Item 1A. Risk Factors
The following risk factors
are not exhaustive and investors are encouraged to perform their own investigation with respect to the business, prospects, financial
condition and operating results of Revelation and our business, prospects, financial condition and operating results. You should carefully
consider the following risk factors in addition to the other information included in this proxy statement/prospectus, including matters
addressed in the section titled “Cautionary Note Regarding Forward-Looking Statements.” We may face additional risks
and uncertainties that are not presently known to us, or that we currently deem immaterial, which may also impair our business, prospects,
financial condition or operating results. The following discussion should be read in conjunction with our financial statements and notes
to the financial statements included herein.
Unless the context otherwise
requires, references herein to “Program Products” refers to Revelation’s REVTx-99a, REVTx-99b, REVTx-200 and REVDx-501
programs.
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Risks Related to Our Business
We have a limited operating history and
no products approved for commercial sale. We have incurred net losses since our inception, we anticipate that we will continue to incur
significant losses for the foreseeable future, and even if we were to generate revenue, we may never achieve or maintain profitability.
We are a clinical stage biopharmaceutical
company with a limited operating history may make it difficult to evaluate the success of our business to date and to assess our future
viability. We commenced our operations in May 2020, and, to date, our operations have been limited to organizing and staffing our
Company, business planning, raising capital, conducting research and development activities, including early clinical study, and providing
general and administrative support for these operations. Investment in biopharmaceutical product development and diagnostic device is
highly speculative because it entails substantial upfront capital expenditures and significant risk that any potential product candidate
and/or diagnostic device will fail to demonstrate adequate effect and/or an acceptable safety profile, gain regulatory approval or become
commercially viable. We currently have no products approved for commercial sale, we have not generated any revenue from product sales
to date and we continue to incur significant research and development and other expenses related to our ongoing operations. We have limited
experience as a Company conducting clinical studies and no experience as a Company commercializing any products.
We are not profitable and
have incurred net losses since our inception. As of December 31, 2021, we had an accumulated deficit of $14.5 million. Consequently,
predictions about our future success or viability may not be as accurate as they would be if we had a longer operating history or a history
of successfully developing and commercializing pharmaceutical products. We have spent, and expect to continue to spend, significant resources
to fund research and development of, conduct clinical studies, and seek regulatory approvals for, our Program Products, and any future
product candidates. We expect to incur substantial and increasing operating losses over the next several years as our research,
development, preclinical testing and clinical study activities increase. As a result, our accumulated deficit will also increase significantly.
We may encounter unforeseen expenses, difficulties, complications, delays and other unknown factors that may adversely affect our business.
The size of our future net losses will depend, in part, on the rate of future growth of our expenses and our ability to generate revenue.
Our prior losses and expected future losses have, had and will continue to have a material adverse effect on our stockholders’
equity and working capital.
The net losses we incur may
fluctuate significantly from quarter-to-quarter such that a period-to-period comparison of our results of operations may not be a good
indication of our future performance
We have no products approved
for marketing in any jurisdiction, our Program Products are in early stages of development. We have never generated any revenue from
product sales. Our ability to generate revenue and achieve profitability depends on our ability, alone or with strategic collaboration
partners, to successfully complete the development of and obtain the regulatory and marketing approvals necessary to commercialize one
or more of our Program Products. We do not anticipate generating revenue from product sales in the next couple of years. Even if
we eventually generate product revenue, we may never be profitable and, if we do achieve profitability, we may not be able to sustain
or increase profitability on a quarterly or annual basis
We may not be able to raise
additional funding on acceptable terms, or at all. Failure to obtain funding on acceptable terms and on a timely basis may require us
to curtail, delay or discontinue our product development efforts or other operations. Raising additional funding may cause dilution to
our stockholders.
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Developing our Program Products
is expensive, and we expect our research and development expenses to increase substantially in connection with our ongoing activities,
particularly as we advance our Program Products through clinical studies, manufacturing and regulatory approval. We expect to finance
future cash needs through public or private equity or debt offerings or product collaborations. We do not have any committed external
source of funds. We cannot guarantee that future financing will be available in sufficient amounts or on terms acceptable to us, if at
all, and the terms of any financing may adversely affect the interests or rights of our stockholders. Even if we believe that we have
sufficient funds for our current or future operating plans, we may seek additional capital if market conditions are favorable or if we
have specific strategic considerations. The issuance of additional securities, whether equity or debt, by us, or the possibility of such
issuance, may affect the value of your investment.
To the extent that we raise
additional capital through the sale of equity or convertible debt securities, your ownership interest will be diluted, and the terms
of such securities may include liquidation or other preferences that adversely affect your rights as a stockholder. Debt financing, if
available, may involve covenants restricting our operations or our ability to incur additional debt.
If we do not raise additional
capital, we may not be able to expand our operations or otherwise capitalize on our business opportunities, our business and financial
condition will be negatively impacted, and we may need to:
Risks Related to the Product Development, Regulatory
Approval, Manufacturing and Commercialization of Our Program Products and Product Candidates
If preclinical studies or clinical studies
for our Program Products are unsuccessful or delayed, we will be unable to meet our future development goals.
Conducting clinical studies
for any product candidates for approval in the United States requires filing an IND and reaching agreement with the FDA on clinical
protocols, finding appropriate clinical sites and clinical investigators, securing approvals for such studies from the institutional
review board (“IRB”) at each such site, manufacturing clinical quantities of product candidates and supplying drug product
or devices to clinical sites. Currently, we do not have an active IND with the FDA in the United States for our Program Products.
If our IND is not approved by the FDA, our clinical development timeline may be negatively impacted, and any future clinical programs
may be delayed or terminated.
Even if the clinical studies
are approved by FDA or other regulatory agencies, clinical study is expensive and can take many years to complete, and its outcome
is inherently uncertain. A failure of one or more of our clinical studies can occur at any time during the clinical study process. We
do not know whether future clinical studies, if any, will begin on time, need to be redesigned, enroll an adequate number of patients
on time or be completed on schedule, if at all. Clinical studies can be delayed, suspended or terminated for a variety of reasons, including
failure to (i) generate sufficient positive preclinical and clinical data; (ii) recruit contract research organizations (“CRO”),
clinical investigators and patients in a timely manner; (iii) manufacture sufficient quantities at the required quality of Program
Products for use in clinical studies; (iv) raise sufficient capital to fund a study; (v) comply with all applicable regulatory
requirements, whether in the United States or elsewhere, and (vi) obtain successful regulatory approval from regulatory authorities
like the FDA.
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If we experience delays in
completing any clinical study of our Program Products or successfully obtaining regulatory approval, the commercial prospects of our
Program Products may be harmed, and our ability to generate product revenues from any of these product candidates will be delayed. In
addition, any delays in completing our clinical studies will increase our costs, slow down the development and approval process of our
Program Products, and jeopardize our ability to commence product sales and generate revenues. Any of these occurrences may significantly
harm our business and financial condition. In addition, many of the factors that cause, or lead to, a delay in the commencement or completion
of clinical studies may also ultimately lead to the denial of regulatory approval of our product candidates.
Clinical drug development involves a lengthy
and expensive process with uncertain timelines and uncertain outcomes, and the results of prior preclinical or clinical studies are not
necessarily predictive of our future results. Our clinical studies may fail to adequately demonstrate the safety and efficacy of our
Program Products or any future product candidates.
To date, the primary focus
of our product development has been on the development of REVTx-99a/b, our therapeutic products and REVDx-501, our diagnostic device.
Currently, REVTx-99a/b are our only product candidates under clinical development. We have completed a Phase 1 clinical study in
Australia and collected data to support continued development. We received approval from the Heads of Medicines Agency and the Federal
Agency for Medicines and Health Product to conduct our Phase 2b viral challenge clinical study for the prevention of influenza infection
in September of 2021. Enrollment and dosing has begun in our Phase 2b viral challenge study. On March 30, 2022 we were told from
an independent data analysis group that the primary endpoint of the Phase 2b study did not meet statistical significance. We were granted
ethics committee approval from Bellberry Limited for a Phase 1b allergen challenge study in October of 2021 to support the treatment
of chronic nasal congestion program. Enrollment and dosing has begun in our Phase 1b allergen challenge study.
Even though our Phase 1
clinical study results are positive, our Phase 1 clinical study involved a small patient population of healthy volunteers, and because
of the small sample size in such study, the results of this clinical study may be subject to substantial variability and may not be indicative
of either future interim results or final results in patients for our indication. Results from preclinical studies or early-stage clinical
studies are not necessarily predictive of future clinical study results, and interim results of a clinical study are not necessarily
indicative of final results. As well, later stage clinical studies may fail to show the desired safety and efficacy in clinical development
despite positive results in preclinical and early clinical studies. This failure would cause us to abandon further development of our
most advanced product candidate.
There is a high failure rate
for product candidates proceeding through clinical studies. Failure can occur at any time during the clinical study process. Many companies
in the pharmaceutical industry have suffered significant setbacks in late-stage clinical studies even after achieving promising results
in preclinical testing and earlier-stage clinical studies. Data obtained from preclinical and clinical activities are subject to varying
interpretations, which may delay, limit or prevent regulatory approval. In addition, we may experience regulatory delays or rejections
as a result of many factors, including changes in regulatory policy during the development period of our Program Products. Success in
preclinical testing and early clinical studies does not ensure that later clinical studies will generate the same results or otherwise
provide adequate data to demonstrate the efficacy and safety of a product candidate. Frequently, product candidates that have shown promising
results in early clinical studies have subsequently suffered significant setbacks in later clinical studies. If we are unable to successfully
demonstrate the safety and efficacy of our Program Products or other future product candidates and receive the necessary regulatory approvals,
our business will be materially harmed.
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The Clinical Studies of our Program Products’
have been and are planned to be conducted outside the United States, and the FDA or comparable foreign regulatory authorities may
not accept data from such studies.
We currently have not conducted
any clinical studies in the United States to date. We have conducted and we plan to conduct additional clinical studies outside
the United States, including Europe, Australia, or other foreign jurisdictions. The acceptance of clinical study data by the FDA
from clinical studies conducted outside the United States may be subject to certain conditions. In cases where data from clinical
studies conducted outside the United States are intended to serve as the sole bases for regulatory approval in the United States,
the FDA will generally not approve the application on the basis of foreign data alone unless (i) the data are applicable to the
United States population and United States medical practices, (ii) the studies were performed by clinical investigators
of recognized competence and (iii) the data may be considered valid without the need for an on-site inspection by the FDA or, if
the FDA considers such an inspection to be necessary, the FDA is able to validate the data through an on-site inspection or other appropriate
means. Additionally, the FDA’s clinical study requirements, including sufficient size of patient populations and statistical powering,
must be met. Many foreign regulatory bodies have similar approval requirements. In addition, such foreign studies would be subject to
the applicable local laws of the foreign jurisdictions where the studies are conducted. There can be no assurance that the FDA or any
comparable foreign regulatory authority will accept data from studies conducted outside of the United States or the applicable jurisdiction.
If the FDA or any comparable foreign regulatory authority does not accept such data, it would result in the need for additional studies,
which would be costly and time-consuming and delay aspects of our business plan, and may result in our Program Products’ not receiving
regulatory approval or clearance for commercialization in the applicable jurisdiction.
As an organization, we have never conducted
pivotal clinical studies, and we may be unable to do so for any Program Products we may develop.
We will need to successfully
complete pivotal clinical studies in order to obtain the approval of the FDA, the European Medicines Agency (“EMA”) or other
regulatory agencies to market any of our Program Products. Carrying out later-stage clinical studies and the submission to the FDA of
a successful NDA, Biologics License Application (“BLA”), 510(k) Clearance, De Novo Clearance or Premarket Approval Application
(“PMA”) is a complicated process. As an organization, we have not previously conducted any later stage or pivotal clinical
studies and have limited experience in preparing, submitting and prosecuting regulatory filings. We may be unable to conduct clinical
studies at preferred sites, enlist clinical investigators, enroll sufficient numbers of participants or begin or successfully complete
clinical studies in a timely fashion, if at all. In addition, the design of a clinical study can determine whether its results will support
approval of a product, and flaws in the design of a clinical study may not become apparent until the clinical study is well advanced.
Because we have limited experience as a company designing clinical studies, we may be unable to successfully and efficiently execute
and complete necessary clinical studies in a way that leads to successful regulatory submission and approval. We may require more time
and incur greater costs than our competitors and may not succeed in obtaining regulatory approvals of product candidates that we develop.
Failure to commence or complete, or delays in, our planned clinical studies, could prevent us from or delay us in commercializing our
Program Products. We rely on third parties to conduct certain elements of our preclinical and clinical studies and perform other tasks
for us. If these third parties do not successfully carry out their contractual duties, meet expected deadlines or comply with regulatory
requirements, we may not be able to obtain regulatory approval for or commercialize our Program Products.
We may find it difficult to enroll patients
in our clinical studies, which could delay or prevent us from proceeding with clinical studies.
Identifying and qualifying
patients to participate in clinical studies of our product candidates is critical to our success. The timing of our clinical studies
depends in part on the speed at which we can recruit patients to participate in testing our Program Products, and we may experience delays
in our clinical studies if we encounter difficulties in enrollment. Patient enrollment and retention in clinical studies depends on many
factors, including the size of the patient population, number and location of the clinical sites, significant adverse events or other
side effects observed, if any, the nature of the study protocol, our ability to recruit clinical study investigators with the appropriate
competencies and experience, the existing body of safety and efficacy data with respect to the study drug, the number and nature of competing
treatments and ongoing clinical studies of competing drugs for the same indication, the proximity of patients to clinical sites, clinicians’
and patients’ perceptions as to the potential advantages of the Program Products being studied in relation to other available therapies,
including any drugs that may be approved for the indications we are investigating, the eligibility criteria for the study, our ability
to obtain and maintain patient consents and the risk that patients enrolled in clinical studies will drop out of the studies before completion.
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In addition, our competitors,
some of whom have significantly greater resources than we do, are conducting clinical studies for the same indications and seek to enroll
patients in their studies that may otherwise be eligible for our clinical studies or studies, which could lead to slow recruitment and
delays in our clinical programs. Further, since the number of qualified clinical investigators is limited, we expect to conduct some
of our clinical studies at the same clinical study sites that some of our competitors use, which could further reduce the number of patients
who are available for our clinical studies in these sites.
Our inability to enroll sufficient
number of patients for our clinical studies would result in significant delays or may require us to abandon one or more clinical studies
altogether. If we are unable to enroll sufficient number of patients that will complete clinical testing, we will be unable to seek or
gain marketing approval for our Program Products and any future product candidates and our business will be harmed. Even if we are able
to enroll a sufficient number of patients in our clinical studies or studies, delays in patient enrollment may result in increased costs
or may affect the timing or outcome of our clinical studies, which could prevent completion of these studies and adversely affect our
ability to advance the development of our Program Products and any future product candidates.
Our Program Products and the administration
of our Program Products may cause undesirable side effects or have other properties that could delay or prevent their regulatory approval,
limit the commercial profile of an approved label or result in significant negative consequences following marketing approval, if any.
The severity and frequency
of undesirable side effects caused by our Program Products, could cause us or regulatory authorities to interrupt, delay or halt clinical
studies and could result in a more restrictive label, delay or denial of regulatory approval by the FDA or other regulatory agencies.
Results of our studies could reveal a high and unacceptable severity and prevalence of these or other side effects. In such an event,
our clinical studies could be suspended or terminated, and the FDA or other regulatory agencies could order us to cease further development
of or deny or withdraw approval of our product candidates for any or all targeted indications. Moreover, during the conduct of clinical
studies, patients report changes in their health, including illnesses, injuries and discomforts, to their study doctor. Often, it is
not possible to determine whether or not the product candidate being studied caused these conditions.
Drug-related, drug product-related,
formulation-related and administration-related side effects could affect patient recruitment, the ability of enrolled patients to complete
the clinical study or result in potential product liability claims, which could exceed the insurance coverage. Additionally, if one or
more of our Program Products receives marketing approval, and we or others later identify undesirable side effects caused by such products,
a number of potentially significant negative consequences could result.
If we or others identify
undesirable or unacceptable side effects caused by our Program Products or any future product candidates or products:
● we may be required to modify, suspend or terminate our clinical studies;
● we may be required to conduct costly additional clinical studies;
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● we may be subject to limitations on how we may promote our approved products;
● sales of our approved products may decrease significantly;
● our products may become less competitive, or our reputation may suffer.
Interim, topline and preliminary data from
our clinical studies that we announce or publish from time to time may change as more patient data become available and are subject to
audit and verification procedures that could result in material changes in the final data.
From time to time, we may
publicly disclose preliminary or topline data from our clinical studies, which are based on a preliminary analysis of then-available
data, and the results and related findings and conclusions are subject to change following a more comprehensive review of the data related
to the particular study or studies. We also make assumptions, estimations, calculations and conclusions as part of our analyses of data,
and we may not have received or had the opportunity to fully and carefully evaluate all data. As a result, the topline results that we
report may differ from future results of the same studies, or different conclusions or considerations may qualify such results, once
additional data have been received and fully evaluated. Topline data also remain subject to audit and verification procedures that may
result in the final data being materially different from the preliminary data we previously published. As a result, topline data should
be viewed with caution until the final data are available. From time to time, we may also disclose interim data from our clinical studies.
In addition, we may report interim analyses of only certain endpoints rather than all endpoints. Interim data from clinical studies that
we may complete are subject to the risk that one or more of the clinical outcomes may materially change as patient enrollment continues
and more patient data become available.
In addition, adverse changes
between interim data and final data could significantly harm our business and prospects. Additional disclosure of interim data by us
or by our competitors in the future could also result in volatility in the price of our Common Stock after this offering. Further, others,
including regulatory agencies, may not accept or agree with our assumptions, estimates, calculations, conclusions or analyses or may
interpret or weigh the importance of data differently, which could impact the value of the particular program, the approvability or commercialization
of the particular product candidate or product and our Company in general. In addition, the information we choose to publicly disclose
regarding a particular study or clinical study is based on what is typically extensive information, and you or others may not agree with
what we determine is the material or otherwise, appropriate information to include in our disclosure, and any information we determine
not to disclose may ultimately be deemed significant with respect to future decisions, conclusions, views, activities or otherwise regarding
a particular drug, drug candidate or our business. If the topline data that we report differ from actual results, or if others, including
regulatory authorities, disagree with the conclusions reached, our ability to obtain approval for, and commercialize, our Program Products
or any future product candidates may be harmed, which could harm our business, financial condition, results of operations and prospects.
Even if we complete the necessary clinical
studies, we cannot predict when, or if, we will obtain regulatory approval to commercialize any of our Program Products, and the approval
may be for a more narrow indication than we seek or be subject to other limitations or restrictions that limit its commercial profile.
Our Program Products have
not received regulatory approval. We do not expect our Program Products or any future product candidate to be commercially available
for years, if at all. Our Program Products are, and any future product candidate will be subject to strict regulation by regulatory
authorities in the United States and in other countries. We cannot commercialize a product candidate or diagnostic device until
the appropriate regulatory authorities have reviewed and approved such product candidate or diagnostic device. Even if our current or
future Program Products meet safety and efficacy endpoints in pivotal clinical studies, the regulatory authorities may not complete their
review processes in a timely manner, or we may not be able to obtain regulatory approval. Additional delays may result if an FDA Advisory
Committee or other regulatory authority recommends non-approval or restrictions on approval. This may include approval of a product candidate
for more limited indications than requested or they may impose significant limitations in the form of warnings. In addition, we may experience
delays or rejections based upon additional government regulation from future legislation or administrative action, or changes in regulatory
authority policy during the period of product development, clinical studies and the review process.
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Our business depends on the success of
our Program Products, including obtaining regulatory approval to market our product candidates in the United States and/or other
major foreign markets such as the European Union (“EU”).
We have invested, and will
continue to invest, a significant portion of our time and financial resources in the clinical development of REVTx-99a, REVTx-99b, REVTx-200
and REVDx-501. If we cannot successfully develop, obtain regulatory approval for, and commercialize our Program Products, we may not
be able to continue our operations. The future regulatory approval and commercial success of our Program Products are subject to a number
of risks, including the following:
Of the large number of drugs
and devices in development in the pharmaceutical industry, only a small percentage results in the submission of a marketing authorization
to the FDA or comparable foreign regulatory authorities and even fewer are approved for commercialization. Furthermore, even if we do
receive regulatory approval to market our Program Products, any such approval may be subject to limitations on the indicated uses or
patient populations for which we may market the products. Accordingly, even if we are able to obtain the requisite financing to continue
to fund our development programs, we may be unable to successfully develop or commercialize our Program Products. If we or any of our
future development collaborators are unable to develop, or obtain regulatory approval for, or, if approved, successfully commercialize
our Program Products, we may not be able to generate sufficient revenue to continue our business.
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Even if we obtain regulatory approval for
a product candidate, our products and business will remain subject to ongoing regulatory obligations and review.
Even if our Program Products
are approved, they will be subject to ongoing regulatory requirements for manufacturing, labeling, packaging, storage, advertising, distribution,
promotion, sampling, record-keeping, conduct of post-marketing studies and submission of safety, efficacy and other post-market information,
including both federal and state requirements in the United States and comparable requirements outside of the United States.
Accordingly, we and others with whom we work must continue to expend time, money and effort in all areas of regulatory compliance, including
manufacturing, production and quality control. If a regulatory agency discovers previously unknown problems with a product, such as adverse
events of unanticipated severity or frequency, quality of product or disagrees with the promotion, marketing or labeling of a product,
such regulatory agency may impose restrictions on that product or us, including requiring recall or withdrawal of the product from the
market.
In addition, manufacturers
of drug products and their facilities are subject to continual review and periodic inspections by the FDA and other regulatory authorities
for compliance with current good manufacturing practices (“cGMP”), regulations and standards. If we or a regulatory agency
discover previously unknown problems with a product, such as adverse events of unanticipated severity or frequency, or problems with
the facility where the product is manufactured, a regulatory agency may impose restrictions on that product, the manufacturing facility
or us, including requiring recall or withdrawal of the product from the market or suspension of manufacturing. If we, our product candidates
or the manufacturing facilities for our product candidates fail to comply with applicable regulatory requirements, or undesirable side
effects caused by such products are identified, a regulatory agency may:
● require that we conduct post-marketing studies;
● seek an injunction or impose civil or criminal penalties or monetary fines;
● suspend marketing of, withdraw regulatory approval of or recall such product;
● suspend any ongoing clinical studies;
The occurrence of any event
or penalty described above may inhibit our ability to commercialize our products and generate product revenue.
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If one or more of our Program Products
is approved for marketing in the United States or other countries, we may be subject, directly or indirectly, to United States
or other countries equivalent federal and state healthcare fraud and abuse laws, false claims laws, physician payment transparency laws
and health information privacy and security laws. If we are unable to comply, or have not fully complied, with such laws, we could face
substantial penalties.
Even if we obtain FDA or
other comparable regulatory agencies approval for any of our Program Products and begin commercializing those products in the United States
or other countries, our operations may be directly or indirectly through our relationships with physicians, patients, third-party payors
and customers, subject to broadly applicable fraud and abuse and other healthcare laws and regulations that may constrain our business
or financial arrangements and relationships through which we research, market, sell and distribute our Program Products. In addition,
we may be subject to patient privacy regulation by both the federal government and the states in which we conduct our business. The laws
that may affect our ability to operate include, among others, the United States Anti-Kickback Statute, the False Claims Act, the
United States Health Insurance Portability and Accountability Act of 1996, and the Physician Payments Sunshine Act (“Sunshine
Act”) and analogous state laws. Ensuring that our internal operations and business arrangements with third parties comply with
all applicable healthcare laws and regulations will likely be costly.
Legislative or regulatory healthcare reforms
in the United States or other countries may make it more difficult and costly for us to obtain regulatory clearance or approval
of our Program Products and to produce, market and distribute our Program Products after clearance or approval is obtained.
From time to time, legislation
is drafted and introduced in Congress that could significantly change the statutory provisions governing the regulatory clearance or
approval, manufacture and marketing of regulated products or the reimbursement thereof. In addition, FDA or other comparable regulatory
agencies regulations and guidance are often revised or reinterpreted by the FDA or other comparable regulatory agencies in ways that
may significantly affect our business and our products. Any new regulations or revisions or reinterpretations of existing regulations
may impose additional costs or lengthen review times of our Program Products. We cannot determine what effect changes in regulations,
statutes, legal interpretation or policies, when and if promulgated, enacted or adopted may have on our business in the future.
We face intense competition in an environment
of rapid technological change and the possibility that our competitors may develop products and drug delivery systems that are similar,
more advanced or more effective than ours, which may adversely affect our financial condition and our ability to successfully market
or commercialize our Program Products.
The pharmaceutical industry
in which we operate is intensely competitive and subject to rapid and significant technological change. We are currently aware of various
existing therapies in the market and in development that may in the future compete with our Program Products.
Even if approved, we will
compete with currently approved therapies and therapies further along in development. Our competitors both in the United States
and abroad include large, well-established pharmaceutical and generic companies with significantly greater name recognition. Our competitors
may be able to charge lower prices than we can, which may adversely affect our market acceptance. Many of these competitors have greater
resources than we do, including financial, product development, marketing, personnel and other resources.
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If our competitors market
products that are more effective, safer or cheaper than our products or that reach the market sooner than our products, we may not achieve
commercial success. In addition, the biopharmaceutical industry is characterized by rapid technological change. Because our research
approach integrates many technologies, it may be difficult for us to stay abreast of the rapid changes in other technologies. If we fail
to stay at the forefront of technological change, we may be unable to compete effectively. Technological advances or products developed
by our competitors may render our technologies, products or product candidates obsolete, less competitive or not economical. Many of
our competitors have substantially greater financial, technical, human and other resources than we do and may be better equipped to develop,
manufacture and market technologically superior products. In addition, many of these competitors have significantly longer operating
histories and greater experience than we have in undertaking nonclinical studies and human clinical studies of new pharmaceutical products
and in obtaining regulatory approvals of human therapeutic products. Many of our competitors have established distribution channels for
the commercialization of their products, whereas we have no such channel or capabilities. In addition, many competitors have greater
name recognition and more extensive collaborative relationships.
As a result, our competitors
may obtain regulatory approval of their products more rapidly than we do or may obtain patent protection or other intellectual property
rights that limit our ability to develop or commercialize our product candidate or any future product candidates. Our competitors may
also develop and succeed in obtaining approval for drugs that are more effective, more convenient, more widely used and less costly or
have a better safety profile than our products and these competitors may also be more successful than we are in manufacturing and marketing
their products. If we are unable to compete effectively against these companies, then we may not be able to commercialize our product
candidate or any future product candidates or achieve a competitive position in the market. This would adversely affect our ability to
generate revenue. Our competitors also compete with us in recruiting and retaining qualified scientific, management and commercial personnel,
establishing clinical study sites and enrolling patients for clinical studies, as well as in acquiring technologies complementary to,
or necessary for, our programs. Our inability to compete effectively in any of these aspects of our business could harm our business,
financial condition, results of operations and prospects.
Risks Related to COVID-19
There is a significant uncertainty around
the effects of COVID-19 on development of our Program Products.
As a result of the COVID-19
pandemic, we continue to experience additional disruptions that could severely impact our clinical studies for all our Program Products,
including:
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The delays to the clinical
study would result in a delay in the expected timeline for data readouts and thus the timeline of regulatory filings will be negatively
impacted, which would adversely affect and delay our ability to obtain regulatory approvals for our product candidates, increase our
operating expenses, and have a material adverse effect on our financial condition.
Risks Related to our Reliance on Third Parties
We rely on third parties to conduct certain
elements of our preclinical and clinical studies and perform other tasks for us. If these third parties do not successfully carry out
their contractual duties, meet expected deadlines or comply with regulatory requirements, we may not be able to obtain regulatory approval
for or commercialize our Program Products.
We currently rely on, and
expect to continue to rely on, third parties, such as CROs, clinical data management organizations, medical institutions, consultants
and clinical investigators, to conduct our clinical studies and certain aspects of our research and preclinical testing. Any of these
third parties may terminate their engagements with us at any time. If we need to enter into alternative arrangements, it will delay our
product development activities and such alternative arrangements may not be available on terms acceptable to us.
Our reliance on these third
parties for research and development activities will reduce our control over these activities but will not relieve us of our responsibilities.
For example, we will remain responsible for ensuring that each of our clinical studies are conducted in accordance with the general investigational
plan and protocols for the study. Moreover, the FDA and other regulatory agencies requires us to comply with standards, commonly referred
to as current Good Clinical Practices or equivalent, for conducting, recording and reporting the results of clinical studies to assure
that data and reported results are credible and accurate and that the rights, integrity and confidentiality of study participants are
protected. We also are required to register ongoing clinical studies and post the results of completed clinical.
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We rely on third parties to manufacture
the raw materials, including the active pharmaceutical ingredients that we use to create our therapeutic product candidate, and to manufacture
the diagnostic devices, including the antibodies used for testing. Our business could be harmed if existing and prospective third parties
fail to provide us with sufficient quantities of these materials and products or fail to do so at acceptable quality levels or prices.
We rely on third party suppliers
for certain raw materials necessary to manufacture our product candidates for our preclinical studies and clinical studies and to manufacture
our diagnostic tests for our clinical studies. Some of these raw materials and test components are difficult to source. Because there
are a limited number of suppliers for these raw materials and components, we may need to engage alternate suppliers to prevent a possible
disruption of the manufacture of the materials necessary to produce our Program Products for our clinical studies, and if approved, ultimately
for commercial sale. In particular, there is only one supplier for PHAD®, Avanti Polar Lipids, Inc. Although we have secured
enough material through a purchase order for our planned clinical trials, we do not have a long-term supply agreement with Avanti Polar
Lipids, Inc. We do not have any control over the availability of raw materials and components. If we or our manufacturers are unable
to purchase these raw materials or components on acceptable terms, at sufficient quality levels, or in adequate quantities, if at all,
the development and commercialization of our product candidates or any future product candidates, would be delayed or there would be
a shortage in supply, which would impair our ability to meet our development objectives for our Program Products or generate revenues
from the sale of any approved products.
Until such time, if ever,
as we establish a manufacturing facility that has been properly validated to comply with FDA or other comparable regulatory agencies cGMP
requirements, we will not be able to independently manufacture Program Products for our planned preclinical and clinical programs. We
currently rely on a third-party manufacturer for the production of our clinical study materials. And to date, REVTx-99a/b and REVTx-200
have been manufactured by a single third-party manufacturer. This manufacturer may not be able to scale production to the larger quantities
required for large clinical studies and to commercialize REVTx-99a/b and REVTx-200, if approved. REVDx-501 has also been manufactured
and developed by a single third-party manufacturer. This manufacturer may not be able to scale production to the larger quantities required
for a clinical study and to commercialize, if approved. Also, the third-party manufacturers may not be able to produce Program Products
that meet the quality requirements. In the event that this third-party manufacturer does not successfully carry out its contractual duties,
meet expected deadlines or manufacture our products in accordance with regulatory requirements or if there are disagreements between us
and this third-party manufacturer, we will not be able to complete, or may be delayed in completing, the clinical studies required. In
such instances, we may need to locate an appropriate replacement third-party relationship, which may not be readily available or on acceptable
terms, which would cause additional delay or increased expense and would thereby have a material adverse effect on our business, financial
condition, results of operations and prospects.
We do not have a long-term
supply agreement with any third-party manufacturer. Reliance on third-party manufacturers entails risks to which we would not be subject
if we manufacture product candidates or products ourselves. For example, if we do not maintain our key manufacturing relationships, we
may fail to find replacement manufacturers or develop our own manufacturing capabilities in a timely manner or at all, which could delay
or impair our ability to obtain regulatory approval for our products and substantially increase our costs or deplete profit margins,
if any. If we do find replacement manufacturers, we may not be able to enter into agreements with them on terms and conditions favorable
to us, and there could be a substantial delay before new facilities could be qualified and registered with the FDA and other comparable
foreign regulatory authorities. Even if we are able to establish agreements with third-party manufacturers, reliance on third-party manufacturers
entails additional risks, including:
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Certain raw materials necessary
for the manufacture of REVTx-99a/b and REVTx-200 under our current manufacturing process, such as our Active Pharmaceutical Ingredient
(“API”), are available only from a single supplier. Any significant delay in the acquisition or decrease in the availability
of these raw materials from our supplier could considerably delay the manufacture of REVTx-99a/b and REVTx-200, which could adversely
impact the timing of any planned studies or the regulatory approvals of REVTx-99a/b and REVTx-200. The FDA and other comparable foreign
regulatory authorities require manufacturers to register manufacturing facilities. The FDA and other comparable foreign regulatory authorities
also inspect these facilities to confirm compliance with cGMP.
Contract manufacturers may
face manufacturing or quality control problems causing drug substance, drug product, diagnostic test kit production and shipment delays
or a situation where the contractor may not be able to maintain compliance with the applicable cGMP requirements. We may have little
to no control regarding the occurrence of third-party manufacturer incidents. Any failure to comply with cGMP requirements or other FDA
or comparable foreign regulatory requirements could adversely affect our clinical research activities and our ability to develop our
Program Products or any future product candidates and market our Program Products following approval.
If our Program Products or
any future product candidates are approved by the FDA or other comparable foreign regulatory authorities for commercial sale, we may
need to manufacture such product candidate in larger quantities. We intend to use third-party manufacturers for commercial quantities
of our Program Products to the extent we advance this product candidate and other product candidates. Our manufacturers may not be able
to successfully increase the manufacturing capacity for any of our product candidates in a timely or efficient manner, or at all. If
we are unable to successfully increase the manufacturing capacity for a product candidate, the regulatory approval or commercial launch
of that product candidate may be delayed or there may be a shortage in the supply of the product candidate.
In addition, the operations
of our third-party manufacturers may be subject to earthquakes, power shortages, telecommunications failures, failures or breaches of
information technology systems, water shortages, floods, hurricanes, typhoons, fires, extreme weather conditions, medical epidemics,
and other natural or man-made disasters or business interruptions. Damage or extended periods of interruption to our facilities due to
fire, natural disaster, power loss, communications failure, unauthorized entry or other events could cause us to cease or delay development
of some or all of our product candidates. Our ability to obtain clinical supplies of our product candidates could be disrupted if the
operations of these suppliers are affected by a man-made or natural disaster or other business interruption.
Our current and anticipated
future dependence upon others for the manufacture of our product candidates may adversely affect our future profit margins and our ability
to develop our product candidates and commercialize any products that receive regulatory approval on a timely basis.
In some cases, the technical
skills or technology required to manufacture our product candidates may be unique or proprietary to the original manufacturer, we may
have difficulty transferring such skills or technology to another third party and a feasible alternative many not exist. These factors
would increase our reliance on such manufacturer or require us to obtain a license from such manufacturer in order to have another third
party manufacture our product candidates. If we are required to change manufacturers for any reason, we will be required to verify that
the new manufacturer maintains facilities and procedures that comply with quality standards and with all applicable regulations and guidelines.
The delays associated with the verification of a new manufacturer, if we are able to identify an alternative source, could negatively
affect our ability to develop product candidates in a timely manner or within budget.
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We may not be able to obtain and maintain
the third-party relationships that are necessary to develop, commercialize and manufacture some or all of our product candidates.
We expect to depend on collaborators,
partners, licensees, clinical investigators, CROs, manufacturers and other third parties to support our discovery efforts, to formulate
product candidates, to conduct clinical studies for some or all of our Program Products, to manufacture clinical and commercial scale
quantities of our drug substance, drug product, diagnostic test and to market, sell and distribute any products we successfully develop.
Any problems we experience with any of these third parties could delay the development, commercialization and manufacturing of our product
candidates, which could harm our results of operations.
We cannot guarantee that
we will be able to successfully negotiate agreements for, or maintain relationships with, collaborators, partners, licensees, clinical
investigators, CROs, manufacturers and other third parties on favorable terms, if at all. If we are unable to obtain or maintain these
agreements, we may not be able to clinically develop, formulate, manufacture, obtain regulatory approvals for or commercialize our Program
Products and any future product candidates, which will in turn adversely affect our business.
We expect to expend substantial
management time and effort to enter into relationships with third parties and, if we successfully enter into such relationships, to manage
these relationships. In addition, substantial amounts will be paid to third parties in these relationships. However, we cannot control
the amount or timing of resources our future contract partners will devote to our research and development programs, product candidates
or potential product candidates, and we cannot guarantee that these parties will fulfill their obligations to us under these arrangements
in a timely fashion, if at all. In addition, while we manage the relationships with third parties, we cannot control all of the operations
of, and any outsourcing used by such third parties. We rely on third parties’ knowledge regarding specific local laws and regulatory
requirements in foreign jurisdictions, where applicable.
We depend on our information technology
systems and those of our third-party collaborators, service providers, contractors or consultants. Our internal computer systems, or
those of our third-party collaborators, service providers, contractors or consultants, may fail or suffer security breaches, disruptions,
or incidents, which could result in a material disruption of our development programs or loss of data or compromise the privacy, security,
integrity or confidentiality of sensitive information related to our business and have a material adverse effect on our reputation, business,
financial condition or results of operations.
In the ordinary course of
our business, we collect, store and transmit large amounts of confidential information, including intellectual property, proprietary
business information and personal information. Our internal technology systems and infrastructure, and those of our current or future
third-party collaborators, service providers, contractors and consultants are vulnerable to damage from computer viruses, unauthorized
access or use resulting from malware, natural disasters, terrorism, war and telecommunication and electrical failures, denial-of-service
attacks, cyber-attacks or cyber-intrusions over the Internet, hacking, phishing and other social engineering attacks, persons inside
our organizations (including employees or contractors), loss or theft, or persons with access to systems inside our organization. Attacks
on information technology systems are increasing in their frequency, levels of persistence, sophistication and intensity, and they are
being conducted by increasingly sophisticated and organized foreign governments, groups and individuals with a wide range of motives
and expertise. In addition to extracting or accessing sensitive information, such attacks could include the deployment of harmful malware,
ransomware, denial-of-service attacks, social engineering and other means to affect service reliability and threaten the security, confidentiality,
integrity and availability of information. The prevalent use of mobile devices that access sensitive information also increases the risk
of data security incidents which could lead to the loss of confidential information or other intellectual property. While to our knowledge
we have not experienced any material system failure, accident or security breach to date, if such an event were to occur and cause interruptions
in our operations or the operations of third-party collaborators, service providers, contractors and consultants, it could result in
a material disruption of our development programs and significant reputational, financial, legal, regulatory, business or operational
harm. The costs to us to mitigate, investigate and respond to potential security incidents, breaches, disruptions, network security problems,
bugs, viruses, worms, malicious software programs and security vulnerabilities could be significant, and while we have implemented security
measures to protect our data security and information technology systems, our efforts to address these problems may not be successful,
and these problems could result in unexpected interruptions, delays, cessation of service and other harm to our business and our competitive
position.
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For example, the loss of
clinical study data from completed, ongoing or planned clinical studies for our product candidates could result in delays in our regulatory
approval efforts and significantly increase our costs to recover or reproduce the data. To the extent that any real or perceived security
breach affects our systems (or those of our third-party collaborators, service providers, contractors or consultants), or results in
the loss of or accidental, unlawful or unauthorized access to, use of, release of, or other processing of personally identifiable information
or damage to our data or applications or other data or applications relating to our technology or product candidates, or inappropriate
disclosure of confidential or proprietary information, we could incur liabilities and the further development of our product candidates
could be delayed. Such a breach may require notification to governmental agencies, the media or individuals pursuant to various foreign,
domestic (federal and state) privacy and security laws, if applicable, including HIPAA, as amended by HITECH, and its implementing rules
and regulations, as well as regulations promulgated by the Federal Trade Commission and state breach notification laws. In addition,
our liability insurance may not be sufficient in type or amount to cover us against claims related to security breaches, cyberattacks
and other related incidents.
Any failure or perceived
failure by us or any third-party collaborators, service providers, contractors or consultants to comply with our privacy, confidentiality,
data security or similar obligations, or any data security incidents or other security breaches that result in the accidental, unlawful
or unauthorized access to, use of, release of, processing of, or transfer of sensitive information, including personally identifiable
information, may result in negative publicity, harm to our reputation, governmental investigations, enforcement actions, regulatory fines,
litigation or public statements against us, could cause third parties to lose trust in us or could result in claims by third parties,
including those that assert that we have breached our privacy, confidentiality, data security or similar obligations, any of which could
have a material adverse effect on our reputation, business, financial condition or results of operations. To the extent we maintain individually
identifiable health information, we could be subject to fines and penalties (including civil and criminal) under HIPAA for any failure
by us or our business associates to comply with HIPAA’s requirements. Moreover, data security incidents and other security breaches
can be difficult to detect, and any delay in identifying them may lead to increased harm. While we have implemented data security measures
intended to protect our information, data, information technology systems, applications and infrastructure, there can be no assurance
that such measures will successfully prevent service interruptions or data security incidents.
Risks Related to Our Intellectual Property
If we are unable to obtain and maintain
effective patent rights for our product candidates or any future product candidates, we may not be able to compete effectively in our
markets. If we are unable to protect the confidentiality of our trade secrets or know-how, such proprietary information may be used by
others to compete against us.
Our success will depend in
significant part on our and our future licensors’, licensees’ or collaborators’ ability to establish and maintain adequate
protection of our owned and licensed intellectual property covering the product candidates we plan to develop, and the ability to develop
these product candidates and commercialize the products resulting therefrom, without infringing the intellectual property rights of others.
Our Program Products have been developed in-house and are not subject to any third-party license. In addition to taking other steps to
protect our intellectual property, we file patent applications to protect inventions we have developed, seeking to protect compositions,
methods of use, manufacturing methods, and other aspects of our technology. There can be no assurance that any of these patent applications
will issue as patents or, for those applications that do mature into patents, that the claims of these patents will exclude others from
making, using or selling our product candidates or products that compete with or are similar to our product candidates.
With respect to patent rights,
we cannot be certain whether any of the technology described in our patent applications for any of our product candidates will remain
relevant to our future commercial products, whether any of our patent applications will issue as patents, whether any patents that may
be issued to us will effectively protect our commercial processes and product candidates, or whether any patents that may be issued to
us will effectively prevent others from competing with our products.
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In countries where we have
not sought and do not seek patent protection, third parties may be able to manufacture and sell our product candidates without our permission,
and we may not be able to stop them from doing so.
Publications of discoveries
in the scientific literature often lag behind the actual discoveries, and patent applications in the United States and other jurisdictions
are typically not published until 18 months after filing or in some cases not at all, until they are issued as a patent. Therefore,
we cannot be certain that we or future licensors, licensees or collaborators were the first to make the inventions claimed in our owned
or licensed patents or pending patent applications, or that we or future licensors, licensees or collaborators were the first to file
for patent protection of such inventions.
Any changes we make to our
Program Products or any future product candidates to cause them to have what we view as more advantageous properties may fall outside
the coverage of our existing patent applications, and we may need to file new patent applications and/or seek other forms of protection
for any such altered product candidates. The patent landscape surrounding the technology underlying our product candidates is crowded,
and there can be no assurance that we will be able to secure patent protection that would adequately cover such altered Program Products
or any future product candidates.
The patent prosecution process
is expensive and time-consuming, and we and our future licensors, licensees or collaborators may not be able to prepare, file and prosecute
all necessary or desirable patent applications at a reasonable cost or in a timely manner. It is also possible that we or our future
licensors, licensees or collaborators will fail to identify patentable aspects of inventions made in the course of development and commercialization
activities before it is too late to obtain patent protection for them. Moreover, in some circumstances, we may not have the right to
control the preparation, filing and prosecution of patent applications, or to maintain or enforce the patents, covering technology that
we license from or license to third parties and may be reliant on our current or future licensors, licensees or collaborators to perform
these activities, which means that these patent applications may not be prosecuted, and these patents may not be enforced or maintained,
in a manner consistent with the best interests of our business. If our future licensors, licensees or collaborators fail to establish,
maintain, protect or enforce such patents and other intellectual property rights, such rights may be reduced or eliminated. If our future
licensors, licensees or collaborators are not fully cooperative or disagree with us as to the prosecution, maintenance or enforcement
of any patent rights, such patent rights could be compromised.
Similar to the patent rights
of other biotechnology companies, the scope, validity and enforceability of our owned and licensed patent rights generally are highly
uncertain and involve complex legal and factual questions. The issuance of a patent is not conclusive as to its inventorship, scope,
validity or enforceability, and our patents may be challenged in the courts or patent offices in the United States and abroad. In
recent years, these areas have been the subject of much litigation in the industry. As a result, the issuance, scope, validity,
enforceability and commercial value of our and our current or future licensors’, licensees’ or collaborators’ patent