Table
of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(Mark One)
For the Fiscal Year Ended December 31,
2022
Or
For the transition period from _____________
to _____________
Commission File Number: 001-39669
Coeptis Therapeutics Holdings, Inc.
(Exact name of registrant as specified in its charter)
105 Bradford Rd, Suite 420
Wexford, Pennsylvania15090
(Address of Principal Executive Offices) (Zip Code)
______________________________________________
(Registrant’s Telephone Number, Including
Area Code): (724) 934-6467
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 COEP Nasdaq Global Market
Indicate by check mark if the registrant is a well-known
seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐No☒
Indicate by check mark if the registrant is not
required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐No☒
Indicate by check mark whether the registrant (1)
has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements
for the past 90 days. Yes☒ No ☐
Indicate by check mark whether the registrant has
submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of
this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files.) Yes☒
No ☐
Indicate by check mark whether the registrant is
a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company.
See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company”
and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer ☐ Accelerated filer ☐
Non-accelerated filer ☒ Smaller reporting company ☒
Emerging growth company ☒
If an emerging growth company, indicate by a check
mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting
standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant has
filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting
under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its
audit report. ☐
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant
included in the fi ling reflect the correction of an error to previously issued financial statements. ☐
Indicate by check mark whether
any of those error corrections are restatements that required a recovery analysis of incentive- based compensation received by any of
the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate by a 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 voting and non-voting common
equity held by non-affiliates of the registrant, as of the last business day of the registrant’s most recently completed
second fiscal quarter, based on the closing sale price of $2.80 as reported on the OTCQB PINK Market was: $49,998,259.
The number of shares outstanding of each of the registrant’s
classes of common stock as of the latest practicable date was: 20,441,036 shares of $0.0001 par value common stock outstanding as of
March 27, 2023.
Coeptis Therapeutics Holdings,
Inc.
Annual Report on Form 10-K for the Year
Ended December 31, 2022
TABLE OF CONTENTS
Item Page
Part I
1. Business 1
1A. Risk Factors 5
1B. Unresolved Staff Comments 19
2. Properties 19
3. Legal Proceedings 19
4. Mine Safety Disclosures 19
Part II
6. Selected Financial Data 27
7A. Quantitative and Qualitative Disclosures About Market Risk 32
8. Financial Statements and Supplementary Data 32
9A. Controls and Procedures 32
9B. Other Information 33
Part III
10. Directors, Executive Officers and Corporate Governance 34
11. Executive Compensation 40
13. Certain Relationships and Related Transactions, and Director Independence 43
14. Principal Accountant Fees and Services 47
Part IV
15. Exhibits and Financial Statement Schedules 48
i
PRESENTATION OF FINANCIAL AND OTHER INFORMATION
On October 28, 2022, Coeptis Therapeutics Holdings,
Inc. (“Coeptis”, ‘‘we’’, ‘‘us’’ or the “Company”), formerly Bull
Horn Holdings Corp., acquired Coeptis Therapeutics, Inc. (“Coeptis Sub”) in an all-stock transaction. The acquisition of Coeptis
Sub was accomplished through a reverse merger of our wholly owned subsidiary BH Merger Sub, Inc. with and into Coeptis Sub, with Coeptis
Sub determined to be the accounting acquirer of us (the “Merger”). As such, the historical financial statements of the registrant
for periods prior to October 28, 2022, are those of Coeptis Sub and, in connection with the acquisition, Coeptis Sub’s equity was
exchanged for shares of our common stock. The acquisition of Coeptis Sub was treated as a “reverse merger.” Unless otherwise
stated or the context otherwise requires, the historical business information described in this Annual Report on Form 10-K prior to consummation
of the acquisition of Coeptis Sub is that of Coeptis Sub and, following consummation of the acquisition of Coeptis Sub, reflects business
information of us and Coeptis Sub on a consolidated basis.
This report includes our audited consolidated financial
statements as at and for the year ended December 31, 2022. This report also includes our audited financial statements as at and for the
year ended December 31, 2021.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Annual Report on Form 10-K contains forward-looking
statements within the meaning of the Private Securities Litigation Reform Act of 1995. We intend such forward-looking statements to be
covered by the safe harbor provisions for forward-looking statements contained in 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”).
All statements other than statements of historical facts contained in this Annual Report on Form 10-K are “forward-looking statements”
for purposes of federal and state securities laws, including statements regarding our expectations and projections regarding future developments,
operations and financial conditions, and the anticipated impact of our acquisitions, business strategy, and strategic priorities. These
statements involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance or
achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking
statements.
In some cases, you can identify forward-looking
statements by terms such as “may,” “will,” “should,” “expect,” “plan,” “anticipate,”
“could,” “intend,” “target,” “project,” “contemplate,” “believe,”
“estimate,” “predict,” “potential” or “continue” or the negative of these terms or other
similar expressions, although not all forward-looking statements contain these words. The forward-looking statements in this Annual Report
on Form 10-K are only predictions and are based largely on our current expectations and projections about future events and financial
trends that we believe may affect our business, financial condition and results of operations. These forward-looking statements speak
only as of the date of this Annual Report on Form 10-K and are subject to a number of known and unknown risks, uncertainties and assumptions.
Although we believe the expectations reflected in any of our forward-looking statements are reasonable, actual results could differ materially
from those projected or assumed in any of our forward-looking statements. Our future financial condition and results of operations, as
well as any forward-looking statements, are subject to change and inherent risks and uncertainties.
ii
These forward-looking statements present our estimates
and assumptions only as of the date of this Annual Report on Form 10-K. Accordingly, you are cautioned not to place undue reliance on
forward-looking statements, which speak only as of the dates on which they are made. Except as required by applicable law, we do not plan
to publicly update or revise any forward-looking statements contained herein, whether as a result of any new information, future events,
changed circumstances or otherwise. Important factors that could cause actual results to differ materially from those in the forward-looking
statements include, but are not limited to, those summarized below:
· We need to obtain financing in order to continue our operations;
· Healthcare reform measures could adversely affect our business;
Given these uncertainties, you should not place
undue reliance on these forward-looking statements. These forward-looking statements represent our estimates and assumptions only as of
the date of this Annual Report on Form 10-K and, except as required by law, we undertake no obligation to update or revise publicly any
forward-looking statements, whether as a result of new information, future events or otherwise after the date of this Annual Report on
Form 10-K. We qualify all of our forward-looking statements by these cautionary statements.
NOTE REGARDING TRADEMARKS
We own or have rights to use the trademarks and
trade names that we use in conjunction with the operation of our business. Each trademark or trade name of any other company appearing
in this Annual Report on Form 10-K is, to our knowledge, owned by such other company. Solely for convenience, our trademarks and trade
names referred to in this Annual Report on Form 10-K may appear without the ® or TM symbols, but those references are not intended
to indicate, in any way, that we will not assert, to the fullest extent under applicable law, our rights or the right of the applicable
licensor to these trademarks and trade names.
iii
PART I
ITEM 1. BUSINESS
As discussed elsewhere
in this Annual Report on Form 10-K, pursuant to the Merger, we acquired our primary operating subsidiary Coeptis Therapeutics, Inc. Since
prior to the Merger the Company was a shell company, the business description below is a description of the Company’s business based
on our subsidiaries’ operations.
Company History
General. We
were originally incorporated in the British Virgin Islands on November 27, 2018, under the name Bull Horn Holdings Corp. On October 27,
2022, Bull Horn Holdings Corp. domesticated from the British Virgin Islands to the State of Delaware. On October 28, 2022, in connection
with the closing of the Merger, we changed our corporate name from Bull Horn Holdings Corp. to “Coeptis Therapeutics Holdings, Inc.”
The Merger Transaction. On
October 28, 2022, a wholly owned subsidiary of Bull Horn Holdings Corp., merged with and into Coeptis Therapeutics, Inc., with Coeptis
Therapeutics, Inc. as the surviving corporation of the Merger. As a result of the Merger, we acquired the business of Coeptis Therapeutics,
Inc., which we now continue to operate as our wholly owned subsidiary.
About the Company’s
Subsidiaries. We are now a holding company that currently operates through our direct and indirect wholly owned subsidiaries
Coeptis Therapeutics, Inc., Coeptis Pharmaceuticals, Inc. and Coeptis Pharmaceuticals, LLC.
Our current business model
is designed around furthering the development of our current product portfolio. We are continually exploring partnership opportunities
with companies that have novel therapies in various stages of development or companies with technologies that improve the way that drugs
are delivered to patients. We seek the best strategic relationships, which relationships could include in-license agreements, out-license
agreements, co-development arrangements and other strategic partnerships in new and exciting therapeutic areas such as auto-immune disease
and oncology.
Collaborations for Product Development — Research
and Development
CD38 Therapeutic and
Diagnostic; VyGen Bio, Inc.
In May 2021, we entered
into two exclusive option agreements (the “CD38 Agreements”) relating to separate technologies (described below) designed
to improve the treatment of CD38-related cancers (e.g., multiple myeloma, chronic lymphocytic leukemia, and acute myeloid leukemia)
with VyGen-Bio, Inc. (“Vy-Gen”), a majority-owned subsidiary of Vycellix, Inc., a Tampa, Florida-based private, immune-centric
discovery life science company focused on the development of transformational platform technologies to enhance and optimize next-generation
cell and gene-based therapies, including T cell and Natural Killer (NK) cell-based cancer therapies. In August 2021, we exercised
those two options and acquired a 50% ownership interest in such technologies, with the ownership interest scalable down to 20% under certain
circumstances. In December 2021, we completed our purchase of the 50% ownership interest in the CD38-Diagnostic and adjusted the
downward adjustment percentage for the CD38-GEAR-NK product candidate to 25%.
The CD38 Agreements relate
to two separate Vy-Gen drug product candidates, as follows:
In May 2021, we made
initial payments totaling $750,000 under the CD38 Agreements, to acquire the exclusive options to acquire co-development rights with respect
to CD38-GEAR-NK and CD38-Diagnostic. On August 15, 2021, we entered into amendments to each of the CD038 Agreements. In connection
with the two amendments, we delivered to VyGen promissory notes aggregating $3,250,000 with maturity dates of December 31, 2021,
and made a cash payment of $1,000,000, upon which cash payment we exercised the two definitive option purchase agreements. In December
2021, we completed our payment obligations to secure our rights to 50% of the net revenue stream related to the CD38-Diagnostic, and also
entered into an amendment of the CD038-GEAR-NK promissory note to extend the maturity date to March 31, 2022 (which date was subsequently
extended to September 30, 2022) and to increase the scalable downward adjustment percentage for the CD38-GEAR-NK product candidate to
25%. Pursuant to the CD038-GEAR-NK amendment and subsequent extension, if the promissory note is timely paid by September 30, 2022, we
will maintain its rights to 50% of the net revenue stream related to the CD38-GEAR-NK product candidate, and if the CD38-GEAR-NK promissory
note is not timely paid by September 30, 2022, our rights with respect to CD38-GEAR-NK will automatically be reduced to 25% and the promissory
note will be automatically cancelled and will no longer be due or payable. Details of the two August amendments and the December amendment
are summarized in the amendments attached at Exhibits 4.1 and 4.2 to our Current Report on Form 8-K dated August 19, 2021, and
Exhibit 4.2 to our Current Report on Form 8-K dated December 27, 2021.
In connection with the Vy-Gen
relationship and the Company’s rights in respect of the two product candidates described above, in December 2021 we entered
into a co-development and steering committee agreement with Vy-Gen. The co-development and steering committee agreement provides for the
governance and economic agreements between the Company and Vy-Gen related of the development of the two Vy-Gen drug product candidates
and the revenue sharing related thereto, including each company having a 50% representation on the steering committee and each company
receiving 50% of the net revenues related to the Vy-Gen product candidates (scalable downward to 25% for the CD38-GEAR-NK as described
above). Related to the joint development, under the direction of the joint steering committee, we are currently assessing market opportunities,
intellectual property protection and potential regulatory strategies for the CD38 Assets, and VyGen is overseeing the development activities
being conducted through the scientists at Karolinska Institute. Details of the co-development and steering committee agreement are summarized
in the agreement attached as Exhibit 4.1 to our Current Report on Form 8-K dated December 27, 2021.
CAR-T Technologies;
University of Pittsburgh
The Option: In
April 2022, we entered into an exclusive option agreement with the University of Pittsburgh to allow us to have an opportunity to evaluate
certain intellectual property and patent rights to the following three CAR-T technologies: (i) mSA2 affinity-enhanced biotin-binding CAR,
(ii) universal self-labeling SynNotch and CARs for programable antigen-targeting, and (iii) conditional control of universal CAR-T cells
through stimulus-reactive adaptors. We paid the University of Pittsburgh a non-refundable $5,000 fee for the exclusive option rights to
the three CAR-T technologies. As described below, we have exercised its option and entered into a license agreement with respect to universal
self-labeling SynNotch and CARs for programable antigen-targeting. The other two technologies currently remain part of the option agreement.
The CAR-T License: On
August 31, 2022, we entered into an exclusive license agreement with the University of Pittsburgh for certain intellectual property rights
related to the universal self-labeling SynNotch and CARs for programable antigen-targeting technology platform. We paid the University
of Pittsburgh a non-refundable fee in the amount of $75,000 for the exclusive patent rights to the licensed technology.
A key potential benefit that
we see in the licensed technology is its potential application in therapeutic treatments that involve solid tumors. While there are currently
a number of FDA-approved CAR-T therapies for hematologic malignancies, there are currently no CAR-T therapies marketed that are indicated
for the treatment of solid tumors.
Under the terms of the agreement,
we have been assigned the worldwide development and commercialization rights to the licensed technology in the field of human treatment
of cancer with antibody or antibody fragments using SNAP-CAR T cell technology, along with (i) an intellectual property portfolio consisting
of issued and pending patents and (ii) options regarding future add-on technologies and developments. In consideration of these rights,
we paid an initial license fee of $75,000, and will have annual maintenance fees ranging between $15,000 and $25,000, as well as developmental
milestone payments (as defined in the agreement and royalties equal to 3.5% of net sales. Additionally, the agreement contemplates that
we will enter into a Sponsored Research Agreement with the University of Pittsburgh within ninety days of the execution of the agreement,
with the goal of further researching and optimizing the SNAP-CAR platform.
The Sponsored Research:
We recently entered into a sponsored research agreement (“SRA”) with the University of Pittsburgh, the focus of which is to
perform pre-clinical research as it relates to our SNAP-CAR program. Our target objectives are to: (i) test and validate CRO antibody
conjugation chemistry and improve the activity of adaptors by investigating alternative chemical composition, (ii) investigate HER2 solid-tumor
model in mice for both breast and ovarian cancers, (iii) identify and test other non-HER2 targets, (iv) further investigate multi-antigen
targeting by dosing multiple adaptors simultaneously to address tumor heterogeneity/resistance in hematological and/or solid tumors and
(v) expand the potential impact of SNAP-CAR by performing in vitro screening of many additional antigen-antibody combinations in hematological
and/or solid tumors. The term of the SRA is two years, and we have committed financing in the amount of $716,714 over the next two years
towards achieving the target objectives.
The SNAP-CAR Platform:
Chimeric antigen receptor (CAR) therapy is a new treatment for cancer in which a patient’s T cells (a type of immune cell) are genetically
engineered to recognize cancer cells to target and destroy them. Cells are extracted from the patient and then genetically engineered
to make the CAR and are re-introduced back into the patient. This therapy is revolutionizing the treatment of many blood cancers including
B cell leukemias and lymphomas by targeting specific proteins found on these cancers, and there is hope in treating additional cancers
including solid tumors by having them recognize new targets. The “SNAP-CAR” CAR T cell therapy platform is being developed
to be a universal therapeutic. The SNAP-CAR technology is in the preclinical stage of development at the University of Pittsburgh. Instead
of directly binding to a target on the tumor cell, the CAR T cells are co-administered with one or more antibody adaptors that bind to
the tumor cells and are fitted with a chemical group that irreversibly connects them to the SNAP-CAR on the therapeutic cells via a covalent
bond. A covalent bond is the highest affinity bond possible, and we believe this binding could translate into highly potent therapeutic
activity.
Pre-clinical studies in mice
have demonstrated a potential benefit that by targeting solid tumors via antibody adaptor molecules, the SNAP-CAR therapy may be able
to provide a highly programmable therapeutic platform, one that we envision could deliver several potential advantages over standard CAR-T
treatments, including:
Market Opportunity:
Due to its unique targeting and binding properties, we believe the SNAP-CAR platform could help accelerate the utilization and effectiveness
of CAR T cell therapies for the treatment of solid tumors. By way of market size, according to Polaris Market Research, the CAR-T cell
therapy market size is expected to reach $20.56 billion by 2029 (from $1.96 billion in 2021), representing a compound annual growth rate
(CAGR) of 31.6% during the forecast period from 2022 to 2029. However, based on the anticipated application of the licensed technology
(i.e. initially focusing on solid tumor treatment) we cannot at this time project the market size of our target market until we further
develop the licensed technology and settle on the initial target indications and follow-up indications. Additional research and analysis
are being conducted which will aid us in the proper identification and selection of the cancer indication(s) we intend to further study.
Once the optimal indication(s) are selected and the overall development strategy is further identified, the market opportunity can be
further defined.
CPT60621; Vici Health
Sciences, LLC
In 2019, we entered into a
co-development agreement with Vici Health Sciences, LLC (“Vici”). Through this partnership, we would co-develop, seek FDA
approval and share ownership rights with Vici to CPT60621, a novel, ready to use, easy to swallow, oral liquid version of an already approved
drug used for the treatment of Parkinson’s Disease (PD). As we continue to direct its operational focus towards the Vy-Gen opportunities
previously described, we have recently stopped allocating priority resources to the development of CPT60621. We are currently in negotiations
in which Vici intends to buy-out most or all of our remaining ownership rights.
Sales and Marketing
We currently do not have in-house
commercial capabilities required to market and distribute FDA-approved products. Therefore, we will be required to partner with firms
who are capable of conducting all sales, marketing, distribution, contracting and pricing for our future products. There is assurance
that we will be able to secure the services of such a firm or that any such firm will be able to achieve sales expectations.
Our Growth Strategy
To achieve our goals, we intend
to deploy an aggressive, four-pronged, growth strategy listed below that we believe will help us maximize our success and deleverage some
of the risk of finding, solely developing and funding our own products.
Portfolio Optimization — We
will continue to evaluate, prioritize, optimize, and make appropriate changes in our pipeline portfolio as market development dynamics
and/or product opportunities change. For example, it may be a strategic business decision for us to divest certain products and/or agreements
to other companies so we can best focus on its core assets.
Strategic Partnerships — We
will focus on expanding our existing pipeline through establishing strategic partnerships with companies that have interesting products
and technologies. We intend to focus on novel, early-stage and preclinical assets in a variety of therapeutic areas, including oncology
and autoimmune diseases.
Business Development — We
will continue to seek acquisition or partnering novel products and technologies that we believe will improve patient outcomes.
We will seek to identify companies with products and technologies that are seeking assistance in developing and commercializing these
assets. We will assess the commercial market opportunities for all potential products and technologies to determine if there are enough
advantages to allow them to be viable, if they are developed.
Commercial Development — While
not a current key focus of our company, we will continue to analyze opportunities to participate and assist in the commercial development
activities directly or with strategic partners. Commercial development activities may include, but are not limited to, clinical development,
CMC manufacturing, supply chain management, market research, healthcare economics, market access, sales/marketing, and commercial launch
strategies.
Employees
As of December 31, 2022, we
had five employees, of which four are full-time employees, and one is a part-time employee. Our employees are not represented by any labor
union or any collective bargaining arrangement with respect to their employment with the Company. We have never experienced any work stoppages
or strikes as a result of labor disputes. We believe that our employee relations are good.
Certain of our employees have
been working remotely due to the COVID-19 outbreak. Our operations or productivity may continue to be impacted throughout the
duration of the COVID-19 outbreak and government-mandated closures.
Available Information
We file annual, quarterly and current reports and
other information with the United States Securities and Exchange Commission (“SEC”) that are publicly available through the
SEC’s website at www.sec.gov. Our SEC filings will also be available free of charge through the home page of our website
https://coeptistx.com as soon as reasonably practicable after they are filed with or furnished to the SEC. Our website and the information
contained on or connected to that site are not incorporated into this Annual Report on Form 10-K.
ITEM 1A. RISK FACTORS
As a smaller reporting
company, we are not required to provide a statement of risk factors. Nonetheless, we are voluntarily providing risk factors herein. You
should consider carefully the following risk factors, together with all the other information in this Annual Report on Form 10-K, including
our consolidated financial statements and notes thereto, and in our other public filings with the SEC. The risk factors discussed below
cover not only our current products, product candidates and relationships, but also the risks we expect to encounter when and if we add
new product candidates and approved products to our proprietary portfolio, which new products, if added, we expect to be a various stages
of pre-clinical and perhaps clinical development. The occurrence of any of the following risks could harm our business, financial
condition, results of operations and/or growth prospects or cause our actual results to differ materially from those contained in forward-looking
statements we have made in this report and those we may make from time to time. You should consider all of the risk factors described
when evaluating our business.
We operate in a highly
competitive and highly regulated business environment. Our business can be expected to be affected by government regulation, economic,
political and social conditions, business’ response to new and existing products and services, technological developments and the
ability to obtain and maintain patent and/or other intellectual property protection for our products and intellectual property. Our actual
results could differ materially from management’s expectations because of changes both within and outside of our control. Reviewers
of this Annual Report on Form 10-K are cautioned not to place undue reliance upon such forward-looking statements. Such forward-looking
statements may include projections with respect to market size and acceptance, revenues and earnings, marketing and sales strategies and
business operations, as well as efficacy of our products. The risk factors discussed below cover not only our current products, product
candidates and relationships, but also the risks we expect to encounter when and if we add new product candidates and approved products
to our proprietary portfolio, which new products, if added, we expect to be at various stages of pre-clinical and perhaps clinical development.
Throughout this section,
references to “Company,” “Coeptis,” “we,” “us,” “our” and similar terms refer
collectively to Coeptis Therapeutics Holdings, Inc., a Delaware corporation, and its operating subsidiaries, as the context so requires.
General Risks
There is a substantial doubt about our ability
to continue as a going concern.
The report of our independent
registered public accounting firm that accompanies our consolidated financial statements includes an explanatory paragraph indicating
there is a substantial doubt about our ability to continue as a going concern, citing our need for additional capital for the future planned
expansion of our activities and to service our ordinary course activities (which may include servicing of indebtedness). The inclusion
of a going concern explanatory paragraph in the report of our independent registered public accounting firm will make it more difficult
for us to secure additional financing or enter into strategic relationships on terms acceptable to us, if at all, and likely will materially
and adversely affect the terms of any financing that we might obtain. Our consolidated financial statements do not include any adjustments
that may result from the outcome of this uncertainty.
We have incurred significant losses in prior
periods, and losses in the future could cause the quoted price of our common stock to decline or have a material adverse effect on our
financial condition, our ability to pay its debts as they become due, and on its cash flows.
For the year ended December 31,
2021, we incurred a net loss of $13,449,280 and, as of that date, we had an accumulated deficit of $27,550,126. For the year ended December
31, 2022, we incurred a net loss of $37,574,217 and, as of that date, had an accumulated deficit of $65,739,723. Any losses in the future
could cause the quoted price of our common stock to decline or have a material adverse effect on our financial condition, its ability
to pay its debts as they become due, and on its cash flows.
To date, we have
generated only minimal product revenue. We expect that our planned product development and strategic expansion pursuits will
increase losses significantly over the next five years. In order to achieve profitability, we will be required to generate
significant revenue. We cannot be certain that we will generate sufficient revenue to achieve profitability. We anticipate that we
will continue to generate operating losses and experience negative cash flow from operations at least through the end of 2023 or
longer. We cannot be certain that we will ever achieve profitability or that, if profitability is achieved, that is will be
maintained. If our revenue grows at a slower rate than we anticipate or if our product development, marketing and operating expenses
exceed our expectations or cannot be adjusted accordingly, our business, results of operation and financial condition will be
materially adversely affected and we may be unable to continue operations.
We will not be able to generate
meaningful product revenue unless and until one of our product candidates or co-development products successfully completes clinical trials
and receives regulatory approval. As some of our current and projected future product candidates or co-development products are, and we
expect will be, at an early proof-of-concept stage, we do not expect to receive revenue from any of these products for several years,
if at all. We intend to seek to obtain revenue from collaboration or licensing agreements with third parties. We shifted our operational
focus away from Conjupri and Consensi (two in-licensed FDA-approved 505(b)2 products), in order to focus our efforts on our other product
opportunities described elsewhere in this Annual Report on Form 10-K. We expect that we will need to rely on key third-party agreements,
in order to be in a position to realize material revenues in the future, and we may never enter into any such agreements or realize material,
ongoing future revenue. Even if we eventually generate revenues, 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.
The COVID-19 pandemic could have a material
adverse impact on our business, results of operations and financial condition.
In December 2019, a novel
strain of coronavirus was reported to have surfaced in Wuhan, China. In January 2020, the World Health Organization declared the
COVID-19 outbreak a “Public Health Emergency of International Concern.” This worldwide outbreak has resulted in the implementation
of significant governmental measures, including lockdowns, closures, quarantines and travel bans intended to control the spread of the
virus. Companies are also taking precautions, such as requiring employees to work remotely, imposing travel restrictions and temporarily
closing businesses and facilities. These restrictions, and future prevention and mitigation measures, have had an adverse impact on global
economic conditions and are likely to have an adverse impact on consumer confidence and spending, which could materially adversely affect
the supply of, as well as the demand for, our products. Uncertainties regarding the economic impact of COVID-19 is likely to result in
sustained market turmoil, which could also negatively impact our business, financial condition and cash flows.
If our operations or productivity
continue to be impacted throughout the duration of the COVID-19 outbreak and government-mandated closures, which may negatively impact
our business, financial condition and cash flows. The extent to which the COVID-19 pandemic will further impact our business will depend
on future developments and, given the uncertainty around the extent and timing of the potential future spread or mitigation and around
the imposition or relaxation of protective measures, we cannot reasonably estimate the impact to our business at this time.
The extent of COVID-19’s
effect on our operational and financial performance will depend on future developments, including the duration, spread and intensity of
the outbreak, all of which are uncertain and difficult to predict considering the rapidly evolving landscape. As a result, it is not currently
possible to ascertain the overall impact of COVID-19 on our business. However, if the pandemic continues for a prolonged period it could
have a material adverse effect on our business, results of operations, financial condition and cash flows and adversely impact the trading
price of our common stock.
If we are unable to manage future expansion
effectively, our business may be adversely impacted.
In the future, we may experience
rapid growth in our business, which could place a significant strain on our operations, in general, and our internal controls and other
managerial, operating and financial resources, in particular. If we are unable to manage future expansion effectively, our business would
be harmed. There is, of course, no assurance that we will enjoy rapid development in our business.
The Company’s ability to be successful
will depend upon the efforts of the Company’s Board and our key personnel and the loss of such persons could negatively impact the
operations and profitability of the Company’s business.
The Company’s ability
to be successful is dependent upon the efforts of the Company’s board members and key personnel, in particular our President and
Chief Executive Officer David Mehalick. We cannot assure you that the Company’s board members and key personnel will be effective
or successful or remain with the Company. In addition to the other challenges they will face, such individuals may be unfamiliar with
the requirements of operating a public company, which could cause the Company’s management to expend time and resources becoming
familiar with such requirements. We have employment agreements in place with Mr. Mehalick and with Daniel Yerace, but no other persons.
See “Executive Compensation” for further discussion. The loss of service of Mr. Mehalick, in particular, for any reason, could
seriously impair our ability to effectuate our business plan, which could have a materially adverse effect on our business and future
results of operations. We also have not purchased any key-man life insurance.
If we are unable to recruit and retain key
personnel, our business may be harmed.
If we are unable to attract
and retain key personnel, our business may be harmed. Our failure to enable the effective transfer of knowledge and facilitate smooth
transitions with regard to our key employees could adversely affect our long-term strategic planning and execution.
Our business plan is not based on independent
market studies.
We have not commissioned any
independent market studies concerning our business plans. Rather, our plans for implementing our business strategy and achieving profitability
are based on the experience, judgment and assumptions of our management. If these assumptions prove to be incorrect, we may not be successful
in our business operations.
Our Board of Directors may change our policies
without shareholder approval.
Our policies, including any
policies with respect to investments, leverage, financing, growth, debt and capitalization, will be determined by our Board of Directors
or officers to whom our Board of Directors delegate such authority. Our Board of Directors will also establish the amount of any dividends
or other distributions that we may pay to our shareholders. Our Board of Directors or officers to which such decisions are delegated will
have the ability to amend or revise these and our other policies at any time without shareholder vote. Accordingly, our shareholders will
not be entitled to approve changes in our policies, which policy changes may have a material adverse effect on our financial condition
and results of operations.
We need to obtain financing in order to
continue our operations and pursue strategic transactions.
On a prospective basis, we
will require both short-term financing for operations and long-term capital to fund our expected growth. We currently have no existing
bank lines of credit and have not established any definitive sources for additional financing. We believe that cash on hand will be sufficient
to meet our short-term financial requirements into the 4rd quarter of 2023 assuming that we elect not to pursue and consummate
strategic transactions prior to that time. However, we will require additional funds if we want to fully implement our business plan and
growth strategy, including strategic transactions, which funds could come in the form of equity, debt (including secured debt) or a combination
of the two. Additional financing may not be available to us, or if available, then it may not be available upon terms and conditions acceptable
to us. If adequate funds are not available, then we may be required to delay, reduce or eliminate product development or clinical programs.
Our inability to take advantage of opportunities in the industry because of capital constraints may have a material adverse effect on
our business and our prospects. If we fail to obtain the capital necessary to fund our operations, we will be unable to advance our development
programs and complete our clinical trials.
In addition, our research
and development expenses could exceed our current expectations. This could occur for many reasons, including:
While we expect to seek additional
funding through public or private financings, we may not be able to obtain financing on acceptable terms, or at all. In addition, the
terms of our financings may be dilutive to, or otherwise adversely affect, holders of our common stock and other capital securities. We
may also seek additional funds through arrangements with collaborators or other third parties. These arrangements would generally require
us to relinquish rights to some of our technologies, product candidates or products, and we may not be able to enter into such agreements,
on acceptable terms, if at all. If we are unable to obtain additional funding on a timely basis, we may be required to curtail or terminate
some or all of our development programs, including some or all of our product candidates.
We currently do not have sufficient cash
to fully implement our business plan.
We have experienced a lack
of adequate capital resources causing us to be unable to fully implement our full business plan. We believe that we need to raise or otherwise
obtain additional financing beyond our current cash position in order to satisfy our existing obligations and fully implement our business
plan. We do not expect to have positive cash flow until the end of 2023 or longer. If we are not successful in obtaining additional financing,
we will not be able to fully implement our business plan and we may not be able to continue our operations.
We have a limited operating history and
a history of operating losses, and expect to incur significant additional operating losses.
We began our business in 2017
and have a limited operating history. Although we have enlisted the assistance of pharmaceutical experts, our lack of experience may cause
us to encounter unforeseen problems that could have a material adverse effect on our business and financial condition. Further, there
is limited historical financial information upon which to base an evaluation of our performance.
The drug development and approval process
is uncertain, time-consuming and expensive.
The process of obtaining and
maintaining regulatory approvals for new therapeutic products is lengthy, expensive and uncertain. It also can vary substantially based
on the type, complexity, and novelty of the product. We, or our co-development partners, must provide the FDA and foreign regulatory authorities
with preclinical and clinical data demonstrating that our products are safe and effective before they can be approved for commercial sale.
Clinical development, including preclinical testing, is a long, expensive and uncertain process. It may take us several years to
complete our testing, and failure can occur at any stage of testing. Any preclinical or clinical test may fail to produce results satisfactory
to the FDA. Preclinical and clinical data can be interpreted in different ways, which could delay, limit or prevent regulatory approval.
Negative or inconclusive results from a preclinical study or clinical trial, adverse medical events during a clinical trial or safety
issues resulting from products of the same class of drug could cause a preclinical study or clinical trial to be repeated or a program
to be terminated, even if other studies or trials relating to the program are successful.
We will be required to sustain and further
build our intellectual property rights.
We do not currently have any
intellectual property rights in our name in respect of our current assets, and instead have rights in respect of our current assets through
agreements with third parties. We intend to fully protect any product, formulation and process that we develop with appropriate intellectual
property registrations. If we fail to sustain and further build our direct and indirect intellectual property rights, competitors will
be able to take advantage of our research and development efforts to develop competing products. If we are not able to protect our proprietary
technology, trade secrets, and know-how, our competitors may use our inventions to develop competing products. Our future patents and
patent applications, even if granted, may not protect us against our competitors. Patent positions generally, including those of other
pharmaceutical and biotechnology companies, are or will be generally uncertain and involve complex legal, scientific and factual questions.
The standards which the United States Patent and Trademark Office uses to grant patents, and the standards which courts use to interpret
patents, are not always applied predictably or uniformly and can change, particularly as new technologies develop. Consequently, the level
of protection, if any, that will be provided by our direct or indirect patent rights from time to time if we attempt to enforce them,
and they are challenged, is uncertain. In addition, the type and extent of patent claims that will be issued to us in the future is uncertain.
Any patents that are issued may not contain claims that permit us to stop competitors from using similar technology.
In addition, we may also rely
on unpatented technology, trade secrets, and confidential information. We may not be able to effectively protect our rights to this technology
or information. Other parties may independently develop substantially equivalent information and techniques or otherwise gain access to
or disclose our technology. We will generally require each of our employees, consultants, collaborators, and certain contractors to execute
a confidentiality agreement at the commencement of an employment, consulting, collaborative, or contractual relationship with us. However,
these agreements may not provide effective protection of our technology or information or, in the event of unauthorized use or disclosure,
they may not provide adequate remedies.
Patent positions are often
uncertain and involve complex legal and factual questions. In addition, the laws of some foreign countries do not protect proprietary
rights to the same extent as the laws of the United States. Whether filed in the United States or abroad, our patent applications
may be challenged or may fail to result in issued patents. In addition, any future patents we obtain may not be sufficiently broad to
prevent others from practicing our technologies or from developing or commercializing competing products. Furthermore, others may independently
develop or commercialize similar or alternative technologies or drugs, or design around our patents. Our patents may be challenged, invalidated
or fail to provide us with any competitive advantages. We may not have the funds available to protect our patents or other technology;
such protection is costly and can result in further litigation expenses.
If we do not obtain or we
are unable to maintain adequate patent or trade secret protection for our products in the United States, competitors could duplicate
them without repeating the extensive testing that we will be required to undertake to obtain approval of the products by the FDA. Regardless
of any patent protection, under the current statutory framework the FDA is prohibited by law from approving any generic version of any
of our products for a period of years that would be determined based on the nature of the product (i.e. an orphan drugs would get
7 years, a new chemical entity would get 5 years and a new clinical investigation would get 3 years). Upon the expiration
of that period, or if that time period is altered, the FDA could approve a generic version of our product unless we have patent protection
sufficient for us to block that generic version. Without sufficient patent protection, the applicant for a generic version of our product
would be required only to conduct a relatively inexpensive study to show that its product is bioequivalent to our product and may not
have to repeat the studies that we will need to conduct to demonstrate that the product is safe and effective. In the absence of adequate
patent protection in other countries, competitors may similarly be able to obtain regulatory approval in those countries of products that
duplicate our products.
We will be required to comply with our obligations
in our intellectual property licenses and other agreements with third parties.
If we fail to comply with
our obligations in our intellectual property licenses and other agreements with third parties, we could lose license rights that are important
to our business. We are not currently party to any intellectual property license agreement with any third parties, but we anticipate that
in-licensing and co-development will be strategies that we utilize as we continue to pursue our growth strategy. We expect to enter into
licenses and co-development and other agreements in the future, and we expect these agreements to impose, various diligences, milestone
payment, royalty, insurance and other obligations on us. If we fail to comply with these obligations, the licensor may have the right
to terminate the license, in which event we might not be able to market any product that is covered by the licensed patents.
We may need to resort to litigation
to enforce or defend our intellectual property rights, including any patents issued to us. If a competitor or collaborator files a patent
application claiming technology also invented by us, in order to protect our rights, we may have to participate in an expensive and time-consuming
interference proceeding before the United States Patent and Trademark Office. We cannot guarantee that our product candidates will
be free of claims by third parties alleging that we have infringed their intellectual property rights. Third parties may assert that we
are employing their proprietary technologies without authorization and they may resort to litigation to attempt to enforce their rights.
Third parties may have or obtain patents in the future and claim that the use of our technology or any of our product candidates infringes
their patents. We may not be able to develop or commercialize combination product candidates because of patent protection others have.
Our business will be harmed if we cannot obtain a necessary or desirable license, can obtain such a license only on terms we consider
to be unattractive or unacceptable, or if we are unable to redesign our product candidates or processes to avoid actual or potential patent
or other intellectual property infringement. Obtaining, protecting and defending patent and other intellectual property rights can be
expensive and may require us to incur substantial costs, including the diversion of management and technical personnel. An unfavorable
ruling in patent or intellectual property litigation could subject us to significant liabilities to third parties, require us to cease
developing, manufacturing or selling the affected products or using the affected processes, require us to license the disputed rights
from third parties, or result in awards of substantial damages against us.
There can be no assurance
that we would prevail in any intellectual property infringement action, will be able to obtain a license to any third-party intellectual
property on commercially reasonable terms, successfully develop non-infringing alternatives on a timely basis, or license non-infringing
alternatives, if any exist, on commercially reasonable terms. Any significant intellectual property impediment to our ability to develop
and commercialize our products could seriously harm our business and prospects.
Patent litigation or other litigation in
connection with our intellectual property rights may lead to publicity that may harm our reputation and the value of our common stock
may decline.
During the course of any patent
litigation, there may be public announcements of the results of hearings, motions, and other interim proceedings or developments in the
litigation. If securities analysts or investors regard these announcements as negative, the value of our common stock may decline. General
proclamations or statements by key public figures may also have a negative impact on the perceived value of our intellectual property.
Protecting and defending against intellectual
property claims may have a material adverse effect on our business.
From time to time, we may
receive notice that others have infringed on our proprietary rights or that we have infringed on the intellectual property rights of others.
There can be no assurance that infringement or invalidity claims will not materially adversely affect our business, financial condition
or results of operations. Regardless of the validity or the success of the assertion of claims, we could incur significant costs and diversion
of resources in protecting or defending against claims, which could have a material adverse effect on our business, financial condition
or results of operations. We may not have the funds or resources available to protect our intellectual property.
Our competitors and potential competitors
may develop products and technologies that make ours less attractive or obsolete.
Many companies, universities,
and research organizations developing competing product candidates have greater resources and significantly greater experience in financial,
research and development, manufacturing, marketing, sales, distribution, and technical regulatory matters than we have. In addition, many
competitors have greater name recognition and more extensive collaborative relationships. Our competitors could commence and complete
clinical testing of their product candidates, obtain regulatory approvals, and begin commercial-scale manufacturing of their products
faster than we or our co-development partners are able to for our products. They could develop products that would render our product
candidates and co-development candidates, and those of our collaborators, obsolete and noncompetitive. If we are unable to compete effectively
against these companies, then we may not be able to commercialize our product candidates or achieve a competitive position in the market.
This would adversely affect our ability to generate revenues.
Competition in the biotechnology and pharmaceutical
industries may result in competing products, superior marketing of other products and lower revenues or profits for us.
There are many companies that
are seeking to develop products and therapies for the treatment of the same diseases that we are currently targeting. 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 greater experience than we do
in undertaking preclinical testing and human clinical studies of new pharmaceutical products and in obtaining regulatory approvals of
human therapeutic products. Accordingly, our competitors may succeed in obtaining FDA approval for superior products.
Other risks and uncertainties
include:
· market acceptance of our products and services.
· our ability to identify new patients for our products and services.
Positive or timely results
from preclinical studies and early clinical trials do not ensure positive or timely results in late-stage clinical trials or product approval