing of a maximum of $5,000,000 (the “2021
Financing”), which amounts will be obtained in several tranches and evidenced by convertible promissory notes (collectively, the
“2021 Notes”). As of December 31, 2023, the Company had received 2021 Notes proceeds of $1,460,000, of which $200,000 is
from a related party investor.
On
September 20, 2022, the Board approved the closure of the 2021 Financing. Through December 31, 2023, the Company had received 2021
Notes proceeds of $2,335,000, of which $525,000 is from a related party investor (a Company officer and Company director), however
$1,260,000 of these notes were converted to Series D-1 Preferred Shares during the 4th quarter 2022 and $875,000 of these
notes were converted to Series D-1 Preferred Shares during the year ended December 31, 2023. As of December 31, 2023, the
remaining 2021 Note balance was $200,000. See Note 5.
On
September 20, 2022, the Board approved a Financing Term Sheet (the “2022 Term Sheet”), which set forth the terms under
which the Company will use its best efforts to arrange for financing of a maximum of $5,000,000 (the “2022 Financing”),
which amounts will be obtained in several tranches. Through December 31, 2023, the Company had received 2022 Notes proceeds of
$3,227,500, as defined below, of which $2,352,500 is from a related party investor (a Company director), however, $752,500 of these
notes were converted to Series D-1 Preferred Shares during the year ended December 31, 2023. As of December 31, 2023, the remaining
2022 Notes balance was $2,475,000. See Note 5.
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.
There
is substantial doubt as to our ability to continue as a going concern.
The
Company’s cash balance was $1,026,799 at December 31, 2023, which includes $950,223 of restricted cash resulting from a grant received
from the State of Tennessee. The Company’s working capital deficiency was $7,652,098 and $6,293,198 as of December 31, 2023 and
December 31, 2022, respectively. The Company continues 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 our prescription drug candidates and prescription drug
formulation candidates, and to raise additional capital.
Management
believes that we may have access to capital resources through possible public or private equity offerings, including the 2022 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
prescription drug product candidates are at early- to mid-stages 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 prescription 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 and clinical trial sites, delays in obtaining required institutional
review board 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 if they
are approved, 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.
If
we lose any of our key personnel, we may be unable to successfully execute our business plan.
Our
business is presently managed by key Board members, employees, and independent contractors: (i) Ed Pershing, who is chairman of the
Board, (ii) Dominic Rodrigues, who is vice chairman of the Board and chief operations consultant, (iii) Eric Wachter, Ph.D., our Chief Technology Officer (“CTO”), who is an employee, and (iv) Heather Raines, CPA, our
CFO, who is an employee.
In
order to successfully execute our business plan, our management and Board must succeed in all of the following critical areas: researching
diseases and possible therapies in the areas of oncology and dermatology, developing our prescription drugs candidates, marketing and
selling developed prescription drug candidates, obtaining additional capital to finance research and development production, and marketing
of our drug products, and managing our business as it grows.
Disruption
resulting from management transition may have a detrimental impact on our ability to implement our strategy. The reduction in role and/or
loss of key employees, contractors, and/or Board members could have a material adverse effect on our operations, and limit or constrain
our ability to execute our business plan.
Our
business and operations are subject to risks related to climate change.
The
long-term effects of global climate change present risks to our business. Extreme weather or other conditions caused by climate change
could adversely impact our supply chain and the operation of our business. Such conditions could also result in physical damage to our
leased property, clinical trial materials, clinical sites, or the facilities of our contract manufacturers. These events could adversely
affect our operations and our financial performance.
Our