UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
☒
ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended December 31, 2023
☐TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______ until ______
Commission File Number: 001-41719
60 DEGREES PHARMACEUTICALS, INC.
(Exact name of Registrant as specified in its charter)
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
(Address of principal executive offices) (Zip Code)
Registrant’s telephone number, including area code: (202)327-5422
Securities registered pursuant to Section 12(b)
of the Act:
Title of each class Trading Symbol(s) Name of each exchange on which registered
Common Stock, par value $0.0001 per share SXTP The Nasdaq Stock Market LLC
Securities registered pursuant to Section 12(g)
of the Act: None
Indicate
by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes ☐ No ☒
Indicate
by check mark if the Registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
Yes ☐ No ☒
Indicate
by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the past 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 post 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. ☐
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included in the filing reflect the correction of an error to previously issued financial statements. ☐
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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 Exchange Act).
Yes ☐ No ☒
The aggregate market value of the Registrant’s
common stock, held by non-affiliates of the Registrant was approximately $11,551,806 as of July 14, 2023. Note that July 14, 2023, the
closing date of the Registrant’s initial public offering, is used to calculate the aggregate market value held by non-affiliates
since the Registrant was not publicly traded on June 30, 2023.
As of April 1, 2024, the Registrant had 11,570,578
shares of common stock, par value $0.0001 per share, issued and outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
None.
TABLE OF CONTENTS
PAGE
PART I 1
Item 1. Description of Business 1
Item 1A. Risk Factors 37
Item 1B. Unresolved Staff Comments 37
Item 1C. Cybersecurity 37
Item 2. Properties 38
Item 3. Legal Proceedings 38
Item 4. Mine Safety Disclosures 38
Item 6. [Reserved] 42
Item 7A. Quantitative and Qualitative Disclosures About Market Risk 52
Item 8. Financial Statements and Supplementary Data F-1
Item 9A. Controls and Procedures 53
Item 9B. Other Information 54
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections 54
PART III 55
Item 10. Directors, Executive Officers and Corporate Governance 55
Item 11. Executive Compensation 61
Item 14. Principal Accountant Fees and Services 71
Item 15. Exhibits and Financial Statement Schedules 72
SIGNATURES 75
In this Annual Report on Form 10-K, unless otherwise
stated or as the context otherwise requires, references to “60 Degrees Pharmaceuticals, Inc.,” “60 Degrees Pharmaceuticals,”
“60P,” the “Company,” “we,” “us,” “our” and similar references refer to 60
Degrees Pharmaceuticals, Inc., a Delaware corporation. Our logo and other trademarks or service marks of the Company appearing in this
Annual Report on Form 10-K are the property of 60 Degrees Pharmaceuticals, Inc. This Annual Report on Form 10-K also contains registered
marks, trademarks and trade names of other companies. All other trademarks, registered marks and trade names appearing in this Annual
Report on Form 10-K are the property of their respective holders.
i
Cautionary Note Regarding Forward-Looking Statements
and Industry Data
This Annual Report on Form 10-K, in particular,
Part II Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” contains
certain “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities
Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These forward-looking
statements represent our expectations, beliefs, intentions or strategies concerning future events, including, but not limited to, any
statements regarding our assumptions about financial performance; the continuation of historical trends; the sufficiency of our cash balances
for future liquidity and capital resource needs; the expected impact of changes in accounting policies on our results of operations, financial
condition or cash flows; anticipated problems and our plans for future operations; and the economy in general or the future of the industry
in which we operate, all of which were subject to various risks and uncertainties.
When used in this Annual Report on Form 10-K and
other reports, statements and information we have filed with the Securities and Exchange Commission (“SEC”), in our press
releases, presentations to securities analysts or investors, in oral statements made by or with the approval of an executive officer,
the words or phrases “believes,” “may,” “will,” “expects,” “should,” “continue,”
“anticipates,” “intends,” “will likely result,” “estimates,” “projects” or
similar expressions and variations thereof are intended to identify such forward-looking statements. However, any statements contained
in this Annual Report on Form 10-K that are not statements of historical fact may be deemed to be forward-looking statements. These statements
are only predictions. All forward-looking statements included in this Annual Report on Form 10-K are based on information available to
us on the date hereof, and we assume no obligation to update any such forward-looking statements. Any or all of our forward-looking statements
in this document may turn out to be wrong. Actual events or results may differ materially. Our forward-looking statements can be affected
by inaccurate assumptions we might make or by known or unknown risks, uncertainties and other factors.
This Annual Report on Form 10-K also contains
estimates, projections and other information concerning our industry, our business and particular markets, including data regarding the
estimated size of those markets. Information that is based on estimates, forecasts, projections, market research or similar methodologies
is inherently subject to uncertainties and actual events or circumstances may differ materially from events and circumstances reflected
in this information. Unless otherwise expressly stated, we obtained this industry, business, market and other data from reports, research
surveys, studies and similar data prepared by market research firms and other third parties, industry, general publications, government
data and similar sources.
ii
PART
I
Item 1. Description of Business.
Overview
We are a specialty pharmaceutical company with
a goal of using cutting-edge biological science and applied research to further develop and commercialize new therapies for the prevention
and treatment of infectious diseases. We have successfully achieved regulatory approval of Arakoda, a malaria preventative treatment that
has been on the market since late 2019. Currently, 60P’s pipeline under development covers development programs for vector-borne,
fungal, and viral diseases utilizing three of the Company’s future products: (i) new products that contain the Arakoda regimen of
Tafenoquine; (ii) new products that contain Tafenoquine; and (iii) Celgosivir. Additionally, we are conducting due diligence activities
in relation to potential in-licensing of a product relevant to Lyme disease and an antimalarial combination partner for Tafenoquine for
P. vivax malaria.
Corporate History
60 Degrees Pharmaceuticals, Inc. is a Delaware
corporation that was incorporated on June 1, 2022. On June 1, 2022, 60 Degrees Pharmaceuticals, LLC, a District of Columbia limited liability
company (“60P LLC”), entered into the Agreement and Plan of Merger with 60 Degrees Pharmaceuticals, Inc., pursuant to which
60P LLC merged into 60 Degrees Pharmaceuticals, Inc. The value of each outstanding member’s membership interest in 60P LLC was correspondingly
converted into common stock of 60 Degrees Pharmaceuticals, Inc., par value $0.0001 per share, with a cost-basis equal to $5.00 per share.
We also operate one subsidiary. A summary of our
majority-owned subsidiary is below.
We own 97% equity in
60P Australia Pty Ltd, a Sydney-Australia based subsidiary (“60P Australia”). 60P Australia holds sub-licensing rights for
several ex-U.S. territories for our product.
60P Australia previously
solely owned a Singaporean subsidiary company, 60P Singapore Pte. Ltd., which dissolved at our election in the second quarter of 2022.
Business Developments
The following highlights recent material developments
in our business:
Recent Developments
Monash University Agreement
On February 13, 2024, our majority-owned Australian
subsidiary, 60P Australia Pty Ltd, and Monash University entered into the Research Services Agreement (the “Monash Agreement”)
in which Monash University agreed to provide research services, including among other things, testing the efficacy of tafenoquine against
candidemia, confirming suitable fungal infection dosage and determining the pharmacokinetics of tafenoquine following intraperitoneal
drug administration (collectively, the “Monash Services”). The commencement date of the Monash Agreement was effective as
of February 5, 2024, and the anticipated commencement of experiments and the completion date is in May 2024 and on November 30, 2024,
respectively. The Company agreed to pay Monash University $90,167 AUD on April 1, 2024 and $90,167 AUD upon the completion of the Monash
Services.
1
January 2024 Public Offering
On January 29, 2024, we entered into an
Underwriting Agreement with WallachBeth Capital LLC, as representative of the underwriters listed on Schedule I thereto (the
“Underwriting Agreement”), relating to our public offering (the “2024 Offering”) of 5,260,901 units (the
“Units”) at an offering price of $0.385 per Unit and 999,076 pre-funded units (the “Pre-Funded Units”) at an
offering price of $0.375 per Pre-Funded Unit. Each Unit consists of one share of common stock and one warrant exercisable for one
share of common stock (the “Warrant”). Each Warrant has an exercise price of $0.4235 per share (110% of the offering price per Unit), is exercisable
immediately upon issuance and expires five years from the date of issuance. Each Pre-Funded Unit consists of one pre-funded warrant
exercisable for one share of common stock (the “Pre-Funded Warrant”) and one warrant identical to the Warrants included
in the Units. The purchase price of each Pre-Funded Unit is equal to the price per Unit sold to the public in the offering, minus
$0.01, and the exercise price of each Pre-Funded Warrant is $0.01 per share. The Pre-Funded Warrants are immediately exercisable and
may be exercised at any time until all of the Pre-Funded Warrants are exercised in full.
The underwriters were granted an option, exercisable
within 45 days after the closing of the offering, to purchase up to 789,136 shares of our common stock at a price of $0.375 per share
and/or 938,997 Warrants at a price of $0.01 per Warrant and/or 149,862 Pre-Funded Warrants at a price of $0.375 per Pre-Funded Warrant,
or any combination of additional shares of common stock, Warrants and/or Pre-Funded Warrants, representing, in the aggregate, up to 15%
of the number of Units sold in the offering, 15% of the Warrants underlying the Units and Pre-Funded Units sold in the offering and 15%
of the Pre-Funded Warrants underlying the Pre-Funded Units sold in the offering, in all cases less the underwriting discount to cover
over-allotments, if any. On January 31, 2024, WallachBeth Capital LLC partially exercised its over-allotment option with respect to 818,177
Warrants. On February 14, 2024, WallachBeth Capital LLC partially exercised its over-allotment option with respect to 50 shares of common
stock and 50 Warrants.
The net proceeds to us from the 2024 Offering
were approximately $1.9 million, after deducting underwriting discounts and commissions and the payment of other offering expenses associated
with the 2024 Offering that were payable by us. We paid the Underwriter an underwriting discount equal to 8.0% of the gross proceeds of
the 2024 Offering and a non-accountable expense fee equal to 1.5% of the gross proceeds of the 2024 Offering.
We also issued to WallachBeth Capital LLC warrants
(the “Representative Warrants”) to purchase 375,599 shares of our common stock, which is equal to six percent (6%) of the
common stock sold that were part of the Units and the pre-funded warrants sold that were part of the Pre-Funded Units in the 2024 Offering,
at an exercise price of $0.4235 per share, which is equal to 110% of the offering price per Unit. The Representative Warrants may be exercised
beginning on January 31, 2024 until January 31, 2029.
We intend to use the net proceeds from the 2024 Offering for increasing
capitalization and financial flexibility, and relaunching our malaria prevention project in the U.S. later in 2024.
Our officers and directors have agreed, subject
to certain exceptions, not to offer, issue, sell, contract to sell, encumber, grant any option for the sale of or otherwise dispose of
any shares of common stock or other securities convertible into or exercisable or exchangeable for shares of common stock until July 29,
2024 without the prior written consent of WallachBeth Capital LLC.
Mission
Our mission is to address the unmet medical need
associated with infectious diseases through the development and commercialization of new small molecule therapeutics, focusing on synthetic
drugs (made by chemists in labs, excluding biologics) with good safety profiles based on prior clinical studies, in order to reduce cost,
risk, and capitalize on existing research. Our present focus is the expansion of Arakoda sales for malaria prevention and to demonstrate
clinical benefit for other disease indications.
Market Opportunity
In 2018, the FDA approved Arakoda for malaria prevention in individuals
18 years and older, an indication for which there has historically been approximately 550,000 prescriptions combined (one prescription
per three weeks of travel) in the United States each year for the current market-leading product (atovaquone-proguanil) and one of the
legacy weekly administered antimalarials, mefloquine. Arakoda entered the U.S. supply chain in the third quarter of 2019, just prior to
the COVID-19 pandemic. As the approved indication is for travel medicine, and international travel was substantially impacted by the pandemic,
we did not undertake any active marketing efforts for Arakoda. For the calendar year 2023, our U.S. sales of Arakoda (not excluding returns)
to pharmacies and other outlets was 1,632 boxes (a gross value of $383,520 at a WAC price of $235 per box), a substantial increase from
the 570 boxes of Arakoda sold in 2022. We are currently assessing a targeted marketing strategy that will extract value from the current
malaria prophylaxis indication and will continue our efforts to develop Arakoda for other applications.
2
We are repositioning the Arakoda regimen of Tafenoquine
for new indications to address several therapeutic indications that have substantial U.S. caseloads, as further described below:
3 According to IDSA guidelines.
3
Celgosivir, a potential clinical candidate of
60P’s, has activity in a number of animal models of important viral diseases such as Dengue and RSV, both of which are associated
with at least 4.1 million cases globally according to the European CDC (Dengue)10 and up to 240,000 hospitalizations (RSV)
in children less than five years of age and adults greater than 65 years of age in the United States each year according to the CDC.11
As outlined in the “Strategy” section below, we expect to evaluate Celgosivir in additional non-clinical disease models
before making a decision regarding clinical development.
4
More information about our products is provided
in the next section, and the status of various development efforts for the above-mentioned diseases is outlined in Figure A, below.
Figure A
Products
Arakoda (Tafenoquine) for malaria prevention
We entered into a cooperative research and development
agreement with the United States Army in 2014 to complete development of Arakoda for prevention of malaria.12 With the U.S.
Army, and other private sector entities as partners, we coordinated the execution of two clinical trials, development of a full manufacturing
package, gap-filling non-clinical studies, compilation of a full regulatory dossier, successful defense of our program at an FDA advisory
committee meeting, and submitted a new drug application (“NDA”) to the FDA in 2018. The history of that collaboration has
been publicly communicated by the U.S. Army.13
The FDA and Australia’s medicinal regulatory
agency, Therapeutic Goods Administration, subsequently approved Arakoda and Kodatef (brand name in Australia), respectively, for prevention
of malaria in travelers in 2018. Prescribing information and guidance for patients can be found at www.arakoda.com. The features
and benefits of Tafenoquine for malaria prophylaxis (marketed as Arakoda in the United States), some of which have been noted by third-party
experts, include: convenient once weekly dosing following a three day load; the absence of reports of drug resistance during malaria prophylaxis;
activity against liver and blood stages of malaria as well as both the major malaria species (Plasmodium vivax and Plasmodium
falciparum); absence of any black-box safety warnings; good tolerability including in women and individuals with prior psychiatric
medical history, and a comparable adverse event rate to placebo with up to 12 months continuous dosing.14 Tafenoquine entered
the commercial supply chains in the U.S. (as Arakoda) and Australia (as Kodatef) in the third quarter of 2019.
5
The only limitation of Arakoda is the requirement
for a G6PD test prior to administration.15 The G6PD test must be administered to a prospective patient prior to administration
of Arakoda in order to prevent the potential occurrence of hemolytic anemia in individuals with G6PD deficiency.16 G6PD
is one of the most common enzyme deficiencies and is implicated in hemolysis following administration/ingestion of a variety of oxidant
drugs/food. G6PD must also be ruled out as a possible cause when diagnosing neonatal jaundice. As a consequence, G6PD testing is widely
available in the United States through commercial pathology service providers (e.g., Labcorp, Quest Diagnostics, etc.). Although these
tests have a turn-around time of up to 72 hours, the test needs only to be administered once. Thus, existing U.S. testing infrastructure
is sufficient to support the FDA-approved use of the product (malaria prevention) by members of the armed forces (who automatically have
a G6PD test when they enlist), civilian travelers with a long planning horizon or repeat travelers.
Tafenoquine for Other (Infectious) Diseases
During the pandemic, we also worked with NIH to
evaluate the utility of Tafenoquine as an antifungal. We, and the NIH, found that Tafenoquine exhibits a Broad Spectrum of Activity in
cell culture against Candida and other yeast strains via a different Mode of Action than traditional antifungals and also exhibits
antifungal activity against some fungal strains at clinically relevant doses in animal models.17 Our work followed Legacy Studies
that show Tafenoquine is effective for treatment and prevention of Pneumocystis pneumonia in animal models.18 We believe
that if added to the standard of care for anti-fungal and yeast infection treatments for general use, Tafenoquine has the potential to
improve patient outcomes in terms of recovery from yeast infections, and prevention of fungal pneumonias in immunosuppressed patients.
There are limited treatment options available for these indications, and Tafenoquine’s novel mechanism of action might also mitigate
problems of resistance. Clinical trial(s) to prove safety and efficacy, and approval by the FDA and other regulators, would be required
before Tafenoquine could be marketed for these indications.
Tafenoquine is effective in animal models of babesiosis
(tick borne red blood cell infections). In two of three recent clinical case studies, Tafenoquine administered after failure of conventional
antibiotics in immunosuppressed babesiosis patients resulted in cures.19 Consequently, we believe that (i) if combined with
standard of care products, Tafenoquine has the potential to reduce the duration of treatment with antibiotic therapy in immunosuppressed
patients and the time to parasite clearance in non-immunosuppressed patients and (ii) that once appropriate clinical studies have been
conducted, it is likely that Tafenoquine would be quickly embraced for post-exposure prophylaxis of babesiosis in patients with tick bites
and suspected of being co-infected with Lyme disease. Clinical trial(s) to prove safety and efficacy, and approval by FDA and other regulators,
would be required before Tafenoquine could be marketed for these indications.
Celgosivir
Celgosivir is a host targeted glucosidase inhibitor
that was developed separately by other sponsors for HIV then for hepatitis C.20 The sponsors abandoned Celgosivir after completion
of Phase II clinical trials involving 700+ patients, because other antivirals in development at the time had superior activity. The National
University of Singapore initiated development of Celgosivir independently for Dengue fever. A clinical study, conducted in Singapore,
the results of which were accepted for publication in the peer-reviewed journal Lancet Infectious Diseases, confirmed its safety but the
observed reduction in viral load was lower than what the study was powered to detect.21 Celgosivir (as with other Dengue antivirals)
exhibits greater capacity to cure Dengue infections in animal models when administered prior to symptom onset compared to post-symptom
onset. In animal models, this problem can be addressed for Celgosivir, by administering the same dose of drug split into four doses per
day rather than two doses per day (as was the case in the Singaporean clinical trial).22 This observation led to the filing
and approval of a patent related to Dengue, which we licensed from the National University of Singapore.
15 See prescribing information at www.arakoda.com.
16 See prescribing information at www.arakoda.com.
22 Watanabe et al, Antiviral Research 2016; 10:e19.
6
Additional clinical studies would be required
to prove that such a 4x daily dosing regimen would be safe and effective in Dengue patients to regulators’ satisfaction. To that
end, earlier in our history, we, in partnership with the National University of Singapore, and Singapore General Hospital, successfully
secured a grant from the government of Singapore for a follow-on clinical trial, but were unable at that time to raise matching private
sector funding. We concluded as a result that development of Repositioned Molecules for Dengue, solely and without simultaneous development
for other therapeutic use, despite substantial morbidity and mortality in tropical countries, was an effort best suited for philanthropic
entities. Accordingly, during the pandemic, we undertook an effort (in partnership with NIH’s Division of Microbiology and Infectious
Diseases program and Florida State University) to determine whether Celgosivir might be more broadly useful for respiratory diseases that
have impact in both tropical and temperate countries. Preliminary data suggest Celgosivir inhibits the replication of the virus that causes
COVID-19 (SARS-CoV-2) in cell culture, and the RSV virus in cell culture and provides benefits in animals. We have filed and/or licensed
patents in relation to Celgosivir for these other viruses as we believe there is potential applications to fight respiratory diseases
that might have more commercial viability than historical development of Celgosivir to combat Dengue fever.
Competitive Strengths
Our main competitive strength has been our ability
to achieve important clinical milestones inexpensively in therapeutic areas that other entities have found extremely challenging. With
a small virtual management team, we have successfully built productive research partnerships with public and academic entities, and licensed
products with well characterized safety profiles in prior clinical studies, thereby reducing the cost and risk of clinical development.
This business and product model enabled Arakoda to be approved in 2018, with a total operating expense of < $10 million. We plan to
focus in the future on generating proof of concept clinical data sets for the approved Arakoda regimen of Tafenoquine in other therapeutic
areas, all of which is expected to foster and continue our existing tradition of inexpensive product development.
Strategy
Following our initial public offering in July
2023, our initial strategic priority was to conduct a Phase IIB that would have evaluated the potential of the Arakoda regimen of Tafenoquine
to accelerate disease recovery in COVID-19 patients with low risk of disease progression. In October 2023, we made a decision to suspend
this study. This was a consequence of advice previously received from the FDA, which we interpreted to mean that they would not have granted
clearance for the study to proceed unless we redesigned it to (i) enroll a patient population in which receipt of Paxlovid or Lagevrio
would be medically contraindicated or (ii) compare Tafenoquine to placebo in patients taking a “standard of care” regimen
(defined by the FDA as Lagevrio or Paxlovid). The FDA’s position was somewhat surprising given that neither Paxlovid nor Lagevrio
is indicated for treatment of COVID-19 in low-risk patients. We determined that conducting our study in an alternate population in the
United States would be unfeasible, and conducting an add-on-to standard of care study might not be Phase III enabling. Accordingly, the
Company made a decision to pivot back to continue commercialization of Arakoda for malaria, and further evaluation of the Arakoda regimen
of Tafenoquine for babesiosis and other diseases. We believe such an approach is both less risky and less expensive.
Moving forward, our general strategy to achieve
profitability and grow shareholder value has three facets: (i) increase sales of Arakoda; (ii) conduct clinical trials to expand the number
of patients who can use Tafenoquine for new indications in the future; and (iii) reposition small molecule therapeutics with good clinical
safety profiles for new indications.”
7
Expansion of U.S. Arakoda Sales
Hiring of Chief Commercial Officer. In February
2024, the Company hired a Chief Commercial Officer, Kristen Landon, to lead its activities relating to commercialization of Arakoda for
malaria prevention. The Company’s planned activities for the first two quarters of 2024 are summarized below.
Acceptability and Demand of the Arakoda
Product Profile. Market research will be conducted to understand current brand awareness and usage among prescribers and
product acceptability among consumers, determine barriers to use, acceptability of differential price points, and demand of Arakoda
relative to its main competitors. Generic atovaquone-proguanil is substantially cheaper than Arakoda for the average trip length
(three weeks) and has superior formulary positioning (Tier 1 vs. Tier 3). However, generic-atovaquone proguanil does not provide the
same level of confidence a traveler may experience from taking a product with a convenient weekly dosing regimen during travel, that
works everywhere in the world against all malaria species and drug resistant strains, and which requires only a single dose for
post-exposure prophylaxis upon return from a malarious area. The value those advantages confer needs to be quantified and
communicated with stakeholders.
Market Segment Definition and Targeting.
We plan to purchase additional sales data in order to define the list of top prescribers of atovaquone-proguanil, the main generic competitor
to Arakoda for malaria prophylaxis Beginning in the third quarter of 2024, we plan to reach out to prescribers covering the top 80% of
atovaquone-proguanil prescribers in order to educate them about the value proposition of Arakoda. We will also compile a list of the top
institutions/organization that have ex-U.S. deployed workforces and internal occupational health and safety programs, and target these
organizations with messaging regarding the convenience and global effectiveness of Arakoda. We do not initially plan to target U.S. government
agencies as these organizations, such as the Department of Defense, are expected to be extremely price sensitive until operational considerations
justify the use of superior products (the DOD used inexpensive doxycycline for malaria prevention in the low malaria risk setting of Afghanistan,
but chose superior weekly mefloquine, despite safety concerns, for the Ebola mission to west Africa in 2014, where malaria rates were
extremely high).
Digital Revamp and Collateral. We will
work with an Agency of Record to test brand positioning and key marketing messages that we believe best highlight the features and benefits
of Arakoda, namely the convenience of the travel and post-travel regimen and global effectiveness. Once these activities are completed,
we will develop a marketing campaign that clearly articulates the brand’s value proposition including, key marketing messages and
the development of promotional materials. The Arakoda website will be updated to reflect the aforementioned marketing messaging to support
the relaunch of the product.
Revised Forecast. Once the above activities
are completed (which we expect to be by the end of the second quarter of 2024), we will develop an internal three-year forecast for the
malaria indication.
Arakoda Regimen of Tafenoquine for Babesiosis
In animal models, Tafenoquine monotherapy has
been shown to suppress acute babesiosis infections to the point where the immune system can control them following single or multiple
doses similar to those effective against malaria parasites, and combination of Tafenoquine with atovaquone leads to complete radical cure
and to the conference of sterile immunity.23 In three case studies in individuals with immunosuppression and/or refractory
parasites, Tafenoquine alone or combination with various standard of care antimalarials and antibiotics successfully cleared parasites
leading to three consecutive negative PCR tests, and prevention of further relapses in two of three individuals.24 Collectively
these data suggest Tafenoquine might have utility as monotherapy in patients with uncomplicated babesiosis and improve clinical outcomes
in hospitalized/immunosuppressed patients already administered standard of care antibiotic regimens.
8
In November 2023, we submitted a request for an
advice (Type C) meeting to FDA to discuss our Tafenoquine babesiosis program. In that correspondence we proposed to the FDA that for a
supplementary indication for Tafenoquine for babesiosis, it would be appropriate to conduct a single randomized placebo-controlled study
in low-risk patients and a case series in high-risk patients. On January 17, 2024, during the requested regulatory advice meeting, the
FDA stated that in principle, a single pivotal study could support a supplementary New Drug Application, provided that it included high-risk
patients and incorporated a clinical endpoint as the primary endpoint. The clinical trial design that we discussed with FDA would have
randomized symptomatic hospitalized patients diagnosed with babesiosis and at low risk of relapse who are taking azithromycin/atovaquone
to receive four daily doses of Tafenoquine or placebo. This initial protocol had previously been approved by an ethics committee, and
submitted to clinicaltrials.gov for public disclosure. We are now redrafting this protocol, per the FDA’s advice, as a pivotal study
which will also include high risk patients, and be powered off a clinical endpoint. We remain on track to recruit patients in three hospitals
in the North-Eastern United States, beginning in the summer of 2024, with a goal of reaching an interim analysis point by the end of 2024.
If we do not achieve statistical significance, a sample re-estimation will be conducted, and additional subjects will be recruited during
the 2025 tick season.
We will also be submitting a compassionate use
IND to FDA so we can provide commercial Arakoda for use in immunosuppressed patients with babesiosis – the data collected under
that future protocol will support data generated from the randomized study. We may, if resources permit, submit a similar compassionate
use protocol to the FDA for the use of Tafenoquine for treatment of chronic babesiosis.
We have signed an agreement with North Carolina State University to
support a pilot study of Tafenoquine for treatment of canine babesiosis in the United States under a sponsored research program. Should
this collaboration be successful, we believe that the data from that study may provide supportive data for the clinical babesiosis development
program, and could provide proof of concept for an expanded study to prove utility for veterinary indications.
From a commercial standpoint we are conducting
market research and engaging with Key Opinion Leaders (KOLs) to further understand the commercial demand in acute and chronic babesiosis,
including an assessment of the pre and post exposure prophylaxis opportunity. We will review current treatment regimens including diagnosis
criteria and management of disease, understand the patient burden, and assess the competitive landscape.
Parenteral Tafenoquine for Fungal Infections
We plan to support a series of studies in animal models to determine
whether single dose parenteral administration of Tafenoquine exhibits efficacy against Candida spp including C. auris. These
studies will be conducted under a sponsored research agreement with Monash University in Melbourne, Australia.
Combination Partner for Tafenoquine for
Malaria
Most new antimalarial treatment products are developed
as drug combinations to proactively combat drug resistance. We believe that Tafenoquine, due to its long half-life and activity against
all parasite species and strains, would be an ideal partner in a drug combination. Recently, Kentucky Technology Inc. (“KTI”),
completed Phase IIA studies in P. vivax malaria, in which they evaluated the safety and efficacy of SJ733, their ATP4 inhibitor
in combination with Tafenoquine as the combination partner drug. Recently it was announced the SJ733 development program would be partially
supported by a grant from the Global Health Innovative Technology Fund (“GHIT”). As part of its shares for services agreement
with KTI, The Company expects to receive a detailed feasibility assessment and business plan for the project in Q1 2024, including an
assessment of potential PRV eligibility. The Company will utilize this information to make a business decision about whether it wishes
to license commercial rights to SJ733.
Celgosivir for Antiviral Diseases
Reviewing prior studies of Celgosivir for Zika, Dengue, and RSV, it
is evident that the drug protects against the pathological effects of viruses through a combination of anti-inflammatory and antiviral
effects. These properties suggest it might have a beneficial effect in several viral diseases. Celgosivir is synthesized from castanospermine,
which is obtained from botanical sources in low yield, making its inherent cost of goods potentially high. Castanospermine is also quite
water soluble making it amenable to intravenous formulation. We plan to conduct a proof of concept study in an animal -COVID-19 model
to evaluate whether parenterally administered castanospermine can ameliorate the pathological effects of SARS CoV-2 via modulation of
cytokine response to infection. This project will be added to our statement of work for our services agreement with FSURF, and will commence
when there are sufficient proceeds from the sale of FSURF’s 60P shares to support this research. The data generated from the study
will allow us to assess whether to move forward with IND enabling studies of parenteral castanospermine (or Celgosivir) for viral indications.
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Post-Marketing Requirements
We have an FDA post-marketing requirement to conduct
a malaria prophylaxis study of Arakoda in pediatric and adolescent subjects. We proposed to the FDA, in late 2021, that this might not
be safe to execute given that malaria prevention is administered to asymptomatic individuals and that methemoglobinemia (damage to the
hemoglobin in blood that carries oxygen) occurred in 5% of patients, and exceeded a level of 10% in 3% of individuals in a study conducted
by another sponsor in pediatric subjects with symptomatic vivax malaria.25 The FDA has asked us to propose an alternate design,
for which we submitted a concept protocol in the fourth quarter of 2022, and submitted a full protocol in early 2024. We estimate the
cost of conducting the study proposed by the FDA, if conducted in the manner suggested by the FDA, would be $2 million, and, due to the
time periods required to secure protocol approvals from the FDA and Ethics Committees, could not be initiated any earlier than the third
quarter of 2025. The funds from our January 2024 public offering to be expended on such a pediatric study will be limited to the minimum
required to support protocol preparation and regulatory interactions with the FDA.
Potential In Licensing Activities
We may in the future engage a business development
consultant to assist us with in-licensing additional late-stage development or early commercial stage infectious disease assets that complement
our existing product portfolio and business plan. We are particularly interested in securing the rights to new products targeted at tick-borne
diseases.
Capitalization and Future Financing
As outlined in "Liquidity and Capital Resources",
following the recent public offering in which we netted approximately $1.9 million, our runway is through approximately October 31, 2024.
To simplify the financing effort in August 2024, we expect that we will become shelf eligible and if we seek additional funding at that
time, we will seek to file a shelf registration statement on Form S-3 to register our securities for sale to the public. Additionally,
if we are able to develop a more robust forecast for Arakoda for the malaria indication, we may seek non-dilutive royalty-based funding
or an equity line of credit to support further commercialization of Arakoda. There is no assurance that funds will be available on acceptable
terms.
Competitors and Competitive Advantage
Arakoda is approved by the FDA for malaria prevention
in travelers. The major (but not only) competing products are generic atovaquone-proguanil and doxycycline – these products have
the benefit of being well established, not requiring a G6PD screen prior to travel (as is the case for Arakoda) and in the case of atovaquone-proguanil
being generally recognized as well tolerated and safe. The major limitations of these two established products are the requirement for
daily dosing including for up to 30 days post-travel in the case of doxycycline, the requirement to also take Primaquine (a medication
used to treat and prevent malaria) for post-exposure prophylaxis to prevent relapse from P. vivax malaria, and the potential inconvenience
for many patients of complying with a daily dosing regimen during travel. Doxycycline has the added disadvantages of a higher risk of
vaginitis, sunburn following sun exposure, contraction of malaria due to missed daily doses, and esophageal necrosis. Drug resistance
against the individual components of the atovaquone-proguanil is prevalent in some regions of the work, and the higher doses of atovaquone-proguanil
used to treat malaria, are no longer effective in some parts of Southeast Asia.
Arakoda has the benefit of a convenient weekly
dosing regimen following a three-day loading dose and a single day of dosing for post-exposure prophylaxis upon return from travel. It
is effective against all species of malaria everywhere in the world, which simplifies prescribing decisions. It is the only FDA-approved
antimalarial other than mefloquine with a safety profile demonstrated based on continuous dosing for 12 months, but unlike that product,
it does not have a black-box safety warning. While G6PD testing is a potential limitation for first time travelers with short planning
horizons, this is not the case for institutional occupation travel or repeat business travel, because a G6PD test need only be performed
once and can be captured in electronic health records. G6PD testing is routinely available in the United States through commercial laboratory
pathology services. Over time, Arakoda is expected to capture a significant share of the antimalarial prophylaxis market as a consequence
of these advantages.
We are targeting additional indications for the
Arakoda regimen of Tafenoquine, of which the priority is treatment of Babesiosis. In hospitalized patients, the Arakoda regimen will be
partnered with the existing standard of care. For follow-on prevention indications for babesiosis there are no competing products.
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Intellectual Property
We are co-owners, with the U.S. Army, of patents
in the United States and certain foreign jurisdictions directed toward use of Tafenoquine for malaria and have obtained an exclusive worldwide
license from the U.S. Army to practice these inventions. We also have an exclusive worldwide license to use manufacturing information
and non-clinical and clinical data that the U.S. Army possesses relating to use of Tafenoquine for all therapeutic applications and uses
excluding radical cure of symptomatic vivax malaria. We have submitted patent applications in the United States and certain foreign jurisdictions
for use of Tafenoquine for COVID-19, fungal lung infections, tick-borne diseases, and other infectious and non-infectious diseases in
which induction of host cytokines/inflammation is a component of the disease process. The United States Patent and Trademark Office (“USPTO”)
recently allowed our first COVID-19 patent for Tafenoquine. We have optioned or licensed patents involving Celgosivir for the treatment
and prevention of Dengue (from the National University of Singapore), COVID-19 & Zika (Florida State University), and have pending
patent applications related to Celgosivir for RSV. We have optioned or own manufacturing methods related to Celgosivir. A detailed list
of our intellectual property is as follows:
Patents
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12
All patents not designated with a “+”
list Geoffrey S. Dow, Ph.D. as an inventor.
All patents not designated with a “+”
or a “#” list 60 Degrees Pharmaceuticals, Inc. as an applicant.
All estimated patent expiration dates and anticipated
patent expiration assume payment of any maintenance/annuity fees during the patent term.
Trademarks
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Key Relationships & Licenses
On May 30, 2014, we entered into the Exclusive
License Agreement (the “2014 NUS-SHS Agreement”) with National University of Singapore (“NUS”) and Singapore Health
Services Pte Ltd (“SHS”) in which we were granted a license from NUS and SHS with respect to their share of patent rights
regarding “Dosing Regimen for Use of Celgosivir as an Antiviral Therapeutic for Dengue Virus Infection” to develop, market
and sell licensed products. The 2014 NUS-SHS Agreement continues in force until the expiration of the last to expire of any patents under
the patent rights unless terminated earlier in accordance with the 2014 NUS-SHS Agreement. We are obligated to pay at the rate of 1.5%
of gross sales.
On July 15, 2015, we entered into the Exclusive
License Agreement with the U.S. Army Medical Materiel Development Activity (the “U.S. Army”), which was subsequently amended
(the “U.S. Army Agreement”), in which we obtained a license to develop and commercialize the licensed technology with respect
to all therapeutic applications and uses excluding radical cure of symptomatic vivax malaria. This exclusion does not impact our ability
to market Arakoda for the FDA-approved use, which is the prevention of malaria utilizing the indicated dose in asymptomatic individuals
traveling to malarious areas (whereas the license exclusion relates to its use to treat symptomatic vivax malaria in a patient already
presenting with that disease). The term of the U.S. Army Agreement will continue until the expiration of the last to expire of the patent
application or valid claim of the licensed technology, or 20 years from the start date of the U.S. Army Agreement, unless terminated earlier
by the parties. We will be required to make a minimum annual royalty payment of 3% of net sales for net sales < $35 million, and 5%
of net sales greater than $35 million, with US government sales excluded from the definition of net sales. In addition, we must pay a
milestone fee of $75,000 once cumulative net sales from all sources exceeds $6 million, $100,000 if the company is acquired or merges,
and regulatory approval milestone payments once marketing authorizations are achieved in Canada ($5,000) and Europe ($5,000). Also, we
will be required to obtain the U.S. Army Medical Materiel Development Activity’s consent prior to a change of control of the Company,
which consent was obtained on September 2, 2022.
On September 15, 2016, we entered into the Exclusive
License Agreement (the “2016 NUS-SHS Agreement”) with National University of Singapore (“NUS”) and Singapore Health
Services Pte Ltd (“SHS”) in which we were granted a license from NUS and SHS with respect to their share of patent rights
regarding “Novel Dosing Regimens of Celgosivir for The Prevention of Dengue” to develop, market and sell licensed products.
The 2016 NUS-SHS Agreement continues in force until the expiration of the last to expire of any patents under the patent rights unless
terminated earlier in accordance with the 2016 NUS-SHS Agreement. We are obligated to pay at the rate of 1.5% of gross sales or minimum
annual royalty ($5,000 in 2022 and $15,000 in 2023). In July 2022, the Company renegotiated the timing of a license fee of $85,000 Singapore
Dollars, payable to the National University of Singapore, such that payment would be due at the earlier of (i) enrollment of a patient
in a Phase II clinical trial involving Celgosivir, (ii) two years from the agreement date and (iii) an initial public offering.
On December 4, 2020, we entered into the
Other Transaction Authority for Prototype Agreement (“OTAP Agreement”) with the Natick Contracting Division of the U.S.
government in which we will, among other things, conduct activities for a Phase II clinical trial to assess the safety and efficacy
of Tafenoquine for the treatment of mild to moderate COVID-19 disease, with the goal of delivering Tafenoquine with an FDA Emergency
Use Authorization (“EUA”) approved as a countermeasure against COVID-19. The total amount of the OTAP Agreement is
$4,999,814. The term of the OTAP Agreement commenced on December 4, 2020, and was completed in the third quarter of 2022. The U.S.
government may terminate the OTAP Agreement for any or no reason by providing us with at least thirty (30) calendar days’
prior written notice. Pursuant to the OTAP Agreement, we will not offer, sell or otherwise provide the EUA or licensed version of
the prototype (Tafenoquine) that is FDA approved for COVID-19 or any like product to any entity at a price lower than that offered
to the DoD, which applies only to products sold in the U.S., European Union and Canada related to COVID-19.
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On February 15, 2021, we entered into the Inter-Institutional
Agreement with FSURF (the “FSURF Agreement”) in which FUSRF granted us the right to manage the licensing of intellectual property
created at FSURF. The term of the FSURF Agreement expires five years from February 15, 2021. After deduction of a 5% administrative fee
by FSURF, capped at $15,000 annually, and reimbursement of patent prosecution expenses, we will receive 20% of license income and FSURF
will receive 80% of license income. Payments of license income shall be paid in U.S. dollars quarterly each year. On February 19, 2021,
we entered into an agreement with FSURF, subsequently amended on February 15, 2023, that collectively granted an option, effective through
August 19, 2023, to us to license methods for purifying castanospermine and its use for the treatment of COVID-19. On August 19, 2021,
we entered into an agreement with FSURF, subsequently amended on February 15, 2023, that collectively granted an option, effective through
August 19, 2023, to us to license a patent relating to the use of alpha glucosidase inhibitors (including Castanospermine and Celgosivir)
for treatment of Zika infections.
Ending upon July 12, 2033 or the conversion or
redemption in full of all of the shares of Series A Preferred Stock owned by Knight, we will pay Knight a royalty equal to 3.5% of our
net sales, where “net sales” has the same meaning as in our license agreement with the U.S. Army for Tafenoquine. Due
to the success of the qualified IPO, at the end of the quarter and each quarter thereafter the royalty will be calculated, and payment
will be made within fifteen days.
On February 13, 2024, 60 Degrees Pharmaceuticals,
Inc.’s (the “Company”) majority-owned Australian subsidiary, 60P Australia Pty Ltd, and Monash University entered into
the Research Services Agreement (the “Agreement”) in which Monash University agreed to provide research services, including
among other things, testing the efficacy of tafenoquine against candidemia, confirming suitable fungal infection dosage and determining
the pharmacokinetics of tafenoquine following intraperitoneal drug administration (collectively, the “Services”). The commencement
date of the Agreement was effective as of February 5, 2024, and the anticipated commencement of experiments and the completion date is
in May 2024 and on November 30, 2024, respectively (each, a “Milestone”). The Company agreed to pay Monash University $90,167
AUD on April 1, 2024 and $90,167 AUD upon the completion of the Services.
Either 60P Australia Pty Ltd or Monash University
may terminate the Agreement immediately by notice to the other if (i) the defaulting party is in breach of the Agreement and the defaulting
party fails to remedy the breach within 20 business days of receiving written notice of the breach from the terminating party; (ii) an
insolvency event occurs in relation to the defaulting party; or (iii) the parties agree that a Milestone will not be met by its anticipated
completion date. Monash University may unilaterally terminate the Agreement if any of the Services contravene Australian Sanctions Law.
Sales and Marketing
Following our recent hire of a new Chief Commercial Officer, in 2024,
we plan to evaluate our “relaunch” strategy for Arakoda for malaria prevention in the United States. As described in the “Strategy”
section this will consist of i) conducting market research to understand HCP and consumer demand which will inform our sales forecast.
A targeted marketing strategy will be developed and implemented in the second half of 2024 and we will evaluate the need to hire a small
account team and /or Medical Science Liaisons (MSL) If so, we may utilize a contract services organization to ensure greater flexibility
and limit overhead. We may also choose to develop an omnichannel approach utilizing digital, non-personal promotion and possibly a tele
sales model if an in-person field force does not support a positive return on investment.
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In 2023, we began to see named-patient sales in
Europe, without any adjustments to pricing, triggering the purchase of another partial lot of Arakoda by our European distributor. Sales
volume has increased in Australia in response to repricing of Kodatef by our local distributor to be more competitive with atovaquone-proguanil.
Manufacturing
We do not currently own or operate manufacturing
facilities for the production of clinical or commercial quantities of our product candidates.
Australian Research Tax Credit and Overseas Finding Process
Under Section 27 of the Industry Research and
Development Act 198626, the Australian government offers a research tax credit of 43.5% on registered research and development
activities executed in Australia by eligible Australian domiciled entities. Companies are eligible to receive tax credits if they meet
the following criteria: (i) are domiciled in Australia, (ii) have incurred at least $20,000 in eligible research and development expenses,
(iii) have conducted at least one eligible research and development activity, (iv) beneficial owner(s) with > 40 % beneficial ownership
when considered together do not have > $20 million AUD aggregated turnover on an annual basis. 60P Australia Pty Ltd meets all these
criteria, and will continue to do so in the future unless, considered together with any of our shareholders who have > 40% beneficial
ownership, have > $20 million AUD in aggregate annual turnover.
Under Section 28D of the Industry Research and
Development Act 198627, research and development activities conducted outside Australia are also potentially eligible if they
meet the following criteria: (i) they are approved in advance, (ii) they are linked to a core research and development activity conducted
in Australia, (iii) cannot be conducted in Australia for various reasons and (iv) the value of activities conducted overseas is less than
the value of activities conducted in Australia.
Government Regulation and Product Approvals
Government authorities in the United States, at
the federal, state and local level, and in other countries and jurisdictions, including the European Union, extensively regulate, among
other things, the research, development, testing, manufacture, quality control, approval, packaging, storage, recordkeeping, labeling,