As filed with the Securities and Exchange Commission on February 14, 2014

 

 

DanDrit Biotech A/S

Fruebjergvej 3 Box 62

2100 Copenhagen, Denmark

+45 39179840 (Telephone Number)

(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)

 

Dr. Eric Leire

Chief Executive Officer

c/o DanDrit Biotech USA, Inc.

P.O. Box 189

Randolph, VT 05060

(Name, address, including zip code, and telephone number, including area code, of agent for service)

 

Approximate date of commencement of proposed sale to the public: Promptly after the effective date of this registration statement.

 

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933 check the following box: þ

 

 

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

 

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

 

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

 

 

 

 

 

 

 

DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS

 

This prospectus contains forward-looking statements. Forward-looking statements give our current expectations or forecasts of future events. You can identify these statements by the fact that they do not relate strictly to historical or current facts. You can find many (but not all) of these statements by looking for words such as “approximates,” “believes,” “hopes,” “expects,” “anticipates,” “estimates,” “projects,” “intends,” “plans,” “would,” “should,” “could,” “may” or other similar expressions in this prospectus. These statements may be found in the sections of this prospectus titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Business”, as well as in this prospectus generally. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from our historical experience and our present expectations or projections. Factors that could cause actual results to differ from those discussed in the forward-looking statements include, but are not limited to:

 

●

future financial and operating results, including projections of revenues, income, expenditures, cash balances and other financial items;

●

our capital requirements and the need for additional financing;

●

our ability to protect our intellectual property rights and secure the right to use other intellectual property that we deem to be essential to the conduct of our business;

●

our ability to execute our growth, expansion and acquisition strategies;

●

current and future economic and political conditions;

●

overall industry and market performance;

●

competition;

●

management’s goals and plans for future operations; and

●

other assumptions described in this prospectus underlying or relating to any forward-looking statements.

 

We describe material risks, uncertainties and assumptions that could affect our business, including our financial condition and results of operations, under “Risk Factors.” We base our forward-looking statements on our management’s beliefs and assumptions based on information available to our management at the time the statements are made. We caution you that actual outcomes and results may differ materially from what is expressed, implied or forecast by our forward-looking statements. Accordingly, you should be careful about relying on any forward-looking statements. Reference is made in particular to forward-looking statements regarding growth strategies, financial results, product development, competitive strengths, intellectual property rights, litigation, mergers and acquisitions, market acceptance or continued acceptance of our products, accounting estimates, financing activities, ongoing contractual obligations and sales efforts. Except as required under the federal securities laws and the rules and regulations of the SEC, we do not have any intention or obligation to update publicly any forward-looking statements after the distribution of this prospectus, whether as a result of new information, future events, changes in assumptions, or otherwise.

 

 

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USE OF PROCEEDS

 

Based on an initial public offering price of $ per share, after deducting commissions and estimated offering expenses payable by us, we estimate that we will receive up to $5,265,464 in net proceeds from the sale of          of shares of our common stock in this offering and up to $10,785,464 in net proceeds from the sale of            the maximum number of shares of common stock in this offering.

 

We intend to use the proceeds from this offering to conduct the Phase IIb/III clinical trial with MCV. All remaining proceeds will be used for working capital and general corporate purposes.

 

If we are unable to raise net proceeds equal to at least $10.7 million, we intend to first apply any proceeds raised towards the clinical trial. However, to the extent that we are unable to raise a sufficient amount of proceeds in this offering, we may not be able to achieve all our business objectives in a timely manner.

 

Pending any ultimate use of any portion of the proceeds from this offering, we intend to invest the proceeds in a variety of capital preservation investments, including short-term, interest-bearing instruments such as United States government securities and municipal bonds.

 

The anticipated use of proceeds for the offering funds is summarized below.

 

USD		Year 1				Year 2				Year 3				Total
Manufacturing			230,000				285,000				315,000				830,000
General & Administrative expenses			975,000				978,000				981,000				2,934,000
Clinical trial costs			1,858,000				2,430,000				2,730,000				7,018,000
Total			3,063,000				3,693,000				4,026,000				10,782,000

 

The amounts and timing of our actual expenditures will depend on numerous factors, including market conditions, results from our research and development efforts, business developments and opportunities and the rate of our growth, sales and marketing activities and competition. Accordingly, our management will have broad discretion in the application of the net proceeds, and investors will be relying on the judgment of our management regarding the application of the proceeds from this offering. We may find it necessary or advisable to use portions of the proceeds from this offering for other purposes. Circumstances that may give rise to a change in the use of proceeds and the alternate purposes for which the proceeds may be used include:

 

●	the existence of unforeseen or other opportunities or the need to take advantage of changes in the timing of our existing activities;

 

●	the need or desire on our part to accelerate, increase, reduce or eliminate one or more existing initiatives due to, among other things, changing market conditions and competitive developments or interim results of research and development efforts;

 

●	results from our business development and marketing efforts, including opportunities that may materialize;

 

●	the effect of federal, state, and local regulation on us and on our identified industries;

 

●	our ability to attract development funding or to license or sell our vaccine candidates; and/or

 

●	the presentation of strategic opportunities of which we are not currently aware (including acquisitions, joint ventures, licensing and other similar transactions).

 

From time to time, we evaluate these and other factors and we anticipate continuing to make such evaluations to determine if the existing allocation of resources, including the proceeds of this offering, is being optimized.

 

 

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DIVIDEND POLICY

 

We do not intend to declare or pay dividends on our common stock in the foreseeable future. Instead, we generally intend to invest any future earnings in our business. Subject to Delaware law, our board of directors will determine the payment of future dividends on our common stock, if any, and the amount of any dividends in light of:

 

●

any contractual restrictions limiting our ability to pay dividends that may be applicable at such time;

 

●

our earnings and cash flow;

 

●

our capital requirements;

 

●

our financial condition; and

 

●

other factors our board of directors deems relevant.

 

 

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CAPITALIZATION

 

The table below sets forth our cash and cash equivalents and capitalization, each as of September 30, 2013:

 

●

on an actual basis;

●

on an as adjusted basis giving effect to the issuance of $6,000,000 (       shares) of common stock in this offering; and

●

on an as adjusted basis giving effect to the issuance of the maximum of $12,000,000 (         shares) of common stock in this offering.

 

You should consider this table in conjunction with our financial statements and the notes thereto included elsewhere in this prospectus.

 

		Actual				As Adjusted $6 Million Offering(1)				As Adjusted Maximum Offering(2)
Cash and cash equivalents		$	36,976				5,302,440				10,822,440
Loans payable – related party			38,235				38,235				38,235
Notes payable - related party, current portion			726,482				237,361				237,361
Accounts payable and accrued liabilities			677,581				677,581				67,581
Total Debt obligations and payables			1,442,998				1,442,998				1,442,998
STOCKHOLDERS’ EQUITY:
Common stock; par value 0.0001 DKK, 100,000,000 shares authorized, 8,040,000 shares issued and outstanding at September 30, 2013			804				924				1,044
Additional Paid-in Capital			17,553,949				22,819,293				28,339,173
Other Comprehensive Income, net			55,703				55,703				55,703
Non-controlled Interest in Subsidiaries			-				-				-
Accumulated Deficit			(18,828,449	)			(18,828,449	)			(18,828,449	)
Total Stockholders’ Equity			(1,053,969	)			4,046,547				9,556,427
Total Capitalization			(1,405,322	)			3,695,194				9,205,074

 

(1) Assumes that $6,000,000 (_______ shares) of our common stock are sold in this offering at an offering price of $   per share and that the net proceeds thereof are approximately $5,265,464, after deducting the placement agent’s commissions and our estimated offering expenses of $254,536.

 

(2) Assumes that $12,000,000 (_______ shares) of our common stock are sold in this offering at an offering price of $   per share and that the net proceeds thereof are approximately $10,785,464, after deducting the placement agent’s commissions and our estimated offering expenses of $254,536.

 

 

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DILUTION

 

Purchasers of the shares of our common stock offered by this prospectus will suffer immediate and substantial dilution in the net tangible book value per share of our common stock. Our net tangible book value (unaudited) as of September 30, 2013, was a deficit of approximately $1,052,079, or $0.13 per share. Net tangible book value per share is calculated by subtracting our total liabilities from our total tangible assets, which is total assets less intangible assets, and dividing this amount by the number of shares of common stock outstanding as of September 30, 2013.

 

Dilution in net tangible book value per share represents the difference between the amount per share paid by purchasers in this offering and the as adjusted net tangible book value per share of our common stock immediately after this offering.

 

Assuming that we complete this offering for a total of $6,000,000 (___ shares) of our common stock at a price of $        per share, and after deducting the Placement Agent’s commission and estimated offering expenses payable by us, our as adjusted net tangible book value as of September 30, 2013 would have been approximately $    , or $   per share. This represents an immediate increase in the net tangible book value of $   per share to our existing stockholders and an immediate dilution in net tangible book value of $   per share to the investors in this offering. The following table illustrates this per share dilution based on the completion of this offering at the minimum level:

 

Price per share to the investor						$
Net tangible book value per share as of September 30, 2013		$	(0.13	)
Increase in net tangible book value per share attributable to this offering at the minimum level		$
As adjusted net tangible book value per share as of September 30, 2013 after giving effect to this offering at the minimum level						$
Dilution in net tangible book value per share to the new investor						$

 

Assuming that we complete this offering at the maximum level of $12,000,000 (___ shares) of our common stock at a price of $   per share, and after deducting the Placement Agent’s commission and estimated offering expenses payable by us, our as adjusted net tangible book value as of September 30, 2013 would have been approximately $   , or $   per share. This represents an immediate increase in the net tangible book value of $   per share to our existing stockholders and an immediate dilution in net tangible book value of $   per share to the investor in this offering. The following table illustrates this per share dilution based on the completion of this offering at the maximum level:

 

Price per share to the investor						$
Net tangible book value per share as of September 30, 2013		$	(1,052,079	)
Increase in net tangible book value per share attributable to this offering at the maximum level		$
As adjusted net tangible book value per share as of September 30, 2013 after giving effect to this offering at the maximum level						$
Dilution in net tangible book value per share to the new investor						$

 

The above table is based on 7,854,945 shares of our common stock outstanding as of February 12, 2014 and excludes, as of that date, any shares that may be issued upon the exercise of the placement agent’s over-allotment option.

 

The shares of common stock issuable upon the exercise of our outstanding warrants and the exercise price in respect thereof are subject to adjustment in certain circumstances.

 

To the extent that any options or warrants are exercised, new options are issued, any new stock option or stock incentive plans are   adopted or we otherwise issue additional shares of common stock in the future, there will be further dilution to investors in this offering.

 

 

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our financial statements and t he related notes included elsewhere in this prospectus. This discussion contains forward-looking statements reflecting our current expectations that involve risks and uncertainties. See “Disclosure Regarding Forward-Looking Statements” for a discussion of the uncertainties, risks and assumptions associated with these statements. Actual results and the timing of events could differ materially from those discussed in our forward-looking statements as a result of many factors, including those set forth under “Risk Factors” and elsewhere in this prospectus .

 

Overview

 

We are a biotechnology company committed to developing the world’s first vaccine against colorectal cancer. For more than a decade, we have developed and patented compounds successfully used in initial clinical trials in Europe and Asia. We expect to continue our clinical development program in the United States, Europe and Asia. Springing from academic roots in the Danish Cancer Society, we have built upon our scientific and medical skills to advance a number of candidate therapies, targeted initially at non-small-cell-lung-cancer (NSCLC) and colorectal-cancer (CRC). On September 22, 2008, MCV was authorized by the Singapore government for named patient compassionate use of MelCancerVac ™ (MCV) for CRC. We have conducted three single-arm Phase II clinical trials in cancer where our dendritic cell vaccine, MCV demonstrated efficacy. The three clinical trials generated data indicating prospects in a larger and different clinical setting. More specifically, this efficacy data needed to be confirmed in a comparative randomized trial with advanced colorectal cancer patients.

 

As a result, DanDrit Denmark, with the assistance of key opinion leaders in colorectal cancer treatment, has designed a randomized trial with 174 stage IV colorectal cancer patients after surgical resection and chemotherapy. Using an adaptive design clinical study that includes a prospectively planned opportunity for modification of one or more specified aspects of the study design and hypotheses based on analysis of data (usually interim data) from subjects in the study (an “Adaptive Design Clinical Study”), we significantly reduced the cost and duration of a Phase IIb/III study and we believe we can complete the study within three years.

 

Share Exchange

 

DanDrit was incorporated in Delaware on January 18, 2011 under the name “Putnam Hills Corp.” as a vehicle to pursue a business combination through the acquisition of, or merger with, an operating business. We filed a Registration Statement on Form 10 with the U.S. Securities and Exchange Commission (the “SEC”) on August 12, 2011.

 

On February 12, 2014, the Company signed and closed the transactions contemplated by a Share Exchange Agreement (the "Share Exchange Agreement"), by and among DanDrit USA (formerly known as Putnam Hills Corp.), Dandrit Denmark and N.E. Nielsen, as the representative of the shareholders of DanDrit Denmark, pursuant to which the holders of approximately 97% of the issued and outstanding capital stock of DanDrit Denmark (the “DanDrit Consenting Holders”) agreed to exchange an aggregate of 3,879,624 equity interests of Dandrit Denmark for 5,814,945 shares of DanDrit USA (the “Share Exchange”) and as a result of which Putnam would become the parent of DanDrit Denmark. Following the closing of the Share Exchange, in accordance with Section 70 of the Danish Companies Act and the Articles of Association of Dandrit Denmark, DanDrit USA will offer to any Dandrit Denmark shareholder that has not consented to the Share Exchange (the “Non-Consenting Shareholders”) and therefore has not exchanged such Dandrit Denmark shareholder’s equity interests in DanDrit Denmark for shares of DanDrit USA, the pro rata portion of the number of shares of DanDrit USA such DanDrit Denmark shareholder would have been entitled to if such DanDrit Denmark shareholder had consented to the Share Exchange, up to an aggregate of 6,000,000 shares of DanDrit USA, including those issued to the DanDrit Consenting Holders at closing. Any remaining shares of DanDrit USA that have not been issued to the Dandrit Consenting Shareholders at the closing, or to the Non-Consenting Shareholders following the closing, shall be distributed pro rata among the shareholders of DanDrit Denmark that have received shares of DanDrit USA based on the number of shares of DanDrit USA issued to such shares of DanDrit Denmark in connection with the Share Exchange and the Share Exchange Agreement.

 

Upon the closing of the Share Exchange, DanDrit USA and the its majority shareholder immediately prior to the closing agreed to cancel up to 4,400,000 share of common stock.  In addition, following the closing of the Share Exchange, the wholly owned subsidiary of the company formed solely for the purposes of changing the company’s name, Dandrit Biotech USA, Inc., merged with and into the company and the company adopted the name of its wholly owned subsidiary “DanDrit Biotech USA, Inc.”

 

DanDrit USA owns approximately 97% of the outstanding equity interests of DanDrit Denmark. As a result of the Share Exchange, we changed our management and reconstituted our board of directors. As of the effective time of the Share Exchange, Samir Masri, the Chief Executive Officer, Chief Financial Officer, President, Secretary and sole director of Putnam resigned as the sole officer and director of the company and appointed NE Nielsen, Dr. Jacob Rosenberg, Dr. Eric Leire, Aldo Petersen and Robert E. Wolfe as directors of Putnam, and Dr. Eric Leire as Chief Executive Officer and President and Mr. Wolfe as Chief Financial Officer.

 

 

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Recent Developments

 

Negotiation with Etablissement Francais du Sang (EFS) regarding the GeniusVac Technology

 

DanDrit has recently entered into a negotiation with the Etablissement Francais du Sang (EFS) regarding access to their GeniusVac Technology. The GeniusVac technology is an Allogenic irradiated plasmacytoid dendritic cell line. This technology may allow DanDrit to develop a 100% off-the-shelf cancer vaccine. DanDrit has conducted and completed due diligence under CDA. DanDrit USA and EFS are now working on a feasibility proof-of-concept test before establishing further collaboration.

 

Trends, Events and Uncertainties

 

A large pharmaceutical company, GSK is developing a MAGE-A3 cancer vaccine in melanoma and non-small cell lung cancer (NSCLC). GSK is in the midst of Phase III trials testing its vaccine candidate against NSCLC. This NSCLC clinical trial is the largest clinical trial ever conducted to assess the efficacy of a cancer vaccine. GSK enrolled 2,700 patients and will publish the results by the end of Q1 2014. Because GSK and DanDrit are the only two companies currently targeting MAGE-A cancer specific antigens, we believe that positive results from the NSCLC clinical trial may significantly increase interest in the vaccines we are developing.

 

 

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Results of Operations

 

Nine months ended September 30, 2013 compared to the nine months ended September 30, 2012

 

The following table sets forth our revenues, expenses and net income for the nine month periods ended September 30, 2013 and 2012. The financial information below is derived from our unaudited condensed consolidated financial statements included elsewhere in this prospectus.

 

		For the Nine Months Ended September 30,
		2013				2012
Net Sales		$	32,483			$	60,544
Cost of Goods Sold			68,486				51,087
Gross Loss			(36,003	)			9,457
Operating Expenses:
General and administrative expenses			573,777				825,306
Depreciation and Amortization			24,566				47,431
Consulting expenses			128,191				705,350
Total Operating Expense			726,534				1,578,087
Loss from Operations			(762,537	)			(1,568,630	)
Other Income (Expense)
Interest (expense)							(490,948	)
Gain on forgiveness of debt			(546,057	)			-
Gain (loss) on currency transactions			48,589				(76,960	)
Gain on derivative liability			8,745				103,603
Gain on sale of fixed assets			136,697				15,073
			-
Total Other Income (Expense)			(352,026	)			(449,233	)
Loss Before Income Taxes			(1,114,563	)			(2,017,862	)
Income Tax Expense (Benefit)							-
Net Loss			(1,114,563	)			(2,017,862	)
Basic Loss Per Share		$	(0.31	)		$	(0.57	)
Weighted Average Common
Shares Outstanding			3,548,172				3,548,172
Diluted Loss Per Share		$	(0.31	)		$	(0.57	)
Weighted Average Common Shares
Outstanding Assuming Dilution			3,548,172				3,548,172

 

 

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Comparison of the nine month periods ended September 30, 2013 and September 30, 2012

 

Revenues

 

Net sales for the nine month period ended September 30, 2013 was $32,483 compared to $60,544 for the same period in 2012, representing a decrease of $28,061, or 46.3%. The decrease was mainly due to lower supply of lysate to NCC Singapore from DanDrit Denmark. This reduced capability to supply NCC Singapore with lysate is explained by the transfer of the cGMP grade lysate production to the CMO, PX Therapeutics. The transfer of manufacturing technology has been successful and DanDrit Denmark should now be able to supply NCC with larger quantities of cGMP lysate.

 

Cost of Goods Sold

 

Cost of goods sold for the nine month period ended September 30, 2013 was $68,486 compared to $51,087 for the same period in 2012, representing an increase of $17,399 or 34%. The increase was due to additional costs of technology transfer of lysate manufacturing.

 

Gross Loss

 

Gross loss for the nine month period ended September 30, 2013 was $36,003 compared to gross profit of $9,457 for same period in 2012, representing a decrease of $45,460, or 480.7%. The decrease was mainly due to lower sales and higher cost of goods sold for the nine month period ended September 30, 2013compared to the nine month period ended September 30, 2012. The gross profit margin for the nine month period ended September 30, 2013 was (110.8)% compared to 15.6 % for the nine month period ended September 30, 2012.

 

Expenses

 

Total operating expenses for the nine month period ended September 30, 2013 was $726,534, representing a decrease of $851,553, or 54.0%, compared to $1,578,087 for the same period in 2012. The largest contributors to the decrease in operating expenses was a decrease in consulting expenses which went from $705,350 for the nine month period ended September 30, 2012 to $128,191 for the nine month period ended September 30, 2013 a decrease of $577,159 or 81.8%. During the period ended September 30, 2012, we retained several consultants to assist us with the preparation of this prospectus.

 

General and administrative expenses for the nine month period ended September 30, 2013 was $573,577 compared to $825,306 for the same period in 2012, representing a decrease of $251,729, or 30.5%. The decrease is mainly due to general cost savings of no longer writing a prospectus and valuing DanDrit Denmark. General and administrative expenses are comprised primarily of office rental, website management and insurance .

 

Net Loss

 

Net loss attributable to the Company for the nine month period ended September 30, 2013 was $1,114,563 compared to a net loss of $2,017,862 for the comparable period in 2012, representing a decrease of $903,299, or 44.8%. This decrease was primarily attributable to a decrease in total operating expenses of $851,553 from $1,578,087 for the nine month period ended September 30, 2012 to $726,534 for the nine month period ended September 30, 2013.

 

 

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Year-ended December 31, 2012 compared to the year-ended December 31, 2011

 

The following table sets forth our revenues, expenses and net income for the years ended December 31, 2012 and 2011. The financial information below is derived from our audited consolidated financial statements included elsewhere in this prospectus.

 

CONSOLIDATED STATEMENTS OF OPERATIONS

 

		FOR THE YEAR ENDED
		DECEMBER 31,
		2012				2011
Net Sales		$	62,806				72,013
Cost of Goods Sold			64,385				85,494
Gross Loss			(1,579	)			(13,481	)
Operating Expenses:
General and administrative expenses			1,036,005				376,944
Depreciation and Amortization			56,600				200,251
Consulting expenses			829,845				573,098
Total Operating Expense			1,922,450				1,150,293
Loss from Operations			(1,924,029	)			(1,163,774	)
Other Income (Expense)
Interest (expense)			(704,911	)			(441,598	)
Gain (loss) on currency transactions			32,841				(69,391	)
Gain on derivative liability			153,430				10,583
Gain on sale of fixed assets			15,020				-
Total Other Income (Expense)			(503,620	)			(500,406	)
Loss Before Income Taxes			(2,427,649	)			(1,664,180	)
Income Tax Expense (Benefit)			-				-
Net Loss		$	(2,427,649	)		$	(1,664,180	)
Basic Earnings Per Share		$	(0.68	)		$	(0.62	)
Weighted Average Common
Shares Outstanding			3,548,172				2,702,055
Diluted Earnings Per Share		$	(0.68	)		$	(0.62	)
Weighted Average Common Shares			3,548,172				2,702,055

 

 

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CONSOLIDATED STATEMENTS OF OTHER COMPREHENSIVE LOSS

 

		DECEMBER 31,
		2012				2011
Net Loss		$	(2,427,649	)		$	(1,664,180	)
Equity Adjustment for foreign Currency Translation			85,701				(273,981	)
Other Comprehensive Loss		$	(2,341,948	)		$	(1,938,161	)

 

Revenues

 

Our net sales for the year ended December 31, 2012 were $62,806 compared to net sales of $72,013 for the year ended December 31, 2011, representing a year over year decrease in sales of $9,207 or 12.8%. This decrease was due primarily to a small decline in the use of our cell lysate in Singapore for the Compassionate Use Program.

 

Cost of Goods Sold

 

Our cost of goods sold declined by $21,209 or 24.7% during the year ended December 31, 2012, to $64,385, from $85,494 in cost of goods sold for the year ended December 31, 2011. The decrease in cost of goods sold was due primarily to the fact that the cell lysate we sold to Singapore during the year ended December 31, 2012 was prepared in 2011, therefore we had no preparation costs related to it.

 

Gross Loss

 

Gross loss for the year ended December 31, 2012 was $1,579 compared to a loss of $13,481 for same period in 2011, representing a decrease in the loss of $11,902, or 88.3%. The decrease in the loss was mainly attributable to the decrease in cost of goods sold for the year ended December 31, 2012.

 

Expenses

 

Our total operating expense for the year ended December 31, 2012 was $1,922,450, representing an increase of $772,157, or 67.1% compared to $1,150,293 for the year ended December 31, 2011. This increase is mainly due to our increased spending on general and administrative expenses.

 

General and administrative expense for the year ended December 31, 2012 was $1,036,005 compared to $376,944 for the year ended December 31, 2011, representing an increase of $659,061, or 195.6%. This increase was due primarily to costs associated with the audit of our financial statements and the conversion of our financial statements to international financial reporting standards. General and administrative expenses include office rental, website management and insurance, salary and payment for assistance with drafting of this prospectus and having the Company valued. Expenses related to assistance with drafting of this prospectus and having the Company valued are the main reasons for the increased spending on general and administrative expenses.

 

Consulting expenses for the year ended December 31, 2012 totaled $829,845 compared to $573,098 for the year ended December 31, 2011, representing an increase of $256,747, or 44.8%. This increase was due primarily to an increased use of consultants in the prospectus writing process and in valuing DanDrit Denmark.

 

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Net Loss

 

Net loss attributable to DanDrit Denmark for the year ended December 31, 2012 was $2,427,649 compared to a loss of $1,664,180 for the year ended December 31, 2011, representing an increase of $763,469, or 45.9%. This increase was attributable to a $772,157 increase in our total operating expenses.

 

The largest contributor to the increase in expenses was general and administrative expenses, which increased by $659,061or 195.6% compared to the year ended December 31, 2011 and to the increase in the consulting expenses, which increased by $256,747 or 44.8% compared to the year ended December 31, 2011.

 

Liquidity and Capital Resources

 

We have historically satisfied our capital and liquidity requirements through funding from our main shareholders and issuance of convertible notes which over time have been converted into shares of our common stock. At September 30, 2013, we had cash of $36,976 and working capital of $(2,815,424) and at December 31, 2012 we had cash of $4,381 and working capital of $(1,980,692). At September 30, 2013, our working capital decreased by $834,732 due to an increase in notes payable - related party, current portion of $1,866,478, partly offset by a decrease in accrued expenses of $1,072,418.

 

In general, lines of credit in Denmark are due on demand. We do not believe that any of our lines of credit will be called but, if they were called, we believe that we could refinance with other lenders in Denmark with similar terms. See “Description of Indebtedness” for more details on our standby lines of credit.

 

During 2012, DKTI A/S, a shareholder, agreed to loan the Company up to DKK 5,000,000 (approximately $880,000) accruing interest at 6%. The loan is secured by all the Company’s intellectual property rights, including patents and patent applications. The loan is payable with 30 days written notice but not before November 30, 2014, but may be payable without notice for 1) failure to make timely payments, 2) a breach by the Company of any other obligation under the loan agreement, 3) a declaration of bankruptcy or the consummation of a merger by the Company, and 4) a change in control of the Company or its assets to any party other than DKTI A/S.

 

During the nine months ended September 30, 2013 and the year ended December 31, 2012 the Company borrowed DKK 310,000 (approximately $55,000) plus DKK 206,212 in interest and DKK 4,431,862 ($783,139) plus DKK 71,563 ($12,646) in interest, respectfully. The notes with related accrued interest were subsequently converted into 96,288 common shares.

 

During years ended December 31, 2012 and 2011, Sune Olsen Holding ApS (Sune Olsen), an entity owned by a shareholder of the Company, loaned the Company DKK 338,719 ($59,854) and DKK 143,750 ($25,019), respectively. The note accrues interest at 6% and the Company recorded interest expense of DKK 20,469 ($3,617) and DKK 2,689 ($468) for the year and the period, respectively.  The loans are payable upon three month written notice of the shareholder. The notes with related accrued interest were subsequently converted into 9,262 common shares.

On January 18, 2013, February 15, 2013 and March 1, 2013, Sune Olsen loaned the Company an additional DKK 1,000,000, DKK 187,724 and DKK 80,000 (approximately $178,661, $33,685 and $14,075). The notes accrue interest at 6% and are payable upon three month written notice of the shareholder. The notes with related accrued interest were subsequently converted into 25,844 common shares.

On April 14, 2013, Sune Olsen acquired DKK 4,375,932 (approximately $773,000) in liabilities owed by the Company for past due rent. The liability will accrue interest at 5% and is payable on demand. The note with related interest was subsequently converted into 86,204 common shares.

On July 26, 2013 and August 15, 2013, Sune Olsen loaned the Company an additional DKK 1,000,000, ($177,239) DKK 750,000($133,343). The notes accrue interest at 5% and are payable upon three month written notice of the shareholder. The notes with related accrued interest were subsequently converted into 33,705 common shares

On June 20, 2013, Sune Olsen Holding ApS paid DKK 1,500,000, ($265,000) in accrued legal fees in exchange for a DKK 1,500,000 ($265,000) 5% note payable. The note with related accrued interest was subsequently converted into 29,036 common shares.

DanDrit Biotech A/S has received a loan facility from Sune Olsen Holding ApS ensuring financing until new equity has been brought in. Under the loan facility DanDrit has received the following amounts: On November 11, 2013 $269,620 (DKK 1,500,000), on November 20, 2013 $55,459 (DKK 405,000), on December 2, 2013 $163,482 (DKK 900,000). The loans are due May 1, 2014 and accrue interest at 5% per year.

DanDrit Biotech A/S has received a loan from Sune Olsen ensuring financing until new equity has been brought in. The loan in the amount of $184,873 (DKK 1,000,000) was issued on December 20, 2013. The loan is due May 1, 2014 and accrues interest at 5% per year.

 

We believe that our cash flow together with currently available funds from our existing lines of credit and other potential sources of funds, such as loans from shareholders, will be sufficient to fund our anticipated working capital needs and capital spending requirements for the next twelve months. However, if we were to incur any unanticipated expenditures or the positive trend of our operating cash flow does not continue, such circumstances could put a substantial burden on our cash resources.

 

We may also need additional funds for possible future strategic acquisitions of businesses, products or technologies complementary to our business. If additional funds are required, we may raise such funds from time to time through public or private sales of equity or debt securities. Financing may not be available on acceptable terms, or at all, and our failure to raise capital when needed could materially adversely impact our growth plans and our financial condition and results of operations.

 

 

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Cash Flows

 

Nine months ended September 30, 2013 compared to nine months ended September 30, 2012

 

Cash loss from operating activities for the nine month period ended September 30, 2013 was $1,806,844, representing an increase of $949,630, compared to cash loss from operating activities of $857,214 for the nine months period ended September 30, 2012. This increase was primarily due to a decrease in accrued expenses of $1,880,229 partly offset by a decrease in net loss of $903,298.

 

Changes in assets and liabilities as of September 30, 2013 compared to December 31, 2012 included the following:

 

There were no major changes in the total assets as of September 30, 2013 compared to December 31, 2012. Total liabilities increased by approx. $1.1 million as of September 30, 2013 compared to December 31, 2012. The increase was mainly due to an increase in notes payable - related party, current portion of $1,866,478 partly offset by a decrease in accrued expenses of $1,072,418.

 

Cash used in investing activities was $8,913 for the nine month period ended September 30, 2013, as compared to cash used in investing activities of $64,723 for the nine month period ended September 30, 2012. Cash used for investing activities decreased in the first nine months of 2013, compared to the first nine months of 2012, primarily due to an approximately $70,000 or 88.8% lower investment in intangible assets. Despite the decrease for the nine month period of 2013, we have, and we anticipate that we will continue to, invest in additional production equipment in order to meet the continuing increase in the demand for our products.

 

Cash provided by financing activities was $1,981,717 for the nine month period ended September 30, 2013, as compared to cash provided by financing activities of $673,746 for the nine month period ended September 30, 2012. The increase of approximately $1,307,971 in cash provided by financing activities in the first nine months of 2013, compared to the first nine months of 2012, was primarily due to cash received in connection with the issuance of related party notes.

 

Year-ended December 31, 2012 compared to the year-ended December 31, 2011

 

For the year ended December 31, 2012, cash used by operations was $933,012 compared to cash used by operations of $1,260,388 for the year ended December 31, 2011, a decrease of $327,376, or 25.97%. The increase was primarily due to an increase in accrued expenses of $1,031,915 partly offset by a decrease in net loss of $763,469.

 

For the year ended December 31, 2012, cash used by investing activities was $84,643 compared to cash used by investing activities of $29,369 for the year ended December 31, 2011, an increase of $55,274, or 188.2%. This increase was due to an increase in purchase of intangible assets of $75,510.

 

For the year ended December 31, 2012, cash provided by financing activities was $856,754 compared to cash provided by financing activities of $1,219,568 for the year ended December 31, 2011, a decrease of $362,814. This decrease was primarily due to a lack of proceeds from convertible bonds, as compared to $1,500,000 in such proceeds for the year ended December 31, 2011. The decrease was partly offset against net payments in 2011 on notes payable – related parties of $1,167,280, of which there were none in 2012.

 

Off Balance Sheet Arrangements

 

As of September 30, 2013, we had no off-balance sheet arrangements. We are not aware of any material transactions which are not disclosed in our consolidated financial statements.

 

Significant Accounting Policies and Critical Accounting Estimates

 

The methods, estimates, and judgments that we use in applying our accounting policies have a significant impact on the results that we report in our consolidated financial statements. Some of our accounting policies require us to make difficult and subjective judgments, often as a result of the need to make estimates regarding matters that are inherently uncertain. Our most critical accounting estimates include:

 

 

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Property and Equipment — Property and equipment are stated at cost. Expenditures for major renewals and betterments that extend the useful lives of property and equipment are capitalized, upon being placed in service. Expenditures for maintenance and repairs are charged to expense as incurred. Depreciation is computed for financial statement purposes on a straight-line basis over the estimated useful lives of the assets which range from four to six years.

 

Intangible Assets — Definite life intangible assets include patents. The Company accounts for definite life intangible assets in accordance with Financial Accounting Standards Board, (“FASB”) Accounting Standards Codification, (“ASC”) Topic 350, “Goodwill and Other Intangible Assets” and amortized the patents on a straight line basis over the estimated useful life of twenty years. Costs incurred in relation to patent applications are capitalized costs and amortized over the estimated useful life of the patent. If it is determined that a patent will not be issued, the related remaining patent application costs are charged to expense.

 

Revenue Recognition and Sales — The Company’s sales of its MelCancerVac colorectal cancer treatment have been limited to a compassionate use basis in Singapore after stage IIA trials and the vaccine is not currently approved for sale for any other use or location. The Company accounts for revenue recognition in accordance with Securities and Exchange Commission Staff Accounting Bulletin No. 101, “Revenue Recognition in Financial Statements” (SAB 101), FASB ASC 605 Revenue Recognition. The Company recognizes revenue when rights and risk of ownership have passed to the customer, when there is persuasive evidence of an arrangement, product has been shipped or delivered to the customer, the price and terms are finalized, and collection of the resulting receivable is reasonably assured. Products are primarily shipped FOB shipping point at which time title passes to the customer.

 

Value Added Tax - In Denmark, Value Added Tax (“VAT”) of 25% of the invoice amount is collected in respect of the sales of goods on behalf of tax authorities. The VAT collected is not revenue of the Company; instead, the amount is recorded as a liability on the balance sheet until such VAT is paid to the authorities. VAT of 25% is also paid to Danish and EU vendors on invoices. These amounts are refundable from the respective governmental authority and recorded as other receivables in the accompanying financial statements.

 

Accounting Estimates — The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosures of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Actual results could differ from those estimated.

 

Recent Enacted Accounting Standards

 

For a description of accounting changes and recent accounting standards, including the expected dates of adoption and estimated effects, if any, on our consolidated financial statements, see “Note 1: Recently Enacted Accounting Standards” in the financial statements included elsewhere in this prospectus.

 

Quantitative and Qualitative Disclosures About Market Risk

 

We are not required to provide quantitative and qualitative disclosures about market risk because we are a smaller reporting company .

 

 

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OUR BUSINESS

 

Overview

 

We are a biotechnology company seeking to develop what we believe could be the world’s first vaccine against colorectal cancer. For more than a decade, we have developed and patented compounds successfully used in initial clinical trials in Europe and Asia. We expect to continue these trials in the United States. Springing from academic roots in Denmark, DanDrit has built upon its scientific and medical skills to advance a number of candidate therapies, targeted initially at non-small-cell-lung-cancer (NSCLC) and colorectal-cancer (CRC). On September 22, 2008, MelCancerVac ™ (MCV) was authorized by the Singapore government for a named patient compassionate use for CRC. We have conducted three single-arm Phase II clinical trials in cancer where our dendritic cell vaccine, MCV, demonstrated efficacy. The three clinical trials generated data indicating prospects in a larger and different clinical setting. More specifically, this efficacy data needed to be confirmed in a comparative randomized trial. As a result, DanDrit Denmark, with the assistance of experienced practitioners in colorectal cancer treatment, has designed a randomized trial with 174 stage IV colorectal cancer patients.

 

Our Biotechnology

 

We plan to use a dendritic cell vaccine technology relatively similar to the technology behind Dendreon’s FDA approved Provenge™ cancer vaccine. However, we believe DanDrit’s next generation of dendritic cell vaccine may benefit from technological competitive advantages over other cancer vaccines including:

 

●

The vaccine will be generated within eight days from a patient’s peripheral blood. We will be able to generate the vaccine quickly because only 200ml of blood is required to be drawn. Leukapheresis (a medical technology in which the blood of a patient is passed through an apparatus -dialysis machine- that separates out one particular constituent and returns the remainder to the circulation which is used in Denderon’s Provenge™ cancer vaccine) is not needed.

●

The vaccine will use an allogenic (using cells, tissues, or organs, sourced from a genetically non-identical member of the same species as the recipient (“Allogenic”) tumor lysate (a fluid containing the contents of lysed cells) as opposed to inconvenient autologous (from the patient) tumor lysate. Our cancer-specific antigens are off-the-shelf and therefore DanDrit does not need a patient’s tumor cells to manufacture the vaccine.

●

The vaccine will be polytopic (targets several cancer specific antigens). As a result, the risk of the tumor escaping is more limited and more T-cells can be activated than if the vaccine is targeting one antigen only. However, MCV has a focus on melanoma-associated antigen (“ MAGE”)-A antigens that are only expressed by tumors and absent in normal tissues.

●

Fast track production in two days is possible.

 

MCV demonstrated efficacy in three separate Phase IIa clinical trials in colorectal and non-small cell lung cancer. Even if MCV can be used for various cancers, DanDrit has decided to focus MCV’s clinical development specifically on the treatment of advanced CRC.

 

Our Proposed Clinical Trial

 

Parallel with the establishment of a cancer vaccine center in Asia, DanDrit intends to develop globally MCV in colorectal cancer, with opportunities to expand the scope of the treatment to other types of cancer. DanDrit will focus on a randomized Phase IIb/III clinical trial in stage IV colorectal cancer. The proposed Proof of Concept (PoC) study with an adaptive design plans to enroll 174 stage IV colorectal cancer patients after resection of liver metastases and therefore no evidence of disease. The clinical study is designed as a randomized, placebo controlled, multicenter, Phase IIb/III clinical study. Treatment is double blinded (to the patients and physicians). Patients will be included after resection of their primary tumor and resectable metastases in liver and after appropriate peri-or post-operative chemotherapy by stratification and random assignment to a non-vaccine control group or a vaccine group receiving five vaccinations with 14-day administration intervals followed by five vaccines with two-month intervals. Inclusion will take place three months after finishing the last round of peri- or post-operative chemotherapy (FOLFOX or FOLFIRI) and after a negative tumor scan (head, thoracic and abdominal cavities) and normal CarcinoEmbryonic Antigen (CEA) prior to inclusion in the vaccine or the control groups. Patients will be screened for MAGE-A expression. The control group will receive five plus five injections with physiological saline. In the event of disease progression, as verified by tumor scan during the vaccination schedule, vaccinations will be discontinued.

 

 

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Corporate History and Information

 

DanDrit was incorporated in Delaware on January 18, 2011 under the name “Putnam Hills Corp.” (“Putnam”) as a vehicle to pursue a business combination through the acquisition of, or merger with, an operating business. We filed a Registration Statement on Form 10 with the U.S. Securities and Exchange Commission (the “SEC”) on August 12, 2011.

 

On February 12, 2014, the Company signed and closed the transactions contemplated by a Share Exchange Agreement (the "Share Exchange Agreement"), by and among DanDrit USA (formerly known as Putnam Hills Corp.), Dandrit Denmark and N.E. Nielsen, as the representative of the shareholders of DanDrit Denmark, pursuant to which the holders of approximately 97% of the issued and outstanding capital stock of DanDrit Denmark (the “DanDrit Consenting Holders”) agreed to exchange an aggregate of 3,879,624 equity interests of Dandrit Denmark for 5,814,945 shares of DanDrit USA (the “Share Exchange”) and as a result of which Putnam would become the parent of DanDrit Denmark. Following the closing of the Share Exchange, in accordance with Section 70 of the Danish Companies Act and the Articles of Association of Dandrit Denmark, DanDrit USA will offer to any Dandrit Denmark shareholder that has not consented to the Share Exchange (the “Non-Consenting Shareholders”) and therefore has not exchanged such Dandrit Denmark shareholder’s equity interests in DanDrit Denmark for shares of DanDrit USA, the pro rata portion of the number of shares of DanDrit USA such DanDrit Denmark shareholder would have been entitled to if such DanDrit Denmark shareholder had consented to the Share Exchange, up to an aggregate of 6,000,000 shares of DanDrit USA, including those issued to the DanDrit Consenting Holders at closing. Any remaining shares of DanDrit USA that have not been issued to the Dandrit Consenting Shareholders at the closing, or to the Non-Consenting Shareholders following the closing, shall be distributed pro rata among the shareholders of DanDrit Denmark that have received shares of DanDrit USA based on the number of shares of DanDrit USA issued to such shares of DanDrit Denmark in connection with the Share Exchange and the Share Exchange Agreement.

Upon the closing of the Share Exchange, DanDrit USA and the its majority shareholder immediately prior to the closing agreed to cancel up to 4,400,000 share of common stock.  In addition, following the closing of the Share Exchange, the wholly owned subsidiary of the company formed solely for the purposes of changing the company’s name, Dandrit Biotech USA, Inc., merged with and into the company and the company adopted the name of its wholly owned subsidiary “DanDrit Biotech USA, Inc.”

 

DanDrit USA owns approximately 97% of the outstanding equity interests of DanDrit Denmark. As a result of the Share Exchange, we changed our management and reconstituted our board of directors. As of the effective time of the Share Exchange, Samir Masri, the Chief Executive Officer, Chief Financial Officer, President, Secretary and sole director of Putnam resigned as the sole officer and director of the company and appointed NE Nielsen, Dr. Jacob Rosenberg, Dr. Eric Leire, Aldo Petersen and Robert E. Wolfe as directors of Putnam, and Dr. Eric Leire as Chief Executive Officer and President and Mr. Wolfe as Chief Financial Officer.

 

Our principal executive offices are located Fruebjergvej 3 Box 62, 2100 Copenhagen, Denmark , and our telephone number is +45 39179840. We maintain an Internet website at www.dandrit.com . The information contained in, or accessible from, our website is not a part of this prospectus.

 

Products

 

DanDrit plans to assess its lead compound, MelCancerVac™ (MCV), a cellular therapy, in a comparative Phase IIb/III clinical trial in advanced colorectal cancer. DanDrit uses a dendritic cell technology similar to the Dendreon’s FDA approved Provenge™ cancer vaccine.

 

MCV demonstrated efficacy in three separate Phase IIa clinical trials in colorectal and non-small cell lung cancer. Even if MCV can be used for various cancers, DanDrit has decided to initiate MCV’s clinical development with advanced colorectal cancer. We believe that a maintenance therapy for advanced colorectal cancer represents a genuine commercial opportunity for MCV.   A clear and unmet medical need for a safe maintenance therapy offers the opportunity to confirm the efficacy of MCV in a favorable setting.

 

DanDrit plans to conduct a randomized multicenter (anticipated to be located in USA, Europe and Asia) clinical trial to determine the safety and efficacy of MCV as adjuvant therapy in advanced colorectal cancer. The study will determine the ability of MCV to prevent recidivism in stage IV colorectal patients with no evidence of disease after surgical resection of liver metastasis and chemotherapy. Using an Adaptive Design Clinical Study, which allows modification made to trail and/or statistical procedures of ongoing clinical trials based on accrued data, the double blinded randomized Proof-of-Concept study will evaluate MCV with standard of care against standard of care alone in 174 colorectal cancer patients using as primary endpoints Progression Free Survival at 18 months and Overall Survival. We anticipated that the blinded comparative trial can be completed within three years. We are confident that positive upcoming clinical data will be the catalyst to unlock commercial revenues for DanDrit through either acquisition by a pharmaceutical partner or licensing deals that would yield upfront and milestone payments as well as royalties.

 

DanDrit has learned how to manufacture dendritic cells, immune cells forming part of the mammalian immune system with the main function of processing antigen material and presenting it on the surface to other cells of the immune system, functioning as antigen-presenting cells, in vitro from monocyte (a type of white blood cell) precursor cells taken from patients eligible for DanDrit’s therapies. The preparation of tumor lysate containing selections of cancer, specific non-self antigens, allows DanDrit to sensitize patients’ dendritic cells. The use of the patient’s own monocyte cells from peripheral blood (autologous cell therapy) overcomes the issues associated with non-self allergic reactions to immune therapies.

 

 

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DanDrit’s intellectual property is protected with patents and trademarks. DanDrit’s candidate vaccines are based on the MCV platform that is protected by a family of issued or submitted patents. DanDrit’s lead product has completed Phase II clinical trials in Denmark and Singapore. DanDrit’s Singapore Phase II data was compelling enough that the Singapore authorities allowed the use of MCV for CRC on a humanitarian named patient basis.

 

To date, clinical trials of MCV have been targeted to patients in terminal stages of cancer with non-resectable bulky tumors who failed to respond to surgery and chemotherapy. Several patients given just months to live were alive and enjoyed high quality of life, two years after MCV therapy commenced. Several patients showed stable disease with no progression of tumors. There was evidence of tumor regression in some patients.

 

These achievements have been built on a carefully executed R&D program that generated practical solutions to scientific and medical challenges. Through this development program, DanDrit gained advanced understanding of the role of dendritic cells in immunoregulation and cancer.

 

Non-core applications of dendritic cell technologies mastered by DanDrit have applications in infectious diseases and auto-immune diseases such as diabetes (7 th leading causes of death in the US). These other applications represent opportunities for out-licensing and cooperation. Where other companies have non-core technologies of relevance to DanDrit’s core business in dendritic cell cancer therapy, we will pursue a policy of cooperation and in-licensing.

 

DENDRITIC CELLS, THE THERAPEUTIC PLATFORM

 

Summary

 

Early academic work of Professor Jesper Zeuthen, and other colleagues at the Danish Cancer Society was spun-out into DanDrit Biotech. The fundamental scientific postulate of DanDrit is the fact that key cells in the immune system can be sensitized to cancer cells that carry foreign (or non-self) antigens. These key antigen-presenting cells are the dendritic cells. Dendritic cells encounter and recognise foreign antigens. Dendritic cells can assimilate and process the cells expressing these antigens. The key components of these antigens (known as epitopes, and several epitopes are known as polytopes) are subsequently presented on the cell surface of the dendrititc cell. Dendritic cells travel to lymph nodes and other lymphatic tissues where the epitopes are presented to other immune cells, including cell-killing T lymphocytes. T lymphocytes sensitised by dendritic cells can then recognize and kill tumor cells carrying tumor-specific antigens recognised by the dendritic cells. The main aim is to kill tumor cells without killing normal body tissues.

 

Dendritic cell interacting with T-lymphocyte

 

 

The above photograph (courtesy Science Photo Library) illustrates a dendritic cell (blue/green) communicating with a T-lymphocyte (gold). From DanDrit’s point of interest, this might represent a dendritic cell instructing a T-lymphocyte to kill tumor cells.

 

DanDrit presents itself as a “Cancer Vaccine” company and its lead product, MelCancerVac ® (MCV), a polytopic vaccine, targets colorectal cancer in the first instance. In addition, DanDrit has developed several technologies relevant to dendritic cell production.

 

 

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DanDrit’s candidate vaccines are based on the MCV platform that is protected by a family of issued and submitted patents. DanDrit’s lead product has completed Phase II clinical trials in Denmark and Singapore. DanDrit’s Singapore Phase II data were compelling enough for the Singapore authorities to make MCV available on a limited humanitarian named patient basis.

 

To date, clinical trials of MCV have been targeted to patients in terminal stages of disease who failed to respond to surgical resection and chemotherapies. Some patients given just months to live were still alive and enjoyed high quality of life, two years after MCV therapy commenced. Many patients were showed stable disease with no progression of tumor. There was evidence of tumor regression in some patients.

 

Scientific and medical research is adding to DanDrit’s clinical and pre-clinical development pipeline in cancer. Some of this research in dendritic cells could have implications that reach beyond DanDrit’s cancer vaccine vision.

 

Dendritic Cells and the immune response

 

Dendritic cells were first recognised by Paul Langerhans in the late 19 th century. For this reason such cells in the skin may still be referred to as Langerhans cells. The term “dendritic cell” was first used by Ralph Steinman and Zanvil Cohn in 1973. Steinman received the 2007 Lasker Award for this work and the 2011 Medicine Nobel Prize.

 

Like macrophages, cells whose role is to phagocytose, or engulf and then digest, cellular debris and pathogens, either as stationary or as mobile cells, dendritic cells are involved in the processing of antigens and their presentation to the cells that directly carry out the immune response through antibody generation (B lymphocytes) or cell killing activity (T- lymphocytes). Like macrophages, dendritic cells are mobile and once stimulated by an antigen, activated macrophages and dendritic cells move from their host tissue (usually skin or epithelial tissue such as gut, mucous membranes, lung etc.) to lymphatic tissues where they encounter and stimulate cells that mediate the immune response.

 

Unsurprisingly, macrophages and dendritic cells are closely related. Both are derived from circulating blood cells known as monocytes. Monocytes, macrophages and immature dendritic cells are all phagocytic cells, that is, they engulf and process foreign antigens. On activation by the uptake of antigen, dendritic cells mature and become mobile. The mobile mature dendritic cells are capable of stimulating T-lymphocytes through the expression of T-cell stimulatory antigens on their cell surfaces.

 

It is possible to force monocytes to differentiate in vitro into immature dendritic cells. This is the basis of DanDrit’s proprietary dendritic cell production process. As in nature DanDrit’s process involves a subtle communication between monocytes and cytokines. Dendritic cells produced by DanDrit are functionally, morphologically and biochemically very similar – if not identical – to natural dendritic cells.

 

 

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Figure 2 Principle of Dendritic Cell cancer vaccines

 

 

DanDrit’s platform technology is based on isolating patient monocytes and transforming them into immature dendritic cells in vitro . This is achieved by exposing monocytes to cytokines (interleukin 4, IL-4; and granulocyte macrophage colony stimulating factor, GM-CSF). Still in vitro these immature dendritic cells are activated by exposure to a cancer cell line lysate. This cancer cell lysate contains many “non-self” antigens of the cancer/testis family. Although coded by the human genome, these antigens are not normally expressed in tissues other than cancer or testis (note that testis and immune system are isolated from each other). Once sensitised in vitro , the immature dendritic cells are matured by exposure to a DanDrit proprietary cytokine cocktail. The now mature dendritic cells can be re-injected to the patient via a simple 0.2 ml intra-dermal injection and they will find their way to the lymphatic tissues. There, they will stimulate multiple cell killing (T) lymphocytes which will become sensitised to the cancer-specific antigens present in the lysate.

 

The Platform Technology, MelCancerVac ®

 

MelcCancerVac® (MCV) is a cellular immunotherapy for treatment of cancer. At this time MCV has been studied in two cancers: Non-Small Cell Lung cancer (NSCLC) and colorectal cancer (CRC). The use of MCV is extended to other tumors in the mid-term such as the two types of oesophageal cancers: esophageal squamous cell carcinoma (EC) and esophageal adenocarcinoma (EAC).

 

DanDrit’s platform technology comprises two arms:

 

●

Autologous dendritic cells obtained by the activation of patient-derived monocytes

 

●

Proprietary lysate from melanoma-derived cell line expressing a range of cancer/testis antigens, notably the MAGE-A family

 

The melanoma lysate component of MCV is manufactured from a melanoma cell line established by DanDrit scientists. This cell line was isolated from a melanoma tumor that expressed antigens found in a wide range of tumors but not in normal tissues (other than the testis). These antigens belong to a family of cancer/testis antigens (including mostly MAGE-A antigens) found in many tumors.

 

Furthermore, by exposing DanDrit’s proprietary melanoma tumor cell to 5-aza-deoxycytadine (5-aza-CdR/Decitabine), which is an inhibitor of DNA methylation, DanDrit has shown that derived tumor lysates (MCV 5AZA ) express a far wider range of tumor-specific antigens.

 

 

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Antigen characterization

 

For a patient to respond favourably to MCV, it is necessary that the antigens presented by the patient’s tumor show a significant match with the antigens in the lysate. The level of expression of antigens in each batch of lysate is determined by a procedure known as Reverse Transcriptase Quantitative Polymerase Chain Reaction or “RT-QPCR”. Clearly all patient cells will present many thousands of antigens - as will the lysate. MCV’s lysate component is isolated from a melanoma cell line that expresses a great many cancer/testis antigens at significant level. This broad spectrum of cancer/testis antigens is what makes MCV a good cancer vaccine. Figure 3 (below) shows how RT-QPCR can analyse levels of antigen expression as measured by messenger RNA.

 

Figure 3 Comparison of tumor antigen expression in MCV with two patient biopsies

 

 

 

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In this example, TA-1 to TA-28 are 28 known tumor antigens (antigens that are only expressed by cancer cells and not by normal cells). We can see that 14 of these antigens are present in MCV. Even more (21) cancer-specific antigens are expressed by the tumor in Patient two, which indicates a good chance of promoting a cancer killing response. In patient one there is not a strong overlap of MCV antigens and the five patient’s tumor antigens. The chances of promoting a strong immune response are less but still significant (TA-3, TA-9, TA-18, and TA-19 are shared).

 

By analyzing patient’s tumors by RT-QPCR it is possible to select patients that have the best chance of success with MCV. However, other uncharacterised antigens may also be present that might promote a response.

 

Clinical Trials Data and product approvals

 

Overall clinical results

 

All dendritic cell-based vaccinations are safe, with no life-threatening side effects, as found by DanDrit, competitors, and the medical community. The only potential adverse events associated with dendritic cell vaccines are a flu-like symptom with fevers (not up to 39-40 deg. C), chills, and headaches in some patients. The occurrence of these adverse events did not require additional treatment or hospitalization. Some patients may also develop a vitiligo, a skin condition in which there is a loss of brown color (pigment) from areas of skin, resulting in irregular white patches that feel like normal skin, when melanocyte differentiation antigens are used as targets in immunotherapy. However, this does not occur with DanDrit’s MCV due to a lack of differentiation antigens in the melanoma cell lysate.

 

MCV is produced according to the principles of Good Manufacturing Practice (GMP) in facilities approved by the Danish Medicine Agency and EU regulation for the production of medicines from patient blood in aseptic conditions. No products of animal origin are used during vaccine preparation. Quality control is performed for each individual batch of the vaccine as well as for the lysate used in the loading of dendritic cells.

 

MCV has been tested in clinical trials for the treatment of colorectal cancer (CRC) and non-small-cell lung cancer (NSCLC).

 

CRC Clinical Trials

 

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Phase II at Gentofte Hospital, Denmark - Completed

 

●

Phase II at the National Cancer Centre, Singapore - Completed

 

NSCLC Clinical Trials

 

●

Phase II at Herlev Hospital, Denmark – Completed

 

ColoRectal Cancer (CRC) in Denmark

 

DanDrit sponsored a clinical trial using MCV at the University Hospital of Copenhagen, Gentofte, in Denmark. Enrolment of CRC patients started in October 2004 and the study ended in September 2006. The title of this study is: “Vaccination with autologous dendritic cells loaded with Lysate of allogeneic melanoma cells (MCV) for treatment of patients with advanced colorectal cancer”.

 

Twenty patients with advanced colorectal cancer (Dukes D - not curable by resection and no further conventional therapy options available) were included in the study (six patients in phase I and 14 in phase II).

 

The purpose of this open phase I/II study was to study the tolerability and effect of MCV given as intradermal injections to patients with metastasizing colorectal cancer, where there was no indication for surgery or chemotherapy. The first part was a phase I study to investigate whether treatment with MCV is in any way toxic. No toxicity was observed and the study continued into phase II to study the effect and tolerability of MCV. At the completion of the study stable disease was observed in twenty percent of the enrolled patients. This data was achieved with a DanDrit’s early MCV vaccine, which has since been replaced by an improved MCV.

 

 

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Inclusion criteria:

 

●

Age 25-75

 

●

No chemo or radiotherapy within six weeks prior to inclusion

 

●

Expected survival > four month

 

●

Performance status two according to the performing status of WHO

 

●

Adequate hepatic and renal function

 

●

Adequate haematopoietic and coagulation capacity

 

●

Normal EKG or non-clinical significant abnormal EKG

 

●

Preserved pulmonary function

 

Exclusion criteria for the trial:

 

●

Uncontrolled serious infection

 

●

Systemic corticosteroid treatment or other immune suppressive treatment in the last two months

 

●

Participation in other clinical trials over the former six weeks

 

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For women, pregnancy or lactation

 

Study design: dendritic cells were generated from autologous peripheral blood mononuclear cells (PBMC). In order to increase the level of circulating leukocytes, patients exercised five minutes on a treadmill before 200ml of blood was drawn. Patients were scheduled for ten vaccinations consisting of 3-5x10 6 dendritic cells. Vaccinations were given bi-weekly intra-dermally on the proximal thigh with two injections each thigh. Adverse events were monitored and classified according to the National Cancer Institute’s Common Toxicity Criteria (NCI’s CTC). Evaluation of responses was made according to the Response Evaluation Criteria in Solid Tumors (“RECIST”) criteria and patients were CT scanned before entering the study, after five vaccinations and after ten vaccinations. Quality of life was monitored by questionnaires bi-weekly. The study was performed at the Department of Surgical Gastroenterology at Gentofte University Hospital, Copenhagen, Denmark according to ICH Guidelines for Good Clinical Practice (European Directive on GCP 2001/20/EC).

 

Non-small cell lung cancer (NSCLC) in Denmark

 

DanDrit sponsored this MCV clinical trial conducted at Herlev Hospital, University of Copenhagen, in Denmark. The title of the study is: “Vaccination with Autologous Dendritic Cells Pulsed with Allogeneic Tumor Lysate (MelCancerVac) for the Treatment of Patients with Advanced or Metastatic Non-Small Cell Lung Cancer”.

 

DanDrit designed the trial as an open-label, phase II clinical study. Enrolled patients had disseminated, inoperable NSCLC after chemotherapy; the patients did not want further chemotherapy: and no other systemic treatments could be offered to them.

 

The primary objective was to measure the antigen specific immunological reaction between vaccine antigens and the patients’ immune system in vivo and in vitro. The secondary objectives were to estimate the patients’ survival time, the tumor response according to RECIST criteria, and the patients’ quality of life during the study period.

 

The first patient was included in January 2007. A total of 28 patients were included in the trial. The initial results were encouraging. In this Phase IIa trial a 43% response rate was observed, with six patients showing stable disease. Five of these patients were immunologically responding to the vaccine (ELISPOT –IFN Gamma positive) while eight of nine patients with no clinical response had no IFN gamma response.

 

Colorectal Cancer (CRC) in Singapore

 

A single arm phase II clinical study was also conducted at the Singapore National Cancer Centre (NCC) to investigate the efficacy of intradermal vaccination with MCV in patients with advanced colorectal cancer. The study used DanDrit’s new patented procedure for generating dendritic cells. All included patients had tumors which antigenically correlated with the vaccine, i.e. were MAGE-A positive. The purpose of the study was to investigate the objective efficacy and specific immunologic response of the MCV vaccination. The first patient was enrolled in June 2005, and by June 2007 a total of 20 patients had been treated and evaluated.

 

 

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The vaccine was given to advanced colorectal cancer patients pre-treated with chemotherapy, where there was no further indication for surgery or treatment with chemotherapy.

 

Treatment with MCV did not adversely affect the patient’s quality of life, which remained both high and stable throughout the study period. MCV induced objective responses in seven of 20 patients (six responses were stable disease and one response was partial regression of tumor mass). Significant immunological and clinical correlation was observed. Results from the trial were presented orally at the AACR meeting in Singapore in November 2007. Since 2009, the focus has been on scaling up manufacturing and compassionate use in Singapore.

 

Compassionate Use/Named Patient Approval

 

Further to the data emerging from the Singapore CRC trial, the Singapore government requested and approved (22 September 2008) that named patients be offered MCV therapy at cost. This first compassionate use approval marked a significant milestone for the progress and acceptability of the MCV therapeutic model. This compassionate program could be used as a model to initiate sales of MCV in other countries of the ASEA such as Thailand or Malaysia.

 

Future: 100% Off-the-Shelve Vaccines

 

Autologous (from the patient) dendritic cells cancer vaccines are tailor made for each individual patient. This personalized medicine approach is appealing to the patients but may present several drawbacks to a pharmaceutical company. Creating a new, unique vaccine for each patient may be perceived as complex, time consuming, and expensive. Therefore, DanDrit is pursuing two programs to offer in addition to its personalized vaccine 100% off-the-shelve cancer vaccines: MCV2 and MelVaxin ™ . These two programs presented below capitalize on the knowledge and the expertise gained with DanDrit’s proprietary lysate used for MCV.

 

Allogenic DC based vaccine: MCV2

 

First, DanDrit is developing MCV2 a 100% off-the-shelf dendritic cell vaccine through collaboration with the Etablissement Francais du Sang (EFS) / GeniusVac (France). MCV2 is a cell-based immunotherapeutic product consisting of an irradiated plasmacytoid dendritic cell line presenting DanDrit’s proven lysate. DanDrit sourced the allogeneic dendritic cells from EFS /GeniusVac. EFS/ GeniusVac produces anallogeneic plasmacytoid dendritic cells (pDCs) line that has demonstrated the induction of multi-specific and highly functional cytotoxic cell responses directed against tumor targets both In vitro and in vivo. These irradiated antigen-presenting pDCs have a strong power to induce specific antitumor response by cytotoxic DC8+ T-cells. The safety and efficacy allogeneic pDC platform has been proven. Stimulation of PBMC from HLA-A*0201+ donors by HLA-A*0201 matched allogeneic pDCs pulsed with tumor-derived peptides triggered high levels of antigen-specific and functional cytotoxic T cell responses (up to 98% tetramer+ CD8 T cells (a group of white blood cells known as lymphocytes and play a central role in cell-mediated immunity). The pDC vaccine demonstrated anti-tumor therapeutic in vivo efficacy as shown by the inhibition of tumor growth in a humanized mouse model. It also elicited functional tumor-specific T cells ex-vivo from PBMC and TIL of stage I-IV melanoma patients. Responses against MelA, GP100, tyrosinase and MAGE-3 antigens reached tetramer levels up to 62%, 24%, 85% and 43% respectively. pDC vaccine-primed T cells specifically killed patients’ own autologous melanoma tumor cells. This semi-allogeneic pDC vaccine was more effective than conventional myeloid DC- based vaccines.

 

This Allogenic approach offers multiple advantages:

	●	The vaccine could then be mass-produced in a unique manufacturing facility
	●	Cost effective process
	●	All manufacturing process can then be out-sourced (DanDrit does not need to support its own GMP manufacturing facility)
	●	The MCV2 vaccine could be more likely to have higher efficacy than MCV. The allogeneic DCs are further regarded as MHC-incompatible foreign invaders.  Then, they induce an inflammatory reaction that further promotes the recruitment and activation of endogenous DCs at the vaccination site. This hypothesis has now been verified in rat and mouse cancer models in which tumor growth was significantly reduced by therapeutic vaccinations with tumor-loaded allogeneic DCs.

 

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●

MCV2 is still using the clinically proven lysate used in MCV as cancer specific antigen

●

“One- To- Many”: the same drug product could be used to treat several patients (consistent with current pharma business model).

●

Fully standardizable product

●

Guarantee of homogeneity of the clinical trials

 

Melvaxin™

 

A second platform product, MelVaxin™ is also evaluated. MelVaxin™ is similar to the lysate component of MCV. DanDrit proposed injecting MelVaxin™ into the skin to promote natural dendritic cell responses that will attack the tumor expressing cancer/testis antigens. It is necessary to inject MelVaxin™ with an immuno-stimulator such as GM-CSF, BCG or novel adjuvants (such as 3M’s TLR7 and TLR8 agonists). A preclinical programme has been planned in minipigs. These animals have immune response profiles, particularly of skin injection, that are very close to human. This programme, currently on hold, can be reinitiated when staff is available to manage this programme. This takes second place to the MCV2 programme and illustrates DanDrit’s professional commitment to advancing lead clinical products.

 

Other Future Products

 

Other cancers

 

DanDrit has already made progress with clinical trials of NSCLC and CRC. DanDrit is now focussing its clinical development on advanced colorectal cancer, but DanDrit may if opportunity arises extend its range of cancer targets to answer the desperate need for effective new therapies. As an illustration, esophageal cancers may be one of these opportunities. The two types of esophageal cancers the esophageal squamous cell carcinoma (EC) and the esophageal adenocarcinoma (EAC) expressed MAGE -A. Worldwide, EC is the most frequent malignant esophageal cancer accounting for at least 10,000 deaths per year.

 

But in Western countries, EAC is the most rapidly increasing cancer compared with other malignancies. Surgical resection is currently the only potential cure with or without neo-adjuvant or adjuvant chemo-and/or radiotherapy, the five year survival rate is less than 20%. At first presentation, approximately 50-60% of patients with esophageal cancer are not eligible for surgery and have very poor outcome.

 

Tolerogenic Dendritic Cells

 

Some dendritic cells seem to instruct cell-killing T cell clones to abandon their mission by self-destructing through an apoptotic pathway. This may offer the possibility of eliminating those T cells responsible for the manifestation of auto-immune disease. In MCV dendritic cells are derived in such a way that the resulting dendritic cells promote an immune reaction. However, dendritic cells may also be derived in such a way that they are tolerogenic, they promote immune tolerance. Promoting immune tolerance can be used to treat autoimmune diseases such as early stage type I diabetes (where insulin secreting cells are still present) or even to help prevent rejection of tissue transplantation. In this way the tolerogenic dendritic cells are used to turn off an undesirable immune reaction. DanDrit has established methods to derive tolerogenic dendritic cells from peripheral blood monocytes, similar to the approach used to generate immunogenic dendritic cells in MCV. Tolerogenic dendritic cells are easily distinguished by their function in vitro. DanDrit has filed patents to cover the generation of tolerogenic dendritic cells.

 

Non-Core Products – Out-licensing

 

Non-core patents are being developed for application in dendritic cell related applications that are not cancer-related. Revenues from licensing such non-core products will support core product and core technology development.

 

The principal non-core intellectual property relates to tolerogenic dendritic cells, their production and application in auto-immune diseases to include type 1 diabetes. DanDrit’s fast track production methods for dendritic cells might be out-licensed for non-competitive applications in areas other than cancer.

 

 

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Fast-track production of Dendritic Cells

 

The generation of mature immunogenic dendritic cells from peripheral blood monocytes requires eight days of growth in culture. The efficiency of producing MCV could be improved if the time required to generate dendritic cells could be significantly reduced. DanDrit has tested many protocols for generating dendritic cells quickly. Two promising methods have emerged from intensive research activities to generate dendritic cells in either two days or five days. The fast track methods for generating dendritic cells produce immunogenic dendritic cells that are comparable to cells generated using DanDrit’s standard technique. These new fast track methods are covered by DanDrit’s existing dendritic cell technology patent.

 

This fast-track production technology could be of commercial interest for other companies working in non-competitive areas of dendritic cell technology.

 

MicroRNAs for dendritic cell quality control

 

DanDrit patented a method using microRNAs to characterise dendritic cells and establish a basis for quality control. To date there are few dendritic-cell specific antigens and those existing are covered by patents. DanDrit has patented its microRNA approach developed with Bioneer (note that patents are 100% owned by DanDrit).

 

Proposed Clinical Trial

 

Most of the net proceeds from this offering will be spent on a Proof of Concept (PoC) clinical trial. DanDrit will focus its development program on a randomized Phase IIb/III clinical trial in stage IV (metastatic) colorectal cancer. The purpose of this section is to present this clinical trial.

 

The proposed PoC study with an adaptive design plans to enroll 174 stage IV colorectal cancer patients after surgical resection of liver metastases and chemotherapy. These patients will therefore have no evidence of disease. The clinical study is designed as a randomized, placebo controlled, multicenter, Phase IIb/III clinical study. Treatment is double blinded (to the patients and physicians). Patients will be included after resection of their primary tumor and resectable metastases in liver and after appropriate peri- or post-operative chemotherapy by stratification and random assignment to a non-vaccine control group or a vaccine group receiving five vaccinations with 14-day administration intervals followed by five vaccines with two-month intervals. Inclusion is planned to take place one month after finishing the last round of peri- or post-operative chemotherapy (FOLFOX or FOLFIRI) and after a negative tumor scan (head, thoracic and abdominal cavities) and normal CEA prior to inclusion in the vaccine or the control groups. Patients will be screened for MAGE-A expression. The control group will receive five plus five injections with physiological saline. In the event of disease progression, as verified by tumor scan during the vaccination schedule, vaccinations will be discontinued. The table below summarizes the key features of the proposed PoC clinical study.

 

 

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Phase IIb/III Overview

 

Purpose	To determine the safety and efficacy of our investigational vaccine in colorectal cancer and to determine its ability to prevent recidive in stage IV colorectal patients with no evidence of disease (after surgical resection of metastase and chemotherapy)
Study Type	Interventional
Study design
Endpoint (primary)	Efficacy : Progression Free Survival at 18 months
Endpoint (secondary)	Overall Survival; Carcino-Embryonic Antigen (CEA); Quality of Life
Intervention Model	Parallel assignment 174 patients
Masking	Double blind
Allocation	Randomized
Power	80%
Adaptive Design	Purpose: potential sample size re-estimation Interim analysis of 12-month data from first 90 patients (CEA)
Treatment	Five vaccines bi-weekly (intra-dermal administration) followed by five vaccines every two months
Location	Asia, Europe, and USA
Expected Duration	Three years
Eligibility	Stage IV colorectal cancer patients After resection of liver metastase (lung metastase are excluded) and no evidence of disease (CT scan and CEA back to normal)           ●    Stratification for risk factor Vaccine therapy given after FOLFOX or FOLFIRI (after completion of course of chemotherapy) Screen for MAGE-A expression

 

 

Critical Success Factors

 

The points below are a specific, focused list of critical factors and challenges that need to be considered for the project, during the critical start-up phase and throughout the project life cycle. In addition to the sections noted below, during the course of the study, DanDrit will be pro-active in discussing the Critical Factors with the investigators.

 

Oncology studies by their nature have a degree of complexity not always encountered in other therapeutic areas. We believe success of the CRC study will be related to these Critical Success Factors. Our approach to each critical factor is detailed below. DanDrit identified the following key factors for success:

 

●

Patient accrual and site selection

●

Assessment of patient response

●

Study design and collection of patient data

●

Vaccine supply

●

Patient safety

●

Multinational regulatory requirements

●

CRO previous experience

●

Adaptive trial design experience

 

Patient accrual and site selection

 

 

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The proposed study is anticipated to enroll 174 patients at approximately 37 sites in the US, Europe and Singapore. Although the number of potential stage IV patients is significant, only a portion of these, approximately 10-20%, will have complete resections of their primary tumors and metastatic disease to liver with no detectable residual disease (i.e. clear resection margins). This coupled with a competitive oncology vaccine research environment will put pressure on accrual milestones.

 

The selected patient population will be easier to work with than the patients in Phase IIa. It is reasonable to expect the response rate to be greater for MCV, or for any immunotherapy, in a patient population with No evident Disease (NED). Consequently in this Phase IIb/III trial, patients will have to be NED, raising the likelihood that the immune system can generate a response against cancer as it re-occurs. We believe this may ultimately lead to better data from the Phase IIb/III trial. Careful selection of study sites using evidence based feasibility research, discussion with colorectal key opinion leaders (KOLs), contact with investigators at key sites and our past clinical experience in this indication and with cancer vaccines will be required. The trial is planned to be run out of sites such as Dana Farber Harvard University in the US, the Institut Gustave Roussy (IGR) in France, the National Cancer Institute of Milan in Italy, all of which are among the world’s premier cancer research and treatment facilities and leaders in immunotherapy research. That these sites are among the selected clinical trial sites raises the chances that the 174 patients will be recruited swiftly.

 

Accrual rates are estimates and can be further refined. Inadequate enrollment is one of the biggest drivers of wasted cost and time in clinical trials. Therefore, DanDrit has taken a very conservative position regarding site selection and patient enrollment.

 

Assessment of patient response

 

In general, in oncology vaccine studies, the relationship between clinical response, survival (and other measures of efficacy) and immune response may be unclear. Changes in patients’ immunological profiles during vaccination protocols, their response to the vaccine components as measured by DTH, ELISPOT, CD antigen profiles and other strategies to attempt to correlate treatment outcome with the results of vaccination are variable. The paper describing the Phase II study in CRC patients by Toh et al indicates that a plasma protein expression profile has been identified for responding patients. Continued evaluation of immunological profiles of the patients and the collection of these data and correlation with outcomes may be desirable but for this POC study will not be necessary.

 

In a guidance document by the FDA, “Clinical Considerations for Therapeutic Cancer Vaccines” (September 2009), the agency recognizes that immunological approaches to tumor control may require significant time to develop, and that careful clinical assessment of patients must be performed as well as the use of methods that rely on radiological measurement of tumor size (e.g. RECIST). The guidance indicates that for cancer vaccines, patients may be observed to develop indications of progressive disease based on radiological measurement, but that these indications may also be transient and that tumor regression is still a possibility as the immunological response develops. Methods to incorporate such an approach will help avoid premature termination of study treatment for some patients.

 

Tumor burden has also been a confounding problem for oncology vaccine development because of tumor-induced immune-suppression in some patients and because of progression prior to immune response. These issues may be obviated in this study of no-evident-disease subjects.

 

Patient safety

 

MCV appears to be safe and well tolerated in studies to date. Adverse events related to the vaccine appear to be Grade 1-2 and consist of mostly superficial toxicities as describe above. Patients in the proposed study will have recovered from previous treatments and will be apparently disease free: thus, at this time, only general safety precautions and observations related to the patient population are recommended.

 

Injection site reactions and other toxicities expected in the class of DC vaccines will be included in site training. Some volume of Severe Adverse Events can be anticipated in a population of advanced CRC patients. Discrimination of events related to vaccine against a background of underlying disease and prior chemo or and/or radiotherapy will be necessary.

 

The CRO’s pharmacovigilance scientists will prepare a Safety Management Plan to specifically outline the procedures to be followed and will train the site personnel to obtain, collect, verify, transmit and coordinate a timely and efficient manner.

 

In addition to reviewing assignment of causality, a DSMB may assist in the (proposed) interim assessment for efficacy and its constitution should be considered.

 

 

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Regulatory

 

DanDrit will seek scientific advice from EMEA (ATMP) and will request a pre-Phase II meeting with the FDA. The CRO Regulatory Affairs group will provide preparation and assistance for the Scientific Advice process in EMEA including the following activities:

 

●

Regulatory review of pertinent data

●

Discussions/kick off meeting with DanDrit contact(s), for background, pertinent issues, proposed questions, strategic discussion etc.

●

Prepare a briefing package for Scientific Advice includes QC (one review round with DanDrit) using the existing information in the Investigational Medicinal Product Dossier(IMPD)/Investigator Brochure(IB) as the basis for the package

●

Set up and attend meeting with EU regulatory agency and conduct all associated administrative tasks (letters, post meeting minutes, etc.)

 

While the IIb trial will commence as soon as practicable and will run over a three year period, DanDrit also has the option to evolve the Phase IIb to a Phase III trial through the use of an adaptive design. Ordinarily a drug requires two Phase III trials before it can apply for FDA approval. Consequently the first patient for Phase IIb could be considered commencement of ‘pivotal’ trials for MCV. Also, DanDrit intends to move to a pivotal trial in China with a Chinese partner. Currently, the China Food and Drug Administration offers a low-cost clinical development pathway for cancer drugs developed, manufactured and commercialized in China. A separate local CRO will be recruited for this Chinese trial.

 

Our Competitive Strengths

 

We believe our following strengths position us to increase our revenue and profitability:

 

●

Cutting Edge Technology. Immunotherapy is one of the waves of the future in cancer treatment.

 

●

Colorectal Market Potential. Colorectal cancer is a large market with a well identified unmet medical need for safe maintenance therapy. The clinical data for MCV to date gives the potential for the vaccine to eventually become the standard of care for maintenance therapy. MCV has the potential to alter the treatment paradigm by prolonging periods of remission after response to chemotherapy. If MCV works as expected in colorectal cancer, we believe it would likely prove beneficial in other tumors that over-express MAGE-A including lung, breast and esophageal cancer.

 

●

Regulatory Precedent. Dendreon with Provenge™, its prostate cancer vaccine, pioneered the regulatory pathway for MCV. Dendreon worked with the FDA to develop the protocols allowing a cellular therapy such as MCV to be approved for clinical use. DanDrit could be the next generation of dendritic cell vaccine with several improvements over its competition:   stimulate a cellular immune response rather than just an antibody response, no need for leukapheresis to produce the vaccine, intradermal administration, convenience of an allogenic vaccine, polytopic approach but with a focus on the MAGE-A antigen family and reliable manufacturing.

 

●

Successful Use in Singapore. For the last five years, DanDrit and the Singapore National Cancer Center have provided MCV to colorectal cancer patients within an on-going compassionate use program in Singapore. Based on that experience, DanDrit is building a potential collaboration with a Chinese oncology pharma partner that may speed up large scale commercialization of MCV.

 

●

Strong IP Protection. The technology is patented with a long patent life. DanDrit owns 100% of the technology, without intellectual property issues.

 

Our Strategy

 

Our strategy is focused on conducting a proof-of-concept clinical trial in advanced colorectal cancer that may trigger partnership deal that should bring a significant return on investment (based on analysis of past acquisitions of peer cancer vaccine companies).

 

DanDrit intends to conduct a randomized multicenter (USA, Europe and Asia) clinical trial to determine the ability of MCV to prevent recidivism in stage IV colorectal patients with no evidence of disease after surgical resection of liver metastasis and chemotherapy.

 

 

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This blinded comparative trial is planned to be completed within three years. DanDrit’s management is confident that upcoming clinical data will be the catalyst to unlock commercial revenues for DanDrit through either acquisition by pharmaceutical partner or licensing deals that would yield upfront and milestone payments as well as royalties.

 

We are also considering a registration trial to support potential approval of MCV in China. This trial would be conducted under China Food and Drug Administration regulations with a Chinese oncology pharmaceutical partner, such as the TASLY Group or 3S Bio. Contacts with 3S Bio and the TASLY Group have already been initiated. China has recently put in place a drug approval system that includes a low-cost first clinical approval pathway especially for Chinese biotechnology companies. The approval for local biotechnology players is advantageous, since costs for a pivotal clinical trial in China are estimated at one tenth of EU or U.S. costs. Therefore, we plan to collaborate with a Chinese company such as the TASLY Group to develop, manufacture and sell MCV in China. Several factors are also making a partnership with a Chinese pharmaceutical company attractive:

 

●

For registration, the clinical trial can only be performed in sites approved by the China Food and Drug Administration. By November 2010, there were 112 oncology sites in Mainland China.

●

Screening for MAGE-A could be attractive to the China Food and Drug Administration, but tumor samples could not be shipped outside of China for genomic testing. Therefore a partner who can perform MAGE-A screening in China is valuable.

 

In addition, the China Food and Drug Administration relies more than other agencies on risk benefit assessment. Risk benefit assessment in China remains the “heart” of determining the value of products and is a more favorable assessment approach to MCV as the vaccine is, thus far, well tolerated with a perfect safety profile (due to dendritic cell technology).

 

Furthermore, due to high unmet medical need, the approval for cancer drugs is also more favorable than in other regions of the world. Because cancer is the first cause of mortality in China, the approval process for oncology drugs benefits from easier rules than those that govern drugs targeting other diseases. The State Food and Drug Administration (the predecessor of China Food and Drug Administration) granted 114 Clinical Trial Authorization (CTA) approvals for oncology global/regional trials from 2005 to 2010. Generally, in order to approve a cancer drug in China:

 

●

Usually only one pivotal study is required

●

With only 100 to 800 patients (most likely 300 patients)

●

An open-label study design is accepted (without placebo control)

●

The statistical consideration are also attractive as relatively low statistical significance (P value 0.03~0.05) is required

●

Overall additional flexibility exists for oncology drugs, driven by the benefit/risk ratio

 

Furthermore, a special review and approval procedure applies to oncology drugs. The review and approval procedure could shorten the review time and can enhance communication with the China Food and Drug Administration. By the end of 2010, 28 drugs obtained approval, and more than half were oncology drugs (ten chemical drugs, and five biologics).

 

We believe that it is important to take advantage of this development opportunity quickly as the paradigm for oncology drug development is changing rapidly in China:

 

●

There is an unprecedented number of anti-cancer therapies in development and the standard of care changes quickly

●

The complexity of information concerning tumor genetics and signaling pathways is growing and will bring greater opportunities for personalized medicine

 

Industry

 

Cancer deaths remain constant, partly because people are living longer. DanDrit’s lead products for NSCLC and CRC address about 40% of all cancer deaths. Other important cancers include Breast (8% of deaths), Prostate (6% of deaths) and Pancreas (6% of deaths). Together these top 5 cancers are responsible for 60% of all cancer deaths.

 

 

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Cancers Diagnosed (deaths in parentheses) each year

 

Region	Population 1000,000s	All Cancer 1000s	NSCLC 1000s	CRC 1000s	Breast 1000s	Prostate 1000s	Pancreas 1000s
USA	300	1400 (560)	190 (125)	150 (50)	185 (40)	185 (30)	37 (30)
EU	500	2300 (900)	315 (205)	250 (85)	305 (67)	305 (50)	60 (50)
Combined	800	3700 (1300)	505 (330)	400 (135)	490 (107)	490 (80)	97 (80)

 

With the 12,667,500 estimated number of new cancer cases in 2008, cancer remains a large market opportunity. Cancer is still the main cause of death in developed countries – accounting for ~33% of death and remains an area of huge unmet medical need. The cancer market has a high growth potential for the coming years with an expected 7% annual growth rate for the years 2011- 2018. The American Cancer Society figured out 1,638,910 new cancer cases in the US for 2012 with 577,190 associated deaths.

 

In Europe the number of new cancer cases for 2012 was estimated at 3.45 million with a 1.75 million deaths. The cancer market is the fastest growing pharmaceutical market with $83 billion expected growth of the cancer drug market by 2020.

 

The per-treatment price of chemotherapy for CRC is approximately $30,000. We expect that, if our vaccine is approved for use in CRC patients, the cost per-treatment will be approximately equal to the per-treatment cost of chemotherapy.

 

Due to its safety profile, MCV should fit easily into the treatment paradigm of most cancers. The initial label of adjuvant therapy for stage IV colorectal cancer with no evidence of disease after surgical resection of metastases could be a door opener for the larger colorectal cancer market. DanDrit’s pharmaceutical partner should be able to grow the label to the larger adjuvant for stage III colorectal cancer market.

 

Colorectal Cancer

 

The figure below presents the market opportunity for MCV in advanced colorectal treatment. The global colorectal cancer market peak opportunity for MCV can be valued at US$4.6 billion using quite conservative assumptions.

 

 

Despite numerous therapeutic advances, colorectal cancer continues to be associated with one of the worst survival rates of all cancers. Metastatic liver disease is found in 10% to 25% of patients having surgery for primary colorectal cancer instead of liver metastasis are detected in 40-50% of patients with diagnosed colon cancer . Then, standard of care “treatment” for colorectal cancer patients after resection surgery and chemotherapy is only observation. When surgical resections of liver metastases are possible, as in 20% of the affected patients, five years survival may approach 35%. According to the most recent papers, the median Progression-Free-Survival (PFS) in patients receiving combined surgery and chemotherapy with No Evidence of Disease is 24-26 months.

 

 

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We believe that it is of great importance for colorectal cancer patients receiving surgery alone or surgery combined with peri- or post-operative chemotherapy, that new and more effective therapies are developed and offered in the post-treatment period. The aim of the proposed trial is to study whether our lead vaccine can increase the progression-free survival for these patients.

 

Licensing Potential and Cooperation Agreements

 

The following discussion represents opportunities that we believe can expand the use of our technology.

 

Alliance with Chinese Company

 

In addition of the size of their national market, Chinese biotech firms currently benefit from a low cost first clinical development path. The Chinese approval process is favorable for local biotechnology companies. With a Chinese partner, we plan to conduct a Phase III trial in China for approximately one tenth of the cost in the U.S. and at a faster pace. A successful Phase III trial could result in large scale commercialization in China and Southeast Asia.

 

Furthermore, the domestic market in China for cancer therapies is expected to grow due to a large aging population, expanded insurance coverage, higher government healthcare spending, rising disposable incomes and the high incidence of cancer among the population. In spite of recent price cuts, we believe that the market for cancer therapies in China represents a long-term opportunity based on the factors set forth above. In 2010, oncology agents (17.1%) ranked second in sales, at 17.1%, only after anti-infective agents (23.1%) and before cardiovascular drugs (13.4%). This market segment is expected to continue to grow at a CAGR of over 20% from 2009 to 2014.

 

Alliance Strategy

 

In addition to its lead compound MCV, DanDrit has built a pipeline of dendritic cell based cancer therapies, currently addressing 40% of all cancer-related deaths. DanDrit intends to work with strategic partners to strengthen the in-house pipeline.

 

We control key technologies with relevance outside our core business area and these we may out-license or co-develop with suitable partners.

 

MyTomorrows

 

In December 2013, DanDrit entered an agreement with MyTomorrows (“MT”), a Dutch company, regarding a Patient Name Use Program (PNU) for MCV. This program will allow DanDrit to sell MCV at $ 20,600 for one year of treatment (10 vaccines) to cancer patients through MT. MT offers a worldwide online platform providing access to non-registered medicines for patients with life threatening diseases.

 

MT is a turnkey solution and will be in charge of regulatory, recruitment, logistics, and pharmacovigilance. DanDrit’s potential liabilities are limited to quality control of cGMP manufacturing of MCV. DanDrit expects several benefits from this agreement. First, in 2014, DanDrit anticipates short term revenue generation as MT will transfer $20,600 as soon as a patient orders MCV. DanDrit also anticipates that this program may contribute to lowering the cost of manufacturing of the clinical lot through economy of scale. This program may also generate real life data for MCV.

 

Manufacturing

 

In 2011 and 2012, DanDrit has out-sourced the GMP manufacturing of its lysate. We believe that proving that our technology transfer was possible was a key step in finding and working with a future pharmaceuticals partner. DanDrit evaluated several possible EU-based contract manufacturing organizations (CMOs) and selected PX Therapeutics SA, a CMO based in Grenoble, France. The collaboration with PX Therapeutics SA in France demonstrated that GMP production of lysate could not only be transferred but that the production could be scaled up. We consider that the potential economy of scale that can be expected in the cost of lysate production could become a competitive advantage versus other cancer vaccine companies using recombinant production of cancer-specific antigens (i.e. Mage-A3 from GSK). Also, the collaboration with the French CMO is based on a pure fee-for-services basis and can be discontinued at any time without notice.

 

In addition, DanDrit will spend a small part of the net proceeds on improving the manufacturing of the MCV vaccine. DanDrit intends to establish a closed fully automatized manufacturing process. We learned from the Dendreon’s experience that an efficient manufacturing process should be in place before approval for commercialization. Cost saving should be expected from a fully automatized vaccine production. We also assume that a fully efficient manufacturing process may increase the value of a deal with a pharmaceutical partner.

 

 

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Cell Banking

 

The melanoma cell lines used by DanDrit in the production of our lysate (MCL) are stored at ultra-low temperature in liquid nitrogen at Symbion Science Park, Copenhagen, Denmark. Both master- and working cell banks are stored this way and the contents of the cell banks (both master and working) are recorded in log books. Nitrogen levels are maintained by the staff of DanDrit Biotech at least once a week and any activity in regards to storage (shipment of cells, nitrogen levels etc.) are documented in the appropriate log book.

 

Furthermore, for security reasons, samples of the master cell banks are also stored at specialized cell storage facilities in England. In addition, samples of one working cell bank from the DDM1.7 cell line are stored at PX Therapeutics in France for production purposes.

 

Sales, Marketing and Distribution

 

The business model of DanDrit is to focus on early development of dendritic cell based vaccine. We have significantly reduced the fixed costs linked with our operation and do not intend to build an expensive marketing, sales and distribution organization. We will rely on pharmaceutical partners with demonstrated relevant experience in commercialization of cancer products to market, sell and distribute MCV. Therefore, we have already identified and establish a communication line with several potential future pharmaceutical partners. At completion of the comparative clinical trial, we plan to enter into a collaboration agreement with a pharmaceutical partner regarding the regulatory approval, marketing, sales and distribution of MCV.

 

Intellectual Property

 

As a company primarily focused on pharmaceutical research, we expect that our most valuable assets are our intellectual property. This includes U.S. and foreign patents, patent applications, common-law trademarks, trade secrets and know-how. We are pursuing an aggressive intellectual property strategy.

 

DanDrit intends to aggressively defend its patents through legal process if necessary. Where appropriate, DanDrit may in-license intellectual property that may add to the strength and defense of our core business. DanDrit’s intellectual property comprises patents, trademarks, copyright and secret know-how.

 

DanDrit’s core business is cancer therapy. Where DanDrit’s patents and secret know-how are applicable to non-core business areas we will consider out-licensing for relevant non-core applications.

 

DanDrit filed its first PCT patent application on November 29, 2002 with priority claimed from 2001 with the Danish application, shortly after our formation.

 

DanDrit may continue to patent its innovations, such as novel dendritic cell production systems or dendritic cell quality control. To support potential income streams DanDrit may patent non-core applications of its dendritic cell technologies so as to secure future revenue streams from out-licensing activity.

 

Patents

 

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Pharmaceutical composition for inducing an immune response in a human or animal (2001 DK, 2002 PCT)

 

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Protocol for generating dendritic cells   2005 DK, 2008 PCT

 

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Method for generating tolerogenic dendritic cells   employing decreased temperature 2007

 

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Micro RNAs as markers of the functional state of a dendritic cell

 

All of the above patents are protected by relevant international extensions.

 

 

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