As filed with the Securities and Exchange Commission on June 23, 2022
Registration No. 333-265429
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT NO. 1
TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
SHUTTLE PHARMACEUTICALS HOLDINGS, INC.
(Exact name of registrant as specified in its charter)
Delaware | 2834 | 82-5089826 | ||
(State
or other jurisdiction of incorporation or organization) |
(Primary
Standard Industrial Classification Code Number) |
(I.R.S.
Employer Identification No.) |
One Research Court, Suite 450
Rockville, Maryland 20850
(240) 403-4212
(Address,
including zip code, and telephone number, including
area code, of registrant’s principal executive office)
Anatoly Dritschilo, M.D.
Chief Executive Officer
Shuttle Pharmaceuticals Holdings, Inc.
One Research Court, Suite 450
Rockville, Maryland 20850
(240) 403-4212
(Name,
address, including zip code, and telephone number,
including area code, of agent for service)
Copies to:
Megan J. Penick, Esq. |
Spencer G. Feldman, Esq. | |
Stephen A. Weiss, Esq. |
Olshan Frome Wolosky LLP | |
Michelman & Robinson LLP |
1325 Avenue of the Americas, | |
800 Third Avenue, 24th Floor |
15th Floor | |
New York, NY 10020 |
New York, NY 10019 | |
(212) 730-7700 | (212) 451-2300 |
Approximate date of commencement of proposed sale to the public: As soon as practicable 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, check the following box. ☐
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. ☐
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. ☐
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.
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer ☐ | Accelerated filer ☐ |
Non-accelerated filer ☒ | Smaller reporting company ☒ |
Emerging Growth Company ☒ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act. ☐
The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the registration statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.
The information in this preliminary prospectus is not complete and may be changed. We may not sell these securities nor may we accept offers to buy these securities until the registration statement filed with the Securities and Exchange Commission becomes effective. This preliminary prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.
PRELIMINARY PROSPECTUS | SUBJECT TO COMPLETION, DATED JUNE 23, 2022 |
$
SHUTTLE PHARMACEUTICALS HOLDINGS, INC.
3,000,000 Shares of Common Stock
This is the initial public offering of common stock of Shuttle Pharmaceuticals Holdings, Inc. Prior to this offering, no public market has existed for our common stock. Of the 3,000,000 shares of our common stock offered by this prospectus, 2,750,000 shares are being sold by us and 250,000 shares are being sold by certain selling stockholders. No stockholder affiliated with management is selling shares in this offering. We will not receive any proceeds from the sale of shares by the selling stockholders. We currently estimate that the initial public offering price will be between $4.50 and $5.00 per share. We intend to list our shares of common stock for trading on The Nasdaq Capital Market under the symbol “SHPH.”
An investment in our common stock involves significant risks. You should carefully consider the risk factors beginning on page 13 of this prospectus before you make your decision to invest in our common stock.
Per Share | Total | |||||||
Offering price | $ | $ | ||||||
Underwriting discounts and commissions (1) | $ | $ | ||||||
Proceeds, before expenses, to us | $ | $ | ||||||
Proceeds, before expenses, to selling stockholders | $ | $ |
(1) | We have also agreed to pay a non-accountable expense allowance and reimburse the underwriter for certain expenses incurred in connection with this offering. See “Underwriting” on page 89 for a description of compensation payable to the underwriter. |
We have granted a 45-day option to the underwriter to purchase up to 450,000 additional shares of common stock solely to cover over-allotments, if any.
We are an “emerging growth company” as defined in Section 2(a) of the Securities Act of 1933, as amended, and we have elected to comply with certain reduced public company reporting requirements.
Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.
The underwriter expects to deliver the shares of common stock against payment as set forth under “Underwriting” on or about , 2022.
Boustead Securities, LLC
The date of this prospectus is ____________, 2022.
TABLE OF CONTENTS
ABOUT THIS PROSPECTUS
We have not, and the underwriter has not, authorized anyone to provide you with any information or to make any representation other than that contained in this prospectus, any amendment or supplement to this prospectus or in any free writing prospectus prepared we may authorize to be delivered or made available to you. We do not, and the underwriter does not, take any responsibility for, and can provide no assurance as to the reliability of, any information that others may provide to you. We are offering to sell, and seeking offers to buy, shares of our common stock only in jurisdictions where offers and sales are permitted. The information in this prospectus is accurate only as of the date on the front cover of this prospectus, regardless of the time of delivery of this prospectus or any sale of shares of our common stock. Our business, financial condition, results of operations and prospects may have changed since that date. You should also read and consider the information in the documents to which we have referred you under the caption “Where You Can Find More Information” in this prospectus.
For investors outside the United States: Neither we, the selling stockholders nor the underwriter have done anything that would permit a public offering of the securities or possession or distribution of this prospectus in any jurisdiction where action for that purpose is required, other than in the United States. Persons outside the United States who come into possession of this prospectus must inform themselves about, and observe any restrictions relating to, the offering of the securities and the distribution of this prospectus outside of the United States. You are required to inform yourselves about and to observe any restrictions relating to this offering and the distribution of this prospectus outside of the United States.
You should rely only on the information contained in this prospectus. Neither we, the selling stockholder nor the underwriter have authorized any dealer, salesperson or other person to provide you with information concerning us, except for the information contained in this prospectus.
Unless otherwise indicated, information contained in this prospectus concerning our industry and the markets in which we operate or plan to operate, including our general expectations and market position, market opportunity and market share, is based on information from our own management estimates and research, as well as from industry and general publications and research, surveys and studies conducted by third parties. Management estimates are derived from publicly available information, our knowledge of our industry, and assumptions based on such information and knowledge which we believe to be reasonable. Our management estimates have not been verified by any independent source, and we have not independently verified any third-party information. In addition, assumptions and estimates of our company’s and our industry’s future performance are necessarily subject to a high degree of uncertainty and risk due to a variety of factors, including those described in the section entitled “Risk Factors” beginning on page 13. These and other factors could cause our future performance to differ materially from our assumptions and estimates. See “Special Note Regarding Forward-Looking Statements” on page 39 below.
i |
The following summary provides an overview of all material information contained in this prospectus. It does not contain all of the information you should consider before making a decision to purchase our shares of common stock in the offering. Prior to investing in our common stock, you should carefully and thoroughly read the more detailed information in this prospectus and review our financial statements and all other information that is included in this prospectus, including the section entitled “Risk Factors” beginning at page 13.
Unless the context otherwise requires, references in this prospectus to “Shuttle Pharma,” “Shuttle Pharmaceuticals,” “the Company,” “we,” “our” and “us” refers to Shuttle Pharmaceuticals Holdings, Inc. and its subsidiary, Shuttle Pharmaceuticals, Inc.
Our Company
Overview
Founded in 2012 by faculty members of the Georgetown University Medical Center, Shuttle Pharmaceuticals is a discovery and development stage specialty pharmaceutical company focused on improving the outcomes of cancer patients treated with radiation therapy (RT). Our mission is to improve the lives of cancer patients by developing therapies that are designed to maximize the effectiveness of RT while limiting the late effects of radiation in cancer treatment. Although RT is a proven modality for treating cancers, by developing radiation sensitizers, we aim to increase cancer cure rates, prolong patient survival and improve quality of life when used as a primary treatment, or in combination with surgery, chemotherapy and immunotherapy. We currently have no FDA approved products and we have not yet applied for a new drug application. To date, we have been funded by investments from private investors and government contracts obtained from the National Institutes of Health (NIH) for performing research. We have no product revenue and our independent auditors, in their report dated June 3, 2022, expressed doubt about our ability to continue as a going concern.
Historically, the major advances in radiation oncology have focused on improving technology to increase the amount of radiation that can be administered to a tumor without damaging adjacent, normal tissues. Examples of other such technologies include intensity modulated radiation therapy (IMRT), stereotactic body radiation therapy (SBRT), stereotactic radiosurgery (SRS) and proton therapy – the backbones of state-of-the-art RT. All offer improvements in physical radiation dose shaping. The basic principle underlying the effectiveness of RT for curing cancers lies in the differential cancer cell kill achieved in tumors, as compared to the effects of RT on the normal surrounding tissues, which is achieved by delivery of highly conformal RT doses – in other words, delivery of high-dose to volumes that are shaped to conform to the target cancers while minimizing the dose to surrounding normal tissues. The treated volumes frequently include sensitive normal tissues, thereby limiting the magnitudes of the prescribed RT doses. We suggest that technological innovations to define tumor volumes and shape radiation delivery have reached an effectiveness plateau and that further improvements in RT outcomes will require pharmacological and immunological approaches to sensitize cancers, protect normal tissues and engage the immune system.
At present, the drugs being used for sensitizing cancers to RT are chemotherapeutic agents possessing radiation sensitizing properties as secondary effects. With the exception of Cituximab, a growth factor targeting monoclonal antibody biologic, all other drugs used as radiation sensitizers are used “off-label” to address the clinical need for radiation sensitizers. For example, certain chemotherapeutic agents, such as 5-fluorouracil, capecitabine and cis-platinum, are approved as single agents for cancer treatment, but are used “off-label” as radiation sensitizers in combination with RT. Treatments with such agents are associated with inherent toxicities associated with the drug’s primary, single-agent mechanisms of action.
Shuttle Pharma’s platform of sensitizers offers a pipeline of product candidates designed to address the urgent clinical need and the current limitations of using “off-label” drugs with potential new sensitizer agents. Our pipeline includes Ropidoxuridine, our lead clinical sensitizer drug candidate, to sensitize rapidly growing cancer cells and selective histone deacetylase (HDAC) inhibitors to sensitize cancer cells and stimulate the immune system. Our novel technologies will be tested in combinations with radiation therapies (conventional X-ray and proton radiation therapies) and in combinations with immune-therapies. To date, Ropidoxuridine has completed a Phase I clinical trial. Our HDAC inhibitor platform drug candidates have been tested in preclinical models of solid tumor cancers. Ropidoxuridine and the selective HDAC6 inhibitor SP-2-225 are the clinical and preclinical candidate drug products we propose to develop using funding from this offering.
Our intellectual property for Ropidoxuridine includes novel formulations that show improved drug bioavailability (in a preclinical animal model) and for sensitizing cancers to proton and to conventional radiation therapies. Our HDAC inhibitor intellectual property includes new patent applications and granted patents for composition of matter and methods of use for treating cancers with HDAC inhibitors in combinations with radiation therapy.
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To date, we have obtained funding for our research from private investors and Small Business Innovation Research (“SBIR”) contracts obtained through the National Institutes of Health (“NIH”) to support the development of the radiation sensitizer Ropidoxuridine in a Phase I clinical trial. We have also received awards for Phase I and II SBIR contracts for development of human cell cultures for health disparities studies and predictive biomarkers of radiation late effects through the NIH’s National Cancer Institute. The completed Phase I and II funded discovery work performed to establish “Cell-based Models for Prostate Cancer Health Disparity Research” and to develop “Predictive Biomarkers of Prostate Cancer Sensitivity for Radiation Late Effects” enables Shuttle Pharma to apply for NIH SBIR Phase IIb funding to develop these products for advancing basic science and clinical research.
Our Product Candidates
The U.S. Food and Drug Administration (the “FDA”) considers new molecular entities as drugs that use new and unique mechanisms of action for treating medical conditions. Our clinical stage agent, Ropidoxuridine (IPdR), increases DNA double strand breaks following radiation exposure and our inhibitors of histone deacetylases (HDACs) stimulate the immune system to produce T-lymphocytes targeting cancer cells.
Our objective is to improve the outcomes of cancer treatment through RT while reducing its side effects by:
● | Sensitizing growing cancer cells to render them more susceptible to the effects of RT; |
● | Activating the DNA damage response pathway to protect normal cells located near cancers; and |
● | Activating the immune response to antigens present on irradiated and un-irradiated cancer cells. |
To our knowledge, no drug utilizing the mechanisms of our candidate small molecule drugs has received FDA approval as a radiation sensitizer. We have developed, to clinical stage, the small molecule strategies to sensitize growing cancer cells in tumors to conventional RT and to large fraction radiation therapy. The pre-clinical technology, HDAC inhibitor platform, is designed to target cancer cells while protecting healthy tissue/normal cells, thus enhancing the candidate radiation sensitizer product pipeline. The selective HDAC6 inhibitor (SP-2-225), discovered and developed by our scientists, has inhibited the growth of melanoma tumors and breast cancers in animal models by an immune stimulating mechanism.
We are focused on developing a clinical stage product candidate (Ropidoxuridine) and a pre-clinical product candidate, selective HDAC6 inhibitor (SP-2-225). We propose to develop these drug candidates as illustrated below:
Overview of Radiation Sensitizer Development
Ropidoxuridine, the clinical stage molecule, sensitizes rapidly growing cancers to radiation therapy by increasing reactive free radicals that increase DNA strand breaks. Ropidoxuridine development for treating glioblastoma will require Phase II clinical testing for use in treating brain tumors. The selective HDAC6 inhibitor, SP-2-225, a pre-clinical stage molecule, activates the innate immune system to target irradiated tumor cells by immune mechanisms.
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Ropidoxuridine (IPdR)
Ropidoxuridine (IPdR) is an orally available halogenated pyrimidine (5-iodo-2-pyrimidinone-2-deoxyribose) with strong cancer radiation sensitizing properties. As a prodrug that does not become an active drug until after it is metabolized, IPdR is absorbed and metabolized to IUdR by enzymes in the liver and in cancer cells. IUdR, a halogenated pyrimidine, is incorporated into DNA by rapidly growing cancer cells. Cells that incorporate IUdR into their DNA then become more sensitive to the effects of RT. The Phase I clinical trial of Ropidoxuridine and RT, supported by an NIH SBIR contract to Shuttle Pharma, was sub-contracted to the Brown University Oncology Group (BrUOG) at the LifeSpan/Rhode Island Hospital. This Phase I clinical trial has been completed and the results were initially reported by the sub-contractor at the 30th EORTC-NCI-AACR Symposium in November 2018 and published in the medical journal Clinical Cancer Research in 2019. A maximum tolerated dose (MTD) of 1200 mg/day for 28 days was established for use in combination with radiation therapy to achieve therapeutic blood levels of IUdR.
The reported Phase I clinical trial of Ropidoxuridine in combination with RT provides the foundation for proposed Phase II clinical trials to establish the data necessary for the FDA to determine efficacy in treating brain tumors, sarcomas and pancreatic cancers, diseases that offer potential for orphan designations. The FDA granted approval of our application for orphan-drug designation for IPdR for the treatment of glioblastoma. Orphan designation protects the marketing position of Ropidoxuridine for up to seven years after marketing approval is received from the FDA. This approval integrates well into the overall intellectual property strategy for Ropidoxuridine which includes filed patent applications for “Method and Compositions for Cancer Therapies that Include Delivery of Halogenated Thymidines and Thymidine Phosphorylase Inhibitors in Combination with Radiation.” We believe that we are positioned to initiate Phase II clinical studies with Ropidoxuridine and RT in 2022.
Extended Bio-availability Ropidoxuridine (IPdR/TPI)
Ropidoxuridine and Tipiracil (IPdR/TPI) is a new combination drug formulation designed to increase the bio-availability and incorporation of IUdR into DNA. Shuttle Pharma’s preclinical studies of the combination of IPdR/TPI have shown up to 10-fold greater bioavailability of the active metabolite (IUdR) as compared to IPdR administered alone in controls. We have filed an application under the Patent Cooperation Treaty (or PCT) for the intellectual property. This new formulation will be tested in a Phase I clinical trial as a sensitizer of rectal cancers. Another nucleoside analogue, Trifluridine has been formulated in combination with Tipiracil (TAS-102) to enhance drug uptake by colon cancer cells to prolong survival in patients treated for metastatic colorectal cancers, as has been reported in the New England Journal of Medicine (N Engl J Med. 2015; 372:1909-1919). We anticipate testing for uptake of IPdR by colorectal cancer cells following administration of the IPdR/TPI drug formulation.
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Proton radiation therapy is an advanced form of radiation therapy using charged proton particles (p+). Proton RT differs from conventional RT in that the radiation is delivered by a beam of protons to precisely target tumors and, due to the favorable physics of energy deposition by proton particles, there is no exit beam, resulting in less radiation to surrounding healthy tissues. The use of Proton RT is expanding rapidly in the U.S. and worldwide. According to the National Association of Proton Therapy, more than 30 facilities are currently in operation in the U.S. and an additional 30 facilities are planned for installation over the next five years. (See www.proton-therapy.org.) Much attention has been paid to proton therapy in the popular press, promoting its advantages, as well as addressing the increased health care costs. The role of a sensitizer that offers proton radiation sensitization presents an opportunity to enhance the value of proton radiation therapy as a cancer treatment modality. We believe the development of a proton therapy targeted radiation sensitizer, such as IPdR/TPI, is timely and consistent with current market needs to advance protons as a therapeutic modality.
We intend to perform clinical studies to support the development of the IPdR/TPI combination to advance this drug candidate with proton RT. The addressable market includes diseases such as brain tumors, cancers of the head and neck, GI cancers and lung cancers.
Selective HDAC Inhibitors
The roles of acetylation in the epigenetic regulation of chromatin structure and gene expression rests on the balance of activities of histone acetyltransferases (HATs) and histone deacetylases (HDACs). Increased acetylation of histones leads to changes in chromatin structure and accessibility for key cellular proteins to specific target sites. Acetylations of non-histone proteins also modulates their enzymatic activities. We have discovered novel HDAC inhibitor molecules and testing in preclinical models has shown cancer radiation sensitizing properties, normal tissue protective properties and selective HDAC6 inhibitory properties. Our HDAC inhibitor platform, described below, will be evaluated in pre-clinical studies of radiation sensitization of solid tumors and activation of the immune response to irradiated cancer cells.
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● | SP-1-161 is our candidate lead pre-clinical, pan-HDAC inhibitor that initiates the mutated in ataxia-telangiectasia (ATM) response pathway. ATM is activated by ionizing radiation induced DNA damage. Activated ATM phosphorylates critical factors involved in DNA repair, apoptosis, and cell cycle checkpoint. Phosphorylation of the molecules in these pathways, in turn, activates the cellular functions. ATM also can be activated by HDAC inhibitors and imparts radiation protective properties. Using rational drug design, we discovered HDAC inhibitors and ATM activators capable of radiation sensitizing cancer cells and protecting normal cells. SP-1-161 is our lead candidate radiation sensitizing pan-HDAC inhibitor. | |
● | SP-2-225 is our candidate lead selective histone deacetylase inhibitor of HDAC6. HDAC6 is a member of the Class IIb HDAC family. Selective HDAC6 inhibitors are an emerging class of pharmaceuticals due to effects on neurodegenerative diseases, cancers and immunology. Specifically, the potential to affect regulation of the immune system and enhance the immune response to cancers is of significant interest as an adjuvant treatment in combination with radiation therapy. We propose to test our HDAC6 inhibitors for a role in enhancing post-RT immune responses to antigens produced in irradiated cancers for their effects on control of local and metastatic disease. | |
● | SP-1-303 is a selective Class I HDAC inhibitor that preferentially affects histone deacetylases HDAC1 and HDAC3 and shows direct and selective cytotoxicity for ER positive and Her2 negative breast cancer cells. |
Drug Development Projects for Radiation Treatment of Cancers
To advance research that is complementary to our radiation sensitizer discovery and development projects, the NIH has awarded SBIR contracts to us to develop reagents for health disparities research and to develop biomarkers of radiation sensitivity for patients treated with radiation therapy. Our scientists have been engaged in developing model human cell systems for testing radiation sensitizers in tissue cultures. This project provides an efficient and low-cost screening technology to provide data for the FDA’s determination of drug efficacy and to identify candidate lead molecules for treating prostate cancers in African-Americans. First developed at Georgetown University, the conditional cellular reprogramming (CRC) technology offers the ability to establish new cell lines from biopsies of cancers. We have obtained a sub-license from Propagenix, Inc. to establish 100 normal and cancer cell lines from prostate biopsy samples for use in screening drug candidates and for health disparities research. A more detailed description of the Propagenix license is set forth on page 60 below.
In addition, to identify patients who may be more sensitive to radiation therapy and are at a higher risk to suffer treatment-related complications, collaborative research with Georgetown University has led to discovery of metabolite biomarkers, which are predictive of patient responses to radiation therapy. A patent for the intellectual property has been submitted by Georgetown University with Shuttle Pharma scientist (Scott Grindrod, PhD) as co-inventor. Developmental work in health disparities and predictive biomarker development has been supported by NIH SBIR contracts to Shuttle Pharmaceuticals for the following areas:
● | Develop prostate cancer cell lines from African-American men with the goal of advancing research to address prostate cancer health disparities (designated SBIR “Topic 352: Cell-Based Models for Prostate Cancer Health Disparity Research- Moonshot Project (Phase II)”); and | |
● | Develop predictive biomarkers of prostate patient outcomes following treatment with SBRT (designated SBIR “Topic 345: Predictive Biomarkers for Prostate Cancer Sensitivity for Radiation Late Effects (Phase I and II).” |
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The NIH’s SBIR program is designed to encourage small businesses to engage in Federal Research/Research and Development (“R/R&D”) that has the potential for commercialization. Shuttle Pharma will apply for additional NIH SBIR grants and contracts to fund advancement of these projects.
Market Opportunity
The American Cancer Society (Cancer Facts & Figures 2020) estimates 1,806,590 new cancer cases and 606,520 cancer deaths each year in the United States and, according to the American Society for Radiation Oncology, more than 50% of patients undergo RT at some point in the treatment of their diseases. RT is used to treat cancers of the lung, breast, brain, esophagus, pancreas, rectum, head and neck, uterus, lymphomas and sarcomas. At present, we are developing drug candidates to address brain, pancreas, rectum, sarcomas and lymphomas, although we may test and seek approval for our drug candidates to treat other cancers in the future.
Currently, there is only one drug (the monoclonal antibody, Cetuximab) that has received FDA approval for the radiation sensitizer indication. Cetuximab is a recombinant monoclonal antibody that binds to epidermal growth factor receptor (EGFR) and inhibits the binding of epidermal growth factor (EGF). Cetuximab is administered via intravenous infusion and is used as monotherapy or in combination with other chemotherapies or radiation therapy. In clinical trials, cetuximab was associated with serious and fatal infusion reactions, cardiopulmonary arrest or sudden death, and serious dermatologic toxicities, toxicities that have created deterrents to its use as a radiation sensitizer. Present treatment utilizes “off-label” small molecule drugs, which are cytotoxic chemotherapy agents that also sensitize, but do not have radiation sensitization as an FDA approved indication. Moreover, since “off-label” drugs are cytotoxic, they are often associated with intrinsic acute and chronic side effects. Nevertheless, these drugs have shown clinically significant improvements in disease control and survival and are typically included in standard-of-care treatment recommendations for patients with cancers of the head and neck, brain, lung, esophagus, stomach, pancreas, liver, bladder, lymphomas and sarcomas. As a result, we believe that there is a significant market opportunity for our product candidates. Based on cancer incidence data published by the American Cancer Society, we have estimated the numbers of patients presenting with local/regional disease, suitable for treatment with RT.
Estimated RT Cases by Disease Site
Cancer Type | Cases Diagnosed Annually | Estimated RT Cases | ||||||
Brain | 23,890 | 21,979 | ||||||
Pancreas | 57,600 | 32,832 | ||||||
Sarcomas | 13,130 | 4,000 | ||||||
Rectum | 43,340 | 26,437 |
Annual cancer cases for each disease site are estimated from American Cancer Society Facts & Figures 2020 publication. The fraction of patients optimally receiving RT for each disease site were obtained from published estimates of Delaney G, Jacob S, Featherstone C, Barton M. The role of radiotherapy in cancer treatment: estimating optimal utilization from a review of evidence-based clinical guidelines. Cancer. 2005 Sep 15;104(6):1129-37. doi: 10.1002/cncr.21324. The Estimated RT cases were obtained by multiplying Cases Diagnosed Annually by the fraction receiving RT for optimal utilization.
Our Development Strategy
Our goal is to maintain and build upon our leadership position in radiation sensitization. We plan to develop Ropidoxuridine and the HDAC6 inhibitor (SP-2-225) and, if approved by the FDA, to commercialize our product candidates for the treatment of cancers. While this process may require years to complete, we believe achieving this goal could result in radiation sensitizer and immunotherapy products for cancer treatment. Key elements of our strategy include:
● | Capitalize on Ropidoxuridine as an orally available, small molecule radiation sensitizer. To date, there is one drug (Cetuximab) approved by the FDA specifically as a radiation sensitizer. If we are successful in developing Ropidoxuridine to obtain FDA approval, a small moleculesensitizer will be enabled for clinical applications for radiation sensitization. | |
● | Expand our leadership position within radiation sensitizers. In addition to our traditional radiation sensitizers, we plan to advance our near-term pipeline to include radiation sensitizers for proton therapy. Proton Therapy is growing worldwide as a form of radiation therapy due to its unique beam shaping characteristics. As a result, this new technology offers a major opportunity for Shuttle Pharma to strive to develop a sensitizer drug for proton therapy sensitization applications. | |
● | Execute a disciplined business development strategy to strengthen our portfolio of product candidates. We have built our current product pipeline through in-house development, partnerships with leading academic institutions and through successful in-licensing deals. We will continue to evaluate new in-licensing opportunities and collaboration agreements with leading academic institutions and other biotechnology companies around programs that seek to address areas of high unmet need and for which we believe there is a high probability of clinical success, including programs beyond our target franchise areas and current technology footprint. |
● | Invest in our HDAC platform technology to maximize its utility across cancer therapies. We are initially applying the platform to develop drugs for cancer radiation sensitization and normal tissue radiation protection. In addition, these drugs also affect immune regulatory properties. We intend to invest to investigate other properties of our platform technology. | |
● | Enter into collaborations to realize the full potential of our platform. The breadth of our HDAC technology platform enables other therapeutic applications, in addition to radiation sensitization and immune therapy. We intend to seek collaborations centered on our platform to maximize applications for our HDAC inhibitor technology. |
We propose the following clinical development plan to identify, develop and commercialize drugs for use in cancer treatments in combination with RT:
Develop Ropidoxuridine (IPdR) for Orphan disease indications to take to market
● | Manufacture 24 kg of Ropidoxuridine and formulate for use in clinical trials. | |
● | Conduct a Phase II clinical trial of Ropidoxuridine, Temodar and RT in glioblastoma. | |
● | Conduct a Phase III clinical trial in glioblastoma to secure FDA approval to market Ropidoxuridine for the glioblastoma indication using orphan disease designation for marketing protection. |
Develop Ropidoxuridine and tipiracil (IPdR/TPI) for colorectal cancer indications to take to market
● | Formulate 5 kg of IPdR/TPI for use in pre-clinical efficacy studies, IND-enabling studies and a Phase I clinical trial. |
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● | Conduct IND-enabling studies; obtain IND for IPdR/TPI with RT. | |
● | Conduct a Phase I clinical trial of IPdR/TPI with RT in rectal cancers to establish the MTD. | |
● | Conduct a Phase II clinical trial of IPdR/TPI with RT in rectal cancer. |
Develop HDAC Inhibitors for use in breast cancer for immune activation after RT
● | Complete pre-clinical studies of HDAC inhibitors in human xenograft tumor models. |
○ | SP-1-161 with RT in breast cancers. | |
○ | SP-1-303 with RT in ER+, Her2- breast cancers. | |
○ | SP-2-225 with immune checkpoint inhibitors in lung cancers. |
● | Advance the lead HDAC6 inhibitor, SP-2-225, for IND-enabling. | |
● | Conduct Phase I clinical trials to determine MTD. | |
● | Conduct Phase II clinical trials for proof-of-concept efficacy evaluation in lung cancers. |
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Management Team
Our management team has significant experience in radiation oncology and in progressing products from early-stage research through clinical trials. Our CEO, Anatoly Dritschilo, M.D., is an experienced clinician and researcher who has held senior academic and management positions including serving as Department Chairman, Hospital Medical Director and Cancer Center Director at Georgetown University Medical Center. Prior to co-founding our company, Dr. Dritschilo was a co-founder of Oncomed, Inc., a company that became public as NeoPharm, Inc. (Nasdaq: NEOL). He has experience in providing care for patients undergoing treatment for cancers of the prostate, breast, brain, lung, sarcomas and GI systems. Dr. Dritschilo has directed basic science research supported by grants from the National Cancer Institute (“NCI”) and performed clinical trials using drugs and radiation therapy. In addition, Dr. Dritschilo served as the principal investigator of pharmaceutical industry sponsored clinical evaluations of human interferon alpha-2 (Bristol-Myers) with radiation therapy and antisense raf oligonucleotides, LErafAON (NeoPharm) with radiation therapy. He serves as a Radiation Biology and Radiation Oncology expert on committees of the NIH to review Program Project (P01) grant applications, Specialized Program of Research Excellence (SPORE) grant applications and investigator-initiated research project (R01) applications.
Dr. Dritschilo is supported in our clinical development effort by Tyvin Rich, MD, our Chief Clinical Officer and Medical Director. Dr. Rich is the former Professor and Chairman of the Department of Therapeutic Radiology and Oncology at the University of Virginia Health Sciences Center and proton radiation therapy specialist at the Hampton Proton Therapy Center in Hampton, Virginia. Dr. Rich has served as principal investigator on multi-modality clinical trials for the treatment of gastrointestinal (GI) cancers and helped to develop treatment with 5-fluorouracil (5-FU) as a radiation sensitizer for use with RT in the treatment of GI cancers. He has extensive cancer clinical trial experience in developing radiation sensitizer applications through his participation in the Radiation Therapy Oncology Group (RTOG). Dr. Rich is a co-inventor with scientists at the University of Virginia of the Proton Activated Atomic Medicine technology.
Our administrative services are provided by Peter Dritschilo, MBA, who has served as our President and COO since 2012. Mr. Dritschilo’s experience in hospital administration and management of medical oncology clinical services and radiation therapy facilities, including management of day-to-day operations, human resources and financial oversight. Peter Dritschilo is the son of our Chairman and CEO, Dr. Anatoly Dritschilo. The addition of Michael Vander Hoek as our CFO and Vice President for Operations and Regulatory expands our capability to provide the level of management needed for the proposed expansion of clinical trials. Mr. Vander Hoek has served as administrative director of the Lombardi Comprehensive Cancer Center (LCC) for the past 12 years and has extensive experience in negotiations, management and supervision of Contract Research Organizations (CROs) and research contracts in general. As the administrative director of the Lombardi Comprehensive Cancer Center, Mr. Vander Hoek also served as the chief financial officer. Taken together, we believe our leadership team of highly qualified specialists will help us achieve the proposed milestones for the development of radiation sensitizer products.
Pre-IPO Bridge Financing
In December 2021, we completed a $500,000 note offering pursuant to which we sold to two accredited investors (the “Investors”) units consisting of (i) a $250,000 promissory note bearing 10% interest, repayable at the time of this offering (the “Note”) and (ii) a warrant to purchase 250,000 shares (the “Warrant Shares”) of our common stock at an exercise price of $1.00 per share (the “Warrant”). Immediately before closing on the Offering, the Notes will be repaid and cancelled in exchange for the exercise of the Warrants and issuance of the 500,000 Warrant Shares to the Investors.
In addition, in February and March 2022, we sold a total of $365,000 and $225,000, respectively, in convertible notes (“Convertible Notes”) to certain accredited investors, which notes will automatically convert upon effectiveness of this offering at a conversion price of $2.50 per share (the “Conversion Shares”). In addition, each of the Convertible Note holders will be entitled to demand registration rights, and we are required to register the shares underlying the Convertible Notes within 180 days of the closing of this offering. The Convertible Note holders are also subject to a six-month lock-up of the shares underlying their Convertible Notes. We are using the net proceeds from the Convertible Notes offering to expand our current operations, including our technology and intellectual property portfolio, and to fund the costs of this offering. Any funds remaining will be used for working capital and other general corporate purposes.
Boustead Securities LLC (“Boustead”) acted as placement agent in both the Note and Warrant offering and the Convertible Notes offering, pursuant to which Boustead waived its cash compensation related to the Note and Warrant offering and received cash compensation of $36,500 and $22,250 in each of the February and March 2022 closings, respectively, and also received warrants to purchase 10% of the total number of Conversion Shares, exercisable at the conversion price of the Convertible Notes.
Summary Risk Factors
Our business is subject to a number of risks you should be aware of before making an investment decision. These risks are discussed more fully in the “Risk Factors” section of this prospectus at page 13 immediately following this prospectus summary. These risks include the following:
● | Our success is primarily dependent on achieving the development, regulatory approval and commercialization of our product candidates, both of which are in the early stages of development. | |
● | Our approach to the discovery and development of innovative radiation oncology drugs based on our HDAC small molecule delivery platform, which is novel, unproven and may not result in marketable products. | |
● | We have no product revenue, have incurred significant losses since inception, may never become profitable and may incur substantial and increasing net losses for the foreseeable future as we continue the development of, and seek regulatory approvals for our product candidates. |
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● | If clinical trials of our product candidates fail to demonstrate safety and efficacy, which are ongoing determinations that are solely within the authority of the FDA, we may be unable to obtain regulatory approvals to commercialize our product candidates. | |
● |
We have not generated any revenue and have incurred losses in each year since our founding in December 2012. Our net loss for the year end December 31, 2021 and the three months ended March 31, 2022 was $1,152, 134 and $638,830, respectively. As of March 31, 2022, we had an accumulated deficit of $6,503,039 and received a “going concern” opinion from our independent auditors for the fiscal year ended December 31, 2021. As a clinical stage pharmaceutical company, we expect to continue to incur significant losses for the foreseeable future. Even if we achieve profitability in the future, we may not be able to sustain profitability in subsequent periods. | |
● | We are subject to regulatory approval processes that are lengthy, time-consuming and unpredictable. We may not obtain approval for any of our product candidates from the FDA or foreign regulatory authorities. | |
● | Even if we obtain regulatory approval, the market may not be receptive to our product candidates. | |
● | We may not be able to establish collaborative partnerships with other pharmaceutical companies, through which we expect to complete development of, obtain marketing approval for and, if approved, manufacture and market our product candidates. | |
● | We may encounter difficulties satisfying the requirements of clinical trial protocols, including patient enrollment. | |
● | We may face competition from other companies in our field or claims from third parties alleging infringement of their intellectual property. | |
● | We may be unable to recruit or retain key employees, including our senior management team. | |
● | We will need to obtain significant additional funding on acceptable terms to continue operations following this offering. | |
● | We are a Phase I clinical stage pharmaceutical company with a limited operating history upon which you can evaluate our business and prospects. Specialty pharmaceutical product development is a highly speculative undertaking and involves a substantial degree of risk. | |
● | We do not currently have any product candidates in advanced clinical trials or approved for sale, and we continue to incur significant research and development and general and administrative expenses in relation to our operations. In addition, we have not yet demonstrated an ability to successfully overcome many of the risks and uncertainties frequently encountered by companies in new and rapidly evolving fields, particularly in the specialty pharmaceutical industry. | |
● | We have not submitted an application or received marketing approval for any of our product candidates. Regulatory approval of our product candidates is not guaranteed, and the approval process is expensive and may take several years. | |
● | It is difficult and costly to protect our intellectual property rights. |
Implications of Being an Emerging Growth Company
● | As a smaller reporting company, and as a company with less than $1.0 billion in revenue during our last fiscal year, we qualify as an “emerging growth company” as defined in the JOBS Act. For so long as we remain an emerging growth company, we are permitted and intend to rely on exemptions from specified disclosure and other requirements that are applicable to other public companies that are not emerging growth companies. These exemptions include: | ||
● | being permitted to provide only two years of audited financial statements, in addition to any required unaudited interim financial statements, with correspondingly reduced “Management’s Discussion and Analysis of Financial Condition and Results of Operations” disclosure; | ||
● | not being required to comply with the auditor attestation requirements in the assessment of our internal control over financial reporting; |
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● | not being required to comply with any mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements; | |
● | reduced disclosure obligations regarding executive compensation; and | |
● | exemptions from the requirements of holding a non-binding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. |
We may take advantage of the above provisions for up to five years or until such earlier time that we are no longer an emerging growth company. We would cease to be an emerging growth company if we have more than $1.0 billion in annual revenues, have more than $700 million in market value of our capital stock held by non-affiliates or issue more than $1.0 billion of non-convertible debt over a three-year period. We may also choose to take advantage of some, but not all, of the available exemptions. We have taken advantage of some reduced reporting requirements in this prospectus. Accordingly, the information contained in this prospectus may be different than the information you receive from other public companies in which you hold stock.
In addition, the JOBS Act provides that an emerging growth company can take advantage of an extended transition period for complying with new or revised accounting standards. This provision allows an emerging growth company to delay the adoption of some accounting standards until those standards would otherwise apply to private companies. We have irrevocably elected not to avail ourselves of this extended transition period for adopting new or revised accounting standards and, therefore, we will be subject to the same new or revised accounting standards as other public companies that are not emerging growth companies.
Corporate Information
The Company was formed as a limited liability company in the state of Maryland in December 2012 and was converted to a C corporation, Shuttle Pharmaceuticals, Inc. (“Shuttle”), in August of 2016. In June 2018, Shuttle completed a share exchange with Shuttle Pharma Acquisition Corp. Inc. (“Acquisition Corp.”), pursuant to which Shuttle Pharmaceuticals, Inc. became a subsidiary of Acquisition Corp. and we subsequently changed the name of Acquisition Corp. to Shuttle Pharmaceuticals Holdings, Inc. Our executive offices are located at 1 Research Court, Suite 450, Rockville, Maryland 20850 and our telephone number is (240) 403-4212. Our corporate website is www.shuttlepharma.com. Information appearing on our corporate website is not incorporated as part of this prospectus.
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The Offering
Common stock offered by us: | 2,750,000 shares | |
Common stock offered by the selling stockholders: | 250,000 shares | |
Common stock outstanding before this offering: | 9,312,991 shares(1) | |
Common stock outstanding immediately after this offering: | 13,324,379 shares (and 13,774,379 shares if the underwriter exercises its over-allotment option in full) (2) | |
Underwriter’s over-allotment option: | We have granted the underwriter a 45-day option, exercisable one or more times in whole or in part, to purchase up to an additional 450,000 shares of common stock. | |
Dividend policy: | We have never paid cash dividends on our common stock and we do not anticipate paying any cash dividends in the foreseeable future. See the section entitled “Dividend Policy.” |
Use of proceeds: | Our net proceeds from this offering, after deducting underwriting discounts and commissions and estimated offering expenses payable by us at closing of approximately $________, will be approximately $____________.
We intend to use the net proceeds from this offering to fund Phase II clinical trials of product candidates, including radiation sensitizer Ropidoxuridine and the HDAC inhibitor small molecule technology platform, potential acquisition or in-licensing activities and working capital and general corporate purposes. We anticipate that the funds raised from this Offering will allow us to complete Phase II clinical trials, although there is no guarantee that we will not require additional funds. See “Risk Factors” beginning on page 13 below. | |
Proposed Nasdaq symbol: | “SHPH” | |
Risk Factors: | You should carefully read and consider the information set forth under “Risk Factors” beginning on page 13 below and all other information included in this prospectus for a discussion of factors that you should consider before deciding to invest in shares of our common stock. |
(1) | The number of shares of our common stock outstanding excludes: |
● | (i) 2,613,273 shares of our common stock reserved for issuance under our 2018 Equity Incentive Plan, of which 384,167 restricted stock units have been issued, of which 353,390 RSUs are fully vested and 30,777 remain subject to vesting; (ii) 500,000 shares of our common stock issuable upon exercise of warrants held by certain selling stockholders, which warrants will be exercised and sold in this offering; (iii) 269,444 shares of our common stock issuable upon conversion of 1,212.5 shares of Series A convertible preferred stock and 269,444 shares of common stock issuable upon exercise of outstanding warrants to purchase common stock, which will be convertible or exercised upon completion of this offering (which conversion amounts do not include an 8.5% cumulative dividend payable, which dividend may be paid in either cash or common stock as determined by the Company); and (iv) 236,000 shares of common stock issuable upon conversion of the outstanding convertible notes, which will be convertible and issued upon effectiveness of this offering. | |
● | 275,000 shares of common stock issuable upon exercise of the underwriter warrants, which underwriter warrants are expected to be issued in this offering. |
(2) | This number assumes (i) 269,444 shares of our common stock issuable upon conversion of 1,212.5 shares of Series A convertible preferred stock and 269,444 shares of common stock issuable upon exercise of outstanding warrants to purchase common stock, which will be issued upon completion of this offering (which conversion amounts do not include an 8.5% cumulative dividend payable, which dividend may be paid in either cash or common stock as determined by the Company), and (ii) 236,000 shares of common stock issuable upon conversion of outstanding convertible notes, which will be convertible and issued upon completion of this offering. |
Reverse Stock Split
Effective April 1, 2022, we effected a 2-for-1 reverse stock split of our issued and outstanding common stock (the “Reverse Stock Split”). All references to shares of our common stock in this prospectus refers to the number of shares of common stock after giving effect to the Reverse Stock Split (unless otherwise indicated).
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The following summary financial data should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and the Financial Statements and notes thereto, included elsewhere in this prospectus.
Statements of Operations Data:
For the Years Ended | For the Three Months Ended | |||||||||||||||
December 31, | March 31, | |||||||||||||||
2021 | 2020 | 2022 | 2021 | |||||||||||||
Revenue | $ | - | $ | - | $ | - | $ | - | ||||||||
Operating expenses | $ | 1,742,992 | $ | 509,522 | $ | 638,396 | $ | 176,086 | ||||||||
Loss from operations | $ | (1,742,992 | ) | $ | (509,522 | ) | $ | (638,396 | ) | $ | (176,086 | ) | ||||
Other income (expense) | $ | 590,858 | $ | (296,210 | ) | $ | (43,443 | ) | $ | 46,762 | ||||||
Net loss | $ | (1,152,134 | ) | $ | (805,732 | ) | $ | (681,839 | ) | $ | (129,324 | ) | ||||
Weighted average common shares outstanding - basic and diluted | 9,301,750 | 9,291,523 | 9,312,165 | 9,291,526 | ||||||||||||
Net loss per share - basic and diluted | $ | (0.12 | ) | $ | (0.09 | ) | $ | (0.07 | ) | $ | (0.01 | ) |
Balance Sheet Data:
As of March 31, 2022 | ||||||||||||
Actual | Pro Forma | Pro Forma as Adjusted for Conversions and this Offering | ||||||||||
Current assets | $ | 426,470 | $ | $ | ||||||||
Long term assets | $ | 125,978 | $ | $ | ||||||||
Current liabilities | $ | 2,357,759 | $ | $ | ||||||||
Noncurrent liabilities | $ | 44,252 | $ | $ | ||||||||
Series A convertible preferred stock, $0.00001 par value; $1,000 per share liquidation value or aggregate of $1,212,500; 20,000,000 shares authorized; 1,213 shares issued and outstanding at March 31, 2022 | $ | - | $ | $ | ||||||||
Common stock, $0.00001 par value; 100,000,000 shares authorized; 9,312,991 shares issued and outstanding at March 31, 2022 | $ | 93 | $ | $ | ||||||||
Additional paid in capital | $ | 4,653,383 | $ | $ | ||||||||
Accumulated deficit | $ | (6,503,039 | ) | $ | $ | |||||||
Total stockholders’ equity (deficit) | $ | (1,849,563 | ) | $ | $ |
The number of shares of common stock issued and outstanding actual, pro forma (reflecting the conversions of Series A preferred stock and convertible notes) and pro forma as adjusted in the table above excludes 2,615,833 shares reserved for issuance under our 2018 Equity Incentive Plan, of which 384,167 shares (on a post-reverse split basis) have been granted to date in the form of restricted stock units, some of which remain subject to certain vesting conditions.
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An investment in our common stock involves a high degree of risk. You should carefully consider the following risk factors and all the other information in this prospectus before you decide to buy our common stock. If any of the following risks related to our business actually occurs, our business, financial condition, operating results, and prospects would be adversely affected. The market price of our common stock could decline due to any of these risks and uncertainties related to our business, or related to an investment in our common stock, and you may lose part or all of your investment.
Risks Related to Our Business, Financial Condition and Capital Requirements
Our funds are limited and our independent auditing firm issued a going concern opinion related to our audit for the year ended December 31, 2021.
To date, we have been funded by investments from private investors and government contracts obtained from the National Institutes of Health (NIH) for performing research. While this has allowed us to complete a Phase I clinical trial for Ropidoxuridine and a pre-clinical trial for our HDAC inhibitor platform, we have not yet completed our clinical trials, will require additional funds to reach such milestone, and do not know if any of our products will ever achieve commercial viability. As such, to date we have no product revenue and our independent auditors, in their report dated June 3, 2022, have expressed doubt about our ability to continue as a going concern.
Our success is primarily dependent on the successful development, regulatory approval and commercialization of our product candidates, all of which are in the early stages of development.
We currently have one clinical stage product candidate in the early stages of development. Ropidoxuridine has undergone an SBIR funded Phase 1 clinical trial at Lifespan/Rhode Island Hospital. We also have an HDAC inhibitor small molecule platform. The three lead drug candidate molecules are in preclinical phases of development. none of our product candidates have gained marketing approval for sale in the United States or any other country, and we cannot guarantee that we will ever have marketable products. To date, we have invested substantially all of our efforts and financial resources in the research and development and commercial planning for our current product candidate and our HDAC small molecule delivery platform. Our near-term prospects, including our ability to finance our Company and generate revenue, as well as our future growth, will depend heavily on the development, marketing approval and commercialization of our product candidates. The clinical and commercial success of product candidates will depend on a number of factors, including the following:
● | obtaining favorable results from our Phase 1 clinical trial for IPdR and proceeding to Phase I(b), Phase II and Phase III clinical trials, which may be slower or cost more than we currently anticipate; | |
● | our ability to demonstrate safety and efficacy of our product candidates, which are ongoing determinations that are solely within the authority of the FDA; | |
● | even if our clinical trials are completed, there can be no assurance that the FDA will agree that we have satisfactorily demonstrated safety or efficacy or that the FDA will not raise new issues regarding the design of our clinical trials; | |
● | whether we are required by the FDA to conduct additional clinical trials to support the approval of our product candidates; | |
● | the acceptance by the FDA of our proposed parameters for regulatory approval, including our proposed indication, endpoints and endpoint measurement tools relating to our product candidates; | |
● | the incidence, duration and severity of adverse side effects; | |
● | the timely receipt of necessary marketing approvals from the FDA; | |
● | whether we are able to secure collaborations for completing the development and, if approved, commercialization of our product candidates; |
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● | the effectiveness of our and our potential collaborators’ marketing, sales and distribution strategy and operations of product candidates that are approved; | |
● | our success in educating physicians and patients about the benefits, administration and use of our product candidates; | |
● | the ability of our third-party manufacturers and potential collaborators to manufacture clinical trial and commercial supplies of our product candidates to remain in good standing with regulatory bodies, and to develop, validate and maintain commercially viable manufacturing processes that are compliant with current Good Manufacturing Practices (“cGMP”) regulations; | |
● | our ability to commercialize our product candidates, if approved for marketing; | |
● | our ability to enforce our intellectual property rights; | |
● | our ability to avoid third-party patent interference or patent infringement claims; | |
● | acceptance of our product candidates as safe and effective by patients and the medical community; and | |
● | a continued acceptable quality profile of our product candidates following approval. |
Many of the above-listed factors are beyond our control. Accordingly, we cannot assure you that we will ever be able to generate revenue through the sale of our product candidates. Any one of these factors or other factors discussed in this prospectus could affect our ability to commercialize product candidates, which could impact our ability to earn sufficient revenues to transition from a developmental stage company and continue our business. If we do not obtain marketing approval of and commercialization of our product candidates, or are significantly delayed in doing so, our business will be materially harmed. We have a limited operating history and have incurred significant losses since our inception, and we anticipate that we will continue to incur losses for the foreseeable future and may never achieve or maintain profitability.
We are a Phase I clinical stage pharmaceutical company with a limited operating history upon which you can evaluate our business and prospects. Specialty pharmaceutical product development is a highly speculative undertaking and involves a substantial degree of risk. We do not currently have any product candidates in advanced clinical trials or approved for sale, and we continue to incur significant research and development and general and administrative expenses related to our operations. In addition, we have limited experience and have not yet demonstrated an ability to successfully overcome many of the risks and uncertainties frequently encountered by companies in new and rapidly evolving fields, particularly in the specialty pharmaceutical industry. We have not generated any revenue and have incurred losses in each year since our founding in December 2012. Our accumulated deficit as of March 31, 2022 was $6,503,039. We expect to continue to incur significant losses for the foreseeable future. Even if we achieve profitability in the future, we may not be able to sustain profitability in subsequent periods.
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We currently have no source of product sales revenue.
We have not generated any revenues from commercial sales of our product candidates. Our ability to generate product revenue depends upon our ability to develop and commercialize products, including any of our current product candidates or other product candidates that we may develop, in-license or acquire in the future. We do not anticipate generating revenue from the sale of products for the foreseeable future. Our ability to generate future product revenue from our current or future product candidates also depends on a number of additional factors, including our ability to:
● | complete research and clinical development of current and future product candidates, either directly or through collaborative relationships; | |
● | establish and maintain supply and manufacturing relationships with third parties, and ensure adequate and legally compliant manufacturing of bulk drug substances and drug products to maintain that supply; | |
● | obtain regulatory approval from relevant regulatory authorities in jurisdictions where we intend to market our product candidates, either directly or through collaborative relationships; | |
● | launch and commercialize future product candidates for which we obtain marketing approval, if any, through collaborative partners; | |
● | obtain coverage and adequate product reimbursement from third-party payors, including government payors; | |
● | achieve market acceptance for our products, if any; | |
● | establish, maintain and protect our intellectual property rights; and | |
● | attract, hire and retain qualified personnel. |
In addition, because of the numerous risks and uncertainties associated with clinical product development, including that our product candidates may not advance through development or achieve the endpoints of applicable clinical trials, we are unable to predict the timing or amount of any potential future product sales revenues. Our expenses also could increase beyond expectations if we decide to or are required by the FDA, or comparable foreign regulatory authorities, to perform studies or trials in addition to those that we currently anticipate. Even if we complete the development and regulatory processes described above, we anticipate incurring significant costs associated with launching and commercializing these products.
The market may not be receptive to our product candidates based on our novel therapeutic modality, and we may not generate any future revenue from the sale or licensing of product candidates.
Even if approval is obtained for a product candidate, we may not generate or sustain revenue from sales of the product due to factors such as whether the product can be sold at a competitive cost and otherwise accepted in the market. The product candidates that we are developing are based on new delivery platform therapeutic approaches (there currently is no drug which has FDA approval for indications of radiation sensitization). Market participants with significant influence over acceptance of new treatments, such as physicians and third-party payors, may not accept our delivery platform, and we may not be able to convince the medical community and third-party payors to accept and use, or to provide favorable reimbursement for, any product candidates developed by us. Market acceptance of our product candidates will depend on, among other factors:
● | timing of our receipt of any marketing and commercialization approvals; |
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● | terms of any approvals and the countries in which approvals are obtained; | |
● | safety and efficacy of our product candidates, which are determinations solely within the authority of the FDA; | |
● | prevalence and severity of any adverse side effects associated with our product candidates; | |
● | warnings contained in any labeling approved by the FDA or other regulatory authority; | |
● | convenience and ease of administration of our product candidates; | |
● | success of our physician education programs; | |
● | availability of adequate government and third-party payor reimbursement; | |
● | pricing of our products, particularly as compared to alternative treatments; and | |
● | availability of alternative effective products for indications our product candidates are intended to treat. |
We will require substantial additional financing in order to obtain marketing approval of our product candidates and commercialize our product candidates; a failure to obtain this necessary capital when needed on acceptable terms, or at all, could force us to delay, limit, reduce or terminate our product development, other operations or commercialization efforts.
Since our inception, substantially all of our resources have been dedicated to the preclinical and clinical development of our HDAC small molecule delivery platform and our initial product candidate, Ropidoxuridine. Our capital needs to date have been met by contributions from existing shareholders, as well as through private offerings of our securities and our SBIR contracts. We believe that we will continue to expend substantial resources for the foreseeable future on the completion of clinical development and regulatory preparedness of our product candidates, preparations for a commercial launch of our product candidates, if approved, and development of any other current or future product candidates we may choose to further develop. These expenditures will include costs associated with research and development, conducting preclinical studies and clinical trials, obtaining marketing approvals, and, if we are not able to enter into planned collaborations, manufacturing and supply as well as marketing and selling any products approved for sale. In addition, other unanticipated costs may arise. Because the outcome of any drug development process is highly uncertain, we cannot reasonably estimate the actual amounts necessary to complete the development and commercialization of our current product candidates, if approved, or future product candidates, if any.
We estimate that our net proceeds from this Offering will be approximately $ , if all 3,000,000 shares offered hereby, including the 250,000 shares sold by the selling stockholders, are offered and sold, less offering expenses payable by us. We believe that such proceeds together with our existing capital resources, will be sufficient to fund our operations through 2025. However, our operating plan may change as a result of factors currently unknown to us, and we may need to seek additional funds sooner than planned, through public or private equity or debt financings or other sources, such as strategic collaborations. Such financing may result in dilution to shareholders, imposition of debt covenants and repayment obligations, or other restrictions that may adversely affect our business. In addition, we may seek additional capital due to favorable market conditions or strategic considerations even if we believe we have sufficient funds for our current or future operating plans.
Our future capital requirements depend on many factors, including:
● | the scope, progress, results and costs of researching and developing our current product candidates, future product candidates and conducting preclinical and clinical trials; | |
● | the cost of commercialization activities if our current product candidates and future product candidates are approved for sale, including securing collaborative ventures for completing development of, securing marketing approval for and ultimately marketing, selling and distributing our product candidates, if approved or building a corporate infrastructure if we have to undertake these activities directly; |
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● | our ability to establish and maintain strategic collaborations, licensing or other arrangements and the financial terms of such agreements; | |
● | the number and characteristics of any additional product candidates we may develop or acquire; | |
● | any product liability or other lawsuits related to our products or commenced against us; | |
● | the expenses needed to attract and retain skilled personnel; | |
● | the costs associated with being a public company; | |
● | the costs involved in preparing, filing, prosecuting, maintaining, defending and enforcing patent claims, including litigation costs and the outcome of such litigation; and | |
● | the timing, receipt and amount of sales of, or royalties on, any future approved products, if any. |
Additional funds may not be available when we need them, on terms that are acceptable to us, or at all. If adequate funds are not available to us on a timely basis, we may be required to:
● | delay, limit, reduce or terminate preclinical studies, clinical trials or other development activities for our current product candidates or future product candidates, if any; | |
● | delay, limit, reduce or terminate our research and development activities; or | |
● | delay, limit, reduce or terminate our establishment of sales and marketing capabilities or other activities that may be necessary to commercialize our current or future product candidates. |
Raising additional capital may cause dilution to our existing shareholders, restrict our operations or require us to relinquish rights to our technologies or product candidates.
We may seek additional capital through a combination of public and private equity offerings, debt financings, strategic collaborations and alliances and licensing arrangements. To the extent that we raise additional capital through the sale of equity or convertible debt securities, your ownership interest will be diluted, and the terms may include liquidation or other preferences that adversely affect your rights as a shareholder. The incurrence of indebtedness would result in increased fixed payment obligations and could involve certain restrictive covenants, such as limitations on our ability to incur additional debt, limitations on our ability to acquire or license intellectual property rights and other operating restrictions that could adversely impact our ability to conduct our business. If we raise additional funds through strategic collaborations and alliances and licensing arrangements with third parties, we may have to relinquish valuable rights to our technologies or product candidates or grant licenses on terms unfavorable to us.
Unstable market and economic conditions caused by the ongoing conflict between the Ukraine and Russia, as well as the ongoing COVID-19 pandemic, may have serious adverse consequences on our business, financial condition and results of operations.
The global economy, including credit and financial markets, has experienced extreme volatility and disruptions as a result of the ongoing conflict between the Ukraine and Russia, as well as challenges arising from the ongoing COVID-19 pandemic, including severely diminished liquidity and credit availability, declines in consumer confidence, declines in economic growth, increases in unemployment rates, increases in inflation rates and uncertainty about economic stability. Any such volatility and disruptions may have adverse consequences on us or the third parties upon whom we rely.
Our product candidates are in the early stages of development and may fail in development or suffer delays that materially adversely affect their commercial viability.
We have no products on the market and all of our product candidates are in the early stages of development. Our ability to achieve and sustain profitability depends on obtaining regulatory approvals, including institutional review board (“IRB”) approval, for and commercializing our product candidates, either alone or with third parties. Before obtaining regulatory approval for the commercial distribution of our product candidates, we or one of our collaborators must conduct extensive preclinical tests and clinical trials to demonstrate the safety and efficacy in humans of our product candidates, the final determination of which rests solely in the authority of the FDA. Preclinical testing and clinical trials are expensive, difficult to design and implement, can take many years to complete and are uncertain as to outcome. The start or end of a clinical study is often delayed or halted due to changing regulatory requirements, manufacturing challenges, required clinical trial administrative actions, slower than anticipated patient enrollment, changing standards of care, availability or prevalence of use of a comparative drug or required prior therapy, clinical outcomes or financial constraints. For instance, delays or difficulties in patient enrollment or difficulties in retaining trial participants can result in increased costs, longer development times or termination of a clinical trial. Clinical trials of a new product candidate require the enrollment of a sufficient number of patients, including patients who are suffering from the disease the product candidate is intended to treat and who meet other eligibility criteria. Rates of patient enrollment are affected by many factors, including the size of the patient population, the eligibility criteria for the clinical trial, the age and condition of the patients, the stage and severity of disease, the nature of the protocol, the proximity of patients to clinical sites and the availability of effective treatments for the relevant disease.
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A product candidate can unexpectedly fail at any stage of preclinical and clinical development. The historical failure rate for product candidates is high due to scientific feasibility, lack of quality and effectiveness, changing standards of medical care and other variables. The results from preclinical testing or early clinical trials of a product candidate may not predict the results that will be obtained in later phase clinical trials of the product candidate. We, the FDA or other applicable regulatory authorities may suspend clinical trials of a product candidate at any time for various reasons, including a belief that subjects participating in such trials are being exposed to unacceptable health risks or adverse side effects. We may not have the financial resources to continue development of, or to enter into collaborations for, a product candidate if we experience any problems or other unforeseen events that delay or prevent regulatory approval of, or our ability to commercialize, product candidates, including:
● | negative or inconclusive results from our clinical trials or the clinical trials of others for product candidates similar to ours, leading to a decision or requirement to conduct additional preclinical testing or clinical trials or abandon a program; | |
● | serious and unexpected drug-related side effects experienced by participants in our clinical trials or by individuals using drugs similar to our product candidates; | |
● | delays in submitting an Investigational New Drug application (“IND”) or delays or failure in obtaining the necessary approvals from regulators to commence a clinical trial, or a suspension or termination of a clinical trial once commenced; | |
● | conditions imposed by the FDA or comparable foreign authorities regarding the scope or design of our clinical trials; | |
● | delays in enrolling research subjects in clinical trials; | |
● | high drop-out rates of research subjects; | |
● | greater than anticipated clinical trial costs; | |
● | poor effectiveness of our product candidates during clinical trials; | |
● | unfavorable FDA or other regulatory agency inspection and review of a clinical trial site; | |
● | failure of our third-party contractors or investigators to comply with regulatory requirements or otherwise meet their contractual obligations in a timely manner, or at all; | |
● | delays and changes in regulatory requirements, policy and guidelines, including the imposition of additional regulatory oversight around clinical testing generally or with respect to our technology in particular; or | |
● | varying interpretations of data by the FDA and similar foreign regulatory agencies. |
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If third parties on which we depend to conduct our preclinical studies, or any future clinical trials, do not perform as contractually required, fail to satisfy regulatory or legal requirements or miss expected deadlines, our development program could be delayed with materially adverse effects on our business, financial condition, results of operations and prospects.
We are relying on third party collaborators to conduct our efficacy clinical trials for Ropidoxuridine and plan to rely on third party clinical investigators, contract research organizations (“CROs”), clinical data management organizations and consultants to design, conduct, supervise and monitor preclinical studies of our product candidates and will do the same for any clinical trials. Because we plan to largely rely on third parties and do not have the ability to conduct preclinical studies or clinical trials independently, we have less control over the timing, quality and other aspects of preclinical studies and clinical trials than we would if we conducted them on our own. These investigators, CROs, and consultants are not our employees and we have limited control over the amount of time and resources that they dedicate to our programs. These third parties may have contractual relationships with other entities, some of which may be our competitors, which may draw time and resources from our programs. The third parties with whom we contract might not be diligent, careful or timely in conducting our preclinical studies or clinical trials, resulting in the preclinical studies or clinical trials being delayed or unsuccessful.
If we cannot contract with acceptable third parties on commercially reasonable terms, or at all, or if these third parties do not carry out their contractual duties, satisfy legal and regulatory requirements for the conduct of preclinical studies or clinical trials or meet expected deadlines, our clinical development programs could be delayed and otherwise adversely affected. In all events, we are responsible for ensuring that each of our preclinical studies and clinical trials is conducted in accordance with the general investigational plan and protocols for the trial. The FDA requires clinical trials to be conducted in accordance with good clinical practices, including for conducting, recording and reporting the results of preclinical studies and clinical trials to assure that data and reported results are credible and accurate and that the rights, integrity and confidentiality of clinical trial participants are protected. Our reliance on third parties that we do not control does not relieve us of these responsibilities and requirements. Any such event could have a material adverse effect on our business, financial condition, results of operations and/or prospects.
Because we rely on third party manufacturing and supply partners, our supply of research and development, preclinical and clinical development materials may become limited or interrupted or may not be of satisfactory quantity or quality.
We rely on third party supply and manufacturing partners to supply the materials and components for, and manufacture, our research and development, preclinical and clinical trial drug supplies. We do not own manufacturing facilities or supply sources for such components and materials. There can be no assurance that our supply of research and development, preclinical and clinical development drugs and other materials will not be limited, interrupted, restricted in certain geographic regions or of satisfactory quality or continue to be available at acceptable prices. In particular, any replacement of any drug product formulation manufacturer we may use could require significant effort and expertise in the event there are a limited number of qualified replacements for a particular product candidate.
The manufacturing process for a product candidate is subject to FDA and foreign regulatory authority review. Suppliers and manufacturers must meet applicable manufacturing requirements and undergo rigorous facility and process validation tests required by regulatory authorities in order to comply with regulatory standards, such as Current Good Manufacturing Practice (or CGMP). In the event that any of our suppliers or manufacturers fail to comply with such requirements or to perform its obligations to us in relation to quality, timing or otherwise, or if our supply of components or other materials becomes limited or interrupted for other reasons, we may be forced to manufacture the materials ourselves, for which we currently do not have the capabilities or resources, or enter into an agreement with another third party, which we may not be able to do on reasonable terms, if at all. In some cases, the technical skills or technology required to manufacture our product candidates may be unique or proprietary to the original manufacturer, and we may have difficulty, or there may be contractual restrictions prohibiting us from, transferring such skills or technology to another third party and a feasible alternative may not exist. These factors would increase our reliance on such manufacturer or require us to obtain a license from such manufacturer in order to have another third party manufacture our product candidates. If we are required to change manufacturers for any reason, we will be required to verify that the new manufacturer maintains facilities and procedures that comply with quality standards and with all applicable regulations and guidelines. The delays associated with the verification of a new manufacturer could negatively affect our ability to develop product candidates in a timely manner or within budget.
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We expect to continue to rely on third party manufacturers if we receive regulatory approval for any product candidate. To the extent that we have existing or future manufacturing arrangements with third parties, we will depend on these third parties to perform their obligations in a timely manner consistent with contractual and regulatory requirements, including those related to quality control and assurance. If we are unable to obtain or maintain third-party manufacturing for product candidates, or to do so on commercially reasonable terms, we may not be able to fully develop and commercialize our product candidates. Our or a third party’s failure to execute on our manufacturing requirements could adversely affect our business in a number of ways, including:
● | an inability to initiate or continue clinical trials of product candidates under development; | |
● | delay in submitting regulatory applications, or receiving regulatory approvals, for product candidates; | |
● | loss of the cooperation of a collaborator; | |
● | subjecting our product candidates to additional inspections by regulatory authorities; | |
● | requirements to cease distribution or to recall batches of our product candidates; and | |
● | in the event of approval to market and commercialize a product candidate, an inability to meet commercial demands for our products. |
We may be unsuccessful in engaging in strategic transactions which could adversely affect our ability to develop and commercialize product candidates, impact our cash position, increase our expense and present significant distractions to our management.
From time to time, we may consider strategic transactions, such as collaborations, acquisitions of companies, asset purchases and out- or in- licensing of product candidates or technologies. In particular, we will evaluate and, if strategically attractive, seek to enter into additional collaborations, including with major biotechnology or pharmaceutical companies to complete development and marketing of our product candidates, if approved. The competition for collaborators is intense, and the negotiation process is time-consuming and complex. Any proposed collaboration may be on terms that are not optimal for us, and we may not be able to maintain any new or existing collaboration if, for example, development or approval of a product candidate is delayed, sales of an approved product candidate do not meet expectations or the collaborator terminates the collaboration. Any such collaboration, or other strategic transaction, may require us to incur non-recurring or other charges, increase our near- and long-term expenditures and pose significant integration or implementation challenges or disrupt our management or business. These transactions would entail numerous operational and financial risks, including exposure to unknown liabilities, disruption of our business and diversion of our management’s time and attention in order to manage a collaboration or develop acquired products, product candidates or technologies, incurrence of substantial debt or dilutive issuances of equity securities to pay transaction consideration or costs, higher than expected collaboration, acquisition or integration costs, write-downs of assets or goodwill or impairment charges, increased amortization expenses, difficulty and cost in facilitating the collaboration or combining the operations and personnel of any acquired business, impairment of relationships with key suppliers, manufacturers or customers of any acquired business due to changes in management and ownership and the inability to retain key employees of any acquired business. Accordingly, although there can be no assurance that we will undertake or successfully complete any transactions of the nature described above, any transactions that we do complete may be subject to the foregoing or other risks and have a material adverse effect on our business, results of operations, financial condition and prospects. Conversely, any failure to enter into any collaboration or other strategic transaction that would be beneficial to us could delay the development and potential commercialization of our product candidates and have a negative impact on the competitiveness of any product candidate that reaches market.
We face competition from entities that have developed or may develop product candidates for our target disease indications, including companies developing novel treatments and technology platforms based on modalities and technology similar to ours. If these companies develop technologies or product candidates more rapidly than we do or their technologies, including delivery technologies, are more effective, our ability to develop and commercialize product candidates may be adversely affected.
The development and commercialization of drugs is highly competitive. We compete with a variety of multinational pharmaceutical companies and specialized biotechnology companies, as well as with universities and other research institutions which are developing new technology. Our competitors have developed, are developing or will develop product candidates and processes competitive with our product candidates. Competitive therapeutic treatments include those that have already been approved and accepted by the medical community and any new treatments that enter the market. We believe that a significant number of products are currently under development, and may become commercially available in the future, for the treatment of conditions for which we may try to develop product candidates.
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Many of our competitors have significantly greater financial, technical, manufacturing, marketing, sales and supply resources or experience than we have. If we obtain approval for any product candidate, we will face competition based on many different factors, including the quality and effectiveness of our products, the ease with which our products can be administered and the extent to which patients accept relatively new routes of administration, the timing and scope of regulatory approvals for these products, the availability and cost of manufacturing, marketing and sales capabilities, price, reimbursement coverage and patent position. Competing products could present superior treatment alternatives, including by being more effective, safer, less expensive or marketed and sold more effectively than any products we may develop. Competitive products may make any products we develop obsolete or noncompetitive before we recover the expense of developing and commercializing our product candidates. Such competitors could also recruit our employees, which could negatively impact our level of expertise and our ability to execute our business plan.
Any inability to attract and retain qualified key management and technical personnel would impair our ability to implement our business plan.
Our success largely depends on the continued service of certain key management and other specialized personnel, including Anatoly Dritschilo, M.D., our Chief Executive Officer, Mira Jung, Ph.D., our Chief Scientific Officer for Biology, Michael Vander Hoek, our Chief Financial Officer and Vice President Operations and Regulatory, and Peter Dritschilo, our President and Chief Operating Officer. The loss of one or more members of our management team or other key employees or advisors could delay our research and development programs and materially harm our business, financial condition, results of operations and prospects. The relationships that our key managers have cultivated within our industry make us particularly dependent upon their continued employment with us. We are dependent on the continued service of our technical personnel because of the highly technical nature of our product candidates and technologies and the specialized nature of the regulatory approval process. Because our management team and key employees are not obligated to provide us with continued service, they could terminate their employment with us at any time without penalty. We do not maintain key person life insurance policies on any of our management team members or key employees. Our future success will depend in large part on our continued ability to attract and retain other highly qualified scientific, technical and management personnel, as well as personnel with expertise in clinical testing, manufacturing, governmental regulation and commercialization. We face competition for personnel from other companies, universities, public and private research institutions, government entities and other organizations.
If our product candidates advance into Phase II and Phase III clinical trials, we may experience difficulties in managing our growth and expanding our operations.
We have limited experience in drug development and have not begun clinical trials for any of our product candidates, other than a Phase 1 clinical trial for Ropidoxuridine. As our product candidates enter and advance through preclinical studies and any clinical trials, we will need to expand our development, regulatory and manufacturing capabilities or contract with other organizations to provide these capabilities for us. In the future, we expect to have to manage additional relationships with collaborators or partners, suppliers and other organizations. Our ability to manage our operations and future growth will require us to continue to improve our operational, financial and management controls, reporting systems and procedures. We may not be able to implement improvements to our management information and control systems in an efficient or timely manner and may discover deficiencies in existing systems and controls.
If any of our product candidates are approved for marketing and commercialization and we are unable to develop sales, marketing and distribution capabilities on our own or enter into agreements with third parties to perform these functions on acceptable terms, we will be unable to commercialize any such future products.
We currently have no sales, marketing or distribution capabilities or experience. If any of our product candidates is approved, we plan to enter into collaborations with third parties to sell, market and distribute our products. In the alternative, we would have to develop internal sales, marketing and distribution capabilities to commercialize any approved product, which would be expensive and time-consuming, or, as is more likely, enter into collaborations with third parties to perform these services. If we rely on third parties with sales, marketing and distribution capabilities to market our products or decide to co-promote products with collaborators, we will need to establish and maintain marketing and distribution arrangements with third parties, and there can be no assurance that we will be able to enter into such arrangements on acceptable terms, if, at all. In entering into third-party marketing or distribution arrangements, any revenue we receive will depend upon the efforts of the third parties and there can be no assurance that such third parties will establish adequate sales and distribution capabilities or be successful in gaining market acceptance of any approved product. If we decide to market our products directly, we will need to commit significant financial and managerial resources to develop a marketing and sales force with technical expertise and supporting distribution, administration and compliance capabilities. If we are not able to commercialize any product approved in the future, either on our own or through third parties, our business, financial condition, results of operations and prospects could be materially adversely affected.
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If we fail to comply with U.S. and foreign regulatory requirements, regulatory authorities could limit or withdraw any marketing or commercialization approvals we may receive and subject us to other penalties that could materially harm our business.
Even if we receive marketing and commercialization approval of a product candidate, there can be no assurance we will not be subject to future or continuing regulatory review, including in relation to adverse patient experiences with the product and clinical results that are reported after a product is made commercially available, both in the U.S. and any foreign jurisdiction in which we seek regulatory approval. The FDA has significant post-market authority, including the authority to require labeling changes based on new safety information and to require post-market studies or clinical trials to evaluate safety risks related to the use of a product or to require withdrawal of the product from the market. The FDA also has the authority to require a risk evaluation and mitigation strategies (“REMS”) plan after approval, which may impose further requirements or restrictions on the distribution or use of an approved drug. The manufacturer and manufacturing facilities we use to make a future product, if any, will also be subject to periodic review and inspection by the FDA and other regulatory agencies, including for continued compliance with CGMP requirements. The discovery of any new or previously unknown problems with our third-party manufacturers, manufacturing processes or facilities may result in restrictions on the product, manufacturer or facility, including withdrawal of the product from the market. If we rely on third-party manufacturers, we will not have control over compliance with applicable rules and regulations by such manufacturers. Any product promotion and advertising will also be subject to regulatory requirements and continuing regulatory review. If we or our collaborators, manufacturers or service providers fail to comply with applicable continuing regulatory requirements in the U.S. or foreign jurisdictions in which we seek to market our products, we or they may be subject to, among other things, fines, warning letters, holds on clinical trials, refusal by the FDA to approve pending applications or supplements to approved applications, suspension or withdrawal of regulatory approval, product recalls and seizures, refusal to permit the import or export of products, operating restrictions, injunction, civil penalties and criminal prosecution.
Our business entails a significant risk of product liability and our ability to obtain sufficient insurance coverage could have a material effect on our business, financial condition, results of operations or prospects.
Our business exposes us to significant product liability risks inherent in the development, testing, manufacturing and marketing of therapeutic treatments. Product liability claims could delay or prevent completion of our development programs. If we succeed in marketing products, such claims could result in an FDA investigation of the quality and effectiveness of our products, our manufacturing processes and facilities or our marketing programs and potentially a recall of our products or more serious enforcement action, limitations on the approved indications for which they may be used or suspension or withdrawal of approvals. Regardless of the merits or eventual outcome, liability claims may also result in decreased demand for our products, injury to our reputation, costs to defend the related litigation, a diversion of management’s time and our resources, substantial monetary awards to trial participants or patients and a decline in our stock price. We currently have product liability insurance that we believe is appropriate for our stage of development and may need to obtain higher levels prior to marketing any of our product candidates. Any insurance we have or may obtain may not provide sufficient coverage against potential liabilities. Furthermore, clinical trial and product liability insurance is becoming increasingly expensive. As a result, we may be unable to obtain sufficient insurance at a reasonable cost to protect us against losses caused by product liability claims that could have a material adverse effect on our business.
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Our employees may engage in misconduct or other improper activities, including noncompliance with regulatory standards and requirements.
We are exposed to the risk of employee fraud or other misconduct. Misconduct by employees could include intentional failures to comply with FDA regulations, provide accurate information to the FDA, comply with manufacturing standards we may establish, comply with federal and state healthcare fraud and abuse laws and regulations, report financial information or data accurately or disclose unauthorized activities to us. In particular, sales, marketing and business arrangements in the healthcare industry are subject to extensive laws and regulations, kickbacks, self-dealing and other abusive practices. These laws and regulations may restrict or prohibit a wide range of pricing, discounting, marketing and promotion, sales commission, customer incentive programs and other business arrangements. While we make an effort to maintain strict employee work processes and oversight, employee misconduct could expose us to liability through the improper use of information obtained in the course of clinical trials, which could result in regulatory sanctions and serious harm to our reputation. Furthermore, it is not always possible to identify and deter employee misconduct, and the precautions we take to detect and prevent this activity may not be effective in controlling unknown or unmanaged risks or losses or in protecting us from governmental investigations or other actions or lawsuits stemming from a failure to be in compliance with such laws or regulations. If any such actions are instituted against us, and we are not successful in defending ourselves or asserting our rights, those actions could have a significant impact on our business, including the imposition of significant fines or other sanctions.
Our internal computer systems, or those of our CROs or other contractors or consultants, may fail or suffer security breaches, which could result in a material disruption of our product development programs.
Despite the implementation of cyber security measures, our internal computer systems and those of our CROs and other contractors and consultants are vulnerable to damage from computer viruses, unauthorized access, natural disasters, terrorism, war and telecommunication and electrical failures. Such events could cause interruptions of our operations. For example, the loss of preclinical data or data from any future clinical trial involving our product candidates could result in delays in our development and regulatory filing efforts and significantly increase our costs. To the extent that any disruption or security breach were to result in a loss of, or damage to, our data, or inappropriate disclosure of confidential or proprietary information, we could incur liability and the development of our product candidates could be delayed.
Our proprietary information, or that of our customers, suppliers and business partners, may be lost or we may suffer security breaches.
In the ordinary course of our business, we collect and store sensitive data, including intellectual property, clinical trial data, our proprietary business information and that of our customers, suppliers and business partners, and personally identifiable information of our customers, clinical trial subjects and employees, in our data centers and on our networks. The secure processing, maintenance and transmission of this information is critical to our operations. Despite our security measures, our information technology and infrastructure may be vulnerable to attacks by hackers or breached due to employee error, malfeasance or other disruptions. Although to our knowledge we have not experienced any such material security breach to date, any such breach could compromise our network, or the networks of our CROs or other third party service providers, and the information stored there could be accessed, publicly disclosed, lost or stolen. Any such access, disclosure or other loss of information could result in legal claims or proceedings, liability under laws that protect the privacy of personal information, regulatory penalties, disrupt our operations, damage our reputation, and cause a loss of confidence in our products and our ability to conduct clinical trials, which could adversely affect our business and reputation and lead to delays in gaining regulatory approvals for our drugs. Although we maintain business interruption insurance coverage, our insurance might not cover all losses from any future breaches of our systems.
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Failure of our information technology systems could significantly disrupt the operation of our business.
Our business increasingly depends on the use of information technologies, which means that certain key areas such as research and development, production and sales are to a large extent dependent on our information systems or those of third-party providers. Our ability to execute our business plan and to comply with regulatory requirements with respect to data control and data integrity, depends, in part, on the continued and uninterrupted performance of our information technology systems, or IT systems and the IT systems supplied by third-party service providers. These systems are vulnerable to damage from a variety of sources, including telecommunications or network failures, malicious human acts and natural disasters. Moreover, despite network security and backup measures, some of our servers are potentially vulnerable to physical or electronic break-ins, computer viruses and similar disruptive problems. Despite the precautionary measures we and our third-party service providers have taken to prevent unanticipated problems that could affect our IT systems, sustained or repeated system failures or problems arising during the upgrade of any of our IT systems that interrupt our ability to generate and maintain data, and in particular to operate our proprietary technology platform, could adversely affect our ability to operate our business.
If we do not comply with laws regulating the protection of the environment and health and human safety, our business could be adversely affected.
Our research, development and manufacturing involve the use of hazardous materials and various chemicals. We maintain quantities of various flammable and toxic chemicals in our facilities in Gaithersburg, Maryland that are required for our research, development and manufacturing activities. We are subject to federal, state and local laws and regulations governing the use, manufacture, storage, handling and disposal of these hazardous materials. We believe our procedures for storing, handling and disposing these materials in our Gaithersburg facilities comply with the relevant guidelines of Gaithersburg, the State of Maryland and the Occupational Safety and Health Administration of the U.S. Department of Labor. Although we believe that our safety procedures for handling and disposing of these materials comply with the standards mandated by applicable regulations, the risk of accidental contamination or injury from these materials cannot be eliminated. If an accident occurs, we could be held liable for resulting damages, which could be substantial. We are also subject to numerous environmental, health and workplace safety laws and regulations, including those governing laboratory procedures, exposure to blood-borne pathogens and the handling of animals and biohazardous materials. Although we maintain workers’ compensation insurance to cover us for costs and expenses, we may incur due to injuries to our employees resulting from the use of these materials, this insurance may not provide adequate coverage against potential liabilities. We do not maintain insurance for environmental liability or toxic tort claims that may be asserted against us in connection with our storage or disposal of biological or hazardous materials. Additional federal, state and local laws and regulations affecting our operations may be adopted in the future. We may incur substantial costs to comply with, and substantial fines or penalties if we violate any of these laws or regulations.
Our information technology systems could face serious disruptions that could adversely affect our business.
Our information technology and other internal infrastructure systems, including corporate firewalls, servers, leased lines and connection to the Internet, face the risk of systemic failure that could disrupt our operations. A significant disruption in the availability of our information technology and other internal infrastructure systems could cause interruptions in our collaborations with our partners and delays in our research and development work.
Changes in accounting rules and regulations, or interpretations thereof, could result in unfavorable accounting charges or require us to change our compensation policies.
Accounting methods and policies for pharmaceutical companies, including policies governing revenue recognition, research and development and related expenses and accounting for stock-based compensation are subject to review, interpretation and guidance from relevant accounting authorities, including the SEC. Changes to accounting methods or policies, or interpretations thereof, may require us to reclassify, restate or otherwise change or revise our financial statements, including those contained in this prospectus.
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Risks Related to Our Intellectual Property
If we are not able to obtain and enforce patent protection for our technologies or product candidates, development and commercialization of our product candidates may be adversely affected.
Our success depends in part on our ability to obtain and maintain patents and other forms of intellectual property rights, including in-licenses of intellectual property rights of others, for our product candidates, methods used to manufacture our product candidates and methods for treating patients using our product candidates, as well as our ability to preserve our trade secrets, to prevent third parties from infringing upon our proprietary rights and to operate without infringing upon the proprietary rights of others. As of the date of this prospectus, we have filed five patent applications with the U.S. Patent and Trademark Office (the “USPTO”) with respect to various aspects of our HDAC inhibitor small molecule delivery platform and Ropidoxuridine, our lead product candidate. However, we may not be able to apply for patents on certain aspects of our product candidates or delivery technologies in a timely fashion or at all. To date, four US patents and two European patents have been granted. There is no guarantee that any of our pending patent applications will result in issued or granted patents, that any of our issued, granted or licensed patents will not later be found to be invalid or unenforceable or that any issued, granted or licensed patents will include claims that are sufficiently broad to cover our product candidates or delivery technologies or to provide meaningful protection from our competitors. Moreover, the patent position of specialty pharmaceutical companies can be highly uncertain because it involves complex legal and factual questions. We will be able to protect our proprietary rights from unauthorized use by third parties only to the extent that our current and future proprietary technology and product candidates are covered by valid and enforceable patents or are effectively maintained as trade secrets. If third parties disclose or misappropriate our proprietary rights, it may materially and adversely impact our position in the market.
The USPTO and various foreign governmental patent agencies require compliance with a number of procedural, documentary, fee payment and other requirements during the patent process. There are situations in which noncompliance can result in abandonment or lapse of a patent or patent application, resulting in partial or complete loss of patent rights in the relevant jurisdiction. In such an event, competitors might be able to enter the market earlier than would otherwise have been the case. The standards applied by the USPTO and foreign patent offices in granting patents are not always applied uniformly or predictably. For example, there is no uniform worldwide policy regarding patentable subject matter or the scope of claims allowable in pharmaceutical patents. As such, we do not know the degree of future protection that we will have on our proprietary products and technology. While we will endeavor to try to protect our product candidates with intellectual property rights such as patents, as appropriate, the process of obtaining patents is time-consuming, expensive and sometimes unpredictable.
We may decide for business reasons to no longer pursue or to abandon certain intellectual property rights in the US or elsewhere, including due to non-cooperation of inventors or owners of such intellectual property, prior art, or scope of protection, or for other reasons.
Once granted, patents may remain open to opposition, interference, re-examination, post-grant review, inter partes review, nullification or derivation action in court or before patent offices or similar proceedings for a given period after allowance or grant, during which time third parties can raise objections against such initial grant. In the course of such proceedings, which may continue for a protracted period of time, the patent owner may be compelled to limit the scope of the allowed or granted claims thus attacked, or may lose the allowed or granted claims altogether. In addition, there can be no assurance that:
● | others will not or may not be able to make, use or sell compounds that are the same as or similar to our product candidates but that are not covered by the claims of the patents that we own or license; | |
● | we or our licensors, collaborators or any future collaborators are the first to make the inventions covered by each of our issued patents and pending patent applications that we own or license; | |
● | we or our licensors, collaborators or any future collaborators are the first to file patent applications covering certain aspects of our inventions; | |
● | others will not independently develop similar or alternative technologies or duplicate any of our technologies without infringing our intellectual property rights; | |
● | A third party may not challenge our patents and, if challenged, a court may not hold that our patents are valid, enforceable and infringed; |
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● | any issued patents that we own or have licensed will provide us with any competitive advantages, or will not be challenged by third parties; | |
● | we may develop additional proprietary technologies that are patentable; | |
● | the patents of others will not have an adverse effect on our business; and | |
● | our competitors do not conduct research and development activities in countries where we do not have enforceable patent rights and then use the information learned from such activities to develop competitive products for sale in our major commercial markets. |
We intend to license patent rights from third-party owners or licensees. If such owners or licensees do not properly or successfully obtain, maintain or enforce the patents underlying such licenses, or if they retain or license to others any competing rights, our competitive position and business prospects may be adversely affected.
We may not be able to protect our intellectual property rights throughout the world.
Obtaining a valid and enforceable issued or granted patent covering our technology in the U.S. and worldwide can be extremely costly. In jurisdictions where we have not obtained patent protection, competitors may use our technology to develop their own products and further, may export otherwise infringing products to territories where we have patent protection, but where it is more difficult to enforce a patent as compared to the U.S. Competitor products may compete with our future products in jurisdictions where we do not have issued or granted patents or where our issued or granted patent claims or other intellectual property rights are not sufficient to prevent competitor activities in these jurisdictions. The legal systems of certain countries, particularly certain developing countries, make it difficult to enforce patents and such countries may not recognize other types of intellectual property protection, particularly that relating to biopharmaceuticals. This could make it difficult for us to prevent the infringement of patents or marketing of competing products in violation of our proprietary rights generally in certain jurisdictions. Proceedings to enforce our patent rights in foreign jurisdictions could result in substantial cost and divert our efforts and attention from other aspects of our business.
We generally file a provisional patent application first (a priority filing) at the USPTO. A U.S. utility application and international application under the Patent Cooperation Treaty (PCT) are usually filed within twelve months after the priority filing. Based on the PCT filing, national and regional patent applications may be filed in the European Union, Japan, Australia and Canada and other countries. We have so far not filed for patent protection in all national and regional jurisdictions where such protection may be available. In addition, we may decide to abandon national and regional patent applications before grant. Finally, the grant proceeding of each national or regional patent is an independent proceeding which may lead to situations in which applications might in some jurisdictions be refused by the relevant registration authorities, while granted by others. It is also quite common that depending on the country, various scopes of patent protection may be granted on the same product candidate or technology. The laws of some jurisdictions do not protect intellectual property rights to the same extent as the laws in the U.S., and many companies have encountered significant difficulties in protecting and defending such rights in such jurisdictions. If we or our licensors encounter difficulties in protecting, or are otherwise precluded from effectively protecting, the intellectual property rights important for our business in such jurisdictions, the value of these rights may be diminished, and we may face additional competition from others in those jurisdictions. Many countries have compulsory licensing laws under which a patent owner may be compelled to grant licenses to third parties. In addition, many countries limit the enforceability of patents against government agencies or government contractors. In these countries, the patent owner may have limited remedies, which could materially diminish the value of such patent. If we or any of our licensors are forced to grant a license to third parties with respect to any patents relevant to our business, our competitive position in the relevant jurisdiction may be impaired and our business and results of operations may be adversely affected.
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We or our licensors, or any future collaborators or a strategic partners may become subject to third party claims or litigation alleging infringement of patents or other proprietary rights or seeking to invalidate patents or other proprietary rights, and we may need to resort to litigation to protect or enforce our patents or other proprietary rights, all of which could be costly, time consuming, delay or prevent the development and commercialization of our product candidates, or put our patents and other proprietary rights at risk.
We or our licensors, or any future collaborators or strategic partners may be subject to third-party claims for infringement or misappropriation of patent or other proprietary rights. We are generally obligated under our license or collaboration agreements to indemnify and hold harmless our licensors or collaborator for damages arising from intellectual property infringement by us. If we or our licensors, or any future collaborators or strategic partners are found to infringe a third-party patent or other intellectual property rights, we could be required to pay damages, potentially including treble damages, if we are found to have willfully infringed. In addition, we or our licensors, collaborators or any future strategic partners may choose to seek, or be required to seek, a license from a third party, which may not be available on acceptable terms, if at all. Even if a license can be obtained on acceptable terms, the rights may be non-exclusive, which could give our competitors access to the same technology or intellectual property rights licensed to us. If we fail to obtain a required license, we or our collaborator, or any future collaborator, may be unable to effectively market product candidates based on our technology, which could limit our ability to generate revenue or achieve profitability and possibly prevent us from generating revenue sufficient to sustain our operations. In addition, we may find it necessary to pursue claims or initiate lawsuits to protect or enforce our patent or other intellectual property rights. The cost to us in defending or initiating any litigation or other proceeding relating to patent or other proprietary rights, even if resolved in our favor, could be substantial, and litigation would divert our management’s attention. Some of our competitors may be able to sustain the costs of complex patent litigation more effectively than we can because they have substantially greater resources. Uncertainties resulting from the initiation and continuation of patent litigation or other proceedings could delay our research and development efforts and limit our ability to continue our operations.
If we were to initiate legal proceedings against a third party to enforce a patent covering one of our products or our technology, the defendant could counterclaim that our patent is invalid or unenforceable. In patent litigation in the U.S., defendant counterclaims alleging invalidity or unenforceability are commonplace. Grounds for a validity challenge could be an alleged failure to meet any of several statutory requirements, for example, lack of novelty, obviousness or non-enablement. Grounds for an unenforceability assertion could be an allegation that someone connected with prosecution of the patent withheld relevant information from the USPTO, or made a misleading statement, during prosecution. The outcome following legal assertions of invalidity and unenforceability during patent litigation is unpredictable. With respect to the validity question, for example, we cannot be certain that there is no invalidating prior art, of which we and the patent examiner were unaware during prosecution. If a defendant were to prevail on a legal assertion of invalidity or unenforceability, we would lose at least part, and perhaps all, of the patent protection on one or more of our products or certain aspects of our platform technology. Such a loss of patent protection could have a material adverse impact on our business. Patents and other intellectual property rights also will not protect our technology if competitors design around our protected technology without legally infringing our patents or other intellectual property rights.
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Intellectual property rights of third parties could adversely affect our ability to commercialize our product candidates, and we might be required to litigate or obtain licenses from third parties in order to develop or market our product candidates. Such litigation or licenses could be costly or not available on commercially reasonable terms.
Our competitive position may suffer if patents issued to third parties or other third-party intellectual property rights cover our products or elements thereof, or our manufacture or uses relevant to our development plans. In such cases, we may not be in a position to develop or commercialize products or product candidates unless we successfully pursue litigation to nullify or invalidate the third-party intellectual property right concerned, or enter into a license agreement with the intellectual property right holder, if available on commercially reasonable terms.
Third party intellectual property right holders may also actively bring infringement claims against us. We cannot guarantee that we will be able to successfully settle or otherwise resolve such infringement claims. If we are unable to successfully settle future claims on terms acceptable to us, we may be required to engage in or continue costly, unpredictable and time-consuming litigation and may be prevented from or experience substantial delays in marketing our products. If we fail in any such dispute, in addition to being forced to pay damages, we may be temporarily or permanently prohibited from commercializing any of our product candidates that are held to be infringing. We might, if possible, also be forced to redesign product candidates so that we no longer infringe the third-party intellectual property rights. Any of these events, even if we were ultimately to prevail, could require us to divert substantial financial and management resources that we would otherwise be able to devote to our business.
If we fail to comply with our obligations under any license, collaboration or other agreements, we may be required to pay damages and could lose intellectual property rights that are necessary for developing and protecting our product candidates and delivery technologies or we could lose certain rights to grant sublicenses.
Our current licenses impose, and any future licenses we enter into are likely to impose, various development, commercialization, funding, milestone, royalty, diligence, sublicensing, insurance, patent prosecution and enforcement, and other obligations on us. If we breach any of these obligations, or use the intellectual property licensed to us in an unauthorized manner, we may be required to pay damages and the licensor may have the right to terminate the license, which could result in us being unable to develop, manufacture and sell products that are covered by the licensed technology or enable a competitor to gain access to the licensed technology. Moreover, our licensors may own or control intellectual property that has not been licensed to us and, as a result, we may be subject to claims, regardless of their merit, that we are infringing or otherwise violating the licensor’s rights. In addition, while we cannot currently determine the amount of the royalty obligations we would be required to pay on sales of future products, if any, the amounts may be significant. The amount of our future royalty obligations will depend on the technology and intellectual property we use in products that we aim to develop and commercialize, if any. Therefore, even if we are able to develop and commercialize products, we may be unable to achieve or maintain profitability.
If we are unable to protect the confidentiality of our trade secrets, our business and competitive position would be harmed.
In addition to seeking patent protection for certain aspects of our product candidates and delivery technologies, we also consider trade secrets, including confidential and unpatented know-how important to the maintenance of our competitive position. We protect trade secrets and confidential and unpatented know-how, in part, by entering into non-disclosure and confidentiality agreements with parties who have access to such knowledge, such as our employees, corporate collaborators, outside scientific collaborators, CROs, contract manufacturers, consultants, advisors and other third parties. We also enter into confidentiality and invention or patent assignment agreements with our employees and consultants that obligate them to maintain confidentiality and assign their inventions to us. Despite these efforts, any of these parties may breach the agreements and disclose our proprietary information, including our trade secrets, and we may not be able to obtain adequate remedies for such breaches. Enforcing a claim that a party illegally disclosed or misappropriated a trade secret is difficult, expensive and time- consuming, and the outcome is unpredictable. In addition, some courts in the U.S. and certain foreign jurisdictions are less willing or unwilling to protect trade secrets. If any of our trade secrets were to be lawfully obtained or independently developed by a competitor, we would have no right to prevent them from using that technology or information to compete with us. If any of our trade secrets were to be disclosed to or independently developed by a competitor, our competitive position would be harmed.
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We may be subject to claims that we or our employees or consultants have wrongfully used or disclosed alleged trade secrets of our employees’ or consultants’ former employers or their clients. These claims may be costly to defend and if we do not successfully do so, we may be required to pay monetary damages and may lose valuable intellectual property rights or personnel.
Many of our employees were previously employed at universities or biotechnology or pharmaceutical companies, including our competitors or potential competitors. Although no claims against us are currently pending, we may be subject to claims that these employees or we have inadvertently or otherwise used or disclosed trade secrets or other proprietary information of their former employers. Litigation may be necessary to defend against these claims. If we fail in defending such claims, in addition to paying monetary damages, we may lose valuable intellectual property rights or personnel. A loss of key research personnel or their work product could hamper our ability to commercialize, or prevent us from commercializing, our product candidates, which could severely harm our business. Even if we are successful in defending against these claims, litigation could result in substantial costs and be a distraction to management.
If our trademarks and trade names are not adequately protected, then we may not be able to build name recognition in our markets of interest and our business may be adversely affected.
Our trademarks or trade names may be challenged, infringed, circumvented or declared generic or determined to be infringing on other marks. We may not be able to protect our rights to these trademarks and trade names or may be forced to stop using these names, which we need for name recognition by potential partners or customers in our markets of interest. If we are unable to establish name recognition based on our trademarks and trade names, we may not be able to effectively compete and our business may be adversely affected.
Risks Related to Government Regulation and Product Approvals
We may be unable to obtain U.S. or foreign regulatory approval and, as a result, unable to commercialize our product candidates.
Our product candidates are subject to extensive governmental regulations relating to, among other things, research, testing, development, manufacturing, safety, efficacy, approval, recordkeeping, reporting, labeling, storage, packaging, advertising and promotion, pricing, marketing and distribution of drugs. Rigorous preclinical testing and clinical trials and an extensive regulatory approval process are required to be completed in the U.S. and in many foreign jurisdictions before a new drug can be marketed. Satisfaction of these and other regulatory requirements is costly, time consuming, uncertain and subject to unanticipated delays. It is possible that none of the product candidates we may develop will obtain the regulatory approvals necessary for us or our collaborators to begin selling them.
We have very limited experience in conducting and managing the clinical trials necessary to obtain regulatory approvals, including approval by the FDA. The time required to obtain FDA and other approvals is unpredictable but typically takes many years following the commencement of clinical trials, depending upon the type, complexity and novelty of the product candidate. The standards that the FDA and its foreign counterparts use when regulating us are not always applied predictably or uniformly and can change. Any analysis we perform of data from preclinical and clinical activities is subject to confirmation and interpretation by regulatory authorities, which could delay, limit or prevent regulatory approval. We may also encounter unexpected delays or increased costs due to new government regulations, for example, from future legislation or administrative action, or from changes in FDA policy during the period of product development, clinical trials and FDA regulatory review. It is impossible to predict whether legislative changes will be enacted, or whether FDA or foreign regulations, guidance or interpretations will be changed, or what the impact of such changes, if any, may be.
Any delay or failure in obtaining required approvals could have a material adverse effect on our ability to generate revenues from the particular product candidate for which we are seeking approval. Furthermore, any regulatory approval to market a product may be subject to limitations on the approved uses for which we may market the product or the labeling or other restrictions. In addition, the FDA has the authority to require a Risk Evaluation and Mitigation Strategy (REMS) plan as part of an NDA or biologics license application (BLA) or after approval, which may impose further requirements or restrictions on the distribution or use of an approved drug or biologic, such as limiting prescribing to certain physicians or medical centers that have undergone specialized training, limiting treatment to patients who meet certain safe-use criteria and requiring treated patients to enroll in a registry. These limitations and restrictions may limit the size of the market for the product and affect reimbursement by third-party payors.
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If we or our collaborators, manufacturers or service providers fail to comply with healthcare laws and regulations, we or they could be subject to enforcement actions, which could affect our ability to develop, market and sell our products and may harm our reputation.
We and our collaborators are subject to federal, state, and foreign healthcare laws and regulations pertaining to fraud and abuse and patients’ rights. These laws and regulations include:
● | the U.S. federal healthcare program anti-kickback law, which prohibits, among other things, persons from soliciting, receiving or providing remuneration, directly or indirectly, to induce either the referral of an individual for a healthcare item or service, or the purchasing or ordering of an item or service, for which payment may be made under a federal healthcare program such as Medicare or Medicaid; | |
● | the U.S. federal false claims law, which prohibits, among other things, individuals or entities from knowingly presenting or causing to be presented, claims for payment by government funded programs such as Medicare or Medicaid that are false or fraudulent, and which may apply to us by virtue of statements and representations made to customers or third parties; | |
● | the U.S. federal Health Insurance Portability and Accountability Act (HIPAA) and Health Information Technology for Economic and Clinical Health (HITECH) Act, which prohibit executing a scheme to defraud healthcare programs, impose requirements relating to the privacy, security, and transmission of individually identifiable health information, and require notification to affected individuals and regulatory authorities of certain breaches of security of individually identifiable health information; | |
● | the federal Open Payments regulations under the National Physician Payment Transparency Program have been issued under the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Affordability Reconciliation Act, and will require that manufacturers of pharmaceutical and biological drugs covered by Medicare, Medicaid, and Children’s Health Insurance Programs report all consulting fees, travel reimbursements, research grants, and other payments or gifts with values over $10 made to physicians and teaching hospitals; and | |
● | state laws comparable to each of the above federal laws, such as, for example, anti-kickback and false claims laws applicable to commercial insurers and other non-federal payors, requirements for mandatory corporate regulatory compliance programs, and laws relating to patient data privacy and security. |
If our operations are found to be in violation of any such requirements, we may be subject to penalties, including civil or criminal penalties, monetary damages, the curtailment or restructuring of our operations, loss of eligibility to obtain approvals from the FDA, or exclusion from participation in government contracting, healthcare reimbursement or other government programs, including Medicare and Medicaid, any of which could adversely our financial results. Although effective compliance programs can mitigate the risk of investigation and prosecution for violations of these laws, these risks cannot be entirely eliminated. Any action against us for an alleged or suspected violation could cause us to incur significant legal expenses and could divert our management’s attention from the operation of our business, even if our defense is successful. In addition, achieving and sustaining compliance with applicable laws and regulations may be costly to us in terms of money, time and resources.
If we or our collaborators, manufacturers or service providers fail to comply with applicable federal, state or foreign laws or regulations, we could be subject to enforcement actions, which could affect our ability to develop, market and sell our products successfully and could harm our reputation and lead to reduced acceptance of our products by the market. These enforcement actions include, among others:
● | adverse regulatory inspection findings; | |
● | warning letters; |
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● | voluntary or mandatory product recalls or public notification or medical product safety alerts to healthcare professionals; | |
● | restrictions on, or prohibitions against, marketing our products; | |
● | restrictions on, or prohibitions against, importation or exportation of our products; | |
● | suspension of review or refusal to approve pending applications or supplements to approved applications; | |
● | exclusion from participation in government-funded healthcare programs; | |
● | exclusion from eligibility for the award of government contracts for our products; | |
● | suspension or withdrawal of product approvals; | |
● | product seizures; | |
● | injunctions; and | |
● | civil and criminal penalties and fines. |
Any drugs we develop may become subject to unfavorable pricing regulations, third-party reimbursement practices or healthcare reform initiatives, thereby harming our business.
The regulations that govern marketing approvals, pricing and reimbursement for new drugs vary widely from country to country. Some countries require approval of the sale price of a drug before it can be marketed. In many countries, the pricing review period begins after marketing or product licensing approval is granted. In some foreign markets, prescription pharmaceutical pricing remains subject to continuing governmental control even after initial approval is granted. Although we intend to monitor these regulations, our programs are currently in the early stages of development and we will not be able to assess the impact of price regulations for a number of years. As a result, we might obtain regulatory approval for a product in a particular country, but then be subject to price regulations that delay our commercial launch of the product and negatively impact the revenues we are able to generate from the sale of the product in that country.
Our ability to commercialize any products also will depend in part on the extent to which reimbursement for these products and related treatments will be available from government health administration authorities, private health insurers and other organizations. Even if we succeed in bringing one or more products to the market, these products may not be considered cost-effective, and the amount reimbursed for any products may be insufficient to allow us to sell our products on a competitive basis. Because our programs are in the early stages of development, we are unable at this time to determine their cost effectiveness or the likely level or method of reimbursement. Increasingly, the third-party payors who reimburse patients or healthcare providers, such as government and private insurance plans, are requiring that drug companies provide them with predetermined discounts from list prices and are seeking to reduce the prices charged or the amounts reimbursed for pharmaceutical products. If the price we are able to charge for any products we develop, or the reimbursement provided for such products, is inadequate in light of our development and other costs, our return on investment could be adversely affected.
Our current product candidates will need to be administered under the supervision of a physician on an outpatient basis. Under currently applicable U.S. law, certain drugs that are not usually self-administered (including injectable drugs) may be eligible for coverage under the Medicare Part B program if:
● | they are incident to a physician’s services; | |
● | they are reasonable and necessary for the diagnosis or treatment of the illness or injury for which they are administered according to accepted standards of medical practice; and | |
● | they have been approved by the FDA and meet other requirements of the statute. |
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There may be significant delays in obtaining coverage for newly-approved drugs, and coverage may be more limited than the purposes for which the drug is approved by the FDA. Moreover, eligibility for coverage does not imply that any drug will be reimbursed in all cases or at a rate that covers our costs, including research, development, manufacture, sale and distribution. Interim payments for new drugs, if applicable, may also not be sufficient to cover our costs and may not be made permanent. Reimbursement may be based on payments allowed for lower- cost drugs that are already reimbursed, may be incorporated into existing payments for other services and may reflect budgetary constraints or imperfections in Medicare data. Net prices for drugs may be reduced by mandatory discounts or rebates required by government healthcare programs or private payors and by any future relaxation of laws that presently restrict imports of drugs from countries where they may be sold at lower prices than in the U.S. Third-party payors often rely upon Medicare coverage policy and payment limitations in setting their own reimbursement rates. Our inability to promptly obtain coverage and adequate reimbursement rates from both government-funded and private payors for new drugs that we develop and for which we obtain regulatory approval could have a material adverse effect on our operating results, our ability to raise capital needed to commercialize products and our financial condition.
We believe that the efforts of governments and third-party payors to contain or reduce the cost of healthcare and legislative and regulatory proposals to broaden the availability of healthcare will continue to affect the business and financial condition of pharmaceutical and biopharmaceutical companies. A number of legislative and regulatory changes in the healthcare system in the U.S. and other major healthcare markets have been proposed in recent years, and such efforts have expanded substantially in recent years. These developments have included prescription drug benefit legislation that was enacted and took effect in January 2006, healthcare reform legislation enacted by certain states, and Patient Protection and Affordable Care Act, as amended by the Health Care and Education Affordability Reconciliation Act (the “ACA”), a sweeping law intended to broaden access to health insurance, reduce or constrain the growth of healthcare spending and enhance remedies against fraud and abuse. The ACA also contains provisions that will affect companies in the pharmaceutical industry and other healthcare related industries by imposing additional costs and changes to business practices. Provisions affecting pharmaceutical companies include the following:
● | mandatory rebates for drugs sold into the Medicaid program have been increased, and the rebate requirement has been extended to drugs used in risk-based Medicaid managed care plans; | |
● | the 340B Drug Pricing Program under the Public Health Services Act has been extended to require mandatory discounts for drug products sold to certain critical access hospitals, cancer hospitals and other covered entities; | |
● | pharmaceutical companies are required to offer discounts on brand-name drugs to patients who fall within the Medicare Part D coverage gap, commonly referred to as the “Donut Hole”; and | |
● | pharmaceutical companies are required to pay an annual non-tax deductible fee to the federal government based on each company’s market share of prior year total sales of branded products to certain federal healthcare programs, such as Medicare, Medicaid, Department of Veterans Affairs and Department of Defense. Since we expect our branded pharmaceutical sales to constitute a small portion of the total federal health program pharmaceutical market, we do not expect this annual assessment to have a material impact on our financial condition. |
Moreover, we cannot predict what healthcare reform initiatives may be adopted in the future. Further federal and state legislative and regulatory developments are likely, and we expect ongoing initiatives in the U.S. to increase pressure on drug pricing. Such reforms could have an adverse effect on anticipated revenues from product candidates that we may develop and for which we may obtain regulatory approval and may affect our overall financial condition and ability to develop product candidates.
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Our ability to obtain services, reimbursement or funding from the federal government may be impacted by possible reductions in federal spending.
U.S. federal government agencies currently face potentially significant spending reductions. Under the Budget Control Act of 2011, the failure of Congress to enact deficit reduction measures of at least $1.2 trillion for the years 2013 through 2021 triggered automatic cuts to most federal programs. These cuts would include aggregate reductions to Medicare payments to providers of up to two percent per fiscal year, starting in 2013. Under the American Taxpayer Relief Act of 2012, which was enacted on January 1, 2013, the imposition of these automatic cuts was delayed until March 1, 2013. Certain of these automatic cuts have been implemented. The full impact on our business of these automatic cuts is uncertain. If federal spending is reduced, anticipated budgetary shortfalls may also impact the ability of relevant agencies, such as the FDA or the National Institutes of Health to continue to function at current levels. Amounts allocated to federal grants and contracts may be reduced or eliminated. These reductions may also impact the ability of relevant agencies to timely review and approve drug research and development, manufacturing, and marketing activities, which may delay our ability to develop, market and sell any products we may develop.
If any of our product candidates receives marketing approval and we or others later identify undesirable side effects caused by the product candidate, our ability to market and derive revenue from the product candidates could be compromised.
In the event that any of our product candidates receive regulatory approval and we or others identify undesirable side effects caused by one of our products, any of the following adverse events could occur, which could result in the loss of significant revenue to us and materially and adversely affect our results of operations and business:
● | regulatory authorities may withdraw their approval of the product or seize the product; | |
● | we may be required to recall the product or change the way the product is administered to patients; | |
● | additional restrictions may be imposed on the marketing of the particular product or the manufacturing processes for the product or any component thereof; | |
● | we may be subject to fines, injunctions or the imposition of civil or criminal penalties; | |
● | regulatory authorities may require the addition of labeling statements, such as a “black box” warning or a contraindication; | |
● | we may be required to create a Medication Guide outlining the risks of such side effects for distribution to patients; | |
● | we could be sued and held liable for harm caused to patients; | |
● | the product may become less competitive; and | |
● | our reputation. |
Risks Related to our Common Stock and this Offering
Our internal controls may be inadequate, which could cause our financial reporting to be unreliable and lead to misinformation being disseminated to the public.
Our management is responsible for establishing and maintaining adequate internal control over financial reporting. As defined in Rule 13a-15(f) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), internal control over financial reporting is a process designed by, or under the supervision of, the principal executive and principal financial officer and effected by the board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that:
● | pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of our assets; |
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● | provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and/or directors of the Company; and | |
● | provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the financial statements. |
We will be required to include a report of management on the effectiveness of our internal control over financial reporting. We expect to incur additional expenses and diversion of management’s time as a result of performing the system and process evaluation, testing and remediation required in order to comply with the management certification requirements.
We do not have a sufficient number of employees to segregate responsibilities and may be unable to afford increasing our staff or engaging outside consultants or professionals to overcome our lack of employees. During the course of our testing, we may identify other deficiencies that we may not be able to timely remediate. Moreover, effective internal controls, particularly those related to revenue recognition, are necessary for us to produce reliable financial reports and are important to help prevent financial fraud. If we cannot provide reliable financial reports or prevent fraud, our business and operating results could be harmed, investors could lose confidence in our reported financial information, and the trading price of our common stock, if a market ever develops, could drop significantly.
The Jobs Act has reduced the information that we are required to disclose.
Under the Jobs Act, the information that we will be required to disclose has been reduced in a number of ways.
As a company that had gross revenues of less than $1.0 billion during the Company’s last fiscal year, the Company is an “emerging growth company,” as defined in the Jobs Act (an “EGC”). We will retain that status until the earliest of (a) the last day of the fiscal year which we have total annual gross revenues of $1,000,000,000 (as indexed for inflation in the manner set forth in the Jobs Act) or more; (b) the last day of the fiscal year of following the fifth anniversary of the date of the first sale of the common stock pursuant to an effective registration statement under the Securities Act of 1933, as amended (the “Securities Act”); (c) the date on which we have, during the previous three year period, issued more than $1,000,000,000 in non-convertible debt; or (d) the date on which we are deemed to be a “large accelerated filer,” as defined in Rule 12b-2 under the Exchange Act or any successor thereto. As an EGC, the Company is relieved from the following:
● | The Company is excluded from Section 404(b) of Sarbanes-Oxley Act (“Sarbanes-Oxley”), which otherwise would have required the Company’s auditors to attest to and report on the Company’s internal control over financial reporting. The JOBS Act also amended Section 103(a)(3) of Sarbanes-Oxley to provide that (i) any new rules adopted by the PCAOB requiring mandatory audit firm rotation or changes to the auditor’s report to include auditor discussion and analysis (in the event the PCAOB adopts an auditor rotation requirement) will not apply to an audit of an EGC; and (ii) any other future rules adopted by the PCAOB will not apply to the Company’s audits unless the SEC determines otherwise. | |
● | The Jobs Act amended Section 7(a) of the Securities Act to provide that the Company need not present more than two years of audited financial statements in an initial public offering registration statement and in any other registration statement, need not present selected financial data pursuant to Item 301 of Regulation S-K for any period prior to the earliest audited period presented in connection with such initial public offering. In addition, the Company is not required to comply with any new or revised financial accounting standard until such date as a private company (i.e., a company that is not an “issuer” as defined by Section 2(a) of Sarbanes-Oxley) is required to comply with such new or revised accounting standard. Corresponding changes have been made to the Exchange Act, which relates to periodic reporting requirements, which would be applicable if the Company were required to comply with them. |
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● | As long as we are an EGC, we may comply with Item 402 of Regulation S-K, which requires extensive quantitative and qualitative disclosure regarding executive compensation, by disclosing the more limited information required of a “smaller reporting company.” | |
● | The Jobs Act will also exempt us from the following additional compensation-related disclosure provisions that were imposed on U.S. public companies pursuant to the Dodd-Frank Act: (i) the advisory vote on executive compensation required by Section 14A(a) of the Exchange Act; (ii) the requirements of Section 14A(b) of the Exchange Act relating to shareholder advisory votes on “golden parachute” compensation; (iii) the requirements of Section 14(i) of the Exchange Act as to disclosure relating to the relationship between executive compensation and our financial performance; and (iv) the requirement of Section 953(b)(1)of the Dodd-Frank Act, which requires disclosure as to the relationship between the compensation of our chief executive officer and median employee pay. |
Our stock price may be volatile, and purchasers of our common stock could incur substantial losses.
Our stock price is likely to be volatile. As a result of this volatility, investors may not be able to sell their common stock at or above the initial public offering price. The market price for our common stock may be influenced by many factors, including the other risks described in this section of the prospectus entitled “Risk Factors” and the following:
● | the success of competitive products or technologies; | |
● | results of preclinical and clinical studies of our product candidates, or those of our competitors, our existing collaborator or any future collaborators; | |
● | regulatory or legal developments in the U.S. and other countries, especially changes in laws or regulations applicable to our products; | |
● | introductions and announcements of new products by us, our commercialization partners, or our competitors, and the timing of these introductions or announcements; | |
● | actions taken by regulatory agencies with respect to our products, clinical studies, manufacturing process or sales and marketing terms; | |
● | actual or anticipated variations in our financial results or those of companies that are perceived to be similar to us; | |
● | the success of our efforts to acquire or in-license additional technologies, products or product candidates; | |
● | developments concerning our collaborations, including but not limited to those with our sources of manufacturing supply and our commercialization partners; | |
● | announcements by us or our competitors of significant acquisitions, strategic partnerships, joint ventures or capital commitments; | |
● | developments or disputes concerning patents or other proprietary rights, including patents, litigation matters and our ability to obtain patent protection for our products; | |
● | our ability or inability to raise additional capital and the terms on which we raise it; | |
● | the recruitment or departure of key personnel; | |
● | changes in the structure of healthcare payment systems; | |
● | market conditions in the pharmaceutical and biotechnology sectors; |
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● | actual or anticipated changes in earnings estimates or changes in stock market analyst recommendations regarding our common stock, other comparable companies or our industry generally; | |
● | our failure or the failure of our competitors to meet analysts’ projections or guidance that we or our competitors may give to the market; | |
● | fluctuations in the valuation of companies perceived by investors to be comparable to us; | |
● | announcement and expectation of additional financing efforts; | |
● | speculation in the press or investment community; | |
● | trading volume of our common stock; | |
● | sales of our common stock by us or our shareholders; | |
● | the concentrated ownership of our common stock; | |
● | changes in accounting principles; | |
● | terrorist acts, acts of war or periods of widespread civil unrest; | |
● | natural disasters and other calamities; and | |
● | general economic, industry and market conditions. |
In addition, the stock markets in general, and the markets for pharmaceutical stocks, in particular, have experienced extreme volatility that has been often unrelated to the operating performance of the issuer. These broad market and industry factors may seriously harm the market price of our common stock, regardless of our operating performance.
You will experience immediate and substantial dilution as a result of this offering and may experience additional dilution in the future.
If you purchase common stock in this offering, you will incur immediate and substantial dilution of $[ ] per share, representing the difference between the assumed initial public offering price of $[ ] per share and our pro forma net tangible book value per share after giving effect to this offering. In addition, we can offer no assurance that you will not experience substantial dilution in the future.
The future issuance of equity or of debt securities that are convertible into common stock will dilute our share capital.
We may choose to raise additional capital in the future, depending on market conditions, strategic considerations and operational requirements. To the extent that additional capital is raised through the issuance of shares or other securities convertible into shares of our common stock, our stockholders will be diluted. Future issuances of our common stock or other equity securities, or the perception that such sales may occur, could adversely affect the trading price of our common stock and impair our ability to raise capital through future offerings of shares or equity securities. No prediction can be made as to the effect, if any, that future sales of common stock or the availability of common stock for future sales will have on the trading price of our common stock.
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Holders of 1% or more of our common stock prior to this offering will be subject to a six month lock-up agreement, and all directors, officers and 10% shareholders will be subject to a one year lock-up. Nonetheless, at such time as such stock becomes available for sale, it is possible a significant number of our shares may cause the market price of our common stock to drop significantly.
Commencing six months after the date of this prospectus, the shares of our common stock outstanding as of the date of this prospectus, will be eligible for sale in the public market from time to time thereafter pursuant to Rule 144 under the Securities Act, and shares of our common stock will be eligible for resale following a one-year lock-up period; some of such shares may be subject to the volume and other restrictions of Rule 144. Further, we have 3,000,000 shares reserved for issuance under our 2018 Equity Incentive Plan, which shares may be issued from time to time by our management and which will be subject to vesting and other requirements. At such time as the lock-up periods end, it is possible that a significant number of such shares will be sold into the market. At such time, the sale of a significant number of shares of our common stock in the public market or the perception that such sales may occur could significantly reduce the market price of our common stock.
The offering price of the shares and the other terms of this Offering have been arbitrarily determined by the Company.
The offering price of the shares and other terms of this offering have been arbitrarily determined by us and bear no relationship to our assets, book value, potential earnings or any other recognized criterion of value. In addition, no investment banker, appraiser, or other independent third party has been consulted concerning the offering price for the shares or the fairness of the offering price used for the shares.
An active trading market for our common stock may not develop.
Prior to this offering, there has been no public market for our common stock. We intend to apply to have the shares of common stock listed on Nasdaq, subject to our sale of a sufficient number of shares in the offering to meet the listing requirements of Nasdaq. There can be no assurance that an application for listing the shares on Nasdaq or on any other market will be approved. Accordingly, an active trading market for our shares may never develop or be sustained following this offering. If an active market for our common stock does not develop, it may be difficult for you to sell shares you purchase in this offering without depressing the market price for the shares or at all.
Because our management will have broad discretion over the use of the net proceeds from this Offering, you may not agree with how we use them and the proceeds may not be invested successfully.
We intend to use the net proceeds to us from this offering to fund offering to fund preclinical and clinical trials of product candidates, Ropidoxuridine and new formulations of Ropidoxuridine with Tipiracil, O-18 containing molecules for proton radiation sensitization, continued HDAC technology platform development, working capital and general corporate purposes, including the costs of operating as a public company, as well as potential acquisition or in-licensing activities. Therefore, our management will have broad discretion as to the use of the offering proceeds. Accordingly, you will be relying on the judgment of our management with regard to the use of these net proceeds, and you will not have the opportunity, as part of your investment decision, to assess whether the proceeds are being used appropriately. It is possible that the proceeds will be invested in a way that does not yield a favorable, or any, return for our Company.
If securities or industry analysts do not publish research or reports about our business, or if they issue an adverse or misleading opinion regarding our stock, our stock price and trading volume could decline.
The trading market for our common stock will be influenced by the research and reports that industry or securities analysts publish about us or our business. We do not currently have and may never obtain research coverage by securities and industry analysts. If no or few securities or industry analysts commence coverage of us, the trading price for our stock would be negatively impacted. In the event we obtain securities or industry analyst coverage, if any of the analysts who cover us issue an adverse or misleading opinion regarding us, our business model, our intellectual property or our stock performance, or if our target studies and operating results fail to meet the expectations of analysts, our stock price would likely decline. If one or more of these analysts cease coverage of us or fail to publish reports on us regularly, we could lose visibility in the financial markets, which in turn could cause our stock price or trading volume to decline.
Our board of directors has the authority, without shareholder approval, to issue preferred stock with terms that may not be beneficial to holders of our common stock and such issuance could potentially affect adversely shareholder voting power and perpetuate their control over us.
Our Certificate of Incorporation, as amended to date, allows us to issue shares of preferred stock without any vote or further action by our shareholders. Our board of directors has the authority to fix and determine the relative rights and preferences of any preferred stock. As a result, our board of directors could authorize the issuance of a series of preferred stock that would grant to holders the preferred right to our assets upon liquidation, the right to receive dividend payments before dividends are distributed to the holders of common stock and the right to the redemption of the shares, together with a premium, prior to the redemption of shares of our common stock. These rights and preferences could negatively affect the holders of our common stock.
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The ability of our executive officers and directors, who are our principal stockholders, to control our business may limit or eliminate the ability of minority shareholders to influence corporate affairs.
Our executive officers and directors, who are our principal stockholders, own approximately 73% of our issued and outstanding common stock and, following this offering, will own approximately 63% of our issued and outstanding common stock. Accordingly, they will be able to effectively control the election of directors, as well as all other matters requiring shareholder approval. The interests of our principal stockholders may differ from the interests of other shareholders with respect to the issuance of shares, business transactions with or sales to other companies, selection of other directors and other business decisions. The minority shareholders have no way of overriding decisions made by our principal stockholders. This level of control may also have an adverse impact on the market value of our shares because our principal stockholders may institute or undertake transactions, policies or programs that result in losses and may not take any steps to increase our visibility in the financial community and/or may sell sufficient numbers of shares to significantly decrease our price per share.
Our Certificate of Incorporation and Bylaws, as amended to date, provide for indemnification of officers and directors at the expense of the Company and limit their liability that may result in a major cost to us and hurt the interests of our shareholders because corporate resources may be expended for the benefit of officers and/or directors.
Our Certificate of Incorporation and Bylaws, each as amended to date, provide for the indemnification of our officers and directors. We have been advised that, in the opinion of the SEC, indemnification for liabilities arising under federal securities laws is against public policy as expressed in the Securities Act and is therefore, unenforceable.
Our Certificate of Incorporation, as amended to date, provides that disputes must be resolved in the Court of Chancery of the State of Delaware, except for cases brought under the Securities Act or Exchange Act.
Our Certificate of Incorporation, as amended to date, provides that the Court of Chancery in the State of Delaware will be the exclusive forum for dispute resolution for certain enumerated actions, excluding any actions brought under the Securities Act or Exchange Act, or unless the Company consents in writing to an alternative jurisdiction. This exclusive forum selection clause may cause inconvenience of our shareholders or other stakeholders, should they need to bring suit against the Company for an action other than one arising under the Securities Act or Exchange Act.
We do not expect to pay cash dividends in the foreseeable future.
We have never paid cash dividends on our common stock. We do not expect to pay cash dividends on our common stock at any time in the foreseeable future. The future payment of dividends directly depends upon our future earnings, capital requirements, financial requirements and other factors that our board of directors will consider. Since we do not anticipate paying cash dividends on our common stock, return on your investment, if any, will depend solely on an increase, if any, in the market value of our common stock.
Provisions in our amended and restated certificate of incorporation, as amended, and bylaws, as amended, as well as Delaware law, might discourage, delay or prevent a change of control of our company or changes in our management and, therefore, depress the market price of our common stock.
Our Certificate of Incorporation and Bylaws, each as amended to date, and bylaws contain provisions that could depress the market price of our common stock by acting to discourage, delay, or prevent a change in control of our company or changes in our management that the stockholders of our company may deem advantageous. These provisions, among other things:
● | permit the board of directors to establish the number of directors; | |
● | provide that directors may only be removed “for cause” and only with the approval of 66 2/3 percent of our stockholders; | |
● | require super-majority voting to amend some provisions in our Certificate of Incorporation and Bylaws; | |
● | authorize the issuance of “blank check” preferred stock that our board could use to implement a stockholder rights plan (also known as a “poison pill”); | |
● | eliminate the ability of our stockholders to call special meetings of stockholders; | |
● | prohibit stockholder action by written consent, which requires all stockholder actions to be taken at a meeting of our stockholders; | |
● | provide that the board of directors is expressly authorized to make, alter or repeal our bylaws; and | |
● | establish advance notice requirements for nominations for election to our board or for proposing matters that can be acted upon by stockholders at annual stockholder meetings. |
In addition, Section 203 of the Delaware General Corporation Law may discourage, delay or prevent a change in control of our company. Section 203 imposes certain restrictions on merger, business combinations and other transactions between us and holders of 15% or more of our common stock.
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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus contains forward-looking statements that involve risks and uncertainties. All statements other than statements of historical facts contained in this prospectus are forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “may,” “could,” “will,” “would,” “should,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “intend,” “predict,” “seek,” “contemplate,” “project,” “continue,” “potential,” “ongoing” or the negative of these terms or other comparable terminology. These forward-looking statements include, but are not limited to, statements about:
● | the initiation, timing, progress and results of our research and development programs, preclinical studies, any clinical trials and INDs, NDAs other regulatory submissions; | |
● | our expected dependence on third party collaborators for developing, obtaining regulatory approval for and commercializing product candidates; | |
● | our receipt and timing of any milestone payments or royalties under any research collaboration and license agreement we enter into; | |
● | our ability to identify and develop product candidates; | |
● | our or a collaborator’s ability to obtain and maintain regulatory approval of any of our product candidates; | |
● | the rate and degree of market acceptance of any approved products candidates; | |
● | the commercialization of any approved product candidates; | |
● | our ability to establish and maintain additional collaborations and retain commercial rights for our product candidates subject to collaborations; | |
● | the implementation of our business model and strategic plans for our business, technologies and product candidates; | |
● | our estimates of our expenses, ongoing losses, future revenue and capital requirements; | |
● | our ability to obtain additional funds for our operations; | |
● | our ability to obtain and maintain intellectual property protection for our technologies and product candidates and our ability to operate our business without infringing the intellectual property rights of others; | |
● | our reliance on third parties to conduct our preclinical studies or any future clinical trials; | |
● | our reliance on third party supply and manufacturing partners to supply the materials and components for, and manufacture, our research and development, preclinical and clinical trial drug supplies; | |
● | our ability to attract and retain qualified key management and technical personnel; | |
● | our use of net proceeds to us from this offering; | |
● | our expectations regarding the time during which we will be an emerging growth company under the JOBS Act; | |
● | our financial performance; and | |
● | developments relating to our competitors or our industry. |
These statements relate to future events or to our future financial performance and involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by these forward-looking statements. Factors that may cause actual results to differ materially from current expectations include, among other things, those described in the section entitled “Risk Factors” and elsewhere in this prospectus.
Any forward-looking statement in this prospectus reflects our current view with respect to future events and is subject to these and other risks, uncertainties and assumptions relating to our operations, results of operations, industry and future growth. Given these uncertainties, you should not place undue reliance on these forward-looking statements. Except as required by U.S. federal securities law, we assume no obligation to update or revise these forward-looking statements for any reason, even if new information becomes available in the future.
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We estimate that the net proceeds from this offering will be approximately $ , after deducting underwriting discounts and commissions and estimated offering expenses payable by us. If the underwriter exercises its over-allotment option to purchase additional shares in full, we estimate that our net proceeds will be approximately $ , after deducting underwriting discounts and commissions and estimated offering expenses payable by us.
We intend to use the net proceeds from this offering to fund Phase I and Phase II clinical trials of product candidates, including radiation sensitizer Ropidoxuridine and the HDAC inhibitor small molecule technology platform, potential acquisition or in-licensing activities, and working capital and general corporate purposes. We anticipate that the funds raised from this offering will allow us to complete Phase II clinical trials for Ropidoxuridine and initiate Phase I clinical trials for our selective HDAC6 inhibitor. The funds are expected to be used as follows:
● | approximately $10 million will be used for product development and operational costs, including the drug manufacturing costs and the costs related to performing the Phase II clinical trials of Ropidoxuridine; and |
● | approximately $5 million will be used to fund drug manufacturing and perform pre-IND testing, obtain IND and initiate Phase I clinicals trials of our selective HDAC6 inhibitor. |
The above estimates include the working capital necessary to fund each of the above listed projects; any additional funds raised in this offering will be used toward additional working capital.
Notwithstanding our planned use of funds, there is no guarantee that we will not require additional funds to complete the above clinical trials. In addition, following our completion of the above-listed clinical trials, we believe we will need approximately $22 million in additional funding to complete Phase III clinical trials for Ropidoxuridine and approximately $30 million in additional funding to complete Phase I through III clinical trials for our selective HDAC6 inhibitor. If such additional funds are required, we will have to secure additional funding from investors or through a joint development partner.
We believe that the net proceeds from this offering, together with our existing cash on hand, cash equivalents and investments, will enable us to fund our operations and continued growth and development through at least the next 12 months. We have based this estimate on assumptions that may prove to be wrong and we may end up using our available capital resources more quickly than currently anticipated.
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The expected use of the net proceeds from this offering represents our intentions based upon our current plans and business conditions, which could change in the future as our plans and business conditions evolve. The amounts and timing of our actual expenditures depend on numerous factors, including the progress of our preclinical development efforts, the results of any clinical trials and other studies and any unforeseen cash needs. All of our research and development programs are at an early stage and development of product candidates from these programs is highly uncertain and may not result in approved products. Completion dates and completion costs can vary significantly for each product candidate and are difficult to predict. Accordingly, we will have broad discretion in the use of the net proceeds from this offering and could spend the proceeds in ways that do not improve our results of operations or enhance the value of our stock.
We may seek additional financing to support the intended use of proceeds discussed above. If we secure additional equity funding, investors in this offering would be diluted. In all events, there can be no assurance that additional financing would be available when needed and, if available, on terms acceptable to us.
Pending the use of the proceeds from this offering, we intend to invest the net proceeds in short-term, interest-bearing, investment-grade securities, certificates of deposit or government securities.
We have not paid any dividends on our common stock since inception and we currently expect that, in the foreseeable future, all earnings (if any) will be retained for the development of our business and no dividends will be declared or paid. Any future dividends will be subject to the discretion of our board of directors and will depend upon, among other things, our earnings (if any), operating results, financial condition and capital requirements, general business conditions and other pertinent facts.
The following table sets forth our cash and cash equivalents and capitalization as of March 31, 2022:
● | on an actual basis; | |
● | on a pro forma basis to reflect the sale of our convertible notes in our pre-IPO bridge financings (the “Pre-IPO Bridge Financings”); and | |
● | on a pro forma as adjusted basis to reflect the (a) Pre-IPO Bridge Financings, and (b) sale of shares of common stock by us in this offering at an assumed initial public offering price of $ per share, after deducting estimated underwriting discounts and commissions and offering expenses payable by us, and the conversion of the Series A convertible preferred stock and convertible notes upon effectiveness of this offering. |
You should read this table in conjunction with our financial statements and related notes and the sections titled “Use of Proceeds,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and “Description of Capital Stock” appearing elsewhere in this prospectus.
Actual | Pro forma | Pro
forma, Adjusted | ||||||||||
Cash and cash equivalents | $ | 405,857 | $ | $ | ||||||||
Capitalization: | ||||||||||||
Notes payable | 1,112,134 | |||||||||||
Stockholders’ equity (deficit): | ||||||||||||
Series A convertible preferred stock, $0.00001 par value; $1,000 per share liquidation value or aggregate of $1,212,500; 20,000,000 shares authorized; 1,213 shares issued and outstanding | - | |||||||||||
Common stock, $0.00001 par value; 100,000,000 shares authorized; 9,312,991 shares issued and outstanding at March 31, 2022 | 93 | |||||||||||
Additional paid-in capital | 4,653,383 | |||||||||||
Accumulated deficit | (6,503,039 | ) | ||||||||||
Total stockholders’ equity (deficit) | (1,849,563 | ) | ||||||||||
Total capitalization | $ | (737,429 | ) | $ | $ |
The number of shares of common stock issued and outstanding actual, pro forma and pro forma as adjusted in the table above excludes 2,615,883 shares reserved for issuance under our 2018 Equity Incentive Plan. To date, we have issued grants of 384,167 shares (on a post-reverse split basis), which were issued in the form of restricted stock units, some of which remain subject to certain vesting conditions.
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If you invest in our common stock, your interest will be diluted to the extent of the difference between the public offering price per share of our common stock that you pay and the pro forma as adjusted net tangible book value per share of our common stock after this Offering, which includes the conversion of 1,215.5 shares of Series A convertible preferred stock (which will convert into approximately 269,444 shares of common stock upon completion of this offering, not including the 8.5% cumulative dividend, which is payable at the time of conversion in either cash or common stock at the Company’s determination), the exercise of approximately 269,444 shares of common stock issuable to the Series A convertible preferred stockholders upon exercise of warrants (which warrants will be issuable to the Series A convertible preferred stockholders upon completion of this offering, and which share calculation does not including the 8.5% cumulative dividend payable at the time of conversion in either cash or common stock at the Company’s determination), the exercise of 500,000 warrants into 500,000 shares of common stock (250,000 shares of which are being sold by certain selling stockholders in this offering), and the conversion of $ of convertible notes (which will convert into shares of common stock upon completion of this Offering). Net tangible book value per share is determined by dividing our total tangible assets less our total liabilities by the number of shares of common stock outstanding. Our historical net tangible book value as of March 31, 2022 was $( ) or $(.00__) per share, based on shares of common stock, 500,000 warrants to purchase common stock, and 1,212.5 shares of Series A preferred stock and related warrants outstanding as of March 31, 2022.
Net tangible book value dilution per share represents the difference between the amount per share paid by new investors who purchase shares from us in this offering and the pro forma net tangible book value per share of common stock immediately after completion of this Offering. As of March 31, 2022, after giving effect to our sale of shares of common stock in this Offering at an initial offering price of $ per share, the exercise of warrants to purchase 500,000 shares of common stock and the sale of such common stock by certain selling stockholders in this Offering, the automatic conversion of our Series A convertible preferred stock into shares of common stock and the automatic conversion of our convertible notes into shares of common stock, after deducting estimated Offering expenses that we must pay, our pro forma as adjusted net tangible book value would have been $ , or $ per share. This represents an immediate increase in pro forma net tangible book value of $ per share to existing shareholders, and an immediate dilution in pro forma net tangible book value of $ per share to new investors purchasing shares in this Offering. The table below illustrates this per share dilution as of March 31, 2022.
Before offering |
Pro forma, as adjusted |
|||||||
Assumed initial public offering price per share | $ | $ | ||||||
Net tangible book value per share as of March 31, 2022 | $ | |||||||
Increase in pro forma net tangible book value per share attributable to new investors participating in this Offering and conversion of the Convertible Notes | $ | $ | ||||||
Pro forma as adjusted net tangible book value per share after this Offering and conversion of the Convertible Notes | $ | |||||||
Dilution of pro forma net tangible book value per share to new investors | $ |
The following table sets forth, on a pro forma as adjusted basis as of March 31, 2022, the number of shares of common stock purchased or to be purchased from us, the total consideration paid or to be paid and the average price per share paid or to be paid by existing holders of common stock and by new investors, at a public offering price of $ per share, before deducting estimated Offering expenses that we must pay.
SHARES PURCHASED | TOTAL CONSIDERATION | AVERAGE PRICE | ||||||||||||||||||
NUMBER | PERCENT | AMOUNT | PERCENT | PER SHARE | ||||||||||||||||
Existing stockholders | % | $ | % | $ | ||||||||||||||||
New investors | ||||||||||||||||||||
Total | 100 | % | $ | 100 | % | $ |
The foregoing discussion and tables are based on the number of shares of common stock outstanding as of March 31, 2022 but excluding 2,615,883 shares of common stock reserved for issuance under our 2018 Equity Incentive Plan. To date, 384,167 shares have been granted in the form of restricted stock units (“RSUs”), of which 357,390 RSUs have vested and 30,777 RSUs remain subject to vesting.
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MANAGEMENT’S
DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following Management’s Discussion and Analysis should be read in conjunction with our financial statements and the related notes thereto included elsewhere in this prospectus. The Management’s Discussion and Analysis contains forward-looking statements that involve risks and uncertainties, such as statements of our plans, objectives, expectations and intentions. Any statements that are not statements of historical fact are forward-looking statements. When used, the words “believe,” “plan,” “intend,” “anticipate,” “target,” “estimate,” “expect,” and the like, and/or future-tense or conditional constructions (“will,” “may,” “could,” “should,” etc.), or similar expressions, identify certain of these forward-looking statements. These forward-looking statements are subject to risks and uncertainties that could cause actual results or events to differ materially from those expressed or implied by the forward-looking statements in this form. Our actual results and the timing of events could differ materially from those anticipated in these forward-looking statements as a result of several factors including, but not limited to, those noted under “Risk Factors” in this prospectus. In addition, any compensation disclosure contained in this prospectus regarding our officers and directors is likely to increase in the near term following completion of the offering, and therefore all such disclosures made within this prospectus reflect historical facts and will not reflect forward looking or anticipated compensation going forward. See the section entitled “Executive Compensation” below for a more detailed discussion.
We do not undertake any obligation to update forward-looking statements to reflect events or circumstances occurring after the date of this prospectus, except as required by U.S. federal securities laws.
Overview
Founded by Georgetown University Medical School faculty members, we are a discovery and development stage pharmaceutical company leveraging our proprietary technology to develop novel therapies that are designed to cure cancer. Originally formed as Shuttle Pharmaceuticals, LLC in 2012, our goal is to extend the benefits of cancer treatments by leveraging insights into cancer therapy with surgery, radiation therapy, chemotherapy and immunotherapy. While there are several therapies being developed with the goal of curing cancer, one of the most effective and proven approaches to this is radiation therapy (RT). We are developing a pipeline of products designed to address the limitations of this current standard of cancer therapies. We believe that our product candidates will enable us to deliver cancer treatments that are safer, more reliable and at a greater scale than that of the current standard of care.
Operations to date have focused on continuing our research and development efforts to advance Ropidoxuridine clinical testing and improved drug formulation, to advance HDAC6 inhibitor (SP-2-225) preclinical development, and complete SBIR contract work on predictive biomarkers of radiation response, as well as prostate cell lines for health disparities research. We have received SBIR contract funding from the NIH for the aforementioned projects. The clinical development of Ropidoxuridine has shown drug bioavailability and a maximum tolerated dose has been established for use in Phase II clinical trials. The radiation biomarker project and the health disparities project have been completed. Changes in operational, administrative, legal and professional expenses related to our operations are set forth in more detail in the discussion below.
Results of Operations
Comparison of the three months ended March 31, 2022 and 2021
The following table summarizes the results of our operations:
Three Months Ended | ||||||||||||||||
March 31, | ||||||||||||||||
2022 | 2021 | Change | % | |||||||||||||
Revenue | $ | - | $ | - | $ | - | - | |||||||||
Operating expenses: | ||||||||||||||||
Research and development, net of contract expense reimbursements | 295,915 | 105,996 | 189,919 | 179 | % | |||||||||||
General and administrative | 13,769 | 6,248 | 7,521 | 120 | % | |||||||||||
Legal and professional | 328,712 | 63,842 | 264,870 | 415 | % | |||||||||||
Total operating expenses | 638,396 | 176,086 | 462,310 | 263 | % | |||||||||||
Other income (expense): | ||||||||||||||||
Interest expense - related party | (10,547 | ) | (10,547 | ) | - | 0 | % | |||||||||
Interest expense | (145,553 | ) | (230 | ) | (145,323 | ) | n/a | |||||||||
Change in fair value of warrant liability | 39,650 | 57,539 | (17,889 | ) | (31 | %) | ||||||||||
Gain on disposal of loan | 73,007 | - | 73,007 | 100 | % | |||||||||||
Total other income (expense) | (43,443 | ) | 46,762 | (90,205 | ) | (193 | %) | |||||||||
Net loss | $ | 681,839 | $ | 129,324 | $ | 552,515 | 427 | % |
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Research and Development-Net of contract expense reimbursements. Research and development-net of contract expense reimbursements was $295,915 for the three months ended March 31, 2022, as compared to $105,996 for three months ended March 31, 2021. For three months ended March 31, 2022, the Company received $0 in reimbursement from the NIH contracts and incurred $295,915 in research and development expenses. For the three months ended March 31, 2021, reimbursement from NIH totaled $211,455 and total expenses related to research and development was $317,451. The increase of $189,919 or 179% is primarily related to the Company receiving $211,455 less in contract reimbursements in 2022 as compared to 2021 and thus increasing spending. The lower contract reimbursements are due to the completion of Topic 345-Predictive-Biomakers and Phase 1 of Topic 352-Prostate Health Disparity contracts in 2020. In 2021, the Company received $82,467 for Topic 352 Prostate Health Disparity Phase 2 and $422,910 Topic 345-Predictive-Biomakers and Phase 2. The no cost extension from the NIH ended on March 15, 2022, and the final report to the NIH was filed and accepted, resulting in a payment of $211,455 following the closing of the first quarter.
Research and development, net of contract expense reimbursements changed substantially from the period ending March 31, 2021 to March 31, 2022. While NIH reimbursement was $211,455, no reimbursement was received in 2022. However, the NIH requires that milestones included in the fixed price contract be met. Therefore, compensation related expenses continued in 2022 under the no cost extension from the NIH contract. Compensation related expenses were $212,510 in 2021 compared to $267,740 in 2022. Compensation related expenses increased from 67% of total research and development in 2021 to 90% in 2022. Subcontract work made up 21% of total research and development expense in 2021 and there were no subcontractor expenses in 2022. All other research and development expenses were inconsequential.
Below is a breakdown of the actual costs and reimbursements received by the company for the three months ended March 31, 2022 and 2021, and a breakdown of how such cost and reimbursements were distributed across research projects.
For the first quarter ending March 31, 2022, total research and development costs were $295,916 for which all costs were funded by the Company. For the first quarter ending March 31, 2021, total research and development costs were $317,450 for which 40.1% of the costs were allocated to the NIH funded project (Topic 345) and Shuttle funded the remaining costs of $190,155 (59.9%). Company funded research and development activities increased in both 2021 and 2022 due to NIH no cost extensions required to complete contracted work and file the final reports. A summary of the breakdown of costs is listed below.
Key Research and Development Projects
Research and Development, Net of Contract Expense Reimbursements
Periods ending March 31, 2021 and 2022
Research & Development Revenue | NIH Topic 345 | NIH Topic 352* | Shuttle Funded | Total | ||||||||||||||||||||||||||||
and Expenses | 2021 | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 | 2022 | ||||||||||||||||||||||||
NIH Reimbursement | 211,455 | - | - | - | - | - | 211,455.00 | - | ||||||||||||||||||||||||
Compensation | 31,471 | - | - | 190,154.79 | 265,568.21 | 221,625.63 | 265,568.21 | |||||||||||||||||||||||||
Subcontracts | 65,928 | - | - | - | 65,928.03 | - | ||||||||||||||||||||||||||
Supplies | 6,379 | - | - | - | 1,579.34 | 6,378.84 | 1,579.34 | |||||||||||||||||||||||||
Other, Lab | 23,518 | - | - | - | 28,768.13 | 23,517.91 | 28,768.13 | |||||||||||||||||||||||||
Expense total | 127,296 | - | - | - | 190,154.79 | 295,915.68 | 317,450.41 | 295,915.68 | ||||||||||||||||||||||||
Research and Development, Net of Contracts | 84,159 | - | - | - | (190,154.79 | ) | (295,915.68 | ) | (105,995.41 | ) | (295,915.68 | ) |
Note: Project 352 reimbursements were not received in in the first quarter of 2021 and research costs were company funded through an NIH extension without cost. The final invoice to NIH was sent to NIH and paid in April 2022 following the final report to NIH.
In addition, our CEO and CMO are actively involved in the research and development activities, but neither receives a salary from the Company. As such, research and development expenses are lower than might otherwise be incurred in the future.
The allocation of costs to each research project for the first quarter of 2021 and 2022 are as follows:
Cost Allocation for the Period Ending March 31, 2021
● | Compensation - $221,626, making up 69.8% of total R & D, with cost allocations of 14.2% (Topic 345) and 85.8% (Shuttle) | |
● | Subcontracts - $65,928, making up 20.8% of total R & D, with 100% of costs allocated to Topic 345. | |
● | Supplies and Other Lab expenses - $29,897, making up 9.4% of total R & D, with all costs allocated to Topic 345. |
Cost Allocation for the Period Ending March 31, 2022
● | Compensation - $265,568, making up 89.7% of total R & D, with all costs allocated to Shuttle. | |
● | Remaining costs of $30,347 were all allocated to Shuttle, with supplies and other lab expenses making up 10.3% of total R & D costs. |
General and Administrative Expenses. General and Administrative expenses increased by $7,521, from $6,248 in the first quarter of 2021 to $13,769 in the first quarter of 2022. Processing fees related to filing accounted for an increase of $3,088 and are related to pre-IPO activities. Website expenses increased by 1,666 in order to maintain and update the company’s profile. Additionally, there was a credit card credit for $1,797 in the first quarter of 2021.
Legal and Professional Expenses. The $264,870, or 415%, increase in legal and professional fees was primarily due to increases in legal expenses and professional expenses related to our financing activities.
Other (Income) Expense. Other expense was $43,443 for the three months ended March 31, 2022, which consisted of $145,553 in interest expense on convertible loans, $10,547 in interest expense on a related party loan, gain on change in warrant liability of $39,650 and a $73,007 gain on the forgiveness of the PPP loan. Other income was $46,762 for the three months ended March 31, 2021, which consisted of $230 for interest expense, $10,547 interest expense on a related party loan and gain on change in warrant liability of $57,539.
Comparison of the Years ended December 31, 2021 (Restated) and 2020
The following table summarizes the results of our operations for the years ended December 31, 2021 (Restated) and 2020:
Years Ended | ||||||||||||||||
December 31, | ||||||||||||||||
2021 | 2020 | Change | % | |||||||||||||
Revenue | $ | - | $ | - | $ | - | - | |||||||||
Operating expenses: | ||||||||||||||||
Research and development, net of contract expense reimbursements | 1,021,808 | 161,772 | 860,036 | 532 | % | |||||||||||
General and administrative | 36,500 | 85,927 | (49,427 | ) | (58 | %) | ||||||||||
Legal and professional | 684,684 | 261,823 | 422,861 | 162 | % | |||||||||||
Total operating expenses | 1,742,992 | 509,522 | 1,233,470 | 242 | % | |||||||||||
Other income (expense): | ||||||||||||||||
Interest expense - related party | (46,947 | ) | (36,771 | ) | (10,176 | ) | 28 | % | ||||||||
Interest expense | (3,841 | ) | (2,859 | ) | (982 | ) | 34 | % | ||||||||
Change in fair value of warrant liability | 579,146 | (256,580 | ) | 835,726 | 326 | % | ||||||||||
Gain on disposal of loan | 62,500 | - | 62,500 | 100 | % | |||||||||||
Total other income (expense) | 590,858 | (296,210 | ) | 887,068 | 299 | % | ||||||||||
Net loss | $ | (1,152,134 | ) | $ | (805,732 | ) | $ | (346,402 | ) | 43 | % |
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Research and Development-Net of contract expense reimbursements. Research and development-net of contract expense reimbursements was $1,021,808 for the year ended December 31, 2021, as compared to $161,772 for the year ended December 31, 2020. For the year ended December 31, 2021, the Company received $505,377 in reimbursement from NIH contracts and incurred $1,527,185 in research and development expenses. For the year ended December 31, 2020, reimbursement from the NIH totaled $1,258,141 and total expenses related to research and development was $1,419,913. The increase of $860,036 or 532% is primarily related to the Company receiving $752,764 less in contract reimbursements in 2021 as compared to 2020. The lower contract reimbursements are due to the completion of Topic 345-Predictive-Biomakers and Phase 1 of Topic 352-Prostate Health Disparity contracts in 2020. In 2021, the Company received $82,467 for Topic 352 Prostate Health Disparity Phase 2 and $422,910 Topic 345-Predictive-Biomakers and Phase 2.
The research and development expenses with the largest variances included compensation of $885,349, subcontractor expenses of $539,043, and lab supply costs of $30,181 for the year end December 31, 2021, as compared to compensation of $888,001, subcontractor expenses of $403,409, and lab supply costs of $57,355 for the year end December 31, 2020. Subcontractor expenses increased by $135,634, or 33.62%, between 2020 and 2021. These expenses increased as more subcontractor services were needed due to the Phase 2 NIH contracts and pending additional financing. All other research and development expense variances between 2020 and 2021 are immaterial.
Below is a breakdown of the actual costs and reimbursements received by the company for the years ended December 31, 2021 and 2020, and a breakdown of how such cost and reimbursements were distributed across research projects.
Key Research and Development Projects
Research and Development, Net of Contract Expense Reimbursements
Periods ending December 31, 2020 and 2021
Research & Development Revenue and | NIH Topic 345 | NIH Topic 352* | Shuttle Funded | Total | ||||||||||||||||||||||||||||
Expenses | 2020 | 2021 | 2020 | 2021 | 2020 | 2021 | 2020 | 2021 | ||||||||||||||||||||||||
NIH Reimbursement | 845,820 | 422,910 | 412,321 | 82,467 | - | - | 1,258,141 | 505,377 | ||||||||||||||||||||||||
Compensation | 183,183 | 198,426 | 174,026 | - | 530,791 | 686,923 | 888,000 | 885,349 | ||||||||||||||||||||||||
Subcontracts | 236,633 | 539,043 | 163,979 | - | 2,797 | - | 403,409 | 539,043 | ||||||||||||||||||||||||
Supplies | 24,670 | 30,181 | 32,655 | - | - | - | 57,355 | 30,181 | ||||||||||||||||||||||||
Other, Lab | 36,969 | 72,611 | 34,179 | - | - | - | 71,148 | 72,611 | ||||||||||||||||||||||||
Expense total | 481,485 | 840,261 | 404,840 | - | 533,588 | 686,923 | 1,419,913 | 1,527,185 | ||||||||||||||||||||||||
Research and Development, Net of Contracts | 364,336 | (417,351 | ) | 7,481 | 82,467 | (533,588 | ) | (686,923 | ) | (161,772 | ) | (1,021,808 | ) |
Note: The Project 352 final reimbursement was received in 2021 and research costs were company funded through an NIH extension without cost
In addition, our CEO and CMO are actively involved in the research and development activities, but neither receives a salary from the Company. As such, research and development expenses are lower than might be incurred in the future.
General and Administrative Expenses. General and Administrative expenses decreased by $49,427, from $85,927 for the year ended December 31, 2020, to $36,500 for the year ended December 31, 2021. There were two changes that account for the decrease in expenses: (1) directors and officers insurance decreased by $34,322 from $45,629 in 2020 to $$11,308 in 2021; and (2) a decrease in travel and conference expenses by $16,686 from $16,887 in 2020 to $202 in 2021. The decrease in costs for insurance was due to a negotiated reduction in premiums for 2021 and the reduction in the number of members serving on our board of directors from seven directors in 2020 to five directors in 2021. Travel and conference fees decreased from 2020 to 2021 due to a shift to virtual investment conferences related to the ongoing Covid-19 pandemic and a change in company strategy from contacting investors through conferences in 2020 to contacting investors through introductions made through an agreement with Boustead Securities.
Legal and Professional Expenses. The 162% increase in legal and professional fees was primarily due to a non-cash payment of $420,000 for business consulting services resulting from the transfer of 210,000 shares (105,000 shares on a post-split basis) of common stock from a major shareholder, who is also the wife our Chairman and CEO, to a business consultant, and increases in accounting and consulting fees of $684,684 for the year ended December 31, 2021 as compared to $261,823 for the year ended December 31, 2020.
Other Income (Expense). Other income was $590,858 for the year ended December 31, 2021, which consisted of $3,841 for interest expense on convertible loans, $46,947 interest expense on a loan-related party, gain on change in warrant liability of $579,146 and $62,500 gain on the forgiveness of the PPP loan. Other expense was $296,210 for the year ended December 31, 2020, which consisted of $2,859 for interest expense on convertible loans, $36,771 interest expense on a loan-related party and loss on change in warrant liability of $256,580.
Liquidity and Capital Resources
Our capital needs to date have been met by contributions from existing shareholders, as well as through private offerings of our securities, SBIR contracts and other grants. In the three months ended March 31, 2022, we raised a total of $525,715 through the sale of convertible notes. In the year ended December 31, 2021, we raised a total of $687,932 through the sale of notes and warrants and receipt of PPP loans. In addition, since inception, we have received a total of $5,531,722 in SBIR contracts and other grants received primarily through the National Institutes of Health.
We believe that we will continue to expend substantial resources for the foreseeable future on the completion of clinical development and regulatory preparedness of our product candidates, preparations for a commercial launch of our product candidates, if approved, and development of any other current or future product candidates we may choose to further develop. These expenditures will include costs associated with research and development, conducting preclinical studies and clinical trials, obtaining marketing approvals, and, if we are not able to enter into planned collaborations, manufacturing and supply as well as marketing and selling any products approved for sale. In addition, other unanticipated costs may arise. Because the outcome of any drug development process is highly uncertain, we cannot reasonably estimate the actual amounts necessary to complete the development and commercialization of our current product candidates, if approved, or future product candidates, if any.
There can be no assurance that additional financing will be available to us when needed, on favorable terms or otherwise. Moreover, any such additional financing may dilute the interests of existing shareholders. The absence of additional financing, when needed, could cause us to delay implementation of its business plan in whole or in part, curtail its business activities and seriously harm us and our prospects.
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Balance Sheet Data:
March 31, | December 31, | |||||||||||||||
2022 | 2021 | Change | % | |||||||||||||
Current assets | $ | 426,470 | $ | 509,615 | $ | (83,145 | ) | (16 | )% | |||||||
Current liabilities | 2,357,759 | 2,217,331 | 140,428 | 6 | % | |||||||||||
Working capital deficiency | $ | (1,931,289 | ) | $ | (1,707,716 | ) | $ | (223,473 | ) | 13 | % |
As of March 31, 2022, total current assets were $426,470. Total current liabilities as of March 31, 2022, were $2,357,759, resulting in a working capital deficiency of $1,931,289. As of December 31, 2021, total current assets were $509,615. Total current liabilities as of December 31, 2021, were $2,217,331, resulting in a working capital deficiency of $1,707,716. The current assets primarily resulted from $525,715 cash received from notes payable issued. The increase in current liabilities is due to the increase in notes payable issued, forgiveness of the PPP loan and payments on trades payable.
Cash Flow Data:
Three Months Ended | ||||||||||||||||
March 31, | ||||||||||||||||
2022 | 2021 | Change | % | |||||||||||||
Cash used in operating activities | $ | (624,607 | ) | $ | (106,622 | ) | $ | (517,985 | ) | 486 | % | |||||
Cash used in investing activities | $ | - | $ | - | $ | - | 0 | % | ||||||||
Cash provided by financing activities | $ | 525,715 | $ | 73,007 | $ | 452,708 | 620 | % | ||||||||
Cash on hand | $ | 405,857 | $ | 83,538 | $ | 322,319 | 386 | % |
Cash Flows from Operating Activities
We have not generated positive cash flows from operating activities. For the three months ended March 31, 2022, net cash flows used in operating activities was $624,607, consisting of a net loss of $681,839, reduced by depreciation expense of $1,450, gain on change in warranty liability of $39,652, amortization of right of use assets of $14,598, amortization of debt discount of $129,568, stock-based compensation of $166,533, gain on forgiveness of the PPP of loan of $73,007 and a net change in working capital of $142,258. For the three months ended March 31, 2021, net cash flows used in operating activities was $106,622, consisting of a net loss of $129,324, adjusted for depreciation expense of $1,350, change in warranty liability of $57,539, amortization of right of use assets of $17,565, stock-based compensation of $122,517, and a net change in working capital of $61,191.
Cash Flows from Investing Activities
For the three months ended March 31, 2022 and 2021, we did no investing activities.
Cash Flows from Financing Activities
For the three months ended March 31, 2022, we received $525,715 from the issuance of convertible notes. For the three months ended December 31, 2021, we received $500,000 from the sale of notes and warrants and $73,007 from the Paycheck Protection Program.
Going Concern
The accompanying financial statements have been prepared in conformity with generally accepted accounting principles, which contemplate continuation of the Company as a going concern. The Company’s only revenue source since inception from 2014 through present has been awards from government contracts totaling $5,531,722, and the Company has incurred losses since inception, having accumulated a deficit of $6,503,039 as of March 31, 2022. We currently have limited liquidity and have not completed our efforts to establish a stable source of revenues sufficient to cover operating costs over an extended period of time. These factors, among others, raise substantial doubt about our ability to continue as a going concern.
We will need to raise capital to fund its operations. To address our financing requirements, the Company intends to seek financing through debt or equity financings with an aim to continue progress toward commercial viability of our products. We continue to submit Federal grant and contract applications which have historically been the primary source of our revenue. The financial statements set forth herein do not include any adjustments that might result from the outcome of the uncertainty of raising additional capital.
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Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.
Critical Accounting Policies and Significant Judgments and Estimates
This discussion and analysis of our financial condition and results of operations is based on our financial statements, which have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”). The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported expenses incurred during the reporting periods. Our estimates are based on our historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. While our significant accounting policies are described in more detail in the notes to our financial statements included elsewhere in this registration statement, we believe that the following accounting policies are critical to understanding our historical and future performance, as these policies relate to the more significant areas involving management’s judgments and estimates.
Our most critical accounting policies and estimates relate to the following:
● | Research and Development Expenses | |
● | Operating Lease Accounting | |
● | Derivative Financial Instruments | |
● | Income Taxes |
Research and Development
Research and Development expenses are offset by contract receivable payments from an NIH SBIR contract that supports this scientific research. This is stated in the financials as research and development-net of contract expense reimbursements.
Operating Lease Right-of-use Assets and Operating Lease Liability
Operating lease right-of-use assets and liabilities are recognized at the present value of the future lease payments at the lease commencement date. The interest rate used to determine the present value is our incremental borrowing rate, estimated to be 10%, as the interest rate implicit in most of our leases is not readily determinable. Operating lease expense is recognized on a straight-line basis over the lease term.
Derivative Financial Instruments
We evaluate all of our agreements to determine if such instruments have derivatives or contain features that qualify as embedded derivatives. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported in the statements of operations. For stock-based derivative financial instruments, we use a Binomial Simulation model to value the derivative instruments at inception and on subsequent valuation dates. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is evaluated at the end of each reporting period. Derivative instrument liabilities are classified in the balance sheet as current or non-current based on whether or not net-cash settlement of the derivative instrument could be required within 12 months of the balance sheet date. As of March 31, 2022, our only derivative financial instrument was an embedded warrant feature associated with warrants issuable to our Series A convertible preferred stockholders upon completion of our initial public offering or public listing due to certain provisions that allow for a change in the warrant value based on fluctuations of our fair value of common stock at the date of issuance of the warrant based on certain contingent call features.
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We are a clinical stage pharmaceutical company leveraging our proprietary technology to develop novel therapies designed to cure cancers. Our goal is to extend the benefits of cancer treatments with surgery, radiation therapy, chemotherapy and immunotherapy. Radiation therapy (RT) is one of the most effective modalities for treating cancers. We are developing a pipeline of products designed to address limitations of the current cancer therapies as well as to extend to the new applications of radiation therapy. We believe that our product candidates will enable us to deliver cancer treatments that are safer, more reliable and at a greater scale than that of the current standard of care.
Our product candidates include Ropidoxuridine, Extended Bio-availability Ropidoxuridine (IPdR/TPI), and a platform of HDAC inhibitors (SP-1-161, SP-2-225 and SP-1-303). We have advanced Ropidoxuridine through a Phase I clinical trial using non-dilutive NIH SBIR contracts and are currently preparing a Phase II study that we intend to commence in 2022. We also plan to submit investigational new drug applications (INDs) for the extended Bio-availability Ropidoxuridine with the goals of initiating Phase I clinical trials in 2023, leveraging the outcomes of the Phase I clinical study results of Ropidoxuridine. We have applied for and received FDA approval of Orphan designation for Ropidoxuridine and RT for treating brain cancer (glioblastoma). In addition, we plan to continue to develop our pre-clinical products SP-1-161, SP-2-225 and SP-1-303 with the goal of submitting INDs in 2023 and 2024. We believe our management team’s expertise in radiation therapy, combined modality cancer treatment and immuno-oncology will help drive the development and, if approved, the commercialization of these potentially curative therapies for patients with aggressive cancers.
Radiation Oncology has gone through transformative technological innovation over the last several years to better define tumors, allow improved shaping of radiation delivery and support dose escalation with shorter courses of treatment. Furthermore, achieving higher dose distributions within tumor volumes has reached a practical plateau, since cancers are frequently integrated with or surrounded by more sensitive normal tissues and further dose increases risk of tissue necrosis. To increase cancer cures at maximally tolerated radiation doses, pharmacological and biological modifications of cells are needed to sensitize cancers, protect normal tissues, and stimulate the immune system to react against antigens produced by irradiated, damaged cancer cells. Drugs that show sensitizing properties, or the ability to make cancer cells more sensitive to radiation, offer a solution to this problem. Currently, such drugs are used off-label, and many have inherent toxicities since they were designed for direct cancer treatments and not for sensitization.
We are developing our products with the goal of addressing the unmet need in cancer treatment for a commercially marketable radiation response modifier solution that leads to greater sensitivity of cancer cells to ionizing radiation therapy. The goal of our products is to increase the therapeutic index for patients receiving radiation and to decrease radiation-related toxicities in patients with solid tumors. Our products operate across three areas related to the treatment of cancer with RT:
1. | Sensitization of growing cancer cells, rendering them more susceptible to the effects of radiation therapy. | |
3. | Activation of the DNA damage response pathway to kill cancer cells and protect adjacent normal cells. | |
4. | Activation of the immune system to kill any remaining cells after RT. |
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Our platform technology allows for the creation of an inventory of products for radiation sensitizing, immune modulation, and protection of healthy tissue.
Our Pipeline
We are currently developing a pipeline of small molecule radiation sensitizers and immune response regulating drugs. Our most advanced product candidate is Ropidoxuridine, an orally available halogenated pyrimidine with strong cancer radiation sensitizing properties in preclinical studies. In addition to our clinical study-ready candidate, we have a pipeline of complimentary product candidates that we are developing to address a host of solid tumor cancer indications. Our pipeline is represented in the diagram below:
Timeline for clinical phase (Ropidoxuridine) and pre-clinical phase (HDAC inhibitors) pipeline.
Our lead product candidates include:
● | Ropidoxuridine (IPdR) is our lead candidate radiation sensitizer for use in combination with RT to treat brain tumors (glioblastoma) and sarcomas. Phase I clinical trial results supported by Shuttle Pharma and the NCI (CTEP) were reported at the 30th EORTC-NCI-AACR Symposium in November 2018 and in a full report in the medical journal, Clinical Cancer Research, in July 2019, by our SBIR subcontractor. Eighteen patients completed dose escalations to 1,800 mg/day for 30 days, establishing the maximum tolerated dose (MTD) of 1,200 mg/day in combination with RT. Four partial responses, nine stable disease and one progressive disease in target lesions were reported. Four patients did not have measurable disease and, as a result, were not evaluable. These Phase I trial results demonstrate oral bioavailability and an MTD of 1,200 mg per day for 28 days for use in combination with radiation for Phase II clinical trials in brain tumors and Phase II clinical trials in sarcomas and/or unresectable pancreatic cancers. These disease sites are eligible for orphan disease designations. |
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● | Ropidoxuridine and Tipracil (IPdR/TPI) is a new combination formulation demonstrating extended bioavailability after oral administration in an animal model system. The IPdR/TPI formulation will be developed for use as a radiation sensitizer of stage II and stage III rectal cancers with an endpoint of pathologic complete response rate (pCR) of greater than 40% as the therapeutic target. The pCR is recognized as a surrogate of survival in patients with solid tumors. | |
● | SP-1-161 is Shuttle Pharma’s pre-clinical candidate lead HDAC inhibitor product. This pan HDAC inhibitor initiates the mutated in ataxia-telangiectasia (ATM) response pathway. Using rational drug design, we discovered HDAC inhibitors and ATM activators capable of radiation sensitizing cancer cells and protecting normal cells. These candidate drugs may serve as direct chemotherapeutic agents or as radiation sensitizers for treating cancers. | |
● | SP-2-225 is Shuttle Pharma’s pre-clinical class IIb selective HDAC inhibitor that affects histone deacetylase HDAC6. SP-2-225 has effects on the regulation of the immune system. The interactions of RT with the immune response to cancers are of great current interest, offering insight into potential mechanisms for primary site and metastatic cancer treatment. With the introduction of check-point inhibitors, CAR-T therapies and personalized medicine in cancer, regulation of the immune response following RT is of significant clinical and commercial interest. | |
● | SP-1-303 is Shuttle Pharma’s pre-clinical selective Class I HDAC inhibitor that preferentially affects histone deacetylases HDAC1 and HDAC3 and is a member of the class I HDAC family. SP-1-303 data show direct cellular toxicity in ER positive breast cancer cells. Furthermore, SP-1-303 increases PD-L1 expression. |
Our Approach
We believe that we have established a leadership position in radiation sensitizer discovery and development. Over approximately six years of research, we have identified two clinical phase product candidates and discovered new pre-clinical molecules using our proprietary platform technologies to increase the therapeutic index for patients receiving radiation for treatment of solid tumors. Our development strategy has four key pillars: (1) to improve the efficacy of RT by demonstrating improved disease-free survival rates in patients who undergo radiation therapy, (2) reduce the amount of radiation needed for a favorable tumor response, thereby limiting the potential for radiation related toxicities to healthy cells, (3) decrease the extent of surgery needed to remove cancers and improve quality of life, and (4) leverage our next generation technologies to create drugs that regulate the immune response assisting immune checkpoint and CAR-T therapies and other personalized medicines targeting cancers.
We propose to perform Phase I and Phase II clinical trials to advance our clinical product candidates. In addition, candidate HDAC inhibitor molecules will be tested, and IND-enabling studies will be performed to prepare for Phase I clinical trials.
To date, we have been awarded three SBIR contracts from the NIH to:
● | Develop IPdR as a radiation sensitizer for the treatment of gastro-intestinal cancers, in combination with radiation therapy. This funding provided partial support for the Phase I clinical trial of Ropidoxuridine and RT. | |
● | Develop prostate cancer cell cultures from African-American men, with donor matched normal prostate cells, with the goal of establishing 50 pairs for accelerating research to reduce prostate cancer health disparities in African-American men. This project was funded under “Moonshot” designation and Shuttle Pharma is eligible to submit an application for additional SBIR (Phase IIb) funding to establish the infrastructure required to expand and distribute cells for research purposes. Cells from African-American patients are distributed to investigators who are conducting health disparities research. | |
● | Develop predictive biomarkers for determining outcomes for prostate cancer patients following treatment with SBRT. This SBIR-funded project was completed on March 15, 2022 and Shuttle Pharma is eligible to apply for additional funding through the SBIR (Phase IIb) mechanism to de-risk clinical validation to develop the predictive biomarkers. |
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All three SBIR funded projects have been completed. The Company is eligible to apply for SBIR Phase IIb funding to “bridge” the funding gap should Shuttle Pharma elect to advance the “Moon shot” health disparities or the predictive biomarker project. The NIH SBIR program is designed to encourage small businesses to engage in Federal Research/Research and Development (“R/R&D”) that has the potential for commercialization.
Our Strategy
Our goal is to maintain and build upon our leadership position in radiation sensitization. We plan to develop Ropidoxuridine and the HDAC6 inhibitor (SP-2-225) and, if approved by the FDA, commercialize our product candidates for the treatment of cancers. While this process may require years to complete, we believe achieving this goal could result in new radiation sensitizer and immunotherapy products. Key elements of our strategy include:
● | Capitalize on Ropidoxuridine as an orally available, small molecule radiation sensitizer. To date, there is one drug (Cetuximab, a monoclonal antibody) approved by the FDA specifically as a radiation sensitizer. If we are successful in developing Ropidoxuridine and obtaining FDA approval, a small molecule sensitizer would then be enabled for clinical applications for radiation sensitization. | |
● | Expand our leadership position within radiation sensitizers. In addition to our traditional radiation sensitizers, we plan to advance our near-term pipeline to include radiation sensitizers for proton therapy. Proton Therapy is growing worldwide as a form of radiation therapy due to its unique beam shaping characteristics. As a result, this new technology offers a major opportunity for Shuttle Pharma to strive to develop an innovative and well-tolerated drug for proton therapy sensitization. | |
● | Execute a disciplined business development strategy to strengthen our portfolio of product candidates. We have built our current product pipeline through in-house development, partnerships with leading academic institutions and through successful in-licensing deals. We will continue to evaluate new in-licensing opportunities and collaboration agreements with leading academic institutions and other biotechnology companies around programs that seek to address areas of high unmet need and for which we believe there is a high probability of clinical success, including programs beyond our target franchise areas and current technology footprint. |
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● | Invest in our HDAC platform technology and maximize its utility across cancer therapies. We are initially applying the platform to develop drugs for cancer radiation sensitization and normal tissue radiation protection. In addition, based on the data we have obtained thus far, these drugs are immune regulatory. We intend to invest to develop other properties of our platform technology, as well. | |
● | Enter into collaborations to realize the full potential of our platform. The breadth of our HDAC technology platform enables other therapeutic applications, including radiation sensitization and immune therapy. We intend to seek collaborations centered on our platform to maximize applications for cancer treatment. |
Radiation Therapy
Radiation Oncologists use Radiation Therapy (RT) to treat cancers that cannot be completely removed by surgery but have not yet spread to distant sites within the body. RT has been a mainstay for the treatment of cancer malignancies for more than half a century. The combination treatment of radiation therapy and chemotherapy has involved the use of cytotoxic drugs, targeted biologic agents and targeted external beam radiation to increase the destruction of tumor cells and cure or delay cancer progression. The low number of drugs and biologic agents under investigation as radiation sensitizing agents highlights an unmet need for new approaches and agents that provide greater effectiveness, increased quality and better tolerability for patients. |
Currently, “chemo-radiation” treatments are established in cancers of the head and neck, esophagus, lung, stomach, breast, brain, pancreas, rectum and uterine cervix. The ideal radiation sensitizer would reach the tumor in adequate concentrations and act selectively in the tumor, as compared to surrounding normal tissues. It would have predictable pharmacokinetics for timing with radiation therapy and could be administered with every radiation treatment approach. The ideal radiation sensitizer would have minimal toxicity or manageable enhancement of radiation toxicity. |
The U.S. market for radiation sensitizing agents is experiencing dynamic growth through development of new radiation technology, the introduction of new agents, growth in the number of diagnosed patients in a variety of cancers and changes in treatment patterns. New agents have been introduced, including bevacizumab (Avastin®, Roche), panitumumab (Vectibix®, Amgen), temozolomide (Temodar®, Merck) and cetuximab (Erbitux®, Eli Lilly/Imclone), with potential as radiation sensitizing agents (though all but cetuximab are used off label); and all are recommended by the NCCN® (National Comprehensive Cancer Network) in clinical practice guidelines for use in combination with established therapies such as FOLFOX (leucovorin, 5-FU, oxaliplatin), CapeOX (capecitabine, oxaliplatin) and FOLFIRI (leucovorin, 5-FU, irinotecan). |
The growth in the number of patients with cancers is being driven by an aging population and improved diagnostic tools. According to the National Cancer Institute (NCI), more than half (~50 - 60%) of all cancer patients undergo some type of radiotherapy during the course of their treatment. Confirming the patient estimate from the NCI, the American Society for Therapeutic Radiology and Oncology (ASTRO) factsheet states approximately 67% of approximately 1.25 million cancer patients are treated with radiation therapy annually, either one or more times during the course of treatment. In addition, in a study published by the Journal of Clinical Oncology in 2016, it is estimated that the number of cancer patients needing radiation therapy will increase by 22% in the next 10 years. (See “The Future of Radiation Oncology in the United States From 2010 to 2020: Will Supply Keep Pace With Demand?” Benjamin D. Smith, Bruce G. Haffty, Lynn D. Wilson, Grace L. Smith, Akshar N. Patel, and Thomas A. Buchholz Journal of Clinical Oncology 2010 28:35, 5160-5165). |
The American Society of Clinical Oncology (ASCO) estimates more than 80% of cancers in the U.S. occur in people in the age group of 50 and above with over 60% of cancers occurring in those 65 and over. (See, 2018 Clinical Cancer Advances Report, American College of Clinical Oncology, 2018). For example, according to the American Cancer Society (ACS), more than 90% of colorectal cancer patients are individuals aged 50 years and older, with approximately 40% of all cases occur in patients aged 75 years and over. The Colon Cancer Alliance estimates that 90% of new cases and 95% of deaths from colorectal cancers occur in people aged 50 or older. Also, the U.S. Census estimates that the age group of 65-84 will grow by 23% within the next five years, indicating a likely increase in the overall number of cancer patients in the U.S. |
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The table below details the number and rate of cancers occurring in the United States in 2018:
Estimated New Cancer Cases in the US
Male | Female | |||||||||||||||||
Prostate | 174,650 | 26 | % | Breast | 268,600 | 38 | % | |||||||||||
Lung & bronchus | 116,440 | 17 | % | Lung & bronchus | 111,710 | 16 | % | |||||||||||
Colon & rectum | 78,500 | 12 | % | Colon & rectum | 67,100 | 10 | % | |||||||||||
Urinary bladder | 61,700 | 9 | % | Uterine corpus | 61,880 | 9 | % | |||||||||||
Melanoma of the skin | 57,220 | 8 | % | Melanoma of the skin | 39,260 | 6 | % | |||||||||||
Kidney & renal pelvis | 44,120 | 7 | % | Thyroid | 37,810 | 5 | % | |||||||||||
Non-Hodgkin lymphoma | 41,090 | 6 | % | Non-Hodgkin lymphoma | 33,110 | 5 | % | |||||||||||
Oral cavity & pharynx | 38,140 | 6 | % | Kidney & renal pelvis | 29,700 | 4 | % | |||||||||||
Leukemia | 35,920 | 5 | % | Pancreas | 26,830 | 4 | % | |||||||||||
Pancreas | 29,940 | 4 | % | Leukemia | 25,860 | 4 | % | |||||||||||
All sites | 677,720 | All sites | 701,860 |
2018 Clinical Cancer Advances Report, American College of Clinical Oncology, 2018
Colon Cancer Alliance. Colorectal Cancer Survival Rates from Facts and Figures, 2017. Chicago, IL; 2017
The U.S. 2019 estimated incidence, deaths and five-year survival rate of cancer patients responsive to radiation therapy is significant (ACS Facts & Figures, 2019). The top cancers responsive to radiation are shown, based on the number of newly diagnosed patients. The incidence rates for some cancers are increasing by approximately 1-2% per year in the U.S. The number of newly diagnosed patients is significant and growing due to the aging of the population and improved diagnostic techniques. |
All of the listed cancers illustrate the opportunity presented for radiation sensitizers. Of note is the low five-year survival of pancreas, brain, lung and esophagus cancers—all are candidates for Shuttle’s pipeline of radiation sensitizing compounds. Cancers with low survival rates are of interest since they show a high unmet need for new therapeutics and an opportunity for Shuttle to gain significant uptake of their pipeline compounds. |
Factors that are challenges and may restrict growth in the radiation sensitizer market include the safety and tolerability of many of the newer agents with radiation sensitizing properties; a regulatory environment that engenders greater levels of scrutiny of clinical practice issues; the high cost of newer agents; and the changing (and more restrictive) reimbursement environment in radiation oncology through CMS (Center for Medicare and Medicaid Services) and private payors. These factors may negatively impact the potential for growth in the US market. |
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Many of the drugs used “off-label” as radiation sensitizers currently require close scrutiny of their potential for side effects that can affect the safety and tolerability of their use with patients. All of the current agents carry significant potential for side effects that can affect patients’ therapies and quality of life. Radiation sensitizing agents can cause both acute and chronic side effects in patients. Side effects can vary from person to person depending on age, sex, type of cancer, dose given per day, total dose given, and the patient’s general medical condition. Some common side effects of currently used radiation sensitizers include leukopenia, skin damage, hair loss, fatigue, bladder problems, nausea, fibrosis, memory loss, infertility, and enhanced risk of developing a second cancer, which may arise as a result of the patient’s weakened immune system due to cytotoxic drugs used in treatment or when newer biologic agents cause the over-production of specific cytokines or proteins, which can lead to developing secondary cancers. |
Over the past five years, the FDA has taken an increasingly conservative approach to the approval of new agents for oncology treatment. There is greater scrutiny of results from clinical trials regarding progression free survival, overall survival, and safety and tolerability of new agents. Restrictions such as black box warnings and REMS (Risk Evaluation and Migration Strategies) are being applied to more new products over the past five years compared to the previous five years. These restrictions require physicians to be more careful in evaluating the use of newer agents and newer diagnostic tools to select the most appropriate patients for newer approved agents. |
Many of the new agents are molecularly targeted therapies that are biologic in their development and manufacturing. The cost of the newer agents can be significant. For example, the cost for Avastin for one treatment course as a radiation sensitizer is estimated at $9,000-12,000 according to one Key Opinion Leader in the U.S. (Carl Schmidt, Consultant, Shuttle Pharmaceuticals Holdings, Inc., Business Plan 2018). Recently, a CAR-T gene therapy from Novartis was launched with a yearly cost of $475,000. Further, as many private payors scrutinize the cost and appropriate use of newer drugs, they require physicians to provide justification for use of newer agents through prior authorization requests, use of step therapy and to follow guidelines that delay treatment, increase administrative costs and limit the therapeutic choices for physicians and hospitals. |
Public payors for radiation oncology therapies such as CMS have instituted reimbursement reductions that potentially affect the overall cost of therapy and can limit the acceptance of newer agents. With CMS announced reductions in reimbursement for radiation oncology, there is increased pressure to find a more potent radiation sensitizer agent with reduced side effects, and greater cost-effectiveness. |
Escalating healthcare spending is adding pressure on government and commercial payors to contain drug costs. While the oncology space is arguably not as tightly managed by payors as other therapeutic areas, utilization management of costly cancer therapeutics has become an increasing priority for US payors, especially with the advent of biologics. Payors (and market access agencies in the EU) will most often restrict high-cost drugs, drugs with limited or no survival benefits, and drugs deemed to be at high risk for widespread off-label use. |
Beyond efforts at cost containment by insurers (which often require patients to first be prescribed lower cost drugs in order to determine effectiveness prior to allowing for reimbursements for more expensive (or less cost effective) drugs), payors are also looking toward implementing clinical pathways as a way to maintain or improve health outcomes while lowering costs. Clinical pathways are designed to address the limitations of prior authorization and of reduced fee schedules, offering more durable cost containment to payors. These pathways may lead to cost savings by encouraging the use of generics, streamlining treatment choices, and reducing side effects while maintaining outcomes. |
Engineered Radiation Sensitizers
The market for radiation sensitizers in selected cancer types is defined by the need to improve local-regional tumor control. Treatment regimens have been developed to address patient needs for tumor control and quality of life. Since the initial applications of Ropidoxuridine and selective HDAC inhibitors are as adjuncts to the standard of care for the treatment of radiation responsive cancers, the unmet needs of the market lie in the potential for the following:
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● | Improvement in efficacy of radiation treatments as determined by overall survival, progression free survival and response rates in comparison to currently used “off-label” sensitizer drugs. | |
● | Reduction in radiation doses needed to affect a positive clinical response for the patient. | |
● | Reduction in the surgical extent that is needed to remove residual cancer. | |
● | Improvement in quality of life outcomes. |
Various sources have estimated that more than 800,000 patients in the US are treated with radiation therapy for their cancers. According to the American Cancer Society about 50% are treated for curative purposes and the balance for palliative care. The market opportunity for radiation sensitizers lies with the 400,000 patients treated for curative purposes. The number of patients being treated with RT is expected to grow by more than 22% over the next five years. Based on a rough estimate of a course of radiation sensitizing brand drug therapy (off label at this time) of $12,000 per patient—the market size would be in excess of $4.0 billion. This would represent about 4% of the annual cost of cancer care in the US.
In the past two decades, developments in the field of oncology have resulted in an increase in the number of clinical trials of marketed products that exhibit radiation sensitizing properties. The following are a few examples of recently approved products that exhibit radiation sensitizing properties: topotecan (Hycamtin®) was approved for ovarian and small-cell lung cancer and also in cervical cancer when used in combination with cisplatin. Irinotecan (Camptosar®) is used for metastatic colorectal carcinoma, trastuzumab (Hercepetin®) for breast cancer, and gefitinib (Iressa®) for locally advanced non-small-cell lung cancer. However, the claims on radiation sensitization are anecdotal in the scientific literature.
In addition, clinical trials are in progress to develop novel molecules (such as poly (ADP-ribose) polymerase (PARP), histone deacetylase (HDAC) inhibitors (such Zolinza® (vorinostat) and heat-shock protein 90 (hsp90) inhibitors with potential to increase the therapeutic use of compounds with radiation sensitizing properties for other cancers. Several drugs with radiation sensitizing properties are currently in Phase III clinical trials, such as nimorazole (for head and neck cancer), motexafin gadolinium (for brain metastases), and cisplatin (for cervical cancer); though none are likely to apply for a radiosensitizing claim with the FDA since the radiosensitizing element in their clinical trials are not primary endpoints. While additional drugs with radiation sensitizing properties are expected to be launched in the future, thereby driving the radiation sensitizers market further, to date, there is no indication that any drug in development is expected to be approved specifically as a radiation sensitizer.
The competitive environment for “off-label” radiation sensitizers for solid tumor cancers is anticipated to become predominantly generic. Avastin, Erbitux, Camptosar and Xeloda have or will lose patent protection in the next three years. Newer products under investigation or approved, such as Vectibix® (panitumumab) from Amgen will be promoted as having radiation sensitizing properties, along with indications for treatment for specific cancers. The high cost of these new therapies coupled with limited efficacy compared to current standard of care will be constrained by both public and private payors. Other new agents are in development but will face similar challenges.
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We anticipate that new products launching into the cancer market with anecdotal claims for use as radiation sensitizers with improved effectiveness, quality and tolerability will initially be limited in their growth until they have been added to established clinical pathways and guidelines. If their effectiveness, quality and tolerability are demonstrated clinically, as determined by the FDA, it is anticipated the National Comprehensive Cancer Network (NCCN), the leading authority in oncology drug evaluation for treatment guidelines, would issue a recommendation and addition to standard of care within approximately six to twelve months after launch. An NCCN recommendation would positively impact the growth potential for a new product entering the market. Also, payors, both public and private, would add the new product to their approved drug lists and provide reimbursement giving providers incentive to use the product as neoadjuvant and adjuvant therapy to standard of care.
As with many cancer therapies, side effects can often have a distinct impact on quality of life and influence the potential for market growth. Patients increasingly have a stronger voice in the decision-making process for the appropriate therapies and costs to treat their cancers. As payors are increasingly placing more of the financial burden of the cost of therapy directly on patients, patients are voicing their opinions to their physicians and payors which have a direct effect on which products are selected. Many of the current therapies have significant side effects:
Private insurers are expected to have more restrictive formularies and medical benefits in which patients will be expected to carry more of the burden of the cost of drugs. Also, it is anticipated that increased application of third party developed treatment guidelines, such as those from the NCCN (National Comprehensive Cancer Network), are expected to be used by private payors to limit the access to products for specific conditions through prior authorizations and implementation of step therapy or increased out of pocket cost approaches. As many of the current drugs used as radiation sensitizers are expensive and not approved for use as radiation sensitizers (thus, such treatment is “off label”), and as many of the products in clinical trials are expected to be at the current or higher price levels, new products that may be specifically approved for an indication as the only approved product as a radiation sensitizer will have increased consideration for reimbursement.
CMS is increasingly moving many patients to private insurance through Medicare Advantage and ACOs. Medicare Advantage plans are capitation HMO and PPO plans offered through private insurers to Medicare patients. ACOs are being developed to increase quality of care for their patients. Most of the new ACOs are initially positioned for Medicare patients with over 400 approved by CMS. Several studies from the Center for Health Strategies, 2017, Journal of American Medical Association, 2018 and the Brookings Institute, 2015 estimated that almost 1000 ACOs for Medicare and non-Medicare patient populations would be approved by CMS or developed by a variety of healthcare entities to begin operating under the ACA in 2017. We expect the growth in ACOs to continue, regardless of any changes that may be made to the ACA going forward. In early 2017, Health Affairs, a magazine tracking ACOs, estimated that over 22 million patients are enrolled in Medicare and private ACOs. To address the quality of care measures designated by CMS and to gain additional incentives, use of clinical pathways or treatment guidelines is anticipated to be increasingly instituted to manage patient care. The impact on the uptake of new products in this environment can be profound if the new product is first in class and is included in national guidelines from organizations such as the NCCN and/or approval by the regional CMS contracting groups.
ROPIDOXURIDINE
The halogenated thymidine (TdR) analogs, bromodeoxyuridine (BUdR) and iododeoxyuridine (IUdR), are a class of pyrimidine analogs that have been recognized as potent radiosensitizing agents since the early 1960s. (See Kinsella TJ. An Approach to the Radiosensitization of Human Tumors. Cancer J Sci Am. Jul-Aug 1996:2(4); 184-193). Their cellular uptake and metabolism are dependent on the TdR salvage pathway where they are initially phosphorylated to the monophosphate derivative by the rate-limiting enzyme, thymidine kinase (TK). (See Shewach DS, Lawrence TS. Antimetabolite radiosensitizers. J Clin Oncol, Sep 10 2007; 25(26):4043-4050). After sequential phosphorylation to triphosphates, they are then used in DNA replication, in competition with deoxythymidine triphosphate (dTTP), by DNA polymerase. DNA incorporation is a prerequisite for radiosensitization of human tumors by the halogenated TdR analogs, and the extent of radiosensitization correlates directly with the percentage TdR replacement in DNA. (See Lawrence TS, Davis MA, Maybaum J, Stetson PL, Ensminger WD. The Dependence of Halogenated Pyrimidine Incorporation and Radiosensitization on the Duration of Drug Exposure. International Journal of radiation oncology, biology, physics. Jun 1990; 18(6);1393-1398). The molecular mechanisms of radiosensitization are most likely the result of increased susceptibility of TdR analog-substituted DNA to the generation of highly reactive uracil free radicals by ionizing radiation (IR), which may also damage unsubstituted complementary-strand DNA. Repair of IR damage may also be reduced by pre-IR exposure to these analogs.
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The rationale for using Ropidoxuridine as a radiation sensitizer is based on prior clinical studies with the active metabolite IUdR; identified in NIH laboratories as a potent radiation sensitizer. Ropidoxuridine is an orally available prodrug of IUdR. In the body, Ropidoxuridine is metabolized in the liver into IUdR. IUdR is incorporated into the DNA of actively growing cells and when cells are exposed to ionizing radiation, DNA strand breaks are generated, resulting in more cell death and radiation sensitization. (See Gurkan E, Schupp JE, Aziz MA, Kinsella TJ, Loparo KA. Probabilistic modeling of DNA mismatch repair effects on cell cycle dynamics and iododeoxyuridine-DNA incorporation. Cancer Res. Nov 15 2007; 67(22):10993-11000).
Most of the clinical efficacy data were obtained from NIH supported studies performed with IUdR, the active metabolite of Ropidoxuridine. However, IUdR requires constant infusion over six weeks of therapy which creates a significant compliance issue for patients. Ropidoxuridine can be given as a capsule for oral administration, resulting in greater ease of medication delivery and potentially improved compliance and fewer complications.
Over the last 20 years, there has been renewed interest in these halogenated TdR analogs as experimental radiation sensitizers in selected cancer patient groups. These analogs are rapidly metabolized in both rodents and humans, principally with cleavage of deoxyribose and subsequent dehalogenation by hepatic and extrahepatic metabolism, when given as a bolus infusion with a plasma half-life of <5 min. Consequently, prolonged continuous or repeated intermittent drug infusions over several weeks before and during irradiation are necessary, based on in vivo human tumor kinetics, to maximize the proportion of tumor cells that incorporate these analogs into DNA during the S phase of the cell cycle. (See Fowler JF, Kinsella TJ. The Limiting Radiosensitization of Tumors by S-phase Sensitizers. Br J Cancer. 1996;74 (Suppl)(27):294-296). Phase I and Phase II trials using prolonged continuous or repeated intermittent intravenous infusions of BUdR or IUdR before and during radiation therapy (RT) have focused principally on patients with high-grade brain tumors. These clinically radiation resistant tumors can have a rapid proliferation rate (potential tumor doubling times of 5–15 days) and are surrounded by non-proliferating normal brain tissues that show little to no DNA incorporation of the TdR analogs. As such, high-grade brain tumors are ideal targets for this approach to radiation sensitization. In Phase I/Phase II clinical trials, prolonged survival outcomes were observed compared to RT alone in patients with anaplastic astrocytomas and in patients with glioblastoma multiforme IUdR continuous IV infusion (1000 mg/m2/ day/ 14 days), Total 39 patients (F. Sullivan, et al. Int J Radiat Oncol Biol Phys. 1994; 30(3):583-90.) A therapeutic gain in clinical radiation sensitization using these halogenated TdR analogs was proposed for other types of clinically poorly radiation responsive (radiation resistant) cancers, including locally advanced cervical cancer, head and neck cancers, unresectable hepatic metastases from colorectal cancers, and locally advanced sarcomas, based on the results of other Phase I/Phase II clinical trials.
Target Indication: Glioblastoma, Sarcomas and Rectal Cancers
After completion of the Phase I clinical trial of Ropidoxuridine and RT in advanced GI cancers, we proposed to perform Phase II efficacy clinical trials in brain tumors (glioblastoma), soft tissue sarcomas, and rectal cancers. Glioblastoma multiforme is a deadly malignancy of the brain with no known cure. Radiation therapy provides delay of disease progression and is standard of care following surgical resection or biopsy. Radiation therapy is combined with Temodar, a drug that has shown activity (~ four months survival benefit) in treating brain tumors. Preliminary data using radiation therapy in combination with IUdR resulted in a delay of disease progression of up to six months. We propose to test IPdR in combination with radiation therapy in the Phase II clinical trial. Similarly, delay in disease progression has been observed following treatment of sarcomas by the combination of IUdR and RT. Based on the Phase I data of our clinical trial we know that therapeutic levels of IUdR are reached by administering the orally available prodrug, IPdR.
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Clinical Data
The Phase I results of the clinical trial supported by an SBIR contract to Shuttle Pharma and a sub-contract to the Brown University Oncology Group (BrUOG) at the LifeSpan/Rhode Island Hospital were reported by the subcontractor at the 30th EORTC-NCI-AACR Symposium in November 2018 and in the medical journal, Clinical Cancer Research, in 2019. Eighteen patients completed dose escalation to 1800 mg/day for 30 days, establishing the maximum tolerated dose (MTD) of 1,200 mg/day in combination with RT. Therapeutic blood levels of IUdR were achieved. Four patients were scored as partial responses, nine patients had stable disease and one patient progressed in the target lesions. These data support advancing IPdR and RT to clinical trials for the FDA to determine efficacy.
Development Plan
A key to driving the Ropidoxuridine product forward, the new formulation of IPdR/TPI, is the development of a clinical plan with aggressive timelines and support within the radiation oncology community to participate in clinical trials with the appropriate patients to ensure a comprehensive NDA dossier for each product. Initially, the plan is focused on the Phase I and Phase II clinical trials. Upon completion of these studies, we will determine whether to extend the Phase II study to a randomized Phase II, or to perform a randomized Phase III clinical trial. Such determination will be based, in part, on results of the initial clinical trials and the end of a Phase II meeting with the FDA. Shuttle Pharmaceuticals requested and received FDA orphan drug status for Ropidoxuridine as a clinical radiation sensitizer for treatment of glioblastoma and pre-operative treatment of soft tissue sarcomas. As a result, the application for “orphan” designation for Ropidoxuridine with RT for glioblastoma has been approved. The application for sarcomas, however, was not approved and will require addressing certain FDA comments and resubmission. The IPdR/TPI formulation clinical plan will focus on resectable stage II and III rectal cancer patients.
Our clinical plan for Ropidoxuridine development includes:
● | GMP manufacture and formulation of 24 kg of Ropidoxuridine for use in clinical trials. | |
● | Completion of pre-clinical Ropidoxuridine and Temodar drug-drug interaction safety study. | |
● | Submission of an IND for a Phase /II clinical trial of Ropidoxuridine, Temodar and RT in glioblastoma. | |
● | Negotiations for CRO contracts to perform the Phase II clinical trial. | |
● | Completion of the Phase II clinical trial in glioblastomas to determine appropriate dosing, quality, effectiveness and tolerability. |
We believe the data obtained from the NIH/NCI SBIR funded Phase I clinical trial supports efforts to raise additional capital to enable performing the Phase II clinical trials of Ropidoxuridine. We aim to conduct and complete the Phase II clinical trial so that we may present data to the FDA for its determination of efficacy. We believe this will support our efforts to raise the additional required capital to fund Phase III clinical trials and seek FDA approval of an NDA with “orphan” designation.
The clinical plan for the IPdR/TPI formulation will focus on resectable Stage II and Stage III rectal cancer patients. Nonetheless, we cannot guarantee the successful completion of any of these trials. Our inability to meet any of the aforementioned milestones in the Phase II or Phase III clinical trials will cause us to be unable to proceed with our present efforts and will likely cause us to be unable to raise additional funds.
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Our HDAC Small Molecule Delivery Platform
General
Since the founding of Shuttle Pharma, our discovery research and development efforts have been focused on our small molecule technology delivery platform which uses HDAC inhibitors, designed to target cancer cells, while protecting healthy tissue.
HDACs are a class of enzymes that regulate gene expression through chemical modification of histones and non-histone proteins. Increased HDAC activity leads to a more condensed chromatin (which is a protein complex consisting of DNA and other proteins), decreased gene expression and loss of key gene products, including tumor suppressor gene function. Inhibition of HDAC activity leads to a more open chromatin and increased expression of the key gene products. This chromatin modification underlies the epigenetic cellular regulatory system and is an area of intense investigation.
Our research and development efforts to date have focused on the discovery of novel, dual functional molecules for potential use in cancer treatment as radiation sensitizers of cancers, protectors of normal tissues, and activators of the immune responses to antigens expressed by irradiated cancer cells. To date, we have produced three candidate molecules:
● | SP-1-161, a candidate lead of compounds demonstrating activation of the “ATM” gene product (mutated in Ataxia-Telangiectasia). Ataxia-Telangiectasia is a human genetic disease characterized by neurological, immunological and radiobiological clinical features. | |
● | SP-2-225, a candidate lead of compounds demonstrating Class II (HDAC6) selective inhibition. HDAC6 is a molecule integral to the presentation of antigens by macrophages to T-lymphocytes. | |
● | SP-1-303 is a candidate Class I HDAC inhibitor with preferential efficacy against ER positive cancers. |
SP-1-161 - A Dual Functional Agent
SP-1-161 is an HDAC inhibitor of the hydroxamate chemical class of compounds and an ATM activator of the indole chemical class. HDACs modify histones and non-histone proteins, which are key components of the chromatin structure, gene expression regulation, and cell growth. HDAC inhibitors inhibit cell proliferation, angiogenesis and immunity. Eighteen human HDACs have been identified, subdivided into four classes based on sequence and functional homology. In cancer cells, HDAC activity silences tumor suppressor genes important for cell growth regulation and to chromosomal instability. Abnormal HDAC activity is also associated with tumor cell growth, invasion, metastasis and resistance to therapy. Therefore, inhibitors of HDACs have emerged as anti-cancer agents for cancer therapy. Vorinostat and romidepsin have been approved by the FDA for treatment of patients with relapsed or refractory T-cell lymphomas. In addition, panobinostat received FDA approval for treatment of recurrent multiple myeloma in combination with bortezomib and dexamethasone.
In preclinical studies, SP-1-161 inhibited the activity of pan-HDACs and activated the ATM gene product. ATM is a critical protein for the activation of the cell stress response for cellular recovery from radiation exposure in normal cells, but not in cancer cells. ATM activates the P53 protein, referred to as the “guardian of the genome,” and serves as a tumor suppressor critical for normal cell function and activation of programmed cell death in cancer cells.
In preclinical studies, SP-1-161 protected normal breast epithelial cells (184A1) following exposure to ionizing radiation while increasing sensitivity of breast cancer cells (MCF7). SP-1-161 provides this dual function in a single molecule and this molecule is differentiated from other HDAC inhibitors by treatment of cancers while protecting normal cells.
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SP-2-225
SP-2-225 is a selective HDAC inhibitor that affects histone deacetylase (HDAC6) and is a member of the class IIb HDAC family. Class II HDACs play important roles in cancer motility, invasion, neurological diseases, and immune checkpoint. HDAC6 inhibition has been most extensively studied for its role in the treatment of hematological cancers. HDAC6 is unique among HDAC enzymes in having two active catalytic domains and a unique physiological function. In addition to the modification of histones, HDAC6 targets specific substrates including α-tubulin and HSP90, and are involved in protein trafficking and degradation, cell shape and migration. Selective HDAC6 inhibitors are an emerging class of pharmaceuticals due to the involvement of HDAC6 in pathways related to neurodegenerative diseases, cancer and immunology. Specifically, its potential to affect regulation of the immune system and enhance the immune response in cancer is of great interest. With the introduction of check-point inhibitors, CAR-T therapies and personalized medicine in cancer, regulation of the immune response to this therapy is of significant clinical and commercial interest. (See Grindrod S, Brown M, Jung M. “Development of dual Function Small Molecules as Therapeutic Agents for Cancer Research,” Poster presentation #A178, American Association of Cancer Research Oct 2017).
Selective inhibition of HCAC6 reduces dose limiting side effects associated with non-selective HDAC inhibitors. Selective HDAC6 inhibitors may be combined with other cytotoxic agents. Shuttle’s discovery of selective HDAC inhibitors has yielded several HDAC6 selective candidate molecules including SP-2-225. HDAC6 inhibitors are under investigation for roles in the treatment of diseases such as multiple myeloma.
SP-1-303 - Target Indication: Breast Cancer
Histone deacetylase inhibitors sensitize cancers to the effects of radiation, protecte normal tissues from radiation injury and activate the immune system. SP-1-303 is a selective Class I HDAC inhibitor that inhibits HDAC1, 3 and 6 and has direct cellular toxicity in ER positive breast cancer cells. Furthermore, SP-1-303 increases the PD-L1 expression level in a time-dependent manner, support combination of SP-1-303 with an immune checkpoint blocker to enhance the therapeutic benefits. We are currently conducting preclinical efficacy studies of these molecules.
Development Plan
The HDAC inhibitor platform of candidate molecules will require pre-clinical evaluation, completion of IND-enabling studies and the lead drug candidates will be tested in Phase I clinical trials for pharmacokinetics and MTD determination. We have three lead candidates for potential development for the treatment of solid tumors, including breast cancer, lung cancer and multiple myeloma.
The results of Phase I and Phase II clinical trials will determine further drug development and Shuttle will seek to establish collaborative partnerships with other pharmaceutical companies to complete pre-clinical and clinical development, drug manufacturing and marketing of our product candidates. In the event we are unsuccessful in completing our clinical trials at any stage, or in the event we obtain negative results, we will likely be unable to raise additional funding related to our HDAC studies or will have to change direction of our research efforts regarding the HDAC inhibitor platform of candidate molecules.
Our Manufacturing Strategy
We have no manufacturing facilities that are company owned or operated. We have performed laboratory scale synthesis and testing in our research laboratories in Gaithersburg, Maryland. GMP synthesis of API, drug formulation and human dosage preparation will be performed under contracts with third-party manufacturers.
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Strategic Agreements
We have developed important strategic agreements with academic institutions for access to resources such as intellectual property, core facilities and contracting relationships. In addition, we have established an agreement with Propagenix for intellectual property in-licensing. Our current and ongoing relationships include:
● | Georgetown University |
○ | Sub-contractor for the SBIR supported African-American prostate cancer patient health disparities project (completed). The conditional reprogramming of cells (CRC) technology was invented at Georgetown University and Georgetown University owns the intellectual property. Propagenix holds the license for the intellectual property for the CRC technology from Georgetown University. The intellectual property for cells derived from African-American patients under the Georgetown University subcontract belong to Shuttle Pharmaceuticals, Inc. based on our sub-licensing agreement with Propagenix. | |
○ | Sub-contractor for the SBIR supported metabolomic predictive biomarker project (completed). The metabolomic biomarker intellectual property belongs to Georgetown University |
● | Brown University |
○ | Sub-contractor of the SBIR supported Phase I clinical trial of IPdR and RT (completed). |
● | University of Virginia |
○ | Research collaboration to develop heavy oxygen molecules for proton radiation sensitizer applications. |
● | George Washington University |
○ | Material transfer agreement for testing HDAC inhibitor effects in immune model systems | |
○ | The material transfer agreement that protects our HDAC inhibitor intellectual property is with George Washington University, transferring drugs for research purposes and sharing authorship on publications. There is no transfer of funds related to such activities. |
● | Propagenix, Inc. |
○ | License agreement for “conditional re-programmed cell” (CRC) technology. The cells established by Shuttle Pharma scientists at Georgetown University belong to us, based on the sublicense from Propagenix, Inc. An up-front licensing fee of $25,000 was paid to Propagenix. No other future milestone or royalty payments owed related to the Propagenix agreement. |
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Competition “Off-Label” Use
Drugs with radiation sensitizing properties.
Our Product Candidates
We are advancing a clinical stage product candidate, Ropidoxuridine, that we believe will target cancer cells while protecting healthy tissue when used in conjunction with RT.
Ropidoxuridine
Ropidoxuridine, an orally available halogenated pyrimidine with strong cancer radiation sensitizing properties, is our lead “clinical phase” product candidate. Halogenated pyrimidines are incorporated into DNA by rapidly growing cancer cells and become more sensitive to the effects of RT. We have received an SBIR contract from the NIH to fund a Phase I clinical trial in collaboration with Brown University at the Lifespan/Rhode Island Hospital to determine the maximum tolerated dose in patients with advanced gastrointestinal cancers. In connection with the trial, NCI has approved the Phase I clinical protocol and provided drug and clinical data management support to Rhode Island Hospital. The Phase I clinical trial has been completed and the results support advancing Ropidoxuridine to Phase II clinical trials of brain tumors, sarcomas and other tumors through contracted research organizations (or CROs).
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The following tables provide data from reported clinical trials of Iododeoxyuridine and RT therapy in brain cancers (glioblastoma multiforme) and high-grade sarcomas. Our primary strategy for Ropidoxuridine and RT therapy is to provide oral drug delivery to effect radiation sensitization of cancers and validate effectiveness in glioblastoma and sarcoma, potential “Orphan” indications.
Brain Cancer Treatment
Efficacy compared to historical RT-alone controls for treatment
of high-grade primary brain tumors (RTOG*, NCI** trials)
** | IUdR continuous IV infusion (1000 mg/m2/ day/ 14 days), Total of 39 patients (F. Sullivan, et al. Int J Radiat Oncol Biol Phys. 1994; 30(3):583-90) |
* | IUdR continuous IV infusion (2000 mg/m2/ 4 day infusion/ 6 week treatment), Total of 21 patients (R. Urtasun, et al. Int J Radiat Oncol Biol Phys. 1996;36(5):1163-7.) |
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Sarcoma Treatment
Efficacy compared to historical RT-alone controls for treatment
of high-grade sarcomas (University of Michigan*** trials)
*** | 16 patients were treated with continuous infusion (1000-1600 mg/m2/day) plus RT (J.M. Robertson, et al. Int J Radiat Oncol Biol Phys. 1995; 31(1):87-92). |
In addition to our primary product candidate, we are developing and planning to develop other cancer radiation sensitizers and radiation protectors, which target protecting normal tissue during the administration of RT, and other products utilizing our HDAC small molecule technology platform.
SBIR Contracts
The SBIR Program
The Small Business Innovation Research program, as developed by Congress under the Small Business Innovation Development Act of 1982, is designed to encourage domestic small businesses to engage in Federal Research/Research and Development (“R/R&D”) that has the potential for commercialization. Through a competitive awards-based program, SBIR enables small businesses to explore their technological potential and provides the incentive to profit from its commercialization. Some of the SBIR’s program goals include stimulating technological innovation, meeting Federal research and development needs and encouraging participation in innovation and entrepreneurship.
The SBIR program is a three-phase program. Phase 1 is to establish the technical merit and commercial potential of the proposed R/R&D efforts. Phase 2 is to continue the R/R&D efforts initiated in Phase 1 and funding is based on the results achieved in Phase 1. Phase 3 allows for the small business to pursue commercialization objectives resulting from the Phase 1 and 2 R/R&D activities. In addition, companies that have successfully completed Phases I and II are also eligible to apply for Phase IIb funding.
In addition to the SBIR contract to fund our Phase I clinical study on Ropidoxuridine in combination with RT for treatment of advanced gastrointestinal cancers, we have also received awards of SBIR contracts from the NIH to address prostate cancer health disparities and prostate cancer radiation biomarker development.
As of the date of this prospectus, all SBIR contracts received by the Company have been completed. The Company submitted a final report for SBIR contract # 75N81018C00031 on March 28, 2022. The following summary of terms for the three Phase II SBIR contracts is provided below.
Summary of SBIR Contracts
● | SBIR contract #261201400013C: Phase I ($191,971) and Phase II ($1,428,117) for Clinical Development of IPdR for Radiosensitization, dates September 19, 2014 through August 3, 2017, Subcontract to Brown University/LifeSpan Rhode Island Hospital. No related intellectual property. | |
● | SBIR contracts # HHSN261201600038C; Phase I ($224,687) and #261201800016C: Cell-Based Models for Prostate Cancer Health Disparity Research - Moonshot Project (Phase II), award amount $1,484,350, dates September 19, 2016 through September 16, 2021, Subcontract to Georgetown University, Intellectual property consists of cell cultures and is property of Shuttle Pharmaceuticals, Inc. via licensing agreement. | |
● | SBIR contracts #HHSN261201600027C ($299,502) and #75N81018C00031: Predictive Biomarkers of Prostate Cancer Patient Sensitivity for Radiation Late Effects, award amount $1,903,015, dates September 16, 2019 through March 15, 2022. Subcontract to Georgetown University, Intellectual property is owned by subcontractor Georgetown University with option to license to Shuttle Pharmaceuticals, Inc. |
Prostate Cancer Studies to Address Health Disparities
Prostate cancer health disparities studies have shown that African-American men are at higher risk for developing prostate cancer, as well as at higher risk of cancer specific death rates as compared to Caucasian American men. The causes of disparities have been attributed to socioeconomic differences, environmental exposures and biological factors. Most disparities studies have been population based, in part, due to the lack of relevant in vitro and in vivo models to support biological studies.
Shuttle Pharma has been awarded Phase I and II SBIR contracts entitled “Cell-based models for prostate cancer health disparity research” to develop African-American prostate cancer cell lines with donor matched normal prostate epithelial cell lines from African American men.
The commercialization of the prostate cells will require additional support through the SBIR funding mechanism. Companies that have completed Phase I and II SBIR awards are eligible to apply for Phase IIb SBIR funding. These awards are intended to de-risk a project by providing up to $4 million of matching funding for product development to commercialization. We intend to apply for such government funding to advance laboratory facilities and to expand the availability of the cell cultures. We are not raising capital through this IPO for the health disparities project. Should we not be successful for SBIR IIb funding, we will pause and may have to terminate this project.
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Prostate Cancer Biomarker Development
Patients treated for prostate cancer may experience treatment related late effects that adversely affect quality of life and may prove life-threatening. Shuttle has been awarded a Phase I SBIR contract entitled “Predictive biomarkers for prostate cancer patient sensitivity for radiation late effects” to determine the technical and commercial feasibility of a biomarker panel predictive of radiation mediated late effects in patients treated for prostate cancer.
Through collaboration with Georgetown University, patients treated with SBRT for prostate cancers will be analyzed for urinary and rectal symptoms and their blood will be analyzed by mass spectroscopy for predictive biomarkers. The discovery and validation of metabolite panels to serve as a predictive biomarker of patient outcomes following radiation therapy will support future development and commercialization of a diagnostic product through a Phase 2 SBIR effort.
The development to commercialization of the metabolite predictive biomarker panel will require additional support through the SBIR funding mechanism. We will be eligible to apply for Phase IIb SBIR funding the next round of solicitation. A Phase IIb will help de-risk the project by providing up to $4 million of matching funds for performing the clinical validation trial for product development to commercialization. We intend to apply for such government funding to advance this project. We do not intend to use the funds raised through this IPO for the health disparities project. Should we not be successful for SBIR IIb funding, we will terminate this project.
Collaborative Arrangements
While we intend to enter into collaborative arrangements to further develop our drug candidates in the future, at present we have not entered into any collaborative arrangements with third parties to develop our drug candidates as we are still completing clinical trials and, as a result, there can be no assurance that we will be able to do so on commercially reasonable terms or otherwise.
Intellectual Property
We invest significant amounts in research and development. Our research and development expenses before contract reimbursements were $1,527,185 and $1,419,913 for the years ended December 31, 2021 and December 31, 2020, respectively. After reimbursements for contracts of $505,377 in 2021 and $1,258,141 in 2020, net research and development expenses were $1,021,808 in 2021 and $161,772 in 2020.
We are seeking multifaceted protection for our intellectual property that includes licenses, confidentiality and non-disclosure agreements, copyrights, patents, trademarks and common law rights, such as trade secrets. We enter into confidentiality and proprietary rights agreements with our employees, consultants, collaborators, subcontractors and other third parties and generally control access to our documentation and proprietary information.
As of the date of this prospectus, we have filed four patent applications with the USPTO with respect to various aspects of our HDAC small molecule delivery platform and Ropidoxuridine, our lead product candidate. The following is the status of the patent applications Shuttle has filed to date:
Summary of Shuttle Pharma’s Intellectual Property Portfolio
USPTO number | Title | Date Filed | Date Granted | Anticipated Expiration Date** | ||||
US Application No.: 16/475,999 | Methods and compositions for cancer therapies that include delivery of halogenated thymidines and thymidine phosphorylase inhibitors in combination with radiation | 7/3/2019
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US Application No.: 17/484,876 | Dual function molecules for histone deacetylase inhibition and ataxia telangiectasia mutated activation and methods of use thereof | 9/24/2021 | ||||||
US Application No.: 17/315,567 | Selective histone deacetylase inhibitors for the treatment of human disease | 5/10/2021 | ||||||
US Application No.: 16/959,570 |
Selective histone deacetylase inhibitors for the treatment of human disease | 7/01/2020 | ||||||
US Patent No.: 9,809,539 | Dual function molecules for histone deacetylase inhibition and ataxia telangiectasia mutated activation and methods of use thereof | 3/3/2015 | 11/7/2017 | 3/3/2035 | ||||
US Patent No.: 11,034,667 | Selective histone deacetylase inhibitors for the treatment of human disease | 7/3/2019 | 6/15/2021 | 1/9/2038 | ||||
US Patent No.: 10,730,834 | Selective histone deacetylase inhibitors for the treatment of human disease | 8/4 /2020 | 8/4/2020 | 3/3/2035 | ||||
US Patent No.: 10,745,352 | Selective histone deacetylase inhibitors for the treatment of human disease | 8/18/2020 | 8/18/2020 | 3/3/2035 |
Morgan, Lewis & Bockius LLP prepared patent applications related to Ropidoxuridine (IpdR) and HDAC inhibitors, and, inthe fourth quarter of 2018, found no freedom to operate (FTO) issue for Ropidoxuridine used as radiosensitizer and used with tipiracil, and HDAC inhibitors SP-1-161 and SP-2-225.
Our strategy around protection of our proprietary technology, including any innovations and improvements, is to obtain worldwide patent coverage with a focus on jurisdictions that represent significant global pharmaceutical markets. Generally, patents have a term of twenty years from the earliest priority date, assuming that all maintenance fees are paid, no portion of the patent has been terminally disclaimed and the patent has not been invalidated. In certain jurisdictions, and in certain circumstances, patent terms can be extended or shortened. We are obtaining worldwide patent protection for at least novel molecules, composition of matter, pharmaceutical formulations, methods of use, including treatment of disease, methods of manufacture and other novel uses for the inventive molecules originating from our research and development efforts. We continuously assess whether it is strategically more favorable to maintain confidentiality for the “know-how” regarding a novel invention rather than pursue patent protection. For each patent application that is filed we strategically tailor our claims in accordance with the existing patent landscape around a particular technology.
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There can be no assurance that an issued patent will remain valid and enforceable in a court of law through the entire patent term. Should the validity of a patent be challenged, the legal process associated with defending the patent can be costly and time consuming. Issued patents can be subject to oppositions, interferences and other third-party challenges that can result in the revocation of the patent limit patent claims such that patent coverage lacks sufficient breadth to protect subject matter that is commercially relevant. Competitors may be able to circumvent our patents. Development and commercialization of pharmaceutical products can be subject to substantial delays and it is possible that at the time of commercialization any patent covering the product has expired or will be in force for only a short period of time following commercialization. We cannot predict with any certainty if any third-party U.S. or foreign patent rights or other proprietary rights will be deemed infringed by the use of our technology. Nor can we predict with certainty which, if any, of these rights will or may be asserted against us by third parties. Should we need to defend ourselves and our partners against any such claims, substantial costs may be incurred. Furthermore, parties making such claims may be able to obtain injunctive or other equitable relief, which could effectively block our ability to develop or commercialize some or all of our products in the U.S. and abroad, and could result in the award of substantial damages. In the event of a claim of infringement, we or our partners may be required to obtain one or more licenses from a third party. There can be no assurance that we can obtain a license on a reasonable basis should we deem it necessary to obtain rights to an alternative technology that meets our needs. The failure to obtain a license may have a material adverse effect on our business, results of operations and financial condition.
We also rely on trade secret protection for our confidential and proprietary information. No assurance can be given that we can meaningfully protect our trade secrets on a continuing basis. Others may independently develop substantially equivalent confidential and proprietary information or otherwise gain access to our trade secrets.
It is our policy to require our employees and consultants, outside scientific collaborators, sponsored researchers and other advisors who receive confidential information from us to execute confidentiality agreements upon the commencement of employment or consulting relationships. These agreements provide that all confidential information developed or made known to these individuals during the course of the individual’s relationship with the company is to be kept confidential and is not to be disclosed to third parties except in specific circumstances. The agreements provide that all inventions conceived by an employee will be the property of our company. There can be no assurance, however, that these agreements will provide meaningful protection or adequate remedies for our trade secrets in the event of unauthorized use or disclosure of such information.
Our success will depend in part on our ability to obtain and maintain patent protection, preserve trade secrets, prevent third parties from infringing upon our proprietary rights and operate without infringing upon the proprietary rights of others, both in the U.S. and other territories worldwide.
Manufacturing and Supply
We do not currently own or operate manufacturing facilities for the production of preclinical, clinical or commercial quantities of any of our product candidates. We currently use a number of our suppliers for the raw materials and formulation to meet the preclinical and any clinical requirements of our product candidates. We do not have a long-term agreement with any of these parties and we believe alternative sources of supply exist.
We intend to enter into collaborations for the manufacture of our product candidates, with our collaborators assuming responsibility for such manufacturing. Manufacturing is subject to extensive regulations that impose various procedural and documentation requirements, which govern record keeping, manufacturing processes and controls, personnel, quality control and quality assurance, among others. Any collaborator or third-party contract manufacturer we use would need to be compliant with cGMP. cGMP is a regulatory standard for the production of pharmaceuticals that will be used in humans.
Competition
The development and commercialization of drugs is highly competitive. We compete with a variety of multinational pharmaceutical companies and specialized biotechnology companies, as well as technology being developed at universities and other research institutions. Our competitors have developed, are developing or will develop product candidates and processes competitive with our product candidates. Competitive therapeutic treatments include those that have already been approved and accepted by the medical community and any new treatments that enter the market. We believe that a significant number of products are currently under development, and may become commercially available in the future, for the treatment of conditions for which we may try to develop product candidates.
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Many of our competitors have significantly greater financial, technical, manufacturing, marketing, sales and supply resources or experience than we have. If we are able to obtain approval for any product candidate, we will face competition based on many different factors, including the quality and effectiveness of our products, the ease with which our products can be administered and the extent to which patients accept relatively new routes of administration, the timing and scope of regulatory approvals for these products, the availability and cost of manufacturing, marketing and sales capabilities, price, reimbursement coverage and patent position. Competing products could present superior treatment alternatives, including by being more effective, safer, and less expensive or marketed and sold more effectively than any products we may develop. Competitive products may make any products we develop obsolete or noncompetitive before we recover the expense of developing and commercializing our product candidates. Such competitors could also recruit our employees, which could negatively impact our level of expertise and our ability to execute our business plan.
The following figure provides summary information about cytotoxic drugs that may be used with radiation therapy for their sensitizing properties that currently comprise the competition for Shuttle’s agents.
Fluorouracil (5-FU) is an anti-metabolite used to treat cancer, by injection, for colon cancer, esophageal cancer, stomach cancer, pancreatic cancer, breast cancer, and cervical cancer. Fluorouracil was patented in 1956 and is an effective and safe drug with radiation sensitizing properties. Capecitabine, an orally available formulation of 5-FU and was patented in 1992. It is used for the treatment of gastric, esophageal and other cancers for sensitization to radiation therapy.
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Cetuximab is an epidermal growth factor receptor (EGFR) inhibitor used for the treatment of metastatic colorectal, lung cancer and head and neck cancers. This monoclonal antibody is administered by intravenous infusion and improves the 5-year survival of patients when used in combination with radiation therapy, compared with radiotherapy alone.
Platinum based compounds (cis-platin, carbo-platin and oxaloplatin) also exhibit radiation sensitizing properties. Platinum and radiation are used together for the treatment of locally advanced cervical cancer and for head and neck cancers. Cisplatin is believed to augment the effects of radiation by inhibiting the repair of radiation-induced sub-lethal damage.
Bevacizumab works as an anti-angiogenic agent. It was approved for medical use in the United States in 2004. The addition of bevacizumab to standard treatment can prolong the lives of breast and lung cancer patients by several months and may be used with radiation therapy.
Irinotecan is given by injection and is used to treat colon cancer and small cell lung cancer and can be combined with radiation therapy. For colon cancer it is used either alone or with fluorouracil.
Government Regulation and Product Approval
Governmental authorities in the U.S., at the federal, state and local level, and other countries extensively regulate, among other things, the research, development, testing, manufacture, labeling, packaging, promotion, storage, advertising, distribution, marketing and export and import of products such as those we are developing. Our product candidates must be approved by the FDA through the NDA process before they may be legally marketed in the U.S. and will be subject to similar requirements in other countries prior to marketing in those countries. The process of obtaining regulatory approvals and the subsequent compliance with applicable federal, state, local and foreign statutes and regulations require the expenditure of substantial time and financial resources.
U.S. government regulation
NDA approval processes
In the U.S., the FDA regulates drugs under the Federal Food, Drug, and Cosmetic Act (the “FDCA”) and implementing regulations. Failure to comply with the applicable U.S. requirements at any time during the product development or approval process, or after approval, may subject an applicant to administrative or judicial sanctions, any of which could have a material adverse effect on us. These sanctions could include:
● | refusal to approve pending applications; | |
● | withdrawal of an approval; | |
● | imposition of a clinical hold; | |
● | warning letters; | |
● | product seizures; | |
● | total or partial suspension of production or distribution; or | |
● | injunctions, fines, disgorgement, or civil or criminal penalties. |
The process required by the FDA before a drug may be marketed in the U.S. generally involves the following:
● | completion of nonclinical laboratory tests, animal studies and formulation studies conducted according to GLPs or other applicable regulations; |
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● | submission to the FDA of an IND, which must become effective before human clinical trials may begin; | |
● | performance of adequate and well-controlled human clinical trials according to GCPs to produce data that the FDA may review to determine safety and efficacy of the product candidate for its intended use; | |
● | submission to the FDA of an NDA; | |
● | satisfactory completion of an FDA inspection of the manufacturing facility or facilities at which the product candidate is produced to assess compliance with cGMPs to assure that the facilities, methods and controls are adequate to preserve the product candidate’s identity, strength, quality and purity; and | |
● | FDA review and approval of the NDA. |
Once a pharmaceutical candidate is identified for development, it enters the preclinical or nonclinical testing stage. Nonclinical tests include laboratory evaluations of product chemistry, toxicity and formulation, as well as animal studies. An IND sponsor must submit the results of the nonclinical tests, together with manufacturing information and analytical data, to the FDA as part of the IND. Some nonclinical testing may continue even after the IND is submitted. In addition to including the results of the nonclinical studies, the IND will also include a protocol detailing, among other things, the objectives of the clinical trial, the parameters to be used in monitoring quality and the effectiveness criteria to be evaluated if the first phase lends itself to an efficacy determination. The IND automatically becomes effective thirty (30) days after receipt by the FDA, unless the FDA, within the thirty (30) day time period, places the IND on clinical hold. In such a case, the IND sponsor and the FDA must resolve any outstanding concerns before clinical trials can begin. A clinical hold may occur at any time during the life of an IND and may affect one or more specific studies or all studies conducted under the IND.
All clinical trials must be conducted under the supervision of one or more qualified investigators in accordance with GCPs. They must be conducted under protocols detailing the objectives of the trial, dosing procedures, research subject selection and exclusion criteria and the quality and effectiveness criteria to be evaluated. Each protocol must be submitted to the FDA as part of the IND, and progress reports detailing the status of the clinical trials must be submitted to the FDA annually. Sponsors also must timely report to FDA serious and unexpected adverse reactions, any clinically important increase in the rate of a serious suspected adverse reaction over that listed in the protocol or investigation brochure or any findings from other studies or animal or in vitro testing that suggest a significant risk in humans exposed to the drug. An institutional review board (IRB) at each institution participating in the clinical trial must review and approve the protocol before a clinical trial commences at that institution and must also approve the information regarding the trial and the consent form that must be provided to each research subject or the subject’s legal representative, monitor the study until completed and otherwise comply with IRB regulations.
Human clinical trials are typically conducted in three sequential phases that may overlap or be combined.
● | Phase I—The product candidate is initially introduced into healthy human subjects and tested for quality, dosage tolerance, absorption, metabolism, distribution and elimination. In the case of some product candidates for severe or life-threatening diseases, such as cancer, especially when the product candidate may be inherently too toxic to ethically administer to healthy volunteers, the initial human testing is often conducted in patients. | |
● | Phase II—Clinical trials are performed on a limited patient population intended to identify possible adverse effects and safety risks, to preliminarily evaluate the efficacy of the product for specific targeted diseases and to determine dosage tolerance and optimal dosage. | |
● | Phase III—Clinical trials are undertaken to further evaluate dosage and produce data that the FDA may determine to establish clinical efficacy and safety in an expanded patient population at geographically dispersed clinical study sites. These studies are intended to establish the overall risk-benefit ratio of the product and provide an adequate basis for product labeling. |
Human clinical trials are inherently uncertain and Phase I, Phase II and Phase III testing may not achieve desired results or otherwise be completed. The FDA or the sponsor may suspend a clinical trial at any time for a variety of reasons, including a finding that the research subjects or patients are being exposed to an unacceptable health risk. Similarly, an IRB can suspend or terminate approval of a clinical trial at its institution if the clinical trial is not being conducted in accordance with the IRB’s requirements or if the product candidate has been associated with unexpected serious harm to patients.
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During the development of a new product candidate, sponsors are given opportunities to meet with the FDA at certain points. These points may be prior to the submission of an IND, at the end of Phase II and before an NDA is submitted. Meetings at other times may be requested. These meetings can provide an opportunity for the sponsor to share information about the data gathered to date and for the FDA to provide advice on the next phase of development. Sponsors typically use the meeting at the end of Phase II to discuss their Phase II clinical results and present their plans for the pivotal Phase III clinical trial that they believe will support the approval of the new drug. If a Phase II clinical trial is the subject of discussion at the end of Phase II meeting with the FDA, a sponsor may be able to request a Special Protocol Assessment (“SPA”), the purpose of which is to reach agreement with the FDA on the Phase III clinical trial protocol design and analysis that will form the primary basis of an efficacy claim.
According to published guidance on the SPA process, a sponsor which meets the prerequisites may make a specific request for a SPA and provide information regarding the design and size of the proposed clinical trial. The FDA is supposed to evaluate the protocol within forty-five (45) days of the request to assess whether the proposed trial is adequate, which evaluation may result in discussions and a request for additional information. An SPA request must be made before the proposed trial begins, and all open issues must be resolved before the trial begins. If a written agreement is reached, it will be documented and made part of the record. The agreement will be binding on the FDA and may not be changed by the sponsor or the FDA after the trial begins except with the written agreement of the sponsor and the FDA or if the FDA determines that a substantial scientific issue essential to determining the safety or efficacy of the product candidate was identified after the testing began.
Concurrent with clinical trials, sponsors usually complete additional animal safety studies and also develop additional information about the chemistry and physical characteristics of the product candidate and finalize a process for manufacturing commercial quantities of the product candidate in accordance with cGMP requirements. The manufacturing process must be capable of consistently producing quality batches of the product candidate and the manufacturer must develop methods for testing the quality, purity and potency of the product candidate. Additionally, appropriate packaging must be selected and tested and stability studies must be conducted to demonstrate that the product candidate does not undergo unacceptable deterioration over its proposed shelf-life.
The results of product development, nonclinical studies and clinical trials, along with descriptions of the manufacturing process, analytical tests and other control mechanisms, proposed labeling and other relevant information are submitted to the FDA as part of an NDA requesting approval to market the product. The submission of an NDA is subject to the payment of user fees, but a waiver of such fees may be obtained under specified circumstances. The FDA reviews all NDAs submitted to ensure that they are sufficiently complete for substantive review before it accepts them for filing. It may request additional information rather than accept an NDA for filing. In this event, the NDA must be resubmitted with the additional information. The resubmitted application also is subject to review before the FDA accepts it for filing.
Once the submission is accepted for filing, the FDA begins an in-depth review. NDAs receive either standard or priority review. A drug representing a significant improvement in treatment, prevention or diagnosis of disease may receive priority review. The FDA may refuse to approve an NDA if the applicable regulatory criteria are not satisfied or may require additional clinical or other data. Even if such data are submitted, the FDA may ultimately decide that the NDA does not satisfy the criteria for approval. The FDA reviews an NDA to determine, among other things, whether a product is safe and effective for its intended use and whether its manufacturing is cGMP-compliant. The FDA may refer the NDA to an advisory committee for review and recommendation as to whether the application should be approved and under what conditions. The FDA is not bound by the recommendation of an advisory committee, but it generally follows such recommendations. Before approving an NDA, the FDA will inspect the facility or facilities where the product is manufactured and tested.
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Expedited review and approval
The FDA has various programs, including Fast Track, priority review and accelerated approval, which are intended to expedite or simplify the process for reviewing product candidates, or provide for the approval of a product candidate on the basis of a surrogate endpoint. Even if a product candidate qualifies for one or more of these programs, the FDA may later decide that the product candidate no longer meets the conditions for qualification or that the time period for FDA review or approval will be shortened. Generally, product candidates that are eligible for these programs are those for serious or life-threatening conditions, those with the potential to address unmet medical needs and those that offer meaningful benefits over existing treatments. For example, Fast Track is a process designed to facilitate the development and expedite the review of product candidates to treat serious or life-threatening diseases or conditions and fill unmet medical needs. Priority review is designed to give product candidates that offer major advances in treatment or provide a treatment where no adequate therapy exists an initial review within six months as compared to a standard review time of ten (10) months.
Although Fast Track and priority review do not affect the standards for approval, the FDA will attempt to facilitate early and frequent meetings with a sponsor of a Fast Track designated product candidate and expedite review of the application for a product candidate designated for priority review. Accelerated approval, which is described in Subpart H of 21 CFR Part 314, provides for an earlier approval for a new product candidate that is intended to treat a serious or life-threatening disease or condition and that fills an unmet medical need based on a surrogate endpoint. A surrogate endpoint is a laboratory measurement or physical sign used as an indirect or substitute measurement representing a clinically meaningful outcome. As a condition of approval, the FDA may require that a sponsor of a product candidate receiving accelerated approval perform post-marketing clinical trials.
In the Food and Drug Administration Safety and Innovation Act (“FDASIA”), the U.S. Congress encouraged the FDA to utilize innovative and flexible approaches to the assessment of product candidates under accelerated approval. The law required the FDA to issue related draft guidance within a year after the law’s enactment and also promulgate confirming regulatory changes. In June 2013, the FDA published a draft Guidance for Industry titled “Expedited Programs for Serious Conditions—Drugs and Biologics,” which provides guidance on FDA programs that are intended to facilitate and expedite development and review of new product candidates as well as threshold criteria generally applicable to concluding that a product candidate is a candidate for these expedited development and review programs.
In addition to the Fast Track, accelerated approval and priority review programs discussed above, the FDA also provided guidance on a new program for Breakthrough Therapy designation. The FDA defines a Breakthrough Therapy as a drug that is intended, alone or in combination with one or more other drugs, to treat a serious or life-threatening disease or condition, and preliminary clinical evidence indicates that the drug may demonstrate substantial improvement over existing therapies on one or more clinically significant endpoints, such as substantial treatment effects observed early in clinical development. A drug designated as a Breakthrough Therapy is eligible for accelerated approval. The FDA must take certain actions, such as holding timely meetings and providing advice, intended to expedite the development and review of an application for approval of a Breakthrough Therapy. Even if a product qualifies for one or more of these programs, the FDA may later decide that the product no longer meets the conditions for qualification or decide that the time period for FDA review or approval will not be shortened. A request for Breakthrough Therapy designation should be submitted concurrently with, or as an amendment to an IND. FDA has already granted this designation to approximately thirty (30) new product candidates and has begun approving Breakthrough Therapy designated drugs.
Patent term restoration and marketing exclusivity
Depending upon the timing, duration and specifics of FDA approval of the use of our product candidates, some of our U.S. patents may be eligible for limited patent term extension under the Drug Price Competition and Patent Term Restoration Act of 1984, referred to as the Hatch- Waxman Act. The Hatch-Waxman Act permits a patent restoration term of up to five years as compensation for patent term lost during product development and the FDA regulatory review process. However, patent term restoration cannot extend the remaining term of a patent beyond a total of fourteen (14) years from the product candidate’s approval date. The patent term restoration period is generally one half of the time between the effective date of an IND and the submission date of an NDA, plus the time between the submission date of an NDA and the approval of that application. Only one patent applicable to an approved product candidate is eligible for the extension and the application for extension must be made prior to expiration of the patent. The USPTO, in consultation with the FDA, reviews and approves the application for any patent term extension or restoration. In the future, we intend to apply for restorations of patent term for some of our currently owned or licensed patents to add patent life beyond their current expiration date, depending on the expected length of clinical trials and other factors involved in the submission of the relevant NDA.
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Market exclusivity provisions under the FDCA also can delay the submission or the approval of certain applications. The FDCA provides a five-year period of non-patent marketing exclusivity within the U.S. to the first applicant to gain approval of an NDA for a new chemical entity. A product candidate is a new chemical entity if the FDA has not previously approved any other new product candidate containing the same active moiety, which is the molecule or ion responsible for the action of the product candidate substance. During the exclusivity period, the FDA may not accept for review an abbreviated new drug application (“ANDA”) or a 505(b)(2) NDA submitted by another company for another version of such product candidate where the applicant does not own or have a legal right of reference to all the data required for approval. However, an application may be submitted after four years if it contains a certification of patent invalidity or non-infringement. The FDCA also provides three years of marketing exclusivity for an NDA, 505(b) (2) NDA, or supplement to an approved NDA if new clinical investigations, other than bioavailability studies, that were conducted or sponsored by the applicant are deemed by the FDA to be essential to the approval of the application, for example, for new indications, dosages or strengths of an existing product candidate. This three-year exclusivity covers only the conditions associated with the new clinical investigations and does not prohibit the FDA from approving ANDAs for product candidates containing the original active agent. Five-year and three-year exclusivity will not delay the submission or approval of a full NDA. However, an applicant submitting a full NDA would be required to conduct or obtain a right of reference to all of the preclinical studies and adequate and well-controlled clinical trials necessary to demonstrate quality and effectiveness.
Orphan drug designation
Under the Orphan Drug Act, the FDA may grant orphan drug designation to product candidates intended to treat a rare disease or condition, which is generally a disease or condition that affects fewer than 200,000 individuals in the U.S. or more than 200,000 individuals in the U.S. and for which there is no reasonable expectation that the cost of developing and making available in the U.S. a product candidate for this type of disease or condition will be recovered from sales in the U.S. for that product candidate. Orphan drug designation must be requested before submitting an NDA. After the FDA grants orphan drug designation, the FDA publicly discloses the identity of the therapeutic agent and its potential orphan use. Orphan drug designation does not convey any advantage in or shorten the duration of the regulatory review and approval process.
If a product candidate that has orphan drug designation subsequently receives the first FDA approval for the disease for which it has such designation, the product candidate is entitled to orphan product exclusivity, which means that the FDA may not approve any other applications to market the same product candidate for the same indication, except in very limited circumstances, for seven years. Orphan drug exclusivity, however, could also block the approval of one of our product candidates for seven years if a competitor obtains approval of the same product candidate as defined by the FDA or if our product candidate is determined to be contained within the competitor’s product candidate for the same indication or disease.
Pediatric exclusivity and pediatric use
Under the Best Pharmaceuticals for Children Act (“BPCA”), certain product candidates may obtain an additional six months of exclusivity if the sponsor submits information requested in writing by the FDA (a “Written Request”) relating to the use of the active moiety of the product candidate in children. The FDA may not issue a Written Request for studies on unapproved or approved indications or where it determines that information relating to the use of a product candidate in a pediatric population, or part of the pediatric population, may not produce health benefits in that population.
In addition, the Pediatric Research Equity Act (“PREA”) requires a sponsor to conduct pediatric studies for most product candidates and biologics, for a new active ingredient, new indication, new dosage form, new dosing regimen or new route of administration. Under PREA, original NDAs, biologics license application and supplements thereto must contain a pediatric assessment unless the sponsor has received a deferral or waiver. The required assessment must assess the quality and effectiveness of the product candidate for the claimed indications in all relevant pediatric subpopulations and support dosing and administration for each pediatric subpopulation for which the product candidate is safe and effective. The sponsor or FDA may request a deferral of pediatric studies for some or all of the pediatric subpopulations. A deferral may be granted for several reasons, including a finding that the product candidate or biologic is ready for approval for use in adults before pediatric studies are complete, or that additional quality or effectiveness data needs to be collected before the pediatric studies begin. After April 2013, the FDA must send a noncompliance letter to any sponsor that fails to: submit the required assessment, keep a deferral current, or submit a request for approval of a pediatric formulation.
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Post-approval requirements
Once an approval is granted, the FDA may withdraw the approval if compliance with regulatory requirements is not maintained or if problems occur after the product candidate reaches the market. Later discovery of previously unknown problems with a product candidate may result in restrictions on the product candidate or even complete withdrawal of the product candidate from the market. After approval, some types of changes to the approved product candidate, such as adding new indications, manufacturing changes and additional labeling claims, are subject to further FDA review and approval. In addition, the FDA may require testing and surveillance programs to monitor the effect of approved product candidates that have been commercialized, and the FDA has the power to prevent or limit further marketing of a product candidate based on the results of these post-marketing programs.
Any product candidates manufactured or distributed by us pursuant to FDA approvals are subject to continuing regulation by the FDA, including, among other things:
● | record-keeping requirements; | |
● | reporting of adverse experiences with the product candidate; | |
● | providing the FDA with updated data for the FDA’s continuing safety and efficacy determination; | |
● | drug sampling and distribution requirements; | |
● | notifying the FDA and gaining its approval of specified manufacturing or labeling changes; and | |
● | complying with FDA promotion and advertising requirements. |
Drug manufacturers and other entities involved in the manufacture and distribution of approved product candidates are required to register their establishments with the FDA and certain state agencies and are subject to periodic unannounced inspections by the FDA and some state agencies for compliance with cGMP and other laws.
Regulation outside of the U.S.
In addition to regulations in the U.S., we will be subject to regulations of other countries governing any clinical trials and commercial sales and distribution of our product candidates. Whether or not we obtain FDA approval for a product, we must obtain approval by the comparable regulatory authorities of countries outside of the U.S. before we can commence clinical trials in such countries and approval of the regulators of such countries or economic areas, such as the European Union, before we may market products in those countries or areas. The approval process and requirements governing the conduct of clinical trials, product licensing, pricing and reimbursement vary greatly from place to place, and the time may be longer or shorter than that required for FDA approval.
Under European Union regulatory systems, a company may submit marketing authorization applications either under a centralized or decentralized procedure. The centralized procedure, which is compulsory for medicines produced by biotechnology or those medicines intended to treat AIDS, cancer, neurodegenerative disorders or diabetes and is optional for those medicines which are highly innovative, provides for the grant of a single marketing authorization that is valid for all European Union member states. The decentralized procedure provides for mutual recognition of national approval decisions. Under this procedure, the holder of a national marketing authorization may submit an application to the remaining member states. Within 90 days of receiving the applications and assessments report, each member state must decide whether to recognize approval. If a member state does not recognize the marketing authorization, the disputed points are eventually referred to the European Commission, whose decision is binding on all member states.
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As in the U.S., we may apply for designation of a product candidate as an orphan drug for the treatment of a specific indication in the European Union before the application for marketing authorization is made. Orphan drugs in Europe enjoy economic and marketing benefits, including up to ten years of market exclusivity for the approved indication unless another applicant can show that its product is safer, more effective or otherwise clinically superior to the orphan-designated product.
Reimbursement
Sales of our products will depend, in part, on the extent to which the costs of our products will be covered by third-party payors, such as government health programs, commercial insurance and managed healthcare organizations. These third-party payors are increasingly challenging the prices charged for medical products and services. Additionally, the containment of healthcare costs has become a priority of federal and state governments and the prices of drugs have been a focus in this effort. The U.S. government, state legislatures and foreign governments have shown significant interest in implementing cost-containment programs, including price controls, restrictions on reimbursement and requirements for substitution of generic products. Adoption of price controls and cost-containment measures, and adoption of more restrictive policies in jurisdictions with existing controls and measures, could further limit our net revenue and results. If these third-party payors do not consider our products to be cost-effective compared to other therapies, they may not cover our products after approved as a benefit under their plans or, if they do, the level of payment may not be sufficient to allow us to sell our products on a profitable basis.
The Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (“MMA”) imposed new requirements for the distribution and pricing of prescription drugs for Medicare beneficiaries. Under Part D, Medicare beneficiaries may enroll in prescription drug plans offered by private entities which will provide coverage of outpatient prescription drugs. Part D plans include both stand-alone prescription drug benefit plans and prescription drug coverage as a supplement to Medicare Advantage plans. Unlike Medicare Part A and B, Part D coverage is not standardized. Part D prescription drug plan sponsors are not required to pay for all covered Part D drugs, and each drug plan can develop its own drug formulary that identifies which drugs it will cover and at what tier or level. However, Part D prescription drug formularies must include drugs within each therapeutic category and class of covered Part D drugs, though not necessarily all the drugs in each category or class. Any formulary used by a Part D prescription drug plan must be developed and reviewed by a pharmacy and therapeutics committee. Government payment for some of the costs of prescription drugs may increase demand for our products for which we receive marketing approval. However, any negotiated prices for our products covered by a Part D prescription drug plan will likely be lower than the prices we might otherwise obtain. Moreover, while the MMA applies only to drug benefits for Medicare beneficiaries, private payors often follow Medicare coverage policy and payment limitations in setting their own payment rates. Any reduction in payment that results from the MMA may result in a similar reduction in payments from non-governmental payors.
The American Recovery and Reinvestment Act of 2009 provides funding for the federal government to compare the effectiveness of different treatments for the same illness. A plan for the research will be developed by the Department of Health and Human Services, the Agency for Healthcare Research and Quality and the National Institutes for Health, and periodic reports on the status of the research and related expenditures will be made to the U.S. Congress. Although the results of the comparative effectiveness studies are not intended to mandate coverage policies for public or private payors, it is not clear what effect, if any, the research will have on the sales of any product, if any such product or the condition that it is intended to treat is the subject of a study. It is also possible that comparative effectiveness research demonstrating benefits in a competitor’s product could adversely affect the sales of our product candidates. If third-party payors do not consider our products to be cost-effective compared to other available therapies, they may not cover our products as a benefit under their plans or, if they do, the level of payment may not be sufficient to allow us to sell our products on a profitable basis.
The Patient Protection and Affordable Care Act, as amended by the Health Care and Education Affordability Reconciliation Act of 2010, collectively referred to as the “ACA,” enacted in March 2010, had a significant impact on the health care industry by expanding coverage for the uninsured. With regard to pharmaceutical products, among other things, ACA is expanded and increased industry rebates for drugs covered under Medicaid programs and made changes to the coverage requirements under the Medicare Part D program. The administration and Congress which will take office in January 2017, has pledged to repeal and replace the ACA, largely because of significantly increasing health insurance premiums and decreasing participation by members of the insurance companies. We cannot predict the impact of any repeal, replacement or modifications which may be enacted.
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In addition, in some non-U.S. jurisdictions, the proposed pricing for a product candidate must be approved before it may be lawfully marketed. The requirements governing drug pricing vary widely from country to country. For example, the European Union provides options for its member states to restrict the range of medicinal products for which their national health insurance systems provide reimbursement and to control the prices of medicinal products for human use. A member state may approve a specific price for the medicinal product or it may instead adopt a system of direct or indirect controls on the profitability of the company placing the medicinal product on the market. There can be no assurance that any country that has price controls or reimbursement limitations for pharmaceutical products will allow favorable reimbursement and pricing arrangements for any of our product candidates. Historically, product candidates launched in the European Union do not follow price structures of the U.S. and generally tend to be significantly lower.
Environment
Our third-party manufacturers are subject to inspections by the FDA for compliance with cGMP and other U.S. regulatory requirements, including U.S. federal, state and local regulations regarding environmental protection and hazardous and controlled substance controls, among others. Environmental laws and regulations are complex, change frequently and have tended to become more stringent over time. We have incurred, and may continue to incur, significant expenditures to ensure we are in compliance with these laws and regulations. We would be subject to significant penalties for failure to comply with these laws and regulations.
Sales and Marketing
Our current focus is on the development of our existing portfolio, the completion of clinical trials and, if and where appropriate, the registration of our product candidates. We currently do not have marketing, sales and distribution capabilities. If we receive marketing and commercialization approval for any of our product candidates, we intend to market the product either directly or through collaborations, strategic alliances and distribution agreements with third parties. The ultimate implementation of our strategy for realizing the financial value of our product candidates is dependent on the results of clinical trials for our product candidates, the availability of funds and the ability to negotiate acceptable commercial terms with third parties.
Employees
As of the date of this prospectus, we have five employees, including our three executive officers, one engaged in research and development and one in administration. We consider our relationship with our employees to be good.
Facilities
Our corporate headquarters are located in Rockville, Maryland, where we lease shared access to office space and reception services. Our research and development activities are performed in approximately 1,727 square feet of laboratory and office space located in Gaithersburg, Maryland. All of such space is leased from a non-affiliated third party, pursuant to leases expiring in 2023, which provide for an aggregate monthly rental of $5,757.
We believe that our existing facilities are adequate for our current needs and have sufficient laboratory space to house additional scientists as we grow. When our lease expires, we may exercise our renewal options or look for additional or alternate space for our operations. We believe that suitable additional or alternative space will be available in the future on commercially reasonable terms.
Legal Proceedings
Currently, there are no legal proceedings pending or threatened against us.
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Directors and Executive Officers
Our directors and executive officers and their respective ages and titles are as follows:
Name | Age | Position(s) and Office(s) Held | ||
Anatoly Dritschilo, M.D. | 77 | Chairman of the Board and Chief Executive Officer | ||
Michael Vander Hoek | 62 | Chief Financial Officer, VP for Operations and Regulatory | ||
Peter Dritschilo | 52 | President and Chief Operating Officer | ||
Mira Jung, Ph.D. | 71 | Chief Scientific Officer for Biology | ||
Tyvin Rich, M.D. | 73 | Chief Clinical Officer | ||
Joshua Schafer | 48 | Independent Director | ||
Steven Richards | 51 | Independent Director | ||
Milton Brown, M.D., Ph.D. | 53 | Director and Chief Scientific Officer for Chemistry | ||
William H. Adkins | 75 | Independent Director | ||
Chris Senanayake, Ph.D. | 64 | Independent Director |
Set forth below is a description of the background and business experience of our directors and executive officers.
Anatoly Dritschilo, M.D. is a co-founder of the Company and has served as Chairman of the Board and Chief Executive Officer since the Company’s formation in December 2012. Dr. Dritschilo is a radiation oncologist by training and has held multiple leadership positions in health care. At Georgetown University Medical School in Washington, D.C., he served principally as Department Chair from 1980 to 2018; Chief of Radiation Oncology at MedStar-Georgetown University Hospital from 2005 to 2016; Medical Director of Georgetown University Hospital from 1994 to 1997; and Interim Director of the NCI-funded Lombardi Comprehensive Cancer Center from 2005 to 2007. He has also served on the Boards of Directors of MedStar-Georgetown University Hospital, the National Capital Rehabilitation Hospital and the MedStar Health Research Institute. His experience with Pharma includes Board of Directors membership of NeoPharm, Inc, and he was a founding director of Oncomed (Neopharm). His 200+ scientific publications and 12 issued patents have earned him election as a Fellow of the National Academy of Inventors. Dr. Dritschilo holds a Bachelor of Science degree in Chemical Engineering from the University of Pennsylvania, his medical degree from the College of Medicine of New Jersey and residency training from the Harvard, Joint Center for Radiation Therapy. His qualifications support his service as our Chairman of the Board of Directors.
Michael P. Vander Hoek serves as the Company’s Chief Financial Officer, a position he was appointed to in August 2019, and Vice President, Operations and Regulatory, a position he has held since 2019. From November 2019 until April 2021, Mr. Vander Hoek served as Director, Finance and Business Development at Georgetown Lombardi Comprehensive Cancer Center (“LCCC”), where he directed a new five-year $221.9 million institutional commitment for cancer center research under a new NCI-approved cancer consortium arrangement and recruited scientists to fulfill strategic objectives with senior leaders to improve cancer research and treatment. From 2007 until November 2019, Mr. Vander Hoek served as Associate Director, Administration, at Georgetown’s LCCC, where he was responsible for direct administrative operations for more than 400 faculty and staff in the department of oncology, radiation medicine, pathology and biostatistics, bioinformatics and biomathematics, including managing $216.9 million in institutional commitments to LCCC from Medstar Health, John Theurer Cancer Center (“JTCC”), and Georgetown University. and implementing an enterprise-wide clinical trial management system for Georgetown University and Medstar Health. From 2004 until 2007, Mr. Vander Hoek served as Chief Financial Officer at Georgetown’s LCCC. During his time at Georgetown, Mr. Vander Hoek negotiated a series of 12 research integration agreements between LCCC and the JTCC that resulted in the approval of an NCI recognized Consortium in 2019. From 2001 until 2004, Mr. Vander Hoek served as Vice-Chair, Planning and Administration, at MedStar Georgetown University Hospital, where he was responsible for managing administrative and financial operations for some 440 staff, physicians, residents and fellows in the departments of Medicine and Neurology. From 1996 until 2001, Mr. Vander Hoek served as Senior Associate Administrator, Finance and Information Systems, for the Department of Medicine, Georgetown University Medical Center, where he designed and managed the faculty compensation system, while managing the finances and information systems for the department. His financial management experience in publicly held companies includes Director of Managed Care Reimbursement for Critical Care America from 1990 to 1993 and Regional Controller for Laboratory Corporation of America (LabCorp) from 1993 to 1996. His responsibilities at both companies included extensive financial management related to mergers, acquisitions, and start-up operations. Mr. Vander Hoek holds a Master’s in Health Services Administration from The George Washington University and a Bachelor of Arts in Biology and Psychology from Hope College.
Peter Dritschilo has served as our President and Chief Operating Officer since Shuttle was formed in December 2012. He also served as our Chief Financial Officer from December 2012 until August 2019. Mr. Dritschilo has over 20 years of business management experience in medical services and cancer treatment. He has held administrative positions with Medstar-Rad America from 2001 to 2005, Georgetown University 2005 to 2006, Prince William Hospital and the Fauquier Hospital Cancer Center 2006 to 2011 and Inova Health System’s Schar Cancer Institute from 2011 to 2018. In 2014, Mr. Dritschilo filed for Chapter 7 bankruptcy protection due to the failure of a personal business venture. Mr. Dritschilo graduated from Georgetown University and received his MBA from the George Washington University.
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Mira Jung, Ph.D., a co-founder of our company, presently serves as our Chief Scientific Officer for Biology and was a member of our board of directors from our formation in December 2012 until 2019. Since 2005, Dr. Jung has served as Professor of Radiation Medicine and Microbiology at Georgetown University Medical School, with over 20 years of experience in molecular radiation biology research. She is an expert in mechanisms of radiation resistance and on the roles of HDAC inhibitors in modifying the radiation response. Dr. Jung’s research has been funded by NIH and the DOD leading to 100 publications and six issued patents, including the first reports of HDAC inhibitor drug classes modifying cancer cell radiation resistance and protecting normal tissues from radiation damage. Dr. Jung holds an MA degree and a PhD in Microbiology and Molecular Virology from the University of Kansas.
Tyvin A. Rich, M.D. serves as our company’s Chief Medical Officer and is responsible for the clinical development of novel radiation sensitizers. Since 2010, Dr. Rich has served as a Staff Radiation Oncologist at the Hampton University Proton Therapy Institute in Hampton Virginia and Professor Emeritus at University of Virginia Health Sciences Center, Department of Radiation Oncology. From 1995 until 2010, Dr. Rich was a Professor and Chairman of the Department of Therapeutic Radiology and Oncology at the University of Virginia Health Sciences Center. And prior to that, from 1984 through 1995, Dr. Rich was a Professor of Radiotherapy and Director of Clinics in the Department of Radiotherapy of the University of Texas M. D. Anderson Cancer Center. He has served as the protocol chair for RTOG clinical trials that advanced the use of chemoradiation for the treatment of rectal and pancreatic cancers. He is an expert in the applications of infusional 5-Fluorouracil for chemoradiation therapy of gastro-intestinal cancers and has authored more than 200 scientific articles, reviews and book chapters. Dr. Rich received his undergraduate degree at Rutgers University, his medical degree at the University of Virginia, and completed residencies in internal medicine at Georgetown University Medical Center and radiation therapy at Massachusetts General, Harvard Medical School.
Joshua Schafer was appointed to be a member of our company’s board of directors in 2019. Since 2015, he has served as Senior Vice President and Head of Corporate Strategy and Business Development for Mallinckrodt Pharmaceuticals Incorporated. From 2009 until 2015, he served as Vice President and Oncology Therapeutic Area Head at Astellas Pharmaceuticals Incorporated, where he was responsible for building the company’s global oncology franchise. From 2000 until 2009, Mr. Schafer served in positions of increasing seniority at Takeda Pharmaceuticals North America, including Manager and Senior Manager, New Product and New Business Development; Senior Product Manager, Gastrointestinal Marketing; and Director, Oncology and Renal Marketing and Commercial Development. He began working in the healthcare and pharmaceutical industry in 1998, and has served in various positions including management consulting at Accenture (formerly Anderson Consulting), G.D. Searle & Co. (later acquired by Pfizer) and Cognia Corporation. He received his Bachelor of Arts in Biology and German at the University of Notre Dame, his MS in Biotechnology from Northwestern University and his MBA from Northwestern University. We believe Mr. Schafer’s extensive experience in pharmaceutical strategy, marketing and business development will assist our board’s oversight role as we build and develop our Company.
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Steven Richards was appointed to be a member of our company’s board of directors in 2019. He is CEO and Founder of Endurance Media, a media finance company based in Santa Monica, California, that launched in 2014 with a strategic alliance with eOne Entertainment and a mandate to produce and finance commercially driven feature films. From 2006 to 2014, Mr. Richards served as Co-President and Chief Operating Officer of Silver Pictures where he oversaw all business activities and managed a team of more than 20 people responsible for film development, production and financial information. From 2000 to 2006, he served as Chief Financial Officer at Silver Pictures and from 1995 to 2000 as Vice President, Finance, at Silver Pictures. Mr. Richards holds an MBA in Finance from UCLA, a BBA in accounting from Temple University, and holds his CPA license. We believe his experience as a chief financial officer and in accounting will assist in providing our board guidance and oversight as we grow our company.
Milton Brown, M.D., Ph.D. is a co-founder of our company and has served as our Chief Scientific Officer for Chemistry and as a member of our board of directors since we were formed in December 2012. Dr. Brown was a founder in 2004 of Rivanna Pharmaceuticals, a Virginia-based biopharmaceutical company engaged in the discovery and development of novel small molecule therapeutics for the treatment of neurological diseases and cancer. Since 2012, Dr. Brown has served as Director of the Drug Discovery Center at Georgetown University Medical School and since 2010, he has been the principal investigator of the NIH/NCI funded Chemical Diversity Center. He brings to Shuttle 15 years of experience in drug discovery with over 80 publications and eight issued patents, including discovery of novel HDAC inhibitors and has two drugs currently in clinical trials. He has served on government committees including the NIH Experimental Therapeutics Study Section, the NIH Drug Discovery and Molecular Pharmacology Study Section and was a scientific counselor to the U.S. Secretary of Health. Dr. Brown holds a Ph.D. in synthetic chemistry from University of Alabama, and an MD from the University of Virginia. He is uniquely qualified to direct the company’s drug discovery program and serve as our director.
William H. Adkins was appointed to be a member of our company’s board of directors in 2019. From 2018 to present, Mr. Adkins has worked as a consultant to businesses, working with business owners to develop strategy, planning and problem solving, especially as concerns developing strategic goals, performance plans and marketing strategies. From 2017 until present, Mr. Adkins has served as the President and General Manager at Gen’R LLC, a business consulting firm. From 2014 until 2017 Mr. Adkins served as a Strategic Business Development Manager at automotiveMastermind Inc., where he was responsible for training dealer candidates and general management, including consulting with dealers and interviewing applicants for management instructor positions. While at automotiveMastermind Inc., he partnered with the company’s founders to develop automotiveMastermind Inc. into a major company that eventually merged with IHS Markit Ltd. From 2004 to 2014, Mr. Adkins was a management instructor for the National Automobile Dealers Association, where he trained managers and dealer successors how to effectively operate a retail automobile dealership with knowledge of the various departments in a traditional dealership (e.g. sales, service, parts, and accounting). From 1985 until 2003, Mr. Adkins was President and General Manager at Chevrolet dealerships in Ohio, California and New York, including Adkins Chevrolet Buick Oldsmobile, Bayview Lincoln Mercury and Palanker Chevrolet. Mr. Adkins attended the University of Maryland where he studied marketing and business management. Mr. Adkins studied marketing at the University of Cincinnati and law at Bryant and Stranton Business College. Mr. Adkins’ substantial business and marketing experience will help us as we develop the Company’s products and business.
Chris Senanayake, Ph.D. was appointed to be a member of the Company’s board of directors in 2021. He is CEO and Founder of TCG GreenChem, Inc., a US subsidiary of TCG Lifesciences Pvt. Ltd., a leading global Contract Research and Manufacturing Services (CRAMS) company in the area of drug discovery, development and commercialization. Dr. Senanayake has more than 30 years of pharmaceutical industry experience, making him an invaluable asset to Shuttle Pharma’s mission as the Company advances its pharmaceutical candidates in clinical trials. He is the Founder and Chief Executive Officer (CEO) of TCG GreenChem Inc. and Chief Scientific Officer of TCG Lifesciences, Pvt. Ltd. He has held positions of Senior Scientist at Dow Chemical, and Research Fellow at Merck & Co, Inc. Director and Executive Director of Process Research at Sepracor, Inc. (1996 to 2002), Director of Chemical Development and Vice President of Chemical Development for Boehringer Ingelheim Pharmaceuticals, Inc. In 2018, he was appointed as the CEO of Asta GreenChem, Inc in Richmond VA and Astatech (Chengdu) Biopharmaceuticals Corp. in China. He has a record of leading and delivering on high complexity APIs for manufacturing. Dr. Senanayake participated in development activities of many drugs, including multi-billion-dollar blockbuster drugs, such as Crixivan, Lunesta, Jardiance, Formotorol, Desvenlafaxine and other drug candidates. He is co-author of 425 scientific publications and is co-inventor of more than 150 patents. We believe he will provide value to us by introducing potential joint venture partners, as well as enhancing our oversight through his in-depth understanding of and experience in the pharmaceuticals industry.
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Scientific Advisory Committee
Theodore L. Phillips, M.D. serves as the Chair of our Scientific Advisory Committee. He held the position of Chief Medical Officer and Clinical Director at Shuttle Pharmaceuticals from 2014 until 2018. Dr. Phillips’ distinguished career has included positions of Chair of the Department of Radiation Oncology (from1978 to 1998) and Associate Director (from 1996 to 1999) of the UCSF Cancer Center at the University of California at San Francisco. He is highly experienced in radiation oncology clinical trials of hypoxic radiation sensitizers. Dr. Phillips served as the principal investigator of the SBIR contract for the Phase I clinical trial of Ropidoxuridine. He previously served as Associate Director of the Northern California Oncology Group from 1983-1990, president of the American Society of Therapeutic Radiation Oncologists from 1984 to 1985, and is an elected member of the Institute of Medicine of the National Academy of Science. Dr. Phillips holds a BS degree from Dickinson College in Carlisle, Pennsylvania and a MD from the University of Pennsylvania. He provides advice to the leadership team to help design and implement clinical trials of radiation therapy and radiation response modifying drugs.
Ralph R. Weichselbaum, M.D. has served as Scientific Advisor to Shuttle Pharmaceuticals for translational research for the discovery and development of radiation response modifiers since 2013. Dr. Weichselbaum is the Daniel K. Ludwig Professor and Chairman of the Department of Radiation and Cellular Oncology, the University of Chicago, a position he has held since 1985. He is also an elected member of the Institute of Medicine, National Academy of Sciences. He has devoted his career to translational research in cancer with combined radiotherapy and chemotherapy. Dr. Weichselbaum and his colleagues conceived “genetic radiotherapy” and developed viral constructs for use in clinical tumor radiation sensitization. These were commercialized as TNFerade (GenVec, Inc.) and tested in a phase I clinical trial in prostate cancer and a phase III clinical trial for pancreatic cancer.
J. Martin Brown, Ph.D. has served as a Scientific Advisor to Shuttle Pharmaceuticals for translational research for the development of hypoxic radiation sensitizers since 2017. Dr. Brown received his Ph.D.in Cancer Biology from Oxford University in 1968 and was Director of the Division of Radiation and Cancer Biology at Stanford University from 1984 to 2004. He is an expert in the radiation biology of hypoxia in cancers and has more than 300 peer-reviewed published articles. He has received awards in recognition of his work, including the Gold Medal, American Society for Therapeutic Radiology and Oncology (1999, the Failla Memorial Award, Radiation Research Society (2000), the Weiss Medal, Association for Radiation Research (2001) and the Henry S. Kaplan Distinguished Scientist Award, International Association for Radiation Research (2007). He developed etanidazole, a hypoxic radiation sensitizer, and tirapazamine, a hypoxic cytotoxic drug, from bench to clinical trials.
Alejandro Villagra, Ph.D. has served as a Scientific Advisor to Shuttle Pharmaceuticals with expertise in cellular signaling pathways, epigenetics and immunology since 2017. Dr. Villagra received his Ph.D. in Molecular Biology from the University of Concepcion, in Chile in 2004 and completed post-graduate training at the H. Lee Moffitt Cancer Center and Research Institute in Tampa, Florida in Molecular Immunology in 2009, in the Laboratory of Eduardo Sotomayor, MD. He joined the faculty of the Moffitt Cancer Center and Research Institute, as a research scientist from 2009 through 2015 and advanced to Assistant Professor of Oncologic Sciences. He became an Assistant Professor in the Department of Biochemistry and Molecular Medicine at the George Washington University (GWU) School of Medicine and Health Sciences in 2015, as a member of the GWU Cancer Center. His research is focused on molecular and cellular roles of histone deacetylases (HDACs) in tumor immunology and as adjuvants for immunotherapy of cancers.
Joseph Armstrong, III, Ph.D. joined as a Scientific Advisor to Shuttle Pharmaceuticals in 2021, He received his Ph.D. from the University of Colorado in 1988, completed his post-doctoral work at the University of Virginia at Charlottesville and holds the position of Chief Operating Officer at and Global Head of Business Development TCG GreenChem, Inc. He provides industry experience in chemistry, drug development and process research, having previously held positions at Merck & Co. Inc. in Rahway, N.J and in the U.K. for two pharmaceutical companies in the areas of Pharmaceutical Research and Development. His primary areas of focus have been in the design and implementation of efficient synthesis of drug candidates amenable to large scale production. Dr. Armstrong led the development team that designed, developed and implemented the manufacturing process for the new treatment for Type II diabetes, Januvia TM. His team was awarded the Solvias Prize in 2004 (Basel, Switzerland), the IChemE Aztra-Zeneca Award for Green Chemistry and Engineering in 2005 (London, England), Dr. Armstrong has more than 40 publications and holds 10 patents.
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Family Relationships
Dr. Anatoly Dritschilo and Peter Dritschilo are father and son. There are no other family relationships among our directors and executive officers.
Board of Directors
Our board of directors is responsible for overseeing the Company’s business consistent with its fiduciary duty to the stockholders. This significant responsibility requires highly skilled individuals with various qualities, attributes and professional experience. There are general requirements for service on the board that are applicable to directors and there are other skills and experience that should be represented on the board as a whole but not necessarily by each director. Our Corporate Governance and Nominating Committee, detailed below, considers the qualifications of director candidates individually and in the broader context of the board’s overall composition and the Company’s current and future needs.
Terms of Office
Our directors were initially appointed for staggered two and three-year terms as initial appointments. The Chairman of the Board is also the CEO and was appointed for an initial three-year term. Following this offering, we intend that all of our directors will be elected to one-year terms to hold office until the next annual meeting of our stockholders and until a successor is appointed and qualified, or until their removal, resignation, or death. Executive officers serve at the pleasure of the board of directors.
Director Independence
In order to qualify to list our shares of common stock for trading on Nasdaq, our board of directors must consist of a majority of “independent” directors, as defined under Nasdaq listing standards and Rule 10A-3(b)(1) under the Exchange Act. At present, five of the seven directors serving on our board of directors qualify as “independent.” Our independent directors consist of Messrs. Adkins, Richards and Schafer and Dr. Senanayake.
Board Committees
General
Our board of directors has established three committees consisting of an audit committee, a compensation committee, and a nominating and corporate governance committee. The members of each committee qualify as “independent” as defined under Nasdaq listing standards and Rule 10A-3(b)(1). Moreover, at least one member of the audit committee qualifies as an “audit committee financial expert” as the term is defined under Nasdaq listing standards and applicable rules and regulations of the SEC, based on their respective business professional experience in the financial and accounting fields.
Audit Committee
The audit committee, which consists of Steve Richards, MBA, CPA (Chair), William Adkins and Chris Senanayake, MD, assists our board of directors in its oversight of the Company’s accounting and financial reporting processes and the audits of the Company’s financial statements, including (a) the quality and integrity of the Company’s financial statements (b) the Company’s compliance with legal and regulatory requirements, (c) the independent auditors’ qualifications and independence and (d) the performance of the Company’s internal audit functions and independent auditors, as well as other matters which may come before it as directed by the board of directors. Further, the audit committee, to the extent it deems necessary or appropriate, among its several other responsibilities, will:
● | be responsible for the appointment, compensation, retention, termination and oversight of the work of any independent auditor engaged for the purpose of preparing or issuing an audit report or performing other audit, review or attest services for the Company; | |
● | discuss the annual audited financial statements and the quarterly unaudited financial statements with management and the independent auditor prior to their filing with the SEC in our Annual Report on Form 10-K and Quarterly Reports on Form 10-Q; | |
● | review with the Company’s management on a periodic basis (i) issues regarding accounting principles and financial statement presentations, including any significant changes in our company’s selection or application of accounting principles; and (ii) the effect of any regulatory and accounting initiatives, as well as off-balance sheet structures, on the financial statements of the company; | |
● | monitor the Company’s policies for compliance with federal, state, local and foreign laws and regulations and the Company’s policies on corporate conduct; | |
● | maintain open, continuing and direct communication between the board of directors, the audit committee and our independent auditors; and | |
● | monitor our compliance with legal and regulatory requirements and will have the authority to initiate any special investigations of conflicts of interest, and compliance with federal, state and local laws and regulations, including the Foreign Corrupt Practices Act, as may be warranted. |
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Compensation Committee
The compensation committee, which consists of Steve Richards (Chair) and Joshua Schafer, aids our board of directors in meeting its responsibilities relating to the compensation of the Company’s executive officers and to administer all incentive compensation plans and equity-based plans of the Company, including the plans under which Company securities may be acquired by directors, executive officers, employees and consultants. Further, the compensation committee, to the extent it deems necessary or appropriate, among its several other responsibilities, will:
● | review periodically our Company’s philosophy regarding executive compensation to (i) ensure the attraction and retention of corporate officers; (ii) ensure the motivation of corporate officers to achieve the Company’s business objectives; and (iii) align the interests of key management with the long-term interests of the Company’s shareholders; | |
● | review and approve corporate goals and objectives relating to chief executive officer compensation and other executive officers of Shuttle; | |
● | make recommendations to the board of directors regarding compensation for non-employee directors, and review periodically non- employee director compensation in relation to other comparable companies and in light of such factors as the compensation committee may deem appropriate; and | |
● | review periodically reports from management regarding funding the Company’s pension, retirement, long-term disability and other management welfare and benefit plans. |
Nominating and Corporate Governance Committee
The nominating and corporate governance committee, which consists of Joshua Schafer (Chair) and Steve Richards, recommends to the board of directors individuals qualified to serve as directors and on committees of the board of directors to advise the board of directors with respect to the board of directors composition, procedures and committees to develop and recommend to the board of directors a set of corporate governance principles applicable to the Company, and to oversee the evaluation of the board of directors and Shuttle’s management. In addition, the nominating and corporate governance committee will consider diversity of background including diversity of race, ethnicity, international background, gender and age when evaluating candidates for board membership.
Further, the nominating and corporate governance committee, to the extent it deems necessary or appropriate, among its several other responsibilities will:
● | recommend to the board of directors and for approval by a majority of independent directors for election by shareholders or appointment by the board of directors as the case may be, pursuant to our bylaws and consistent with the board of director’s evidence for selecting new directors; | |
● | review the suitability for continued service as a director of each member of the board of directors when his or her term expires or when he or she has a significant change in status; | |
● | review annually the composition of the board of directors and to review periodically the size of the board of directors; | |
● | make recommendations on the frequency and structure of board of directors meetings or any other aspect of procedures of the board of directors; | |
● | make recommendations regarding the chairmanship and composition of standing committees and monitor their functions; | |
● | review annually committee assignments and chairmanships; | |
● | recommend the establishment of special committees as may be necessary or desirable from time to time; and | |
● | develop and periodically review corporate governance procedures and consider any other corporate governance issue. |
Code of Ethics
We have adopted a code of ethics that applies to all of our executive officers, directors and employees. The code of ethics codifies the business and ethical principles that govern all aspects of our business. This document will be made available in print, free of charge, to any shareholder requesting a copy in writing from our Secretary at our executive offices in Rockville, Maryland. A copy of our code of ethics is available on our website at www.shuttlepharma.com.
Board of Directors Role in Risk Oversight
Members of the board of directors have periodic meetings with management and the Company’s independent auditors to perform risk oversight with respect to the Company’s internal control processes. The Company believes that the board’s role in risk oversight does not materially affect the leadership structure of the Company. The Company believes that its founders, leadership team and members of the board of directors exemplify diversity and inclusivity with respect to race, sex and ethnic origin. The board of directors presently has two diverse directors and is in the process of reviewing and vetting a female candidate to serve as a director. As such, the Company anticipates being in full compliance with Nasdaq’s newly adopted diversity requirements by the end of its first year of listing.
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Summary Compensation Table
The table below summarizes all compensation awarded to, earned by, or paid to our Chief Executive Officer and Chief Financial Officer and certain of our other executive officers for 2021 and 2020.
SUMMARY COMPENSATION TABLE
Name and principal position | Year | Salary ($) | Bonus ($) | Stock Awards ($) | Option Awards ($) | Non-Equity Incentive Plan Compensation ($) | Nonqualified Deferred Compensation Earnings ($) | All Other Compensation ($) | Total ($) | |||||||||||||||||||||||||||
Anatoly Dritschilo M.D., CEO | 2021 | 18,829 | - | - | - | - | - | - | 18,829 | |||||||||||||||||||||||||||
2020 | 35,144 | - | - | - | - | - | - | 35,144 | ||||||||||||||||||||||||||||
Michael Vander Hoek, CFO, VP | 2021 | 18,338 | - | - | - | - | - | - | 18,138 | |||||||||||||||||||||||||||
2020 | 17,484 | - | - | - | - | - | - | 17,484 | ||||||||||||||||||||||||||||
Peter Dritschilo, President and COO | 2021 | 31,534 | - | - | - | - | - | - | 31,534 | |||||||||||||||||||||||||||
2020 | 23,970 | - | - | - | - | - | - | 23,970 |
Employment Agreements
Each of our executive officers has entered into an employment agreement with us. The employees each will receive compensation on an annual basis in cash, payable in monthly installments commencing at the completion of this offering, as well as restricted stock units subject to achieving certain key performance indicators. Certain of our executive officers are entitled to various target bonuses, upon achievement of certain milestones. The terms of the employment agreements are as follows:
Employment Agreement with Anatoly Dritschilo, MD
On June 28, 2019, we entered into an employment agreement with our Chief Executive Officer and Chairman of the Board, Anatoly Dritschilo, M.D. Under Dr. Dritschilo’s employment agreement, Dr. Dritschilo will receive base compensation of $274,000 per year. Dr. Dritschilo also received an initial restricted stock unit grant of 45,495 restricted stock units (“RSUs”) (22,747 on a post-reverse split basis) issuable under the Company’s 2018 Equity Incentive Plan, which RSUs vest over three years in substantially equal one-third installments on each one year anniversary of the agreement. Under his employment agreement, if Dr. Dritschilo terminates his employment for “Good Reason,” as defined in the agreement, Dr. Dritschilo will be entitled to his then applicable base salary for period of 12 months, subject to his continued compliance with certain requirements of his employment agreement.
Employment Agreement with Michael Vander Hoek
On September 1, 2019, we entered into an amended employment agreement with our Chief Financial Officer and Vice President for Operations and Regulatory, Michael Vander Hoek. Under Mr. Vander Hoek’s employment agreement, he will receive base compensation of $227,000 and is entitled to a target bonus of $72,000 upon achievement of certain milestones. Mr. Vander Hoek also received an initial restricted stock unit grant of 6,096 RSUs (on a post-reverse split basis) issuable under the Company’s 2018 Equity Incentive Plan, which RSUs vest over three years in substantially equal installments on each one year anniversary of the agreement. Under Mr. Vander Hoek’s employment agreement, if he terminates his employment for “Good Reason,” as defined in the agreement, he will be entitled to his then applicable base salary for period of 12 months, subject to his continued compliance with certain requirements of his employment agreement.
Employment Agreement with Peter Dritschilo
On May 30, 2019, we entered into an employment agreement with our President and Chief Operating Officer, Peter Dritschilo. Under Mr. Dritschilo’s employment agreement, Mr. Dritschilo will receive base compensation of $236,000 and is entitled to a target bonus of $72,000 upon achievement of certain milestones. Mr. Dritschilo also received an initial restricted stock unit grant of 20,760 RSUs (10,380 on a post-reverse split basis) issuable under the Company’s 2018 Equity Incentive Plan, which RSUs vest over three years in substantially equal installments on each one year anniversary of the agreement. Under Mr. Dritschilo’s employment agreement, if Mr. Dritschilo terminates his employment for “Good Reason,” as defined in the agreement, he will be entitled to his then applicable base salary for period of 12 months, subject to his continued compliance with certain requirements of his employment agreement.
Employment Agreement with Tyvin Rich, MD
On May 31, 2019, we entered into an employment agreement with our Chief Clinical Officer, Tyvin Rich, M.D. Under Dr. Rich’s employment agreement, Dr. Rich receives base compensation of $218,000 per year and is entitled to a target bonus of $43,000 upon achievement of certain milestones. Dr. Rich also received an initial restricted stock unit grant of 3,843 RSUs (on a post-reverse split basis) issuable under the Company’s 2018 Equity Incentive Plan, which RSUs vest over three years in substantially equal installments on each one year anniversary of the agreement. Under Dr. Rich’s employment agreement, if Dr. Rich terminates his employment for “Good Reason,” as defined in the agreement, he is entitled to his then applicable base salary for period of 12 months, subject to his continued compliance with certain provisions of his employment agreement.
Employment Agreement with Mira Jung, Ph.D.
On May 30, 2019, we entered into an employment agreement with our Chief Scientific Officer for Biology, Mira Jung, Ph.D. Under Dr. Jung’s employment agreement, Dr. Jung receives base compensation of $46,800 and is entitled to a target bonus of $14,200 upon achievement of certain milestones. Dr. Jung also received an initial restricted stock unit grant of 892 RSUs (on a post-reverse split basis) issuable under the Company’s 2018 Equity Incentive Plan, which RSUs vest over three years in substantially equal installments on each one year anniversary of the agreement. Under Dr. Jung’s employment agreement, if Dr. Jung terminates her employment for “Good Reason,” as defined in the agreement, Dr. Jung is then entitled to her then applicable base salary for period of 12 months, subject to her continued compliance with certain requirements of her employment agreement.
Outstanding Equity Awards at Fiscal Year-End
On a post-reverse split basis, a total of 384,167 RSUs have been granted to our executive officers under our 2018 Equity Incentive Plan (the “Plan”), of which 357,390 have vested to date yet remain unissued. After completion of this public offering, it is our intent to file a registration statement on Form S-8 to register the shares granted under our 2018 Equity Incentive Plan, at which time we will issue all such vested shares.
2018 Equity Incentive Stock Plan
Our 2018 Equity Incentive Plan provides for equity incentives to be granted to our employees, executive officers or directors and to key advisers and consultants. Equity incentives may be in the form of stock options with an exercise price of not less than the fair market value of the underlying shares as determined pursuant to the 2018 Equity Incentive Plan, restricted stock awards, other stock- based awards, or any combination of the foregoing. The 2018 Equity Incentive Plan is administered by the Company’s compensation committee or, alternatively, if there is no compensation committee, the Company’s board of directors. We have reserved 3,000,000 shares of our common stock for issuance under the 2018 Equity Incentive Plan (the “Plan”), of which 384,167 shares have been granted under the Plan as of the date of this prospectus.
Director Compensation
Each of our non-employee directors, who were elected in 2019, receives compensation on an annual basis consisting of $25,000 in cash, payable in quarterly installments commencing 90 days after completion of the offering, and 2,702 restricted stock units. Pursuant to director offer letters entered into between each director and our company (the “Director Agreements”), the RSUs vest over a two-year period in one third increments, with one-third vesting immediately upon signing and then one-third vesting on each of the first and second anniversary of election. In addition, non-employee directors will also be reimbursed for out-of-pocket costs incurred in connection with attending meetings.
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PRINCIPAL AND SELLING STOCKHOLDERS
The following table sets forth, as of the date of this prospectus, the beneficial ownership of our common stock by each director and executive officer, by each person known by us to beneficially own 5% or more of our common stock and by directors and executive officers as a group, and by certain selling stockholders. Unless otherwise stated, the address of the persons set forth in the table is c/o Shuttle Pharmaceuticals Holdings, Inc., One Research Court, Suite 450, Rockville, Maryland 20850.
Beneficial ownership is determined in accordance with SEC rules and generally includes voting or investment power with respect to securities. Unless otherwise indicated, the stockholders listed in the table below have sole voting and investment power with respect to the shares indicated.
All share ownership figures include shares of our commons stock issuable upon securities convertible or exchangeable into shares of our common stock, whether or not convertible or exchangeable within 60 days of the effective date of this registration statement. Such shares are deemed outstanding and beneficially owned by such person only for purposes of computing his or her percentage ownership, but not for purposes of computing the percentage ownership for any other person.
As of June 23, 2022, there were issued and outstanding 9,312,991 shares of common stock, 269,444 shares of common stock issuable upon conversion of 1,212.5 shares of Series A convertible preferred stock and warrants to purchase up to 269,444 common stock issuable to the Series A convertible preferred stockholders upon completion of this initial public offering.
Names and addresses | Number of shares of common stock beneficially owned (#) | Percentage of shares of common stock beneficially owned before offering (%) | Number of shares of common stock beneficially owned after the Offering | Percentage of shares of common stock beneficially owned after offering (1) | ||||||||||||
Directors and Named Executive Officers: | ||||||||||||||||
Anatoly Dritschilo, M.D.(2) | 4,557,979 | 49.1 | 4,557,979 | |||||||||||||
Milton Brown, M.D., Ph.D.(3) | 1,073,826 | 11.6 | 1,073,826 | |||||||||||||
Mira Jung, Ph.D.(4) | 1,071,716 | 11.6 | 1,071,716 | |||||||||||||
Michael Vander Hoek(5) | 6,095 | - | 6,095 | |||||||||||||
Peter Dritschilo(5) | 10,380 | - | 10,380 | |||||||||||||
Tyvin A. Rich, M.D. (5) | 3,843 | - | 3,843 | |||||||||||||
Steve Richards(6) | 2,702 | - | 2,702 | |||||||||||||
Joshua Schafer(6) | 2,702 | - | 2,702 | |||||||||||||
Chris Senanayake(6) | 3,843 | - | 3,843 | |||||||||||||
William H. Adkins(6)(7) | 224,298 | 2.4 | 224,298 | |||||||||||||
All directors and officers as a group (eleven persons) | 6,957,384 | 74.7 | 6,957,384 | |||||||||||||
Other 5% beneficial owners: | ||||||||||||||||
Amir F. Heshmatpour(8) | 1,569,518 | 16.9 | 1,569,581 | |||||||||||||
Selling Stockholders | ||||||||||||||||
Bayern Capital LLC(9) | 355,000 | 3.8 | 230,000 | |||||||||||||
Rui Wu(10) | 250,000 | 2.6 | 125,000 | - |
- | Denotes the holder owns less than one percent of the outstanding common stock. |
± | The persons named above have full voting and investment power with respect to the shares indicated. Under the rules of the SEC, a person (or group of persons) is deemed to be a “beneficial owner” of a security if he or she, directly or indirectly, has or shares the power to vote or to direct the voting of such security, or the power to dispose of or to direct the disposition of such security. Accordingly, more than one person may be deemed to be a beneficial owner of the same security. |
+ | Assumes the Series A convertible preferred shares will convert at 90% of the IPO per share price, in accordance with the Series A convertible preferred stock certificate of designation, as amended. Upon conversion, each holder of Series A convertible preferred stock will consist of 50% common stock and 50% warrants to purchase common stock, which warrants will be exercisable at the per share price of this offering. |
(1) | Gives pro forma effect to the sale of up to 3,000,000 shares of common stock offered hereby. |
(2) | Consists of 1,070,824 shares of common stock held of record by Dr. Anatoly Dritschilo, 22,748 restricted stock units which have been granted to Dr. Dritschilo, two-thirds of which have fully vested but none of which has yet been issued, and 3,464,407 shares of common stock held of record by Joy Dritschilo, his spouse. |
(3) | Consists of 1,070,824 shares of our common stock held by Dr. Milton Brown and 2,702 restricted stock units which have been granted to Dr. Brown, all of which have fully vested but none of which have been issued. |
(4) | Consists of 1,070,824 shares of our common stock held by Dr. Mira Jung and 892 restricted stock units which have been granted to Dr. Jung, two-thirds of which have vested and one-third of which remain subject to vesting. |
(5) | Consists of a grant of restricted stock units, two-thirds of which is fully vested and one-third of which remains subject to vesting. |
(6) | Each of our directors have been granted restricted stock units (“RSUs”) pursuant to their letter agreements with the Company, all of which have fully vested as of the date of this prospectus, aside from the RSUs held by Dr. Senanayake, of which two-thirds have fully vested and one-third remains subject to vesting. |
(7) | Includes the following shares held by the William Henry Adkins & Pauline Adkins 1993 Revocable Trust (i) 111,112 shares of common stock issuable upon conversion of Series A Convertible preferred stock, (ii) 111,112 shares of common stock issuable upon exercise of warrants to purchase common stock, and 2,702 restricted stock units, all of which have vested but have yet to be issued. |
(8) | Includes (i) 1,119,581 shares of our common stock held of record by AFH Holding & Advisory, LLC, of which Mr. Heshmatpour is the sole member and over which he has sole voting and investment control; (ii) 300,000 shares of our common stock held of record by KIG LLC of which Mr. Heshmatpour’s spouse, Kathy Heshmatpour, exercises sole voting and investment control; and (iii) 150,000 shares held by Angelina Heshmatpour, the minor daughter of Mr. Heshmatpour. |
(9) | Consists of (i) warrants to purchase 250,000 shares of common stock, exercisable at a price of $1.00 per share, which warrant will be simultaneously exercised into 250,000 shares of common stock and of which 125,000 shares will be sold in this offering upon effectiveness of the IPO and (ii) 105,000 shares of common stock held by Steven Bayern, president and sole shareholder of Bayern Capital LLC (“Bayern Capital”). Mr. Bayern, who is a consultant to the Company, has sole voting and investment power with respect to the shares held by Bayern Capital. |
(10) | Consists of warrants to purchase 250,000 shares of common stock, exercisable at a price of $1.00 per share, which shares will be simultaneously exercised. 125,000 shares will be sold in this offering. |
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Related Party Transactions
Unless described below, during the last two fiscal years, there were no transactions or series of similar transactions to which we
were a party or will be a party, in which:
● | the amounts involved exceed or will exceed $120,000; and | |
● | any of our directors, executive officers or holders of more than 5% of our capital stock, or any member of the immediate family of any of the foregoing had, or will have, a direct or indirect material interest. |
On January 25, 2018, Shuttle entered into a loan from Joy Dritschilo, the wife of our Chief Executive Officer, Anatoly Dritschilo, in the amount of $300,000 (the “January 2018 Loan”). The January 2018 Loan bears an interest rate of 7.5% per annum. The loan plus accrued interest was payable in full on January 25, 2019. On January 25, 2019, the Company amended the terms to extend the maturity date from January 25, 2019 to October 25, 2019.
On April 4, 2018, Shuttle entered into a loan from Mrs. Dritschilo in the amount of $50,000 (the “April 2018 Loan”). The April 2018 Loan bears an interest rate of 7.5% per annum. The loan plus accrued interest were payable in full on September 4, 2018. On October 31, 2018, the Company amended the terms to extend the maturity date of the April 2018 Loan from September 4, 2018 to April 4, 2019. On April 4, 2019, the Company amended the terms to extend the maturity date from April 4, 2019 to October 25, 2019.
On April 5, 2018, our predecessor in interest, Shuttle Pharma Acquisition Corp. Inc. (“Acquisition Corp.”), issued 3,600,000 shares to its founders, AFH Holding & Advisory, LLC and its affiliates (together, “AFH”). Such shares were issued at par value. AFH has also served as an advisor and consultant to the Company, and its owner, Amir Heshmatpour, has also served as a board member to our Company, a position he relinquished in advance of our commencement of the IPO process.
On May 31, 2018, the Company entered into a loan with our Chief Executive Officer in the amount of $25,000 (the “May 2018 Loan”). The May 2018 Loan bears interest at the rate of 7.5% per annum. The loan plus accrued interest were payable in full on July 15, 2018. On October 31, 2018, the Company amended the terms to extend the maturity date from July 15, 2018 to November 30, 2019.
On June 29, 2018, the Company entered into a loan with our Chief Executive Officer in the amount of $25,000. The loan bears an interest rate of 7.5% per annum. The loan plus accrued interest were payable in full on August 15, 2018. On December 6, 2018, the Company amended the terms to extend the maturity date from August 15, 2018 to February 15, 2019. On February 19, 2019, the Company paid off this note in full. The interest expense incurred on this loan was $1,223 for the year ended December 31, 2019.
On June 24, 2019, the Company entered into a loan from Mrs. Dritschilo in the amount of $70,000. The loan bears an interest rate of 7.5% per annum. The loans plus accrued interest are payable in full on June 23, 2020. This loan has since been satisfied in full.
In the fall of 2018 through to June 2019, we paid a total of $500,000 in cash to pay for a deposit on Acquisition Corp. in order to facilitate the process of taking the Company public.
On July 15, 2019, the Company issued 639,161 to our then consultant, AFH, to satisfy certain compensation owed to the consultant in relation to certain advisory services provided during 2018 and 2019. Such shares were issued pursuant to the Company’s 2018 Equity Incentive Plan.
On August 24, 2019, the Company entered into a loan with our Chief Executive Officer in the amount of $70,000. The loan bears interest at the rate of 7.5% per annum. The loan plus accrued interest is due and payable in full on August 24, 2020. This loan has since been satisfied in full.
On September 23, 2019, the Company entered into a loan with our Chief Executive Officer in the amount of $100,000 (the “September 2019 Loan”). The September 2019 Loan bear interest at the rate of 7.5% per annum and the loan plus accrued interest.
On December 1, 2020, the Company consolidated the January 2018 Loan and the April 2018 Loan into a single loan between Mrs. Dritschilo and the Company (the “2018 Consolidated Loan”) such that, with accrued interest, the 2018 Consolidated Loan had a principal balance of $424,005.65, bears interest at a rate of 7.5% per annum, and has a maturity date of December 31, 2021. The 2018 Consolidated Loan was extended until June 30, 2022, pursuant to an amendment to the 2018 Consolidated Loan agreement dated January 24, 2022.
On December 1, 2020, the Company consolidated the May 2018 loan and the September 2019 Loan with our Chief Executive Officer (the “2019 Consolidated Loan”), such that, with accrued interest, the 2019 Consolidated Loan had a principal balance of $138,448.20, bears interest at the rate of 7.5% per annum, and has a maturity date of December 31, 2021. The 2019 Consolidated Loan was extended until June 30, 2022, pursuant to an amendment to the 2019 Consolidated Loan agreement dated January 24, 2022.
On June 21, 2021, the Company entered into a loan agreement with Mrs. Dritschilo in the amount of $120,000 (principal), bearing interest at the rate of 7.5% per annum, with a single balloon payment due at maturity on June 21, 2022.
On September 22, 2021, Mrs. Dritschilo, who is one of our major shareholders, transferred 210,000 shares (105,000 shares post-split) of common stock of the Company in a private transaction to Steven Bayern, who had also been engaged by the Company to perform certain consulting services for the Company. Such shares, which represent approximately three percent of her total share ownership, were sold at par value pursuant to an exemption from registration under Section 4(a)(7) of the Securities Act. As a result of the transfer, the Company recognized $420,000 in non-cash stock compensation in legal and professional fees.
Review, Approval and Ratification of Related Party Transactions
All related party transactions are subject to the review, approval, or ratification of our board of directors or an appropriate committee thereof.
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Capital Stock
Our authorized capital stock consists of 100,000,000 shares of common stock, par value $0.00001 per share, and 20,000,000 shares of preferred stock, par value $0.00001 per share.
Common Stock
As of the date of this prospectus, we had 9,312,991 shares of common stock issued and outstanding. In addition, 500,000 shares of common stock will be issuable upon exercise of certain warrants at the effectiveness of this offering, and 236,000 shares will be issuable upon conversion of notes upon effectiveness of this offering. The shares of common stock and preferred stock presently outstanding are, and the shares of common stock in this offering, when issued and paid for as contemplated in this prospectus, will be, fully paid and non-assessable. Each holder of common stock is entitled to one vote for each share owned on all matters voted upon by shareholders, and a majority vote is required for all actions to be taken by shareholders. In the event we liquidate, dissolve or wind-up our operations, the holders of the common stock are entitled to share equally and ratably in our assets, if any, remaining after the payment of all our debts and liabilities and the liquidation preference of any shares of preferred stock that may then be outstanding. The common stock has no preemptive rights, no cumulative voting rights, and no redemption, sinking fund, or conversion provisions.
Holders of common stock are entitled to receive dividends, if and when declared by the board of directors, out of funds legally available for such purpose, subject to the dividend and liquidation rights of any preferred stock that may then be outstanding.
Preferred Stock
Our board of directors has the authority, without further action by the shareholders, to issue shares of preferred stock in one or more series and to fix the rights, preferences and the number of shares constituting any series or the designation of such series. While our Certificate of Incorporation and Bylaws, each as amended to date, do not contain any provisions that may delay, defer or prevent a change in control, the issuance of preferred stock may have the effect of delaying or preventing a change in control or make removal of our management more difficult. At present, our board of directors has authorized the issuance of up to 10,000 shares of Series A preferred stock, of which 1,212.5 shares are issued and outstanding as of the date of this prospectus.
Series A Convertible Preferred Stock
Our board of directors has designated and authorized the issuance of up to 10,000 shares of Series A Convertible Preferred Stock, par value $0.00001 per share (the “Series A Convertible Preferred Stock”), of which there are presently 1,212.5 shares outstanding. A total of $1,212,500 was raised during 2018 and 2019 from the sale of our Series A Convertible Preferred Stock. The Series A Convertible Preferred Stock has a stated value of $1,000 per share, is entitled to receive a dividend at the rate of 8.5% per annum, which dividend is cumulative and will be payable at our option in shares of common stock or cash upon the date of conversion or redemption, as so determined by the Company. The Series A Convertible Preferred Stock will be automatically convertible upon the earlier of (a) the closing of the sale of shares of common stock to the public at an offering price of at least $5.00 per share in a firm commitment underwritten public offering pursuant to an effective registration statement under the Securities Act, resulting in gross proceeds to us (before underwriter’s discounts, commissions and expenses) of an amount of at least $10 million (a “Qualified IPO”), or (b) listing of the common stock on the NYSE or Nasdaq (a “Qualified Listing”). All shares of Series A Convertible Preferred Stock will be convertible at either (i) 90% of the gross public offering price per share of the Qualified IPO (before deducting underwriter’s discounts, commissions and expenses) or (ii) in the case of (b) above, $5.00 per share. Until such time as the Series A Convertible Preferred Stock has been converted into our common stock, the Series A Convertible Preferred stockholders have no voting rights other than to rights to vote on matters concerning the Series A Convertible Preferred Stock.
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Warrants
In conjunction with our sale of Series A Convertible Preferred Stock, our board of directors authorized the issuance of warrants to purchase up to approximately 269,444 shares of common stock (the “Warrants”) to the holders of Series A Preferred Stock. The Warrants are issuable upon the earlier of the closing of a Qualified IPO or Qualified Listing, will have an exercise price per share equal to the IPO’s initial per share offering price and shall be exercisable at any time on or before expiration on the three-year anniversary following their issuance.
Notes and Warrants
On December 28, 2021, we completed a private placement offering (the “Note and Warrant Offering”) pursuant to which we sold to two accredited investors (the “Note and Warrant holders”) an aggregate of $500,000 of our 10% promissory notes, which are due upon completion of this Offering, and warrants to purchase $500,000 shares of common stock, at an exercise price of $1.00 per share. Such issuance was completed pursuant to an exemption from registration under Rule 506(b) of Regulation D of the Securities Act. Boustead Securities, LLC acted as placement agent in the Note and Warrant offering but waived its compensation in relation to such offering. Upon completion of this Offering, the notes will be repaid and the warrants will be exercised simultaneously, such that the Note and Warrant holders will have been repaid in full through their receipt of 500,000 shares of common stock, 250,000 shares of which will then be sold in this Offering. The remaining 250,000 shares may then either be sold pursuant to a resale registration statement or an applicable exemption from registration.
6% Convertible Notes
On February 8, 2022 and March 11, 2022, we completed private placement offerings pursuant to which we sold to several accredited investors an aggregate of $365,000 and $225,000, respectively, of our 6% convertible notes due three years from the date of issuance (the “Convertible Notes”), pursuant to an exemption from registration under Rule 506(b) of Regulation D of the Securities Act. Boustead Securities, LLC acted as placement agent in the Convertible Note and Warrant offering and received commissions and non-accountable reimbursements of 10% of the gross proceeds received and warrants to purchase 10% of the common stock.
Upon completion of this Offering, the Convertible Notes will automatically convert into shares of common stock at a conversion price equal to 50% of the IPO per share offering price.
In connection with this Convertible Note offering, each purchaser of Convertible Notes entered into an investor rights and lock-up agreement (the “Investor Rights and Lock-up Agreement”) pursuant to which the Company has agreed, upon conversion of the Convertible Notes, to register the shares of common stock underlying the Convertible Notes and the Convertible Note holders have each agreed not to sell their shares of common stock for a period of 180 days following completion of this offering.
Registration Rights
We are party to a registration rights agreement with the holders of Series A Convertible Preferred Stock pursuant to which we are obligated to register the shares of common stock underlying the Series A Convertible Preferred Stock and Warrants. The registration of these shares of common stock would enable the holders to sell their shares without restriction under the Securities Act when the registration statement is declared effective. We will pay for the registration expenses, other than underwriting discounts and commissions, of any shares subject to registration rights.
Generally, in an underwritten offering, the managing underwriter, if any, has the right, subject to specific conditions, to limit the number of shares such holders may include. As a result of the underwriter objecting to the registration of the common stock underlying the Series A Convertible Preferred shares in this offering, we will be required to file a resale registration statement registering the shares, with an obligation of having such registration statement declared effective within 180 days of the initial filing of such resale registration statement.
Anti-Takeover Effects of Provisions of our Certificate of Incorporation, our Bylaws and Delaware Law
Some provisions of Delaware law, our certificate of incorporation and our bylaws contain provisions that could make the following transactions more difficult: acquisition of us by means of a tender offer; acquisition of us by means of a proxy contest or otherwise; or removal of our incumbent officers and directors. It is possible that these provisions could make it more difficult to accomplish or could deter transactions that stockholders may otherwise consider to be in their best interest or in our best interests, including transactions that might result in a premium over the market price for our shares.
These provisions, summarized below, are expected to discourage coercive takeover practices and inadequate takeover bids. These provisions are also designed to encourage persons seeking to acquire control of us to first negotiate with our Board of Directors. We believe that the benefits of increased protection of our potential ability to negotiate with the proponent of a non-friendly or unsolicited proposal to acquire or restructure us outweigh the disadvantages of discouraging these proposals because negotiation of these proposals could result in an improvement of their terms.
Delaware Anti-Takeover Statute
In general, Delaware corporations are subject to Section 203 of the DGCL, which prohibits a Delaware corporation from engaging in any business combination with any interested stockholder for a period of three years after the date that such stockholder became an interested stockholder, with the following exceptions:
● | before such date, the board of directors of the corporation approved either the business combination or the transaction that resulted in the stockholder becoming an interested holder; | |
● | upon completion of the transaction that resulted in the stockholder becoming an interested stockholder, the interested stockholder owned at least 85% of the voting stock of the corporation outstanding at the time the transaction began, excluding for purposes of determining the voting stock outstanding (but not the outstanding voting stock owned by the interested stockholder) those shares owned (i) by persons who are directors and also officers and (ii) employee stock plans in which employee participants do not have the right to determine confidentially whether shares held subject to the plan will be tendered in a tender or exchange offer; |
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● | on or after such date, the business combination is approved by the board of directors and authorized at an annual or special meeting of the stockholders, and not by written consent, by the affirmative vote of at least 662/3% of the outstanding voting stock that is not owned by the interested stockholder; or | |
● | the corporation does not have a class of voting stock that is: (i) listed on a national securities exchange; or (ii) held of record by more than 2,000 stockholders, unless any of the foregoing results from action taken, directly or indirectly, by an interested stockholder or from a transaction in which a person becomes an interested stockholder |
In general, Section 203 defines business combination to include the following:
● | any merger or consolidation involving the corporation and the interested stockholder; | |
● | any sale, transfer, pledge, or other disposition of 10% or more of the assets of the corporation involving the interested stockholder; | |
● | subject to certain exceptions, any transaction that results in the issuance or transfer by the corporation of any stock of the corporation to the interested stockholder; | |
● | any transaction involving the corporation that has the effect of increasing the proportionate share of the stock or any class or series of the corporation beneficially owned by the interested stockholder; or | |
● | the receipt by the interested stockholder of the benefit of any loss, advances, guarantees, pledges or other financial benefits by or through the corporation. |
Section 203 defines interested stockholder as an entity or person beneficially owning 15% or more of the outstanding voting stock of the corporation or any entity or person affiliated with or controlling or controlled by such entity or person.
While we are currently not subject to the restrictions contained in Section 203, we will become subject to these restrictions if our common stock is listed on a national securities exchange or we have more than 2,000 stockholders of record of our common stock.
Nasdaq Listing
We have applied to list our shares of common stock on The Nasdaq Capital Market. There can be no assurance that our application for listing will be approved.
Transfer Agent
The transfer agent and registrar of our common stock is VStock Transfer, LLC, of Woodmere, New York. Our transfer agent’s telephone number is (212) 828-8436.
87 |
SHARES ELIGIBLE FOR FUTURE SALE
Prior to this offering, there has been no public market for our common stock, and we cannot assure you that a liquid trading market for our common stock will develop or be sustained after this offering.
Commencing 90 days after the date of this prospectus, subject to lock-up agreements of 365 days for directors, officer and affiliates and 180 days for holders of 1% or more of our comment stock, the 9,312,991 shares of our common stock outstanding as of the date of this prospectus will be eligible for sale in the public market from time to time thereafter pursuant to Rule 144 under the Securities Act, and in some cases, subject to the volume and other restrictions of Rule 144. In addition, we have 1,212.5 share of Series A convertible preferred common stock, which shares will be convertible into approximately 269,444 shares of common stock upon the earlier of completion of the offering or the Company’s listing on a national securities exchange, as well as warrants to purchase up to 269,444 shares of common stock, which will be issuable upon closing of this offering. We also have 3,000,000 shares of common stock reserved for issuance under our 2018 Equity Incentive Plan, of which 384,167 shares have been granted to date. The sale of a significant number of shares of our common stock in the public market or the perception that such sales may occur could significantly reduce the market price of our common stock.
Rule 144
In general, under Rule 144 under the Securities Act, beginning 90 days after the effective date of the registration statement of which this prospectus is a part, a person (or persons whose shares are aggregated) who is not deemed to have been an affiliate of ours at any time during the three months preceding a sale, and who has beneficially owned restricted securities within the meaning of Rule 144 for at least six months (including any period of consecutive ownership of preceding non-affiliated holders) would be entitled to sell those shares, subject only to the availability of current public information about us. A non-affiliated person who has beneficially owned restricted securities within the meaning of Rule 144 for at least one year would be entitled to sell those shares without regard to the provisions of Rule 144.
A person (or persons whose shares are aggregated) who is deemed to be an affiliate of ours and who has beneficially owned restricted securities within the meaning of Rule 144 for at least six months would be entitled to sell within any three-month period a number of shares that does not exceed the greater of one percent of the then outstanding shares of our common stock or the average weekly trading volume of our common stock reported through Nasdaq or such other market on which our shares of common stock are listed for trading during the four calendar weeks preceding such sale. Such sales are also subject to certain manner of sale provisions, notice requirements and the availability of current public information about us.
2018 Equity Incentive Plan Form S-8 Registration Statement
We intend to file with the SEC a registration statement on Form S-8 under the Securities Act covering the shares of common stock that we may issue upon exercise of awards which may be granted under our 2018 Equity Incentive Plan. Such registration statement is expected to be filed and become effective as soon as practicable after the effectiveness of this registration statement. Accordingly, shares registered under such registration statement will be available for sale in the open market following its effective date, subject to Rule 144 volume and manner of sale limitations, if applicable.
88 |
In connection with this offering, we and the selling stockholders will enter into an underwriting agreement with Boustead Securities, LLC to serve as lead book-running manager of the offering and as representative of the several underwriters (if any) named below. Subject to the terms and conditions of the underwriting agreement, each underwriter will severally agree to purchase from us and the selling stockholders the number of shares of common stock set forth opposite its name below, at the public offering price, less the underwriting discount set forth on the cover page of this prospectus.
Underwriters | Number of Shares | |||
Boustead Securities, LLC | 3,000,000 | |||
Total | 3,000,000 |
Subject to the terms and conditions set forth in the underwriting agreement, the underwriter has agreed to purchase 2,750,000 shares of our common stock from us and 250,000 shares of our common stock from the selling stockholders offered by this prospectus (other than those covered by the over-allotment option described below), if any are purchased.
The underwriter is offering the shares of common stock subject to various conditions and may reject all or part of any order. The underwriter has advised us and the selling stockholders that the underwriter proposes initially to offer the shares of common stock to the public at the public offering price set forth on the cover page of this prospectus and to dealers at a price less a concession not in excess of $ per share of common stock to brokers and dealers. After the shares of common stock are released for sale to the public, the underwriter may change the offering price, the concession and other selling terms at various times.
The table below provides information regarding the amount of the discounts and commissions to be paid to the underwriters by us, before estimated expenses.
Over-Allotment Option
We have granted the underwriter an over-allotment option. This option, which is exercisable for up to 45 days after the date of this prospectus, permits the underwriter to purchase a maximum of 450,000 additional shares from us to cover over-allotments. If the underwriter exercises all or part of this option, it will purchase shares covered by the option at the initial public offering price that appears on the cover page of this prospectus, less the underwriting discount. If this option is exercised in full, the total proceeds to us will be $ before deduction of underwriting discounts and estimated offering expenses. The underwriters have agreed that, to the extent the over-allotment option is exercised, they will purchase a number of additional shares proportionate to the underwriter’s initial amount reflected in the foregoing table.
Underwriting Discount
The following table summarizes the compensation and estimated expenses we and the selling stockholders will pay. The information assumes either no exercise or full exercise by the underwriter of the over-allotment option.
Per Share | Total | |||||||||||||||
Without Over-allotment | With Over-allotment | Without Over-allotment | With Over-allotment | |||||||||||||
Underwriting discount payable by us | $ | $ | $ | $ | ||||||||||||
Underwriting discount payable by selling stockholders | $ | $ | $ | $ | ||||||||||||
Non-accountable and accountable expenses payable by us | $ | $ | $ | $ | ||||||||||||
Non-accountable expenses payable by selling stockholders | $ | $ | $ | $ |
89 |
We and the selling stockholders have agreed to pay a non-accountable expense allowance to the underwriter equal to 1.0% of the gross proceeds (including proceeds subject to the over-allotment option, if and to the extent it is exercised) for expenses in connection with this offering. We have also agreed to pay the underwriter an accountable expense reimbursement of up to $255,000 for out-of-pocket expenses incurred by it with respect to this offering. We estimate that our total expenses of the offering, excluding the underwriting discounts and commissions, will be approximately $484,936.
We have also agreed to issue to the underwriter a warrant to purchase a number of shares of common stock equal to an aggregate of 7% of the aggregate number of the shares sold in this offering. The warrant will be exercisable on a cashless basis at an exercise price equal to 100% of the offering price of the shares sold in this offering. The warrants are exercisable commencing six months after the date of effectiveness of the registration statement of which this prospectus forms a part, have piggyback registration rights, and will be exercisable for a period of five years from the effective date of the registration statement of which this prospectus forms a part. The warrants are not redeemable by us. The warrants and the shares of common stock issuable upon exercise of the warrants have been included on the registration statement of which this prospectus forms a part. Pursuant to applicable FINRA rules, and in particular Rule 5110, the warrants (and underlying shares) issued to the underwriter may not be sold, transferred, assigned, pledged, or hypothecated, or the subject of any hedging, short sale, derivative, put or call transaction that would result in the effective disposition of the securities by any person for a period of 180 days after the effective date of the registration statement related to this offering; provided, however, the warrants (and underlying shares) may be transferred to the underwriter’s officers, partners, registered persons or affiliates as long as the warrants (and underlying shares) remain subject to the lock-up.
We and the selling stockholders have agreed to indemnify the underwriter against certain liabilities, including liabilities under the Securities Act of 1933, as amended.
Pursuant to the underwriting agreement, we will provide the underwriter the right of first refusal for two years from the date of commencement of sales of this offering to act as financial advisor or to act as joint financial advisor on at least equal economic terms on any public or private financing (debt or equity), merger, business combination, recapitalization or sale of some or all of the equity or assets of our company.
We have agreed to a six-month “lock-up” from the closing of this offering, during which, without the prior written consent of the underwriter, we will not issue, sell or register with the SEC (other than on Form S-8 or on any successor form) with respect to any of our equity securities (or any securities convertible into, exercisable for or exchangeable for any of our equity securities), except for (i) the issuance of the shares of common stock offered pursuant to this prospectus; and (ii) the issuance of shares of common stock pursuant to our existing stock option or bonus plan as described in the registration statement of which this prospectus forms a part.
Our executive officers, directors and certain of our significant stockholders have also agreed to a 12-month “lock-up” period, and any stockholders who own in excess of 1% of the outstanding shares of our common stock will be subject to a six-month lock-up period, during which time, without the prior written consent of the underwriter, they will not, directly or indirectly, (i) offer, pledge, assign, encumber, announce the intention to sell, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, or otherwise transfer or dispose of, any shares of common stock or any securities convertible into or exercisable or exchangeable for common stock, owned either of record or beneficially (as defined in the Securities Exchange Act of 1934, as amended (the “Exchange Act”) by any signatory of the lock-up agreement on the date of the prospectus or thereafter acquired; (ii) enter into any swap or other agreement that transfers, in whole or in part, any of the economic consequences of ownership of the common stock or any securities convertible into or exercisable or exchangeable for common stock, whether any such transaction described in clauses (i) or (ii) above is to be settled by delivery of common stock or such other securities, in cash or otherwise, or publicly announce an intention to do any of the foregoing; and (iii) make any demand for or exercise any right with respect to, the registration of any shares of common stock or any security convertible into or exercisable or exchangeable for common stock. The foregoing will not apply to (i) common stock to be transferred as a gift or gifts (provided, that (a) any donee will execute and deliver to the underwriter, not later than one business day prior to such transfer, a lock-up agreement to the underwriter and (b) if the lock-up signatory is required to file a report under Section 16(a) of the Exchange Act, reporting a reduction in beneficial ownership of shares of common stock or beneficially owned shares or any securities convertible into or exercisable or exchangeable for common stock or beneficially owned shares during the six-month “lock-up,” the lock-up signatory will include a statement in such report to the effect that such transfer is being made as a gift), and (ii) the sale of the shares of common stock to be sold pursuant to this prospectus.
90 |
Rules of the SEC may limit the ability of the underwriter to bid for or purchase shares before the distribution of the shares is completed. However, the underwriter may engage in the following activities in accordance with the rules:
● | Stabilizing transactions — The representative may make bids or purchases for the purpose of pegging, fixing or maintaining the price of the shares, so long as stabilizing bids do not exceed a specified maximum. | |
● | Over-allotments and syndicate covering transactions — The underwriter may sell more shares of common stock in connection with this offering than the number of shares that they have committed to purchase. This over-allotment creates a short position for the underwriter. This short sales position may involve either “covered” short sales or “naked” short sales. Covered short sales are short sales made in an amount not greater than the underwriter’s over-allotment option to purchase additional shares in this offering described above. The underwriters may close out any covered short position either by exercising their over-allotment option or by purchasing shares in the open market. To determine how they will close the covered short position, the underwriter will consider, among other things, the price of shares available for purchase in the open market, as compared to the price at which they may purchase shares through the over-allotment option. Naked short sales are short sales in excess of the over-allotment option. The underwriter must close out any naked short position by purchasing shares in the open market. A naked short position is more likely to be created if the underwriter is concerned that, in the open market after pricing, there may be downward pressure on the price of the shares that could adversely affect investors who purchase shares in this offering. | |
● | Penalty bids — If the representative purchases the shares in the open market in a stabilizing transaction or syndicate covering transaction, it may reclaim a selling concession from the underwriter and selling group members who sold those shares as part of this offering. | |
● | Passive market making — Market makers in the shares who are underwriters or prospective underwriters may make bids for or purchase the shares, subject to limitations, until the time, if ever, at which a stabilizing bid is made. |
Similar to other purchase transactions, the underwriter’s purchases to cover the syndicate short sales or to stabilize the market price of our common stock may have the effect of raising or maintaining the market price of our common stock or preventing or mitigating a decline in the market price of our common stock. As a result, the price of our common stock may be higher than the price that might otherwise exist in the open market. The imposition of a penalty bid might also have an effect on the price of the common stock if it discourages resales of our shares of common stock.
Neither we nor the underwriters make any representation or prediction as to the effect that the transactions described above may have on the price of our common stock. These transactions may occur on the Nasdaq Capital Market or otherwise. If such transactions are commenced, they may be discontinued without notice at any time.
In December 2021, we completed a $500,000 unit offering private placement offering to two investors, which units consisted of a total of $500,000 of 10% promissory notes and warrants to purchase 500,000 shares of common stock, exercisable at a purchase price of $1.00 per share, which private placement was completed pursuant to an exemption from registration under Rule 506(b) of the Securities Act. Boustead acted as placement agent in the private placement, however, Boustead agreed to waive its placement agent fees and expenses.
In February and March 2022, we completed a $365,000 and a $225,000 convertible note offering, respectively, to certain accredited investors, which notes are convertible into shares of common stock (the “Conversion Shares”) at a conversion price of $2.50 per share upon effectiveness of this offering. The convertible note offering was completed pursuant to an exemption from registration under Rule 506(b) of the Securities Act. Boustead acted as placement agent in each of the February and March 2022 private placements and received $36,500 and $22,250 cash compensation, respectively, and five-year warrants to purchase shares of common stock equal to 10% of the number of Conversion Shares, which warrants will be exercisable at the conversion price.
A prospectus in electronic format may be delivered to potential investors by one or more of the underwriters participating in this offering. The prospectus in electronic format will be identical to the paper version of such preliminary prospectus. Other than the prospectus in electronic format, the information on any underwriter’s website and any information contained in any other website maintained by an underwriter is not part of the prospectus or the registration statement of which this prospectus forms a part.
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Transfer Agent and Registrar
The transfer agent and registrar for shares of our common stock and preferred stock is VStock Transfer, LLC, Woodmere, New York. Our transfer agent’s telephone number is (212) 828-8436.
Notice to Non-US Investors
Canada
The securities may be sold in Canada only to purchasers purchasing, or deemed to be purchasing, as principal who are “accredited investors,” as defined in National Instrument 45-106 Prospectus Exemptions or subsection 73.3(1) of the Securities Act (Ontario), and are “permitted clients”, as defined in National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations. Any resale of the securities must be made in accordance with an exemption from, or in a transaction not subject to, the prospectus requirements of applicable securities laws. Securities legislation in certain provinces or territories of Canada may provide a purchaser with remedies for rescission or damages if this prospectus (including any amendment thereto) contains a misrepresentation, provided that the remedies for rescission or damages are exercised by the purchaser within the time limit prescribed by the securities legislation of the purchaser’s province or territory. The purchaser should refer to any applicable provisions of the securities legislation of the purchaser’s province or territory for particulars of these rights or consult with a legal advisor. Pursuant to section 3A.3 of National Instrument 33-105 Underwriting Conflicts (NI 33-105), the underwriters are not required to comply with the disclosure requirements of NI 33-105 regarding underwriter conflicts of interest in connection with this offering.
European Economic Area
In relation to each Member State of the European Economic Area which has implemented the Prospectus Directive, each, a Relevant Member State, with effect from and including the date on which the European Union Prospectus Directive, or the EU Prospectus Directive, was implemented in that Relevant Member State, or the Relevant Implementation Date, no offer of securities may be made to the public in that Relevant Member State other than:
1. | to any legal entity which is a qualified investor as defined under the EU Prospectus Directive; | |
2. | to fewer than 150 natural or legal persons (other than qualified investors as defined in the EU Prospectus Directive), subject to obtaining the prior consent of the representatives; or | |
3. | in any other circumstances falling within Article 3(2) of the EU Prospectus Directive; |
provided that no such offer of securities shall require the Company or any underwriter to publish a prospectus pursuant to Article 3 of the Prospectus Directive and each person who initially acquires any securities or to whom any offer is made will be deemed to have represented, acknowledged and agreed to and with each of the underwriters and the Company that it is a “qualified investor” within the meaning of the law in that Relevant Member State implementing Article 2(1)(e) of the Prospectus Directive.
In the case of any securities being offered to a financial intermediary as that term is used in Article 3(2) of the Prospectus Directive, each such financial intermediary will be deemed to have represented, acknowledged and agreed that the securities acquired by it in the offer have not been acquired on a non-discretionary basis on behalf of, nor have they been acquired with a view to their offer or resale to, persons in circumstances which may give rise to an offer of any securities to the public other than their offer or resale in a Relevant Member State to qualified investors as so defined or in circumstances in which the prior consent of the representatives has been obtained to each such proposed offer or resale.
For the purposes of this provision, the expression an “offer of securities to the public” in relation to any securities in any Relevant Member State means the communication in any form and by any means of sufficient information on the terms of the offer and the securities to be offered so as to enable an investor to decide to purchase or subscribe for the securities, as the same may be varied in that Member State by any measure implementing the EU Prospectus Directive in that Member State. The expression “EU Prospectus Directive” means Directive 2003/71/EC (and any amendments thereto, including the 2010 PD Amending Directive, to the extent implemented in the Relevant Member State) and includes any relevant implementing measure in each Relevant Member State, and the expression “2010 PD Amending Directive” means Directive 2010/73/EU.
92 |
United Kingdom
In the United Kingdom, this document is being distributed only to, and is directed only at, and any offer subsequently made may only be directed at persons who are “qualified investors” (as defined in the Prospectus Directive) (i) who have professional experience in matters relating to investments falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended, or the Order, and/or (ii) who are high net worth companies (or persons to whom it may otherwise be lawfully communicated) falling within Article 49(2)(a) to (d) of the Order (all such persons together being referred to as “relevant persons”) or otherwise in circumstances which have not resulted and will not result in an offer to the public of the securities in the United Kingdom.
Any person in the United Kingdom who is not a relevant person should not act or rely on the information included in this document or use it as basis for taking any action. In the United Kingdom, any investment or investment activity that this document relates to may be made or taken exclusively by relevant persons.
The validity of the common stock being offered hereby has been passed upon by Michelman & Robinson, LLP, California and New York. The underwriter has been represented in connection with this offering by Olshan Frome Wolosky LLP, New York, New York.
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The consolidated financial statements of Shuttle Pharmaceuticals Holdings, Inc. appearing in this prospectus and related registration statement for the years ended December 31, 2021 and 2020 have been audited by BF Borgers CPA PC, an independent registered public accounting firm, as set forth in their report thereon and are included in reliance upon such report given on the authority of BF Borgers CPA PC as experts in accounting and auditing.
WHERE YOU CAN FIND MORE INFORMATION
We have filed a registration statement on Form S-1 under the Securities Act with the SEC with respect to the shares of our common stock offered through this prospectus. This prospectus is filed as a part of that registration statement, but does not contain all of the information contained in the registration statement and exhibits. Statements made in the registration statement are summaries of the material terms of the referenced contracts, agreements or documents of the company. We refer you to our registration statement and each exhibit attached to it for a more detailed description of matters involving the company. You may inspect the registration statement, exhibits and schedules filed with the SEC at the SEC’s principal office in Washington, D.C. Copies of all or any part of the registration statement may be obtained from the Public Reference Section of the SEC, 100 F Street, N.E. Washington, D.C. 20549. Please Call the Commission at 1-800-SEC-0330 for further information on the operation of the public reference rooms. The SEC also maintains a web site at http://www.sec.gov that contains reports, proxy Statements and information regarding registrants that files electronically with the SEC. Our registration statement and the referenced exhibits can also be found on this site.
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DISCLOSURE OF SEC POSITION ON INDEMNIFICATION
FOR SECURITIES ACT LIABILITIES
In accordance with the provisions in our Certificate of Incorporation, as amended, we will indemnify an officer, director, or former officer or director, to the full extent permitted by law.
Insofar as indemnification for liabilities arising under the Securities Act may be permitted to our directors, officers and controlling persons pursuant to the foregoing provisions, or otherwise, we have been advised that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable.
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SHUTTLE PHARMACEUTICALS HOLDINGS, INC.
Consolidated Financial Statements
Contents
F-1 |
Shuttle Pharmaceuticals Holdings, Inc.
Condensed Consolidated Balance Sheets
(Unaudited)
March 31, | December 31, | |||||||
2022 | 2021 | |||||||
ASSETS | ||||||||
Current Assets: | ||||||||
Cash | $ | 405,857 | $ | 504,749 | ||||
Prepaid expenses | 20,613 | 4,866 | ||||||
Contracts receivable | - | - | ||||||
Total current assets | 426,470 | 509,615 | ||||||
Property and equipment, net | 17,114 | 18,564 | ||||||
Other assets | 6,480 | 6,480 | ||||||
Operating lease right-of-use asset | 102,384 | 116,982 | ||||||
Total assets | $ | 552,448 | $ | 651,641 | ||||
LIABILITIES AND STOCKHOLDERS’ DEFICIT | ||||||||
Current Liabilities: | ||||||||
Accounts payable and accrued expenses | $ | 691,196 | $ | 828,313 | ||||
Accrued interest payable | 16,538 | 552 | ||||||
Accrued interest payable - related parties | 57,494 | 46,947 | ||||||
Dividends Payable | 356,827 | 331,059 | ||||||
Notes payable - related parties | 685,473 | 685,473 | ||||||
Notes payable | 426,661 | 91,021 | ||||||
Paycheck Protection Program note payable | - | 73,007 | ||||||
Warrant liability | 54,373 | 94,025 | ||||||
Operating lease liability current portion | 69,197 | 66,934 | ||||||
Total current liabilities | 2,357,759 | 2,217,331 | ||||||
Operating lease liability non-current | 44,252 | 62,442 | ||||||
Total liabilities | 2,402,011 | 2,279,773 | ||||||
Stockholders’ Deficit: | ||||||||
Series A convertible preferred stock, $0.00001 par value; $1,000 per share liquidation value or aggregate of $1,212,500; 20,000,000 shares authorized; 1,213 shares issued and outstanding at March 31, 2022 and December 31, 2021 | - | - | ||||||
Common stock, $0.00001 par value; 100,000,000 shares authorized; 9,312,991 and 9,312,152 shares issued and outstanding at March 31, 2022 and December 31, 2021, respectively | 93 | 93 | ||||||
Additional paid in capital | 4,653,383 | 4,150,867 | ||||||
Common stock to be issued | - | 16,340 | ||||||
Accumulated deficit | (6,503,039 | ) | (5,795,432 | ) | ||||
Total stockholders’ deficit | (1,849,563 | ) | (1,628,132 | ) | ||||
Total liabilities and stockholders’ deficit | $ | 552,448 | $ | 651,641 |
The accompanying footnotes are an integral part of these unaudited condensed consolidated financial statements.
F-2 |
Shuttle Pharmaceuticals Holdings, Inc.
Condensed Consolidated Statements of Operations
(Unaudited)
Three Months Ended | ||||||||
March 31, | ||||||||
2022 | 2021 | |||||||
Revenue | $ | - | $ | - | ||||
Operating expenses: | ||||||||
Research and development, net of contract expense reimbursements | 295,915 | 105,996 | ||||||
General and administrative | 13,769 | 6,248 | ||||||
Legal and professional | 328,712 | 63,842 | ||||||
Total operating expenses | 638,396 | 176,086 | ||||||
Loss from operations | (638,396 | ) | (176,086 | ) | ||||
Other income (expense): | ||||||||
Interest expense - related parties | (10,547 | ) | (10,547 | ) | ||||
Interest expense | (145,553 | ) | (230 | ) | ||||
Change in fair value of warrant liability | 39,650 | 57,539 | ||||||
Gain on forgiveness of Paycheck Protection Program note payable | 73,007 | - | ||||||
Total other income (expense) | (43.443 | ) | 46,762 | |||||
Loss before income taxes | (681,839 | ) | $ | (129,324 | ) | |||
Income tax provision | - | - | ||||||
Net loss | $ | (681,839 | ) | $ | (129,324 | ) | ||
Dividend on Series A preferred stock | (25,768 | ) | (25,768 | ) | ||||
Net loss attributable to common stockholders | $ | (707,607 | ) | $ | (155,092 | ) | ||
Weighted average common shares outstanding - basic and diluted | 9,312,165 | 9,291,526 | ||||||
Net loss per shares - basic and diluted | $ | (0.07 | ) | $ | (0.01 | ) |
The accompanying footnotes are an integral part of these unaudited condensed consolidated financial statements.
F-3 |
Shuttle Pharmaceuticals Holdings, Inc.
Condensed Consolidated Statements of Changes in Stockholders’ Deficit
(Unaudited)
Series A Convertible | Additional | Common | Total | |||||||||||||||||||||||||||||
Preferred Stock | Common Stock | Paid-in | Stock to be | Accumulated | Stockholders’ | |||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Capital | Issued | Deficit | Deficit | |||||||||||||||||||||||||
Balance, December 31, 2021 | 1,213 | $ | - | 9,312,152 | $ | 93 | $ | 4,150,867 | $ | 16,340 | $ | (5,795,432 | ) | $ | (1,628,132 | ) | ||||||||||||||||
Warrants issued for financing costs | - | - | - | - | 319,643 | - | - | 319,643 | ||||||||||||||||||||||||
Common stock issued for conversion of convertible debt and accrued interest | - | - | 839 | - | 16,340 | (16,340 | ) | - | - | |||||||||||||||||||||||
Common stock issued for restricted stock units | - | - | - | - | 166,533 | - | - | 166,533 | ||||||||||||||||||||||||
Dividends on Series A preferred stock | - | - | - | - | - | - | (25,768 | ) | (25,768 | ) | ||||||||||||||||||||||
Net loss | - | - | - | - | - | - | (681,839 | ) | (681,839 | ) | ||||||||||||||||||||||
Balance, March 31, 2022 | 1,213 | $ | - | 9,312,991 | $ | 93 | $ | 4,653,383 | $ | - | $ | (6,503,039 | ) | $ | (1,849,563 | ) |
The accompanying footnotes are an integral part of these unaudited condensed consolidated financial statements.
F-4 |
Shuttle Pharmaceuticals Holdings, Inc.
Consolidated Statements of Changes in Stockholders’ Deficit
(Unaudited)
Series A Convertible | Additional | Common | Total | |||||||||||||||||||||||||||||
Preferred Stock | Common Stock | Paid-in | Stock to be | Accumulated | Stockholders’ | |||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Capital | Issued | Deficit | Deficit | |||||||||||||||||||||||||
Balance, December 31, 2020 | 1,213 | $ | - | 9,291,526 | $ | 93 | $ | 2,833,507 | $ | 16,340 | $ | (4,540,236 | ) | $ | (1,690,296 | ) | ||||||||||||||||
Warrants issued for financing costs | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||
Common stock issued for restricted stock units | - | - | - | - | 122,517 | - | - | 122,517 | ||||||||||||||||||||||||
Dividends on Series A preferred stock | - | - | - | - | - | - | (25,768 | ) | (25,768 | ) | ||||||||||||||||||||||
Net loss | - | - | - | - | - | - | (129,324 | ) | (129,324 | ) | ||||||||||||||||||||||
Balance, March 31, 2021 | 1,213 | $ | - | 9,291,526 | $ | 93 | $ | 2,956,024 | $ | 16,340 | $ | (4,695,328 | ) | $ | (1,722,871 | ) |
The accompanying footnotes are an integral part of these unaudited condensed consolidated financial statements.
F-5 |
Shuttle Pharmaceuticals Holdings, Inc.
Consolidated Statements of Cash Flows
(Unaudited)
Three months ended | ||||||||
March 31, | ||||||||
2022 | 2021 | |||||||
Cash Flows From Operating Activities: | ||||||||
Net loss | $ | (681,839 | ) | $ | (129,324 | ) | ||
Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
Depreciation | 1,450 | 1,350 | ||||||
Change in fair value of warrant liability | (39,652 | ) | (57,539 | ) | ||||
Amortization of right-of-use asset | 14,598 | 17,565 | ||||||
Amortization of debt discount | 129,568 | - | ||||||
Gain on forgiveness of Paycheck Protection Program note payable | (73,007 | ) | - | |||||
Stock-based compensation | 166,533 | 122,517 | ||||||
Changes in operating assets and liabilities: | ||||||||
Prepaid expenses | (15,747 | ) | 4,896 | |||||
Accounts payable and accrued expenses | (137,117 | ) | (58,185 | ) | ||||
Accrued interest payable | 15,986 | 156 | ||||||
Accrued interest payable - related parties | 10,547 | 10,547 | ||||||
Operating lease liability | (15,927 | ) | (18,605 | ) | ||||
Net cash used in operating activities | (624,607 | ) | (106,622 | ) | ||||
Cash Flows From Financing Activities: | ||||||||
Proceeds from PPP note payable | - | 73,007 | ||||||
Proceeds from notes payable | 525,715 | - | ||||||
Net cash provided by financing activities | 525,715 | 73,007 | ||||||
Net change in cash | (98,892 | ) | (33,615 | ) | ||||
Cash, beginning of period | 504,749 | 117,153 | ||||||
Cash, end of period | $ | 405,857 | $ | 83,538 | ||||
Cash paid for: | ||||||||
Interest | $ | - | $ | - | ||||
Income taxes | $ | - | $ | - | ||||
Supplemental non-cash financing activities: | ||||||||
Reclassification from additional paid in capital to warrant liability | $ | - | $ | - | ||||
Shares issued for conversion of accrued interest | $ | 16,340 | $ | - |
The accompanying footnotes are an integral part of these unaudited condensed consolidated financial statements.
F-6 |
Shuttle Pharmaceuticals Holdings, Inc.
Notes to Condensed Consolidated Financial Statements
For the Three Months Ended March 31, 2022 and 2021
(Unaudited)
Note 1 – Organization and Going Concern
Organization and Line of Business
The Company was formed as Shuttle Pharmaceuticals, LLC, in the State of Maryland on December 18, 2012. On August 12, 2016, the Company filed articles of conversion with the state of Maryland to convert from an LLC to a corporation and the Company changed its name to Shuttle Pharmaceuticals, Inc. (“Shuttle”). In connection with the conversion the Company issued 45,000,000 shares of common stock in exchange for 100% of the outstanding membership interests prior to conversion. On June 4, 2018, Shuttle completed a reverse merger with Shuttle Pharmaceuticals Holdings, Inc. (then known as Shuttle Pharma Acquisition Corp.), a Delaware corporation (the “Company”), pursuant to which Shuttle, our operating entity, became a wholly owned subsidiary of the Company.
The Company’s primary purpose is to develop and commercialize unique drugs for the sensitization of cancers and protection of normal tissues, with the goal of improving outcomes for cancer patients receiving radiation therapy. Shuttle has deployed its proprietary technology to develop novel cancer immunotherapies which has produced a pipeline of selective HDAC inhibitors for cancer and immunotherapy applications. The Company’s HDAC platform is designed to target candidate molecules with potential roles in therapeutics beyond cancer, including autoimmune, inflammatory, metabolic, neurological and infectious diseases. The Company’s Ropidoxuridine product, which is used with radiation therapy to sensitize cancer cells, was funded by a Small Business Innovation Research (SBIR) contract provided by the National Cancer Institute (NCI), a unit of the National Institutes of Health (NIH). Ropidoxuridine has been further developed though the Company’s collaborations with the University of Virginia for use in combination with proton therapy to improve patient survival. The Company is working on developing products through NIH grants, including a product to predict late effects of radiation with metabolite biomarkers and develop prostate cancer cell lines in health disparities research.
The production and marketing of the Company’s products and its ongoing research and development activities will be subject to extensive regulation by numerous governmental authorities in the United States. Prior to marketing in the United States, any combination product developed by the Company must undergo rigorous preclinical (animal) and clinical (human) testing and an extensive regulatory approval process implemented by the Food and Drug Administration (“FDA”) under the Food, Drug and Cosmetic Act. There can be no assurance that the Company will not encounter problems in clinical trials that will cause the Company or the FDA to delay or suspend clinical trials.
The Company’s success will depend in part on its ability to obtain patents and product license rights, maintain trade secrets, and operate without infringing on the proprietary rights of others, both in the United States and other countries. There can be no assurance that patents issued to or licensed by the Company will not be challenged, invalidated or circumvented, or that the rights granted thereunder will provide proprietary protection or competitive advantages to the Company now or in the future.
Reverse Stock Split
Effective April 1, 2022, we effected a 2-for-1 reverse stock split of our issued and outstanding common stock (the “Reverse Stock Split”). All references to shares of our common stock in this report refers to the number of shares of common stock after giving effect to the Reverse Stock Split (unless otherwise indicated).
Going Concern
The accompanying financial statements have been prepared in conformity with generally accepted accounting principles, which contemplate continuation of the Company as a going concern. The Company’s only revenue source since inception has been government awarded contracts totalling $5,531,722, and the Company has incurred losses since inception, having accumulated a deficit of $6,503,039 as of March 31, 2022. The Company currently has limited liquidity and has not completed its efforts to establish a stabilized source of revenues sufficient to cover operating costs over an extended period. These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern.
F-7 |
The Company will need to raise capital to fund its operations. To address its financing requirements, the Company intends to seek financing through debt or equity financings with an aim to continue progress toward commercial viability of its products. The Company continues to submit Federal grant and contract applications which have historically been the primary source of revenue. The financial statements do not include any adjustments that might result from the outcome of the uncertainty of raising additional capital.
Note 2 – Summary of Significant Accounting Policies
Basis of Presentation
The financial statements and related disclosures have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). The financial statements have been prepared using the accrual basis of accounting in accordance with Generally Accepted Accounting Principles of the United States (“GAAP”).
Basis of Consolidation
The financial statements have been prepared on a consolidated basis with those of the Company’s wholly-owned subsidiary, Shuttle Pharmaceuticals, Inc. All intercompany transactions and balances have been eliminated.
Use of Estimates
The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. The Company regularly evaluates estimates and assumptions. The Company bases its estimates and assumptions on current facts, historical experience, and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Company’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected. Significant estimates in the accompanying financial statements include useful lives of property and equipment, valuation of derivatives, and the valuation allowance on deferred tax assets.
Property and Equipment
Property and equipment are stated at cost. Expenditures for maintenance and repairs are charged to earnings as incurred; additions, renewals and betterments are capitalized. When property and equipment are retired or otherwise disposed of, the related cost and accumulated depreciation are removed from the respective accounts, and any gain or loss is included in operations. Depreciation of property and equipment is provided using the straight-line method for substantially all assets with estimated lives as follows:
Furniture | 5 years | |
Computers and equipment | 5 years | |
Research Equipment | 10 years |
Research and Development Expenses
Research and development expenses are charged to expense as incurred. Research and development expenses include, but are not limited to, product development, clinical and regulatory expenses, payroll and other personnel expenses, materials, supplies, related subcontract expenses, and consulting costs. The expenses assigned to NIH SBIR sponsored research are related to: (1) “Topic 352: Cell-Based Models for Prostate Cancer Health Disparity Research – Moonshot Project” and (2) “Topic 345: Predictive Biomarkers of Prostate Cancer Patient Sensitivity for Radiation Late Effects.”
F-8 |
The research expenses are assigned to the research projects to demonstrate proof of principle in patients with prostate cancer that may support development and commercialization of biomarker products and to gather prostate cancer cell lines in African American men to serve as the product for use in health disparities research. Costs that are not covered by the SBIR contract for performing the Phase I contract to determine commercialization feasibility included partial salary support of personnel and a consultant to develop a commercialization plan. Costs that are not covered in the Phase II contract include business development and partial salary support.
Research expenses related to new drug discovery include partial support of personnel, space, supplies, and legal costs.
During fiscal year 2022, the Company completed two SBIR contracts from the NIH to support research projects with potential for commercialization. The SBIR contract awards are fixed payments made by the NIH in response to quarterly Shuttle invoices and provide non-dilutive funds that do not include a repayment obligation. Details on the three contracts follow:
1. Contract #HHSN261201600027C/75N91018C00016 supported “Topic 345: Predictive Biomarkers of Prostate Cancer Patient Sensitivity for Radiation Late Effects.” This $299,502 Phase I award includes funded research from 9/19/2016 through 9/18/2017 and was advanced to Phase II of the awards with funding of $1,903,095 with a fixed price contract period of 9/17/2018 through 9/16/2020 and subsequent no cost extensions through 9/15/2021 and then 3/15/2022 (Reference 75N91019C00031). The Company received quarterly payments of $211,455 for a total of $845,820 in 2020; and 2 quarterly payments related to Topic 345 for a total of $422,910 in 2021. One quarterly report remains to be filed covering the period of 9/16/2019-3/15/2022 and was not submitted as of March 31, 2022. In Phase II of the SBIR effort, the Company will license the metabolite signatures (intellectual property) from Georgetown University, manufacture 500 “kits,” test and validate the metabolic kit performance and develop a multi-institutional clinical trial to be implemented in the Phase III effort. This contract includes a subcontract to Georgetown University for use of Mass Spectrometry core facilities to analyze clinical samples. The contract was extended to complete the milestones which were delayed due to the impact of COVID-19.
On December 6, 2019, the Company engaged Georgetown University to perform the $795,248 subcontract of its Phase II contract #HHSN75N91019C00031. The Company will reimburse Georgetown for its allowable costs not to exceed the ceiling amount of $795,248. Georgetown invoiced for a total of $791,017.12 as of March 31, 2022, leaving a balance of $4,230.88. Depending on the resources it uses, Georgetown may or may not invoice for the total subcontract amount. In the event Georgetown does not invoice for the total allowable amount, the Company is not obligated to pay the ceiling amount. As of March 31, 2021, payments of $508,373 were made to Georgetown, and an additional invoice for $282,643 was received but not yet paid until the second quarter of 2022.
2. The Phase II contract #HHSN261201800016C supports the discovery work following a Phase I contract # HHSN261600038C “Topic 352 – SBIR Phase II Cell-based Models for Prostate Cancer Health Disparity Research” and was awarded to provide $1,484,350 to fund research from 9/17/2018 through 9/16/2020 and was extended without cost through 11/16/2021 due to delays caused by the impact of COVID-19. For the entire contract period, the Company invoiced and received a total of $1,411,883. The final draft report was filed with the NIH along with the final invoice for $10,000 and no additional payments are expected. The Phase II contract also includes a subcontract to Georgetown University for $742,002 to establish prostate cancer cell lines from African American patients undergoing prostate surgery for cancers.
On December 5, 2018, the Company engaged Georgetown University to perform the $742,002 subcontract of its Phase II contract #HHSN261201800016C. Depending on the resources it uses, Georgetown may or may not invoice for the total subcontract amount. In the event Georgetown does not invoice for the total allowable amount, the Company is not obligated to pay the ceiling amount. The Company has been invoiced by Georgetown and has paid Georgetown a total of $305,866.35 as of March 31, 2022.
The Company recognizes the amounts received from the contract at fair value when there is reasonable assurance that the contract amount will be received, and it is probable that all attaching conditions will be complied with. The Company recognizes the amounts received in accordance with the contract as a reduction of research and development expenses over the periods necessary to match the contract on a systematic basis to the costs that it is intended to compensate. The Company records reimbursements on the balance sheet as contract receivables upon meeting the criteria discussed above until cash is received. During the quarter ended March 31, 2022, the Company recorded a net deficit of $295,915 from these two SBIR contracts which is made up of only expenses with no revenue for the period.
F-9 |
Regarding the accounting treatment for reimbursements, GAAP provides limited guidance on the accounting for government grants received by for-profit companies. We understand there is more than one acceptable alternative for the accounting treatment – a reduction of costs, a deferred credit to be amortized, revenue, or other income. Due to the terms of the contracts, we have entered into the Company concluded that the reimbursements were more akin to a reduction of costs rather than any of the other alternatives that would match the contract reimbursements on a systematic basis to the costs that the contract is intended to compensate.
Derivative Financial Instruments
The Company evaluates all of its agreements to determine if such instruments have derivatives or contain features that qualify as embedded derivatives. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported in the statements of operations. For stock-based derivative financial instruments, the Company uses a Binomial Simulation model to value the derivative instruments at inception and on subsequent valuation dates. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is evaluated at the end of each reporting period. Derivative instrument liabilities are classified in the balance sheet as current or non-current based on whether or not net-cash settlement of the derivative instrument could be required within 12 months of the balance sheet date. As of March 31, 2022, the Company’s only derivative financial instrument was an embedded warrant feature associated with Series A Convertible Preferred Stock due to certain provisions that allow for a change in the warrant value based on fluctuations of the Company’s fair value of common stock at the date of issuance of the warrant based on certain contingent call features.
Fair Value of Financial Instruments
For certain of the Company’s financial instruments, including cash, accounts receivable, accounts payable, accrued liabilities and short-term debt, the carrying amounts approximate their fair values due to their short maturities.
FASB ASC Topic 820, Fair Value Measurements and Disclosures, requires disclosure of the fair value of financial instruments held by the Company. FASB ASC Topic 825, Financial Instruments, defines fair value, and establishes a three-level valuation hierarchy for disclosures of fair value measurement that enhances disclosure requirements for fair value measures. The carrying amounts reported in the consolidated balance sheets for receivables and current liabilities each qualify as financial instruments and are a reasonable estimate of their fair values because of the short period of time between the origination of such instruments and their expected realization and their current market rate of interest. The three levels of valuation hierarchy are defined as follows:
● | Level 1 inputs to the valuation methodology are quoted prices for identical assets or liabilities in active markets. | |
● | Level 2 inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets in inactive markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument. | |
● | Level 3 inputs to the valuation methodology use one or more unobservable inputs which are significant to the fair value measurement. |
The Company analyzes all financial instruments with features of both liabilities and equity under FASB ASC Topic 480, Distinguishing Liabilities from Equity, and FASB ASC Topic 815, Derivatives and Hedging.
For certain financial instruments, the carrying amounts reported in the balance sheets for cash and current liabilities, including convertible notes payable, each qualify as a financial instrument, and are a reasonable estimate of their fair values because of the short period of time between the origination of such instruments and their expected realization and their current market rate of interest.
F-10 |
An established trading market for the Company’s common stock does not exist. The fair value of the shares was determined based on the then most recent price per share at which we sold preferred stock to unrelated parties in a private placement during the six months then ended.
During the year ended December 31, 2020, the Company utilized $25.22 (post-share exchange) per share as the fair value of its common stock for accounting purposes based on preferred share transactions with investors from August 2018 through December 2019, with no transactions occurring in 2020 and $5.00 in 2021 and $4.00 through March 31, 2022.
At March 31, 2022, the Company identified the following liabilities that are required to be presented on the balance sheet at fair value:
Description | Level 1 | Level 2 | Level 3 | |||||||||
Warrant Liability | $ | - | $ | - | $ | 54,373 |
At December 31, 2021, the Company identified the following liabilities that are required to be presented on the balance sheet at fair value:
Description | Level 1 | Level 2 | Level 3 | |||||||||
Warrant Liability | $ | - | $ | - | $ | 94,025 |
Revenue Recognition
Revenue from providing research and development is recognized under Topic 606 in a manner that reasonably reflects the delivery of its services to customers in return for expected consideration and includes the following elements:
● | executed contracts with the Company’s customers that it believes are legally enforceable; | |
● | identification of performance obligations in the respective contract; | |
● | determination of the transaction price for each performance obligation in the respective contract; | |
● | allocation the transaction price to each performance obligation; and | |
● | recognition of revenue only when the Company satisfies each performance obligation. |
To satisfy these five elements, the Company records revenue for research and development services on a quarterly basis as services are provided. Revenue received from National Institutes of Health contracts is received in accordance with Federal grants and contracts policies. Research and development expenses are posted against revenue and recorded on the statement of operations as “Research and development, net of contract expense reimbursements.”
Basic and Diluted Earnings Per Share
Basic earnings per share (“EPS”) is computed based on the weighted average number of shares of common stock outstanding during the period. Diluted EPS is computed based on the weighted average number of shares of common stock plus the effect of dilutive potential common shares outstanding during the period using the treasury stock method and as if converted method. Dilutive potential common shares include outstanding warrants and Series A preferred stock.
F-11 |
For the three months ended March 31, 2022 and year ended December 31, 2021, the following common stock equivalents were excluded from the computation of diluted net loss per share as the result of the computation was anti-dilutive.
March 31, | March 31, | |||||||
2022 | 2021 | |||||||
Series A preferred stock | 97,062 | 97,062 | ||||||
Warrants | 48,532 | 48,532 | ||||||
Total | 145,594 | 145,594 |
Recent Accounting Pronouncements
In August 2020, the FASB issued ASU 2020-06, ASC Subtopic 470-20 “Debt—Debt with “Conversion and Other Options” and ASC subtopic 815-40 “Hedging—Contracts in Entity’s Own Equity.” The standard reduced the number of accounting models for convertible debt instruments and convertible preferred stock. Convertible instruments that continue to be subject to separation models are (1) those with embedded conversion features that are not clearly and closely related to the host contract, that meet the definition of a derivative, and that do not qualify for a scope exception from derivative accounting; and (2) convertible debt instruments issued with substantial premiums for which the premiums are recorded as paid-in capital. The amendments in this update are effective for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. Early adoption is permitted. The Company adopted this standard on January 1, 2021.
Management does not believe that any recently issued, but not yet effective, accounting standards could have a material effect on the accompanying financial statements. As new accounting pronouncements are issued, we will adopt those that are applicable under the circumstances.
Note 3 – Property and Equipment, Net
Property and equipment consisted of the following:
March 31, | December 31, | |||||||
2022 | 2021 | |||||||
Office Furniture and equipment | $ | 8,861 | $ | 8,861 | ||||
Laboratory equipment | 118,605 | 118,605 | ||||||
127,466 | 127,466 | |||||||
Less accumulated depreciation | (110,352 | ) | (108,902 | ) | ||||
Property and equipment, net | $ | 17,114 | $ | 18,564 |
Depreciation expense for the three months ended March 31, 2022 and 2021, were $1,450 and $1,350 respectively.
Note 4 – Operating Lease Right-of-use Asset and Operating Lease Liability
Operating lease right-of-use assets and liabilities are recognized at the present value of the future lease payments at the lease commencement date. The interest rate used to determine the present value is our incremental borrowing rate, estimated to be 10%, as the interest rate implicit in most of our leases is not readily determinable. Operating lease expense is recognized on a straight-line basis over the lease term. During the three months ended March 31 2022, and 2021, the Company recorded $17,544 and $17,544, respectively, as operating lease expense.
The Company currently has a lease agreement which allows for the use of a laboratory facility for a monthly payment of $6,107, which monthly lease payment increases by 3% every year. The laboratory lease commenced October 1, 2018, with the first payment due January 1, 2019, and expires on October 31, 2023. A security deposit of $6,480 is being held for the duration of the lease term.
In adopting ASC Topic 842, Leases (Topic 842), the Company has elected the ‘package of practical expedients,’ which permits the Company to avoid reassessing its prior conclusions about lease identification, lease classification and initial direct costs under the new standard. The Company did not elect the use-of-hindsight or the practical expedient pertaining to land easements, as the latter is not applicable to the Company. In addition, the Company elected not to apply ASC Topic 842 to arrangements with lease terms of 12 month or less. On January 1, 2019, upon adoption of ASC Topic 842, the Company recorded a right-of-use asset.
F-12 |
March 31, | December 31, | |||||||
2022 | 2021 | |||||||
Office Lease | $ | 265,207 | $ | 265,207 | ||||
Less accumulated amortization | (162,823 | ) | (148,225 | ) | ||||
Right-of-use, net | $ | 102,384 | $ | 116,982 |
The Right-of-use assets are summarized below:
Amortization on the right-of -use asset is included in rent expense on the statements of operations.
Operating lease liabilities are summarized below:
March 31, | ||||
2022 | ||||
Office Lease | $ | 113,449 | ||
Less: current portion | (69,197 | ) | ||
Long term portion | $ | 44,252 |
The Maturities of lease liabilities are summarized below:
As of | ||||
March 31, | ||||
2022 | ||||
2022 | $ | 57,375 | ||
2023 | 64,800 | |||
Total future minimum lease payments | 122,175 | |||
Less imputed interest | (8,726 | ) | ||
PV of Payments | $ | 113,449 |
Note 5 – Notes Payable-Related Party
On December 1, 2020, the Company consolidated all of the outstanding loans owed to an officer of the Company and to his spouse, resulting in the following two loans: (i) a single loan from the spouse of an officer of the Company, dated December 1, 2020, with a principal balance of $424,056, bearing interest at the rate of 7.5% per annum, with a maturity date of December 31, 2021; and (ii) a single loan owed to an officer of the company in the principal amount of $138,449, bearing interest at the rate of 7.5% per annum, with a maturity date of December 31, 2021. In December of 2021 the maturity dates of these loans were extended to June 30, 2022. As of March 31, 2022, the accrued interest was $39,646 and $12,944, and the total balances with accrued interest of $465,889 and $152,173 respectively.
On June 21, 2021, the Company entered into a loan from the spouse of an officer of the Company in the amount of $120,000 (principal) with an interest rate of 7.5% per annum due June 21, 2022, due at maturity. As of March 31, 2022, the accrued interest was $6,978 and the total balances with accrued interest of $126,978.
Note 6 - Notes Payable
On March 9, 2021, the Company obtained a $73,007 term note issued under the Coronavirus Aid, Relief, and Economic Security Act’s Paycheck Protection Program (the “PPP”). The note bears an interest rate of 1% per annum, has a six-month deferral period with payments beginning the seventh month and all outstanding principal and interest is due within two years from the note’s inception date. All or a portion of the note may be forgiven in accordance with PPP requirements. No more than 25% of the amount forgiven can be attributable to non-payroll costs. As of December 31, 2021, a “Loan Forgiveness Application” was submitted to PNC Bank along with the requested documentation and during the period ended March 31, 2022 the note liability was reduced in its entirety.
F-13 |
On May 15, 2020, the Company obtained a $62,500 term note issued under the Coronavirus Aid, Relief, and Economic Security Act’s Paycheck Protection Program (the “PPP”). The note bears an interest rate of 1% per annum, has a six-month deferral period with payments beginning the seventh month and all outstanding principal and interest is due within two years from the note’s inception date. All or a portion of the note may be forgiven in accordance with PPP requirements. No more than 25% of the amount forgiven can be attributable to non-payroll costs. A “Loan Forgiveness Application” was submitted to PNC Bank along with the requested documentation and the note liability was reduced in its entirety during the year ended December 31, 2021.
March 31, | December 31, | |||||||
2022 | 2021 | |||||||
PPP Note payable | ||||||||
PPP Note May 15, 2020 | $ | - | $ | 62,500 | ||||
PPP Note March 9, 2021 | 73,007 | 73,007 | ||||||
Loan Forgiveness | (73,007 | ) | (62,500 | ) | ||||
$ | - | $ | 73,007 |
On December 28, 2021, the Company issued $500,000 note units, consisting of two $250,000 notes, for a total of $500,000 10% unsecured promissory notes with a maturity date of December 28, 2022, and 500,000 warrants exercisable at $1.00 per share with an expiry date of December 28, 2026, and fees of $5,075. The value of the warrants was determined using a computed volatility of 85.5%, 0% dividend rate, and a risk free interest rate of 1.27% and was applied as a discount on the notes payable.
On February 8, 2022, and March 11, 2022, the Company sold $365,000 and $224,985, respectively, in 6% convertible notes (the “Notes”), which bear 6% interest, are repayable three years from the date of issuance, and will convert automatically into shares of common stock (the “Conversion Shares”) at a conversion price of $2.50 per share upon closing of this offering. Boustead Securities LLC acted as placement agent for this offering and received compensation of $36,500 and $22,250, respectively, and warrants to purchase shares of common stock equal to 10% of the Conversion Shares, exercisable at the conversion price of the Convertible Notes. The value of the warrants was determined using computed volatility of 83.4%, 0% dividend rate, and a risk free interest rate of 1.27%, and computed volatility of 85.5% %, 0% dividend rate, and a risk free interest rate of 1.96%, and was applied as a discount on the notes payable.
March 31, | December 31, | |||||||
2022 | 2021 | |||||||
Promissory note issued on December 28, 2021 | $ | 500,000 | $ | 500,000 | ||||
Promissory note issued on February 8, 2022 | 365,000 | - | ||||||
Promissory note issued on March 11, 2022 | 225,000 | - | ||||||
1,090,000 | 500,000 | |||||||
Less discount on notes payable | (663,339 | ) | (408,979 | ) | ||||
$ | 426,661 | $ | 91,021 |
Note 7 – Stockholders’ Equity
Pursuant to the Company’s amended and restated articles of incorporation, the Company is authorized to issue 100,000,000 shares of common stock, with a par value of $0.00001 per share, and 20,000,000 shares of preferred stock, with a par value of $0.00001 per share.
Series A Preferred Shares
The Series A Preferred Stock, in accordance with its terms, is automatically convertible into a number of shares of the Company’s common stock upon the closing of the sale of shares of common stock to the public in a qualified offering (as set forth in the Series A certificate of designation) or upon listing of the Company’s common stock on a national securities exchange.
F-14 |
As of March 31, 2022, and December 31, 2021, the Company had 1,213 shares of Series A Preferred Stock issued and outstanding.
As of March 31, 2022, and December 31, 2021, the Company accrued $25,768 for the 8.5% cumulative dividends on the Series A Preferred stock for the three months ended March 31, 2022 and $103,062 for the year ended December 31, 2021, for a total of $356,827 and $331,059 respectively.
Common Stock
As of March 31, 2022 and December 31, 2021, the Company had 9,312,991 and 9,312,152 shares of common stock issued and outstanding, respectively. The balance includes 20,626 and 21,530 shares of restricted stock issued in 2021 and 2020 respectively.
Common Stock to be Issued
On June 4, 2018, $120,250 outstanding convertible notes were converted to 6,182 shares of common stock of the Company at a price of $19.44 per share. The Company recorded $16,340 of common stock to be issued for the accrued interest. As of March 31, 2022, 839 common shares were issued to settle the $16,340 of common stock to be issued.
Warrants
The Series A Preferred Stock sold in the private placement offerings, included warrants to be issued upon the earlier of a closing of the sale of shares of common stock to the public at a prices per share of at least $13.88 or in a firm commitment underwritten public offering pursuant to an effective registration statement resulting in gross proceeds of at least $15,000,000. The warrants shall be exercisable for a period of three years after the date of issuance. The warrant exercise price is contingent on the terms of the public offering. If an initial public offering occurs at a price at or above $13.88 per share, then the exercise price shall be set to the issuance price of the common stock with the number of warrants determined based on a 10% discount to the per share common stock issuance price. In the scenario where the common stock is listed with the common stock issuance price below $13.88, the exercise price will be set to $20.82 with the number of warrants based on a fixed conversion price of $12.49, which represents a 10.0% discount to the $13.88 threshold. The warrants also have contingent call features based on the terms of the public offering. If an initial public offering occurs at a price at or above $13.88, then the warrants are callable if the 20-day VWAP of the common stock in at or above 150% of the variable exercise price. In the scenario where the common stock is listed with a common stock issuance price below $13.88, then the warrants are callable if the 20-day VWAP of the common stock is at or above the $20.82 exercise price. The detachable warrants contained terms and features that gave rise to derivative liability classification.
Current accounting principles that are provided in ASC 815 - Derivatives and Hedging require derivative financial instruments to be classified in liabilities and carried at fair value with changes recorded in income. The Company has selected the Binomial Option Pricing valuation technique to fair value the compound embedded derivative. Inherent in a binomial options pricing model are assumptions related to expected stock-price volatility, expected life, risk-free interest rate, and dividend yield. The Company estimates the volatility of its ordinary shares based on historical volatility of comparable companies that matches the expected remaining life of the warrants. The risk-free interest rate is based on the U.S. Treasury zero-coupon yield curve on the grant date for a maturity similar to the expected remaining life of the warrants.
The derivative liability linked to the Series A Preferred Stock as of March 31, 2022, and December 31, 2021 was $54,373 and $94,025, respectively. For the period ended March 31, 2022 and 2021, the change in fair value of warrant liability was a gain of $39,652 and a gain of $57,539, respectively.
The estimated fair values of the liability measured on a recurring basis are as follows:
March 31, | December 31, | |||||||
2022 | 2021 | |||||||
Expected average volatility | 84.87 | % | 85.50 | % | ||||
Dividend yield | - | - | ||||||
Expected life | 2.08 Years | 2.33 Years | ||||||
Risk-free interest rate | 2.45 | % | 0.73 | % |
F-15 |
A continuity schedule of the Series A Preferred Stock warrants is set forth below:
Number of Warrants | Weighted Average Exercise Price | Weighted Average Life (years) | ||||||||||
Outstanding, December 31, 2020 | 48,532 | $ | 24.98 | 3.33 | ||||||||
Granted | - | - | - | |||||||||
Forfeited | - | - | - | |||||||||
Exercised | - | - | - | |||||||||
Outstanding and Exercisable, December 31, 2021 | 48,532 | $ | 24.98 | 2.33 | ||||||||
Granted | - | - | - | |||||||||
Forfeited | - | - | - | |||||||||
Exercised | - | - | - | |||||||||
Outstanding and Exercisable, March 31, 2022 | 48,532 | $ | 24.98 | 2.08 |
Equity Incentive Plan
Our 2018 Equity Incentive Plan provides for equity incentives to be granted to our employees, executive officers or directors and to key advisers and consultants. Equity incentives may be in the form of stock options with an exercise price of not less than the fair market value of the underlying shares as determined pursuant to the 2018 Equity Incentive Plan, restricted stock awards, other stock-based awards, or any combination of the foregoing. The 2018 Equity Incentive Plan is administered by the Company’s compensation committee or, alternatively, if there is no compensation committee, the Company’s board of directors. We have reserved 3,000,000 shares of our common stock for issuance under the 2018 Equity Incentive Plan. As of March 31, 2022, 384,167 shares have been granted under the 2018 Equity Incentive Plan.
Restricted Stock Units. We may grant restricted stock units under our 2018 Plan. Restricted stock units are bookkeeping entries representing an amount equal to the fair market value of one share of our common stock. Subject to the provisions of our 2018 Plan, the administrator determines the terms and conditions of restricted stock units, including the vesting criteria and the form and timing of payment. The administrator, in its sole discretion, may pay earned restricted stock units in the form of cash, in shares or in some combination thereof. Notwithstanding the foregoing, the administrator, in its sole discretion, may accelerate the time at which any restrictions will lapse or be removed.
On August 16, 2019, five individuals were appointed to the Board of Directors of the Company to serve as directors. Each individual entered into an agreement pursuant to which they will serve as a director and pursuant to which they would each receive a grant of $75,000 worth of Restricted Stock Units (“RSUs”) issuable under the Company’s 2018 Equity Incentive Plan (the “2018 Plan”). The RSUs vest annually in one third increments from the date of appointment. Under the terms of the director agreements, the Company has also agreed to pay each director $25,000 per annum, payable in equal quarterly installments commencing 90 days following the Company becoming a publicly reporting company under the Securities Exchange Act of 1934, as amended.
During the three months ended March 31, 2022 and 2021, pursuant to the agreements with directors and officers compensation expense for the RSUs of $166,533 and $122,517 was included in wages, respectively.
As of March 31, 2022, there was $198,534 of total unrecognized compensation cost related to non-vested share-based compensation arrangements which is expected to be recognized within the current year.
A continuity schedule of the Restricted Stock Units (RSU) follows:
Number of RSU | Weighted Average Exercise Price | Weighted Average Life (years) | ||||||||||
Outstanding, December 31, 2020 | 61,884 | $ | 23.76 | 4.33 | ||||||||
Granted | - | - | ||||||||||
Forfeited | (2,702 | ) | 27.76 | - | ||||||||
Exercised | - | - | - | |||||||||
Outstanding, December 31, 2021 | 59,182 | $ | 23.57 | 3.33 | ||||||||
Granted | - | - | - | |||||||||
Forfeited | - | - | - | |||||||||
Exercised | - | - | - | |||||||||
Outstanding, March 31, 2022 | 59,182 | $ | 23.57 | 3.08 | ||||||||
Exercisable, March 31, 2022 | 50,412 | $ | 23.74 | 3.08 |
Note 8 – Subsequent Events
Management evaluated all additional events subsequent to the balance sheet date through June 3, 2022, the date the financial statements were available to be issued, and determined the following items:
On April 6, 2022, the Company submitted the final invoice for “Topic 345: Predictive Biomarkers of Prostate Cancer Patient Sensitivity for Radiation Late Effects,” for $211,455, following the completion of the Final Quarterly Progress Report to NIH covering the performance period of 9/16/2019-3/15/2022. The invoice was paid in full on April 27, 2022.
F-16 |
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the shareholders and the board of directors of Shuttle Pharmaceuticals Holdings, Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Shuttle Pharmaceuticals Holdings, Inc. (the “Company”) as of December 31, 2021 and 2020, the related statements of operations, stockholders’ equity (deficit), and cash flows for the years then ended, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2021 and 2020, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States.
Restatement of December 31, 2021 Financial Statements
As discussed in Note 9 to the financial statements, the financial statements have been restated to correct certain misstatements.
Substantial Doubt about the Company’s Ability to Continue as a Going Concern
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company’s significant operating losses raise substantial doubt about its ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.
/s/ BF Borgers CPA PC
BF Borgers CPA PC
Served as Auditor since 2021
Lakewood, CO
June 3, 2022, except for the effects of the restatement disclosed in Note 9, as to which the date is June 23, 2022
F-17 |
Shuttle Pharmaceuticals Holdings, Inc.
December 31, | December 31, | |||||||
2021 | 2020 | |||||||
(As Restated) | ||||||||
ASSETS | ||||||||
Current Assets: | ||||||||
Cash | $ | 504,749 | $ | 117,153 | ||||
Prepaid expenses | 4,866 | 12,579 | ||||||
Contracts receivable | - | 211,455 | ||||||
Total current assets | 509,615 | 341,187 | ||||||
Property and equipment, net | 18,564 | 24,782 | ||||||
Other assets | 6,480 | 6,480 | ||||||
Operating lease right-of-use asset | 116,982 | 171,598 | ||||||
Total assets | $ | 651,641 | $ | 544,047 | ||||
LIABILITIES AND STOCKHOLDERS’ DEFICIT | ||||||||
Current Liabilities: | ||||||||
Accounts payable and accrued expenses | $ | 828,313 | $ | 516,966 | ||||
Accrued interest payable | 552 | 392 | ||||||
Accrued interest payable - related parties | 46,947 | - | ||||||
Dividends Payable | 331,059 | 227,997 | ||||||
Notes payable - related parties | 685,473 | 565,473 | ||||||
Notes payable | 91,021 | - | ||||||
Paycheck Protection Program note payable, current portion | 73,007 | 62,500 | ||||||
Warrant liability | 94,025 | 673,171 | ||||||
Operating lease liability current portion | 66,934 | 58,468 | ||||||
Total current liabilities | 2,217,331 | 2,104,967 | ||||||
Operating lease liability non-current | 62,442 | 129,376 | ||||||
Total liabilities | 2,279,773 | 2,234,343 | ||||||
Stockholders’ Deficit: | ||||||||
Series A convertible preferred stock, $0.00001 par value; $1,000 per share liquidation value or aggregate of $1,212,500; 20,000,000 shares authorized; 1,213 shares issued and outstanding at December 31, 2021 | - | - | ||||||
Common stock, $0.00001 par value; 100,000,000 shares authorized; 9,312,152 and 9,291,526 shares issued and outstanding at December 31, 2021 and 2020, respectively | 93 | 93 | ||||||
Additional paid in capital | 4,150,867 | 2,833,507 | ||||||
Common stock to be issued | 16,340 | 16,340 | ||||||
Accumulated deficit | (5,795,432 | ) | (4,540,236 | ) | ||||
Total stockholders’ deficit | (1,628,132 | ) | (1,690,296 | ) | ||||
Total liabilities and stockholders’ deficit | $ | 651,641 | $ | 544,047 |
The accompanying footnotes are an integral part of these consolidated financial statements.
F-18 |
Shuttle Pharmaceuticals Holdings, Inc.
Consolidated Statements of Operations
Year Ended | ||||||||
December 31, | ||||||||
2021 | 2020 | |||||||
(As Restated) | ||||||||
Revenue | $ | - | $ | - | ||||
Operating expenses: | ||||||||
Research and development, net of contract expense reimbursements | 1,021,808 | 161,772 | ||||||
General and administrative | 36,500 | 85,927 | ||||||
Legal and professional | 684,684 | 261,823 | ||||||
Total operating expenses | 1,742,992 | 509,522 | ||||||
Loss from operations | (1,742,992 | ) | (509,522 | ) | ||||
Other income (expense): | ||||||||
Loss on write off of deposit | - | - | ||||||
Interest expense - related parties | (46,947 | ) | (36,771 | ) | ||||
Interest expense | (3,841 | ) | (2,859 | ) | ||||
Change in fair value of warrant liability | 579,146 | (256,580 | ) | |||||
Gain on forgiveness of Paycheck Protection Program note payable | 62,500 | - | ||||||
Total other income (expense) | 590,858 | (296,210 | ) | |||||
Loss before income taxes | (1,152,134 | ) | $ | (805,732 | ) | |||
Income tax provision | - | - | ||||||
Net loss | $ | (1,152,134 | ) | $ | (805,732 | ) | ||
Dividend on Series A preferred stock | (103,062 | ) | (103,062 | ) | ||||
Net loss attributable to common stockholders | $ | (1,255,196 | ) | $ | (908,794 | ) | ||
Weighted average common shares outstanding - basic and diluted | 9,301,750 | 9,291,526 | ||||||
Diluted | 9,306,610 | 18,575,143 | ||||||
Net loss per shares - basic and diluted | $ | (0.12 | ) | $ | (0.09 | ) |
The accompanying footnotes are an integral part of these consolidated financial statements.
F-19 |
Shuttle Pharmaceuticals Holdings, Inc.
Consolidated Statements of Changes in Stockholders’ Deficit
Series A Convertible | Additional | Common | Total | |||||||||||||||||||||||||||||
Preferred Stock | Common Stock | Paid-in | Stock to | Accumulated | Stockholders’ | |||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Capital | be Issued | Deficit | Deficit | |||||||||||||||||||||||||
Balance, December 31, 2019 | 1,213 | $ | - | 9,269,996 | $ | 93 | $ | 2,373,918 | $ | 16,340 | $ | (3,631,442 | ) | $ | (1,241,091 | ) | ||||||||||||||||
Common stock issued for restricted stock units | - | - | 21,530 | - | 459,589 | - | - | 459,589 | ||||||||||||||||||||||||
Dividends on Series A preferred stock | - | - | - | - | - | - | (103,062 | ) | (103,062 | ) | ||||||||||||||||||||||
Net loss | - | - | - | - | - | - | (805,732 | ) | (805,732 | ) | ||||||||||||||||||||||
Balance, December 31, 2020 | 1,213 | $ | - | 9,291,526 | $ | 93 | $ | 2,833,507 | $ | 16,340 | $ | (4,540,236 | ) | $ | (1,690,296 | ) | ||||||||||||||||
Stock based compensation (As Restated) | - | - | - | - | 420,000 | - | - | 420,000 | ||||||||||||||||||||||||
Warrants issued for financing costs | - | - | - | - | 407,293 | - | - | 407,293 | ||||||||||||||||||||||||
Common stock issued for restricted stock units | - | - | 20,626 | - | 490,067 | - | - | 490,067 | ||||||||||||||||||||||||
Dividends on Series A preferred stock | - | - | - | - | - | - | (103,062 | ) | (103,062 | ) | ||||||||||||||||||||||
Net loss | - | - | - | - | - | - | (1,152,134 | ) | (1,152,134 | ) | ||||||||||||||||||||||
Balance, December 31, 2021 (As Restated) | 1,213 | $ | - | 9,312,152 | $ | 93 | $ | 4,150,867 | $ | 16,340 | $ | (5,795,432 | ) | $ | (1,628,132 | ) |
The accompanying footnotes are an integral part of these consolidated financial statements.
F-20 |
Shuttle Pharmaceuticals Holdings, Inc.
Consolidated Statements of Cash Flows
Year Ended | ||||||||
December 31, | ||||||||
2021 | 2020 | |||||||
(As Restated) | ||||||||
Cash Flows From Operating Activities: | ||||||||
Net loss | $ | (1,152,134 | ) | $ | (805,732 | ) | ||
Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
Depreciation | 6,218 | 5,782 | ||||||
Change in fair value of warrant liability | (579,146 | ) | 256,580 | |||||
Amortization of right-of-use asset | 54,616 | 49,169 | ||||||
Amortization of debt discount | 3,389 | - | ||||||
Gain on forgiveness of Paycheck Protection Program note payable | (62,500 | ) | - | |||||
Stock-based compensation | 490,067 | 459,589 | ||||||
Changes in operating assets and liabilities: | ||||||||
Contracts receivable | 211,455 | 164,927 | ||||||
Prepaid expenses | 7,713 | (586 | ) | |||||
Accounts payable and accrued expenses | 311,347 | (51,127 | ) | |||||
Accrued interest payable | 160 | 392 | ||||||
Accrued interest payable - related parties | 46,947 | (54,959 | ) | |||||
Operating lease liability | (58,468 | ) | (50,866 | ) | ||||
Net cash used in operating activities | (300,336 | ) | (26,831 | ) | ||||
Cash Flows From Investing Activities: | ||||||||
Purchase of property and equipment | - | (10,818 | ) | |||||
Net cash used in investing activities | - | (10,818 | ) | |||||
Cash Flows From Financing Activities: | ||||||||
Proceeds from notes payable-related parties | 120,000 | 7,573 | ||||||
Proceeds from PPP note payable | 73,007 | 62,500 | ||||||
Proceeds from notes payable | 494,925 | - | ||||||
Net cash provided by financing activities | 687,932 | 70,073 | ||||||
Net change in cash | 387,596 | 32,424 | ||||||
Cash, beginning of period | 117,153 | 84,729 | ||||||
Cash, end of period | $ | 504,749 | $ | 117,153 | ||||
Cash paid for: | ||||||||
Interest | $ | 293 | $ | 1,886 | ||||
Income taxes | $ | - | $ | - |
The accompanying footnotes are an integral part of these consolidated financial statements.
F-21 |
Shuttle Pharmaceuticals Holdings, Inc.
Notes to Consolidated Financial Statements
Year Ended December 31, 2020 and 2021
Note 1 – Organization and Going Concern
Organization and Line of Business
The Company was formed as Shuttle Pharmaceuticals, LLC, in the State of Maryland on December 18, 2012. On August 12, 2016, the Company filed articles of conversion with the state of Maryland to convert from an LLC to a corporation and the Company changed its name to Shuttle Pharmaceuticals, Inc. (“Shuttle”). In connection with the conversion the Company issued 45,000,000 shares of common stock in exchange for 100% of the outstanding membership interests prior to conversion. On June 4, 2018, Shuttle completed a reverse merger with Shuttle Pharmaceuticals Holdings, Inc. (then known as Shuttle Pharma Acquisition Corp.), a Delaware corporation (the “Company”), pursuant to which Shuttle, our operating entity, became a wholly owned subsidiary of the Company.
The Company’s primary purpose is to develop and commercialize unique drugs for the sensitization of cancers and protection of normal tissues, with the goal of improving outcomes for cancer patients receiving radiation therapy. Shuttle has deployed its proprietary technology to develop novel cancer immunotherapies which has produced a pipeline of selective HDAC inhibitors for cancer and immunotherapy applications. The Company’s HDAC platform is designed to target candidate molecules with potential roles in therapeutics beyond cancer, including autoimmune, inflammatory, metabolic, neurological and infectious diseases. The Company’s Ropidoxuridine product, which is used with radiation therapy to sensitize cancer cells, was funded by a Small Business Innovation Research (SBIR) contract provided by the National Cancer Institute (NCI), a unit of the National Institutes of Health (NIH). Ropidoxuridine has been further developed though the Company’s collaborations with the University of Virginia for use in combination with proton therapy to improve patient survival. The Company is working on developing products through NIH grants, including a product to predict late effects of radiation with metabolite biomarkers and develop prostate cancer cell lines in health disparities research.
The production and marketing of the Company’s products and its ongoing research and development activities will be subject to extensive regulation by numerous governmental authorities in the United States. Prior to marketing in the United States, any combination product developed by the Company must undergo rigorous preclinical (animal) and clinical (human) testing and an extensive regulatory approval process implemented by the Food and Drug Administration (“FDA”) under the Food, Drug and Cosmetic Act. There can be no assurance that the Company will not encounter problems in clinical trials that will cause the Company or the FDA to delay or suspend clinical trials.
The Company’s success will depend in part on its ability to obtain patents and product license rights, maintain trade secrets, and operate without infringing on the proprietary rights of others, both in the United States and other countries. There can be no assurance that patents issued to or licensed by the Company will not be challenged, invalidated or circumvented, or that the rights granted thereunder will provide proprietary protection or competitive advantages to the Company now or in the future.
Reverse Stock Split
Effective April 1, 2022, we effected a 2-for-1 reverse stock split of our issued and outstanding common stock (the “Reverse Stock Split”). All references to shares of our common stock in this registration statement on Form S-1 refers to the number of shares of common stock after giving effect to the Reverse Stock Split (unless otherwise indicated).
Going Concern
The accompanying financial statements have been prepared in conformity with generally accepted accounting principles, which contemplate continuation of the Company as a going concern. The Company’s only revenue source since inception has been government awarded contracts totaling $5,531,722, and the Company has incurred losses since inception, having accumulated a deficit of $5,795,432 as of December 31, 2021. The Company currently has limited liquidity and has not completed its efforts to establish a stabilized source of revenues sufficient to cover operating costs over an extended period. These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern.
F-22 |
The Company will need to raise capital to fund its operations. To address its financing requirements, the Company intends to seek financing through debt or equity financings with an aim to continue progress toward commercial viability of its products. The Company continues to submit Federal grant and contract applications which have historically been the primary source of revenue. The financial statements do not include any adjustments that might result from the outcome of the uncertainty of raising additional capital.
Note 2 – Summary of Significant Accounting Policies
Basis of Presentation
The financial statements and related disclosures have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). The financial statements have been prepared using the accrual basis of accounting in accordance with Generally Accepted Accounting Principles of the United States (“GAAP”).
Basis of Consolidation
The financial statements have been prepared on a consolidated basis with those of the Company’s wholly-owned subsidiary, Shuttle Pharmaceuticals, Inc. All intercompany transactions and balances have been eliminated.
Use of Estimates
The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. The Company regularly evaluates estimates and assumptions. The Company bases its estimates and assumptions on current facts, historical experience, and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Company’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected. Significant estimates in the accompanying financial statements include useful lives of property and equipment, valuation of derivatives, and the valuation allowance on deferred tax assets.
Accounts Receivable
The Company’s accounts receivable consists of amounts due from the National Institutes of Health (“NIH”), a government agency under the Department of Health and Human Services. The Company submits quarterly reports of progress for tasks performed on research and development contracts it is awarded. The contracts are typically reimbursed on a fixed fee cost reimbursement basis and payments from the contracts are generally collected within 30 days of the Company’s submission for reimbursement. The Company currently does not provide an allowance for doubtful collections, which is based upon a review of outstanding receivables, historical collection information, and existing economic conditions. Normal receivable terms vary from 7-30 days after the issuance of the invoice and typically would be considered past due when the term expires. The Company’s allowance for doubtful accounts was $0 at December 31, 2020 and 2021.
Property and Equipment
Property and equipment are stated at cost. Expenditures for maintenance and repairs are charged to earnings as incurred; additions, renewals and betterments are capitalized. When property and equipment are retired or otherwise disposed of, the related cost and accumulated depreciation are removed from the respective accounts, and any gain or loss is included in operations. Depreciation of property and equipment is provided using the straight-line method for substantially all assets with estimated lives as follows:
Furniture | 5 years | |
Computers and equipment | 5 years | |
Research Equipment | 10 years |
F-23 |
Research and Development Expenses
Research and development expenses are charged to expense as incurred. Research and development expenses include, but are not limited to, product development, clinical and regulatory expenses, payroll and other personnel expenses, materials, supplies, related subcontract expenses, and consulting costs. The expenses assigned to NIH SBIR sponsored research are related to: (1) “Topic 352: Cell-Based Models for Prostate Cancer Health Disparity Research – Moonshot Project” and (2) “Topic 345: Predictive Biomarkers of Prostate Cancer Patient Sensitivity for Radiation Late Effects.”
The research expenses are assigned to the research projects to demonstrate proof of principle in patients with prostate cancer that may support development and commercialization of biomarker products and to gather prostate cancer cell lines in African American men to serve as the product for use in health disparities research. Costs that are not covered by the SBIR contract for performing the Phase I contract to determine commercialization feasibility included partial salary support of personnel and a consultant to develop a commercialization plan. Costs that are not covered in the Phase II contract include business development and partial salary support.
Research expenses related to new drug discovery include partial support of personnel, space, supplies, and legal costs.
During fiscal year 2021, the Company has made progress on completing two SBIR contracts from the NIH to support research projects with potential for commercialization. The SBIR contract awards are fixed payments made by the NIH in response to quarterly Shuttle invoices and provide non-dilutive funds that do not include a repayment obligation. Details on the three contracts follow:
1. Contract #HHSN261201600027C/75N91018C00016 supported “Topic 345: Predictive Biomarkers of Prostate Cancer Patient Sensitivity for Radiation Late Effects.” This $299,502 Phase I award includes funded research from 9/19/2016 through 9/18/2017 and was advanced to Phase II of the awards with funding of $1,903,095 with a fixed price contract period of 9/17/2018 through 9/16/2020 and subsequent no cost extensions through 9/15/2021 and then 3/15/2022 (Reference 75N91019C00031). The Company received quarterly payments of $211,455 for a total of $845,820 in 2020; and 2 quarterly payments related to Topic 345 for a total of $422,910 in 2021. In Phase II of the SBIR effort, the Company will license the metabolite signatures (intellectual property) from Georgetown University, manufacture 500 “kits,” test and validate the metabolic kit performance and develop a multi-institutional clinical trial to be implemented in the Phase III effort. This contract includes a subcontract to Georgetown University for use of Mass Spectrometry core facilities to analyze clinical samples. The contract was extended to complete the milestones which were delayed due to the impact of COVID-19.
On December 6, 2019, the Company engaged Georgetown University to perform the $795,248 subcontract of its Phase II contract #HHSN75N91019C00031. The Company will reimburse Georgetown for its allowable costs not to exceed the ceiling amount of $795,248. Depending on the resources it uses, Georgetown may or may not invoice for the total subcontract amount. In the event Georgetown does not invoice for the total allowable amount, the Company is not obligated to pay the ceiling amount. As of December 31, 2021, payments of $354,829 were made to Georgetown, and additional invoices for $436,188 were received but not yet paid.
2. The Phase II contract #HHSN261201800016C supports the discovery work following a Phase I contract # HHSN261600038C “Topic 352 – SBIR Phase II Cell-based Models for Prostate Cancer Health Disparity Research” and was awarded to provide $1,484,350 to fund research from 9/17/2018 through 9/16/2020 and was extended without cost through 11/16/2021 due to delays caused by the impact of COVID-19. For 2020, the Company received 2.5 quarterly payments for a total of $412,321 and $82,467 in 2021. The Phase II contract also includes a subcontract to Georgetown University for $742,002 to establish prostate cancer cell lines from African American patients undergoing prostate surgery for cancers.
On December 5, 2018, the Company engaged Georgetown University to perform the $742,002 subcontract of its Phase II contract #HHSN261201800016C. Depending on the resources it uses, Georgetown may or may not invoice for the total subcontract amount. In the event Georgetown does not invoice for the total allowable amount, the Company is not obligated to pay the ceiling amount. The Company has been invoiced by Georgetown and has paid Georgetown a total of $292,252 as of December 31, 2021.
F-24 |
The Company recognizes the amounts received from the contract at fair value when there is reasonable assurance that the contract amount will be received, and it is probable that all attaching conditions will be complied with. The Company recognizes the amounts received in accordance with the contract as a reduction of research and development expenses over the periods necessary to match the contract on a systematic basis to the costs that it is intended to compensate. The Company records reimbursements on the balance sheet as contract receivables upon meeting the criteria discussed above until cash is received. During the 12 months ended December 31, 2021, the Company recorded a net deficit of $1,021,808 from these two SBIR contracts which is the result of recording $1,527,185 in SBIR contract related expenses on revenues of $505,377.
Regarding the accounting treatment for reimbursements, GAAP provides limited guidance on the accounting for government grants received by for-profit companies. We understand there is more than one acceptable alternative for the accounting treatment – a reduction of costs, a deferred credit to be amortized, revenue, or other income. Due to the terms of the contracts, we have entered into the Company concluded that the reimbursements were more akin to a reduction of costs rather than any of the other alternatives that would match the contract reimbursements on a systematic basis to the costs that the contract is intended to compensate.
Derivative Financial Instruments
The Company evaluates all of its agreements to determine if such instruments have derivatives or contain features that qualify as embedded derivatives. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported in the statements of operations. For stock-based derivative financial instruments, the Company uses a Binomial Simulation model to value the derivative instruments at inception and on subsequent valuation dates. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is evaluated at the end of each reporting period. Derivative instrument liabilities are classified in the balance sheet as current or non-current based on whether or not net-cash settlement of the derivative instrument could be required within 12 months of the balance sheet date. As of December 31, 2021, the Company’s only derivative financial instrument was an embedded warrant feature associated with Series A Convertible Preferred Stock due to certain provisions that allow for a change in the warrant value based on fluctuations of the Company’s fair value of common stock at the date of issuance of the warrant based on certain contingent call features.
Fair Value of Financial Instruments
For certain of the Company’s financial instruments, including cash, accounts receivable, accounts payable, accrued liabilities and short-term debt, the carrying amounts approximate their fair values due to their short maturities.
FASB ASC Topic 820, Fair Value Measurements and Disclosures, requires disclosure of the fair value of financial instruments held by the Company. FASB ASC Topic 825, Financial Instruments, defines fair value, and establishes a three-level valuation hierarchy for disclosures of fair value measurement that enhances disclosure requirements for fair value measures. The carrying amounts reported in the consolidated balance sheets for receivables and current liabilities each qualify as financial instruments and are a reasonable estimate of their fair values because of the short period of time between the origination of such instruments and their expected realization and their current market rate of interest. The three levels of valuation hierarchy are defined as follows:
● | Level 1 inputs to the valuation methodology are quoted prices for identical assets or liabilities in active markets. | |
● | Level 2 inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets in inactive markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument. | |
● | Level 3 inputs to the valuation methodology us one or more unobservable inputs which are significant to the fair value measurement. |
F-25 |
The Company analyzes all financial instruments with features of both liabilities and equity under FASB ASC Topic 480, Distinguishing Liabilities from Equity, and FASB ASC Topic 815, Derivatives and Hedging.
For certain financial instruments, the carrying amounts reported in the balance sheets for cash and current liabilities, including convertible notes payable, each qualify as a financial instrument, and are a reasonable estimate of their fair values because of the short period of time between the origination of such instruments and their expected realization and their current market rate of interest.
An established trading market for the Company’s common stock does not exist. The fair value of the shares was determined based on the then most recent price per share at which we sold preferred stock to unrelated parties in a private placement during the six months then ended.
During the year ended December 31, 2020, the Company utilized $25.22 (post-share exchange) per share as the fair value of its common stock for accounting purposes based on preferred share transactions with investors from August 2018 through December 2019, with no transactions occurring in 2020 and $5.00 in 2021.
At December 31, 2021, the Company identified the following liabilities that are required to be presented on the balance sheet at fair value:
Description | Level 1 | Level 2 | Level 3 | |||||||||
Warrant Liability | $ | - | $ | - | $ | 94,025 |
At December 31, 2020, the Company identified the following liabilities that are required to be presented on the balance sheet at fair value:
Description | Level 1 | Level 2 | Level 3 | |||||||||
Warrant Liability | $ | - | $ | - | $ | 673,171 |
Revenue Recognition
Revenue from providing research and development is recognized under Topic 606 in a manner that reasonably reflects the delivery of its services to customers in return for expected consideration and includes the following elements:
● | executed contracts with the Company’s customers that it believes are legally enforceable; | |
● | identification of performance obligations in the respective contract; | |
● | determination of the transaction price for each performance obligation in the respective contract; | |
● | allocation the transaction price to each performance obligation; and | |
● | recognition of revenue only when the Company satisfies each performance obligation. |
To satisfy these five elements, the Company records revenue for research and development services on a quarterly basis as services are provided. Revenue received from National Institutes of Health contracts is received in accordance with Federal grants and contracts policies. Research and development expenses are posted against revenue and recorded on the statement of operations as “Research and development, net of contract expense reimbursements.”
Impairment of Long-Lived Assets
The Company reviews its long-lived assets for impairment whenever events or changes in business circumstances indicate that the carrying amount of the asset may not be fully recoverable. Recoverability of assets is measured by a comparison of the carrying amount of an asset to the estimated undiscounted cash flows expected to be generated by the asset. If the carrying amount of the asset exceeds its estimated future cash flows, an impairment charge will be recognized in the amount by which the carrying amount of the asset exceeds the fair value of the asset. There were no impairments of long-lived assets during the periods presented.
F-26 |
Income Taxes
The Company accounts for income taxes in accordance with ASC Topic 740, Income Taxes. ASC 740 requires a company to use the asset and liability method of accounting for income taxes, whereby deferred tax assets are recognized for deductible temporary differences, and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, the Company does not foresee generating taxable income in the near future and utilizing its deferred tax asset, therefore, it is more likely than not that some portion, or all of, the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.
Under ASC 740, a tax position is recognized as a benefit only if it is “more likely than not” that the tax position would be sustained in a tax examination, with a tax examination being presumed to occur. The amount recognized is the largest amount of tax benefit that is greater than 50% likely of being realized on examination. For tax positions not meeting the “more likely than not” test, no tax benefit is recorded. The Company has no material uncertain tax positions for any of the reporting periods presented.
Basic and Diluted Earnings Per Share
Basic earnings per share (“EPS”) is computed based on the weighted average number of shares of common stock outstanding during the period. Diluted EPS is computed based on the weighted average number of shares of common stock plus the effect of dilutive potential common shares outstanding during the period using the treasury stock method and as if converted method. Dilutive potential common shares include outstanding warrants and Series A preferred stock.
For the years ended December 31, 2021, and 2020, the following common stock equivalents were excluded from the computation of diluted net loss per share as the result of the computation was anti-dilutive.
December 31, | December 31, | |||||||
2021 | 2020 | |||||||
Series A preferred stock | 97,062 | 97,062 | ||||||
Warrants | 48,532 | 48,532 | ||||||
Total | 145,594 | 145,594 |
Recent Accounting Pronouncements
In August 2020, the FASB issued ASU 2020-06, ASC Subtopic 470-20 “Debt—Debt with “Conversion and Other Options” and ASC subtopic 815-40 “Hedging—Contracts in Entity’s Own Equity.” The standard reduced the number of accounting models for convertible debt instruments and convertible preferred stock. Convertible instruments that continue to be subject to separation models are (1) those with embedded conversion features that are not clearly and closely related to the host contract, that meet the definition of a derivative, and that do not qualify for a scope exception from derivative accounting; and (2) convertible debt instruments issued with substantial premiums for which the premiums are recorded as paid-in capital. The amendments in this update are effective for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. Early adoption is permitted. The Company has adopted this standard on January 1, 2021.
Management does not believe that any recently issued, but not yet effective, accounting standards could have a material effect on the accompanying financial statements. As new accounting pronouncements are issued, we will adopt those that are applicable under the circumstances.
F-27 |
Note 3 – Property and Equipment, Net
Property and equipment consisted of the following as of December 31, 2021, and 2020:
December 31, | December 31, | |||||||
2021 | 2020 | |||||||
Office Furniture and equipment | $ | 8,861 | $ | 8,861 | ||||
Laboratory equipment | 118,605 | 118,605 | ||||||
127,466 | 127,466 | |||||||
Less accumulated depreciation | (108,902 | ) | (102,684 | ) | ||||
Property and equipment, net | $ | 18,564 | $ | 24,782 |
Depreciation expense for the twelve months ended December 31, 2021, and 2020 were $6,218 and $5,782 respectively.
Note 4 – Operating Lease Right-of-use Asset and Operating Lease Liability
Operating lease right-of-use assets and liabilities are recognized at the present value of the future lease payments at the lease commencement date. The interest rate used to determine the present value is our incremental borrowing rate, estimated to be 10%, as the interest rate implicit in most of our leases is not readily determinable. Operating lease expense is recognized on a straight-line basis over the lease term. During the twelve months ended December 31, 2021, and the year ended December 31, 2020, the Company recorded $74,028 and $71,872, respectively, as operating lease expense.
The Company currently has a lease agreement which allows for the use of a laboratory facility for a monthly payment of $6,107, which monthly lease payment increases by 3% every year. The laboratory lease commenced October 1, 2018, with the first payment due January 1, 2019, and expires on October 31, 2023. A security deposit of $6,480 is being held for the duration of the lease term.
In adopting ASC Topic 842, Leases (Topic 842), the Company has elected the ‘package of practical expedients,’ which permits the Company to avoid reassessing its prior conclusions about lease identification, lease classification and initial direct costs under the new standard. The Company did not elect the use-of-hindsight or the practical expedient pertaining to land easements, as the latter is not applicable to the Company. In addition, the Company elected not to apply ASC Topic 842 to arrangements with lease terms of 12 month or less. On January 1, 2019, upon adoption of ASC Topic 842, the Company recorded a right-of-use asset.
F-28 |
December 31, | December 31, | |||||||
2021 | 2020 | |||||||
Office Lease | $ | 265,207 | $ | 265,207 | ||||
Less accumulated amortization | (148,225 | ) | (93,609 | ) | ||||
Right-of-use, net | $ | 116,982 | $ | 171,598 |
The Right-of-use assets are summarized below:
Amortization on the right-of -use asset is included in rent expense on the statements of operations.
Operating lease liabilities are summarized below:
December 31, | ||||
2021 | ||||
Office Lease | $ | 129,376 | ||
Less: current portion | (66,934 | ) | ||
Long term portion | $ | 62,442 |
The Maturities of lease liabilities are summarized below:
As of | ||||
December 31, | ||||
2021 | ||||
2022 | $ | 76,248 | ||
2023 | 64,800 | |||
Total future minimum lease payments | 141,048 | |||
Less imputed interest | (11,672 | ) | ||
PV of Payments | $ | 129,376 |
Note 5 – Notes Payable-Related Party
On January 25, 2018, the Company entered into a loan from the spouse of an officer of the Company in the amount of $300,000. The loan bears interest at the rate of 7.5% per annum. The loan plus accrued interest was payable in full on January 25, 2019. On January 25, 2019, the Company amended the loan for purposes of extending the maturity date from January 25, 2019, to October 25, 2020. On December 1, 2020, the Company again amended the terms and extended the maturity date to December 31, 2021, bringing the total amount owed under the loan, together with accrued interest of $64,084, to a total of $364,084. This note was rolled into the note referenced below with a principal amount of $424,056.
On April 4, 2018, the Company entered into a loan from the spouse of an officer of the Company in the amount of $50,000. The loan bears an interest rate of 7.5% per annum. The loan plus accrued interest was payable in full on September 4, 2018. On October 31, 2018, the Company amended the terms to extend the maturity date from September 4, 2018, to April 4, 2019. On April 4, 2019, the Company amended the terms to extend the maturity date from April 4, 2019, to October 25, 2020. On December 1, 2020, the Company again amended the terms and extended the maturity date to December 31, 2021, bringing the total amount owed under the loan, together with accrued interest of $9,972, to a total of $59,972. This note was rolled into the note referenced below with a principal amount of $424,056.
On May 30, 2018, the Company entered into a loan with an officer of the Company in the amount of $25,000. The loan bears an interest rate of 7.5% per annum. The loan plus accrued interest was payable in full on July 15, 2018. On October 31, 2018, the Company amended the terms to extend the maturity date from July 15, 2018, to November 30, 2020. On December 1, 2020, the Company again amended the terms and extended the maturity date to December 31, 2021, bringing the total amount owed under the loan, together with accrued interest of $4,698, to a total of $29,698. This note was rolled into the note reference below with a principal amount of $138,448.
F-29 |
On June 24, 2019, the Company entered into a loan from the spouse of an officer of the Company in the amount of $70,000. The loan bore interest rate of 7.5% per annum and required monthly payments of $6,073. The loan plus accrued interest was paid in full on June 30, 2020.
On August 24, 2019, the Company entered into a loan from the spouse of an officer of the Company in the amount of $70,000. The loan bore an interest rate of 7.5% per annum and required monthly payments of $6,073. The loan plus accrued interest was paid in full on August 23, 2020.
On September 23, 2019, the Company entered into a loan from the spouse of an officer of the Company in the amount of $100,000. The loan bore an interest rate of 7.5% per annum and became payable in full on September 22, 2020. This note was rolled into the note reference below with a principal amount of $138,448.
On December 1, 2020, the Company consolidated all of the outstanding loans owed to an officer of the Company and to his spouse, resulting in the following two loans: (i) a single loan from the spouse of an officer of the Company, dated December 1, 2020, with a principal balance of $424,056, bearing interest at the rate of 7.5% per annum, with a maturity date of December 31, 2021; and (ii) a single loan owed to an officer of the company in the principal amount of $138,449, bearing interest at the rate of 7.5% per annum, with a maturity date of December 31, 2021. In December of 2021 the maturity dates of these loans were extended to June 30, 2022. As of December 31, 2021, the accrued interest was $31,804 and $10,384, and the total balances with accrued interest of $458,047 and $149,613 respectively.
On June 21, 2021, the Company entered into a loan from the spouse of an officer of the Company in the amount of $120,000 (principal) with an interest rate of 7.5% per annum due June 21, 2022, due at maturity. As of December 31, 2021, the accrued interest was $4,759 and the total balances with accrued interest of $124,759.
Note 6 - Notes Payable
On March 9, 2021, the Company obtained a $73,007 term note issued under the Coronavirus Aid, Relief, and Economic Security Act’s Paycheck Protection Program (the “PPP”). The note bears an interest rate of 1% per annum, has a six-month deferral period with payments beginning the seventh month and all outstanding principal and interest is due within two years from the note’s inception date. All or a portion of the note may be forgiven in accordance with PPP requirements. No more than 25% of the amount forgiven can be attributable to non-payroll costs. As of December 31, 2021, a “Loan Forgiveness Application” was submitted to PNC Bank along with the requested documentation and subsequent to the close of the December 31, 2021, reporting period the note liability was reduced in its entirety.
On May 15, 2020, the Company obtained a $62,500 term note issued under the Coronavirus Aid, Relief, and Economic Security Act’s Paycheck Protection Program (the “PPP”). The note bears an interest rate of 1% per annum, has a six-month deferral period with payments beginning the seventh month and all outstanding principal and interest is due within two years from the note’s inception date. All or a portion of the note may be forgiven in accordance with PPP requirements. No more than 25% of the amount forgiven can be attributable to non-payroll costs. A “Loan Forgiveness Application” was submitted to PNC Bank along with the requested documentation and the note liability was reduced in its entirety during the year ended December 31, 2021.
December 31, | December 31, | |||||||
2021 | 2020 | |||||||
PPP Note May 15, 2020 | $ | 62,500 | $ | 62,500 | ||||
PPP Note March 9, 2021 | 73,007 | - | ||||||
Loan Forgiveness | (62,500 | ) | - | |||||
Total | $ | 73,007 | $ | 62,500 |
F-30 |
On December 28, 2021, the Company issued $500,000 note units, consisting of two $250,000 notes, for a total of $500,000 10% unsecured promissory notes with a maturity date of December 28, 2022, and 500,000 warrants exercisable at $1.00 per share with an expiry date of December 28, 2026, and fees of $5,075. The value of the warrants was determined using a computed volatility of 85.5%, 0% dividend rate, and a risk free interest rate of 1.27% and was applied as a discount on the notes payable as follows:
December 31, | ||||
2021 | ||||
Promissory notes issued on December 28, 2021 | $ | 500,000 | ||
Less unamortized discount on notes payable | (408,979 | ) | ||
Total | $ | 91,021 |
Note 7 – Stockholders’ Equity
Pursuant to the Company’s amended and restated articles of incorporation, the Company is authorized to issue 100,000,000 shares of common stock, with a par value of $0.00001 per share, and 20,000,000 shares of preferred stock, with a par value of $0.00001 per share.
Series A Preferred Shares
The Series A Preferred Stock, in accordance with its terms, is automatically convertible into a number of shares of the Company’s common stock upon the closing of the sale of shares of common stock to the public in a qualified offering (as set forth in the Series A certificate of designation) or upon listing of the Company’s common stock on a national securities exchange.
As of December 31, 2021, and 2020, the Company had 1,213 shares of Series A Preferred Stock issued and outstanding.
As of December 31, 2021, and 2020, the Company had accrued the 8.5% cumulative dividends on the Series A Preferred stock of $331,059 and $227,997 respectively.
Common Stock
As of December 31, 2021, and 2020, the Company had 9,312,152 and 9,291,526 shares of common stock issued and outstanding, respectively. The balance includes 20,626 and 21,530 shares of restricted stock issued in 2021 and 2020 respectively.
Common Stock to be Issued
On June 4, 2018, $120,250 outstanding convertible notes were converted to 6,182 shares of common stock of the Company at a price of $19.44 per share. The Company has recorded $16,340 of common stock to be issued for the accrued interest. As of December 31, 2020 and 2021, the common stock has not been issued.
Warrants
The Series A Preferred Stock sold in the private placement offerings, included warrants to be issued upon the earlier of a closing of the sale of shares of common stock to the public at a prices per share of at least $13.88 or in a firm commitment underwritten public offering pursuant to an effective registration statement resulting in gross proceeds of at least $15,000,000. The warrants shall be exercisable for a period of three years after the date of issuance. The warrant exercise price is contingent on the terms of the public offering. If an initial public offering occurs at a price at or above $13.88 per share, then the exercise price shall be set to the issuance price of the common stock with the number of warrants determined based on a 10% discount to the per share common stock issuance price. In the scenario where the common stock is listed with the common stock issuance price below $13.88, the exercise price will be set to $20.82 with the number of warrants based on a fixed conversion price of $12.49, which represents a 10.0% discount to the $13.88 threshold. The warrants also have contingent call features based on the terms of the public offering. If an initial public offering occurs at a price at or above $13.88, then the warrants are callable if the 20-day VWAP of the common stock in at or above 150% of the variable exercise price. In the scenario where the common stock is listed with a common stock issuance price below $13.88, then the warrants are callable if the 20-day VWAP of the common stock is at or above the $20.82 exercise price. The detachable warrants contained terms and features that gave rise to derivative liability classification.
F-31 |
Current accounting principles that are provided in ASC 815 - Derivatives and Hedging require derivative financial instruments to be classified in liabilities and carried at fair value with changes recorded in income. The Company has selected the Binomial Option Pricing valuation technique to fair value the compound embedded derivative. Inherent in a binomial options pricing model are assumptions related to expected stock-price volatility, expected life, risk-free interest rate, and dividend yield. The Company estimates the volatility of its ordinary shares based on historical volatility of comparable companies that matches the expected remaining life of the warrants. The risk-free interest rate is based on the U.S. Treasury zero-coupon yield curve on the grant date for a maturity similar to the expected remaining life of the warrants.
The derivative liability linked to the Series A Preferred Stock as of December 31, 2021 and 2021 was $94,025 and $673,171, respectively. The change in fair value of warrant liability was a gain of $579,146 as of December 31, 2021 and a loss of $256,580 as of December 31, 2020.
For the year ended December 31, 2021, and 2020, the estimated fair values of the liability measured on a recurring basis are as follows:
December 31, | December 31, | |||||||
2021 | 2020 | |||||||
Expected average volatility | 85.5 | % | 69.8 | % | ||||
Dividend yield | 8.5 | % | 8.5 | % | ||||
Expected life | 2.33 Years | 3.33 Years | ||||||
Risk-free interest rate | 0.73 | % | 0.17 | % |
A continuity schedule of the Series A Preferred Stock warrants is set forth below:
Number of Warrants | Weighted Average Exercise Price | Weighted Average Life (years) | Intrinsic Value | |||||||||||||
Outstanding, December 31, 2019 | 48,532 | $ | 24.98 | 4.33 | $ | - | ||||||||||
Granted | - | - | - | |||||||||||||
Forfeited | - | - | - | |||||||||||||
Exercised | - | - | - | |||||||||||||
Outstanding, December 31, 2020 | 48,532 | 24.98 | 3.33 | - | ||||||||||||
Granted | - | - | - | |||||||||||||
Forfeited | - | - | - | |||||||||||||
Exercised | - | - | - | |||||||||||||
Outstanding and Exercisable, December 31, 2021 | 48,532 | $ | 24.98 | 2.33 | $ | - |
F-32 |
Equity Incentive Plan
Our 2018 Equity Incentive Plan provides for equity incentives to be granted to our employees, executive officers or directors and to key advisers and consultants. Equity incentives may be in the form of stock options with an exercise price of not less than the fair market value of the underlying shares as determined pursuant to the 2018 Equity Incentive Plan, restricted stock awards, other stock-based awards, or any combination of the foregoing. The 2018 Equity Incentive Plan is administered by the Company’s compensation committee or, alternatively, if there is no compensation committee, the Company’s board of directors. We have reserved 3,000,000 shares of our common stock for issuance under the 2018 Equity Incentive Plan. As of December 31, 2021, 384,167 shares have been granted under the 2018 Equity Incentive Plan.
Restricted Stock Units. We may grant restricted stock units under our 2018 Plan. Restricted stock units are bookkeeping entries representing an amount equal to the fair market value of one share of our common stock. Subject to the provisions of our 2018 Plan, the administrator determines the terms and conditions of restricted stock units, including the vesting criteria and the form and timing of payment. The administrator, in its sole discretion, may pay earned restricted stock units in the form of cash, in shares or in some combination thereof. Notwithstanding the foregoing, the administrator, in its sole discretion, may accelerate the time at which any restrictions will lapse or be removed.
On August 16, 2019, five individuals were appointed to the Board of Directors of the Company to serve as directors. Each individual entered into an agreement pursuant to which they will serve as a director and pursuant to which they would each receive a grant of $75,000 worth of Restricted Stock Units (“RSUs”) issuable under the Company’s 2018 Equity Incentive Plan (the “2018 Plan”). The RSUs vest annually in one third increments from the date of appointment. Under the terms of the director agreements, the Company has also agreed to pay each director $25,000 per annum, payable in equal quarterly installments commencing 90 days following the Company becoming a publicly reporting company under the Securities Exchange Act of 1934, as amended.
During the years ended December 31, 2021 and 2020, pursuant to the agreements with directors and officers 20,626 and 21,530 RSUs were issued with a value of $490,067 and $459,589 included in wages, respectively.
As of December 31, 2021, there was $390,067 of total unrecognized compensation cost related to non-vested share-based compensation arrangements which is expected to be recognized within the next two years.
A continuity schedule of the Restricted Stock Units (RSU) follows:
Number of RSU | Weighted Average Exercise Price | Weighted Average Life (years) | ||||||||||
Outstanding, December 31, 2019 | 60,169 | $ | 24.02 | - | ||||||||
Granted | 4,417 | 22.64 | - | |||||||||
Forfeited | (2,702 | ) | 27.76 | - | ||||||||
Exercised | - | - | - | |||||||||
Outstanding, December 31, 2020 | 61,884 | 23.76 | 4.33 | |||||||||
Granted | - | - | ||||||||||
Forfeited | (2,702 | ) | 27.76 | - | ||||||||
Exercised | - | - | - | |||||||||
Outstanding, December 31, 2021 | 59,182 | $ | 23.57 | 3.33 | ||||||||
Exercisable, December 31, 2021 | 43,056 | $ | 23.93 | 3.33 |
Note 8 – Income Taxes (Restated)
The Company has not made provision for income taxes for the years ended December 31, 2021, since the Company has the benefit of net operating losses in these periods.
F-33 |
The reconciliation of income tax benefit at the U.S. statutory rate of 21% to the Company’s tax expense is as follows:
December 31, | December 31, | |||||||
2021 | 2020 | |||||||
(Restated) | ||||||||
Federal tax benefit at statutory rate | $ | (241,948 | ) | $ | (21,111 | ) | ||
State income tax benefit, net of federal tax effect | (95,051 | ) | (8,293 | ) | ||||
Permanent differences | 19,381 | 19,381 | ||||||
Change in valuation allowance | 317,618 | 10,023 | ||||||
$ | - | $ | - |
The principal components of deferred tax assets consist of the following:
December 31, | December 31, | |||||||
2021 | 2020 | |||||||
(Restated) | ||||||||
Deferred income tax asset: | ||||||||
Net operation loss carry forwards | $ | 890,970 | $ | 587,699 | ||||
Fixed assets | 7,479 | 8,110 | ||||||
Intangibles | 7,788 | 7,788 | ||||||
Interest | 45,574 | 30,596 | ||||||
R&D tax credits | 87,801 | 87,801 | ||||||
Total deferred income tax asset | 1,039,612 | 721,994 | ||||||
Less: valuation allowance | (1,039,612 | ) | (721,994 | ) | ||||
Total deferred income tax asset | $ | - | $ | - |
The Company has approximately $3,000,000 of net operating losses (“NOL”) carried forward to offset taxable income, if any, in future. In assessing the realization of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment. Based on the assessment, management has established a full valuation allowance against all of the deferred tax asset relating to NOLs for every period because it is more likely than not that all of the deferred tax asset will not be realized.
Note 9 – Restatement of Financial Statements
The Company’s financial statements as of and for the year ended December 31, 2021, contained an understatement of legal and professional expenses of $420,000 for the valuation of a total of 210,000 shares (105,000 shares on a post-split basis) of incentive stock transferred from a significant shareholder of the Company , who is also the wife of our Chairman and CEO, to a consultant for the Company in a private transaction.
Originally Reported
| Restatement Adjustment ($) | As Restated ($) | ||||||||||
Stockholders’ Equity | ||||||||||||
Additional paid-in capital | 3,730,867 | 420,000 | 4,150,867 | |||||||||
Accumulated deficit | (5,375,432 | ) | (420,000 | ) | (5,795,432 | ) |
Year Ended December 31, 2021
Originally Reported ($) | Restatement Adjustment ($) | As Restated ($) | ||||||||||
OPERATING EXPENSES | ||||||||||||
Legal and professional | 264,684 | 420,000 | 684,684 | |||||||||
Total operating expenses | 1,322,992 | 420,000 | 1,742,992 | |||||||||
Loss from operations | (1,322,992 | ) | (420,000 | ) | (1,742,992 | ) | ||||||
Loss before Income Taxes | (732,134 | ) | (420,000 | ) | (1,152,134 | ) | ||||||
Net loss | (732,134 | ) | (420,000 | ) | (1,152,134 | ) | ||||||
Net loss attributable to common stockholders | (835,196 | ) | (420,000 | ) | (1,255,196 | ) | ||||||
Net loss per shares - basic and diluted | (0.08 | ) | (0.04 | ) | (0.12 | ) |
Originally Reported ($) | Restatement Adjustment ($) | As Restated ($) | ||||||||||
Cash Flows From Operating Activities: | ||||||||||||
Net loss | (732,134 | ) | (420,000 | ) | (1,152,134 | ) | ||||||
Stock-based compensation | 490,067 | 420,000 | 910,067 |
Note 10 – Subsequent Events
Management evaluated all additional events subsequent to the balance sheet date through June 3, 2022, the date the financial statements were available to be issued, and determined the following items:
On January 22, 2022, the Company received notice of forgiveness for the PPP loan entered into on March 9, 2021 for $73,007 and $641 in interest that reduced the note liability in its entirety.
On February 8, 2022, and March 11, 2022, the Company sold $365,000 and $224,985, respectively, in 6% convertible notes (the “Notes”), which bear 6% interest, are repayable three years from the date of issuance, and will convert automatically into shares of common stock (the “Conversion Shares”) at a conversion price of $2.50 per share upon closing of this offering. Boustead Securities LLC acted as placement agent for this offering and received compensation of $36,500 and $22,250, respectively, and warrants to purchase shares of common stock equal to 10% of the Conversion Shares, exercisable at the conversion price of the Convertible Notes.
Effective March 30, 2022, the Company issued 1,678 shares (839 shares post-reverse split) of common stock to correct an issuance error on completion of the 2018 share exchange which is valued at $16,340 common stock to be issued.
Effective April 1, 2022, pursuant to the consent of the Company’s board of directors and a majority of its common stockholders, the Company effectuated a two-for-one reverse split, pursuant to which each stockholder received one share of common stock for every two shares held.
On April 6, 2022, the Company submitted the final invoice for “Topic 345: Predictive Biomarkers of Prostate Cancer Patient Sensitivity for Radiation Late Effects,” for $211,455, following the completion of the Final Quarterly Progress Report to NIH covering the performance period of 9/16/2019-3/15/2022. The invoice was paid in full on April 27, 2022.
F-34 |
$
3,000,000 shares of Common Stock
Shuttle Pharmaceuticals Holdings, Inc.
_______________
PROSPECTUS
______________
Boustead Securities, LLC
______________
_______, 2022
Through and including , 2022 (the 25th day after the date of this prospectus), all dealers effecting transactions in these securities, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to a dealer’s obligation to deliver a prospectus when acting as an underwriter and with respect to an unsold allotment or subscription.
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 13. | OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION |
Registration Fees | $ | 5,000 | ||
SEC Filing Fees | $ | 1,711 | ||
Nasdaq Application Fees | $ | 75,000 | ||
FINRA Expenses | $ | 2,225 | ||
Transfer Agent Fees | $ | 6,000 | ||
Accounting Fees and Expenses | $ | 45,000 | ||
Legal Fees and Expenses | $ | 350,000 | ||
Miscellaneous Fees and Expenses | $ | - | ||
Total | $ | 484,936 |
All amounts are estimates other than the Nasdaq Application Fees and the SEC’s and FINRA’s registration fees.
ITEM 14. | INDEMNIFICATION OF DIRECTORS AND OFFICERS |
Section 145 of the Delaware General Corporation Law, as amended, authorizes us to indemnify any director or officer under certain prescribed circumstances and subject to certain limitations against certain costs and expenses, including attorney’s fees actually and reasonably incurred in connection with any action, suit or proceeding, whether civil, criminal, administrative or investigative, to which a person is party by reason of being one of our directors or officers if it is determined that such person acted in accordance with the applicable standard of conduct set forth in such statutory provisions. Our certificate of incorporation contains provisions relating to the indemnification of directors and officers and our by-laws extend such indemnities to the full extent permitted by Delaware law. We currently maintain insurance for the benefit of any director or officer which cover claims for which we could not indemnify such persons.
Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers or persons controlling us pursuant to the foregoing provisions, or otherwise, we have been advised that in the opinion of the SEC, such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable.
ITEM 15. | RECENT SALES OF UNREGISTERED SECURITIES |
During the past three years, we effected the following transactions in reliance upon exemptions from registration under the Securities Act, as amended:
During the period commencing October 29, 2018 through February 11, 2019, we issued 1,215.5 units (the “Units”), at a purchase price of $1,000 per Unit, which Units consist of a total of (i) 1,215.5 shares of Series A convertible preferred stock, par value $0.001 per share, which shares will convert into approximately 269,444 shares of common stock, and (ii) warrants to purchase up to 269,444 shares of common stock, which warrants will be issuable upon completion of the Company’s initial public offering (“IPO”). The Units were sold to a total of 21 accredited investors pursuant to an exemption from registration under Rule 506(b) of the Securities Act.
On July 15, 2019, the Company issued to AFH Holding & Advisory, LLC, as consultant (“AFH”), 639,161 restricted stock units (319,580 shares post-reverse split) under the Company’s 2018 Equity Incentive Plan.
On December 28, 2021, in conjunction with entering into two loan agreements for a total of $500,000, which are repayable at the time of our IPO, we issued warrants to purchase a total of 500,000 shares of our common stock, exercisable at $1.00 per share. Such warrants were sold to two accredited investors pursuant to an exemption from registration under Rule 506(b) of the Securities Act. Boustead Securities LLC acted as placement agent, but waived its cash compensation related to such offering and, to date, has received no warrant compensation.
The above disclosures do not include 768,334 shares (384,167 shares on a post-reverse split basis) granted pursuant to the Shuttle Pharmaceuticals Holdings, Inc. 2018 Equity Incentive Plan, which were issued to certain employees, directors and consultants, and vest on a periodic basis in accordance with the grant agreements between such individuals and the Company.
On February 8, 2022 and March 11, 2022, the Company sold to certain accredited investors $365,000 and $224,985, respectively, in 6% convertible notes (the “Notes”), which bear 6% interest, are repayable three years from the date of issuance, and will convert automatically into shares of common stock at a conversion price of $2.50 per share upon closing of this offering. Such notes were sold to accredited investors pursuant to an exemption from registration under Rule 506(b) of the Securities Act. Boustead Securities LLC acted as placement agent and received compensation of (i) $36,500 in cash and warrants to purchase 10% of the total number of shares issuable upon conversion of the Convertible Notes, exercisable at the conversion price of the Convertible Notes for the February offering and (ii) $22,750 in cash and warrants to purchase 10% of the total number of shares issuable upon conversion of the Convertible Notes, exercisable at the conversion price of the Convertible Notes for the March offering.
Effective March 30, 2022, the Company issued a total of 1,678 shares (839 shares on a post-reverse split basis) of common stock (the “Issuance”) to some 23 existing shareholders in satisfaction of certain interest that had accrued as the result of an inaccurate conversion of convertible notes in our 2018 share exchange. The Issuance satisfied in full all interest owed or otherwise accruing as the result of the inaccurate conversion. Such issuance was made in accordance with Rule 506(b) of the Securities Act.
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ITEM 16. | EXHIBITS |
Unless otherwise indicated, all exhibits previously filed. | |
* | Filed herewith. |
+ | To be filed by amendment. |
II-2 |
ITEM 17. UNDERTAKINGS
The undersigned registrant hereby undertakes:
(a) (1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in this registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high and of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than 20 percent change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement; and
(iii) To include any material information with respect to the plan of distribution not previously disclosed in this registration statement or any material change to such information in this registration statement.
(2) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time to be deemed the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.
(4) That, for the purpose of determining liability under the Securities Act of 1933 to any purchaser each prospectus filed pursuant to Rule 424(b) as part of a registration statement relating to an offering, other than registration statements relying on Rule 430B or other than prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and included in the registration statement as of the date it is first used after effectiveness. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such date of first use.
(b) Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.
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SIGNATURES
In accordance with the requirements of the Securities Act of 1933, the registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing this registration statement on Form S-1 to be signed on its behalf by the undersigned, in Rockville, Maryland, on June 23, 2022.
SHUTTLE PHARMACEUTICALS, INC. | ||
By: | /s/ Anatoly Dritschilo | |
Anatoly Dritschilo, M.D., Chief Executive Officer | ||
(Principal Executive Officer) |
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Anatoly Dritschilo, M.D. and Peter Dritschilo, and each of them as his or her true and lawful attorney-in-fact and agent, with full power of substitution and re- substitution, for each of them and in each name, place and stead, in any and all capacities, to sign any and all pre- or post-effective amendments to this registration statement, and to file the same with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney-in-fact and agent, full power and authority to do and perform each and every act and thing requisite or necessary to be done in and about the premises, as fully to all intents and purposes as each might or could do in person, hereby ratifying and confirming all that said attorney-in-fact and agent or his substitute, may lawfully do or cause to be done by virtue hereof. In accordance with the requirements of the Securities Act of 1933, as amended, this registration statement was signed by the following persons in the capacities and on the dates stated.
Signatures | Title(s) | Date | ||
/s/ Anatoly Dritschilo | Chairman of the Board and | June 23, 2022 | ||
Anatoly Dritschilo, M.D. | Chief Executive Officer (Principal Executive Officer) | |||
/s/ Michael Vander Hoek | Chief Financial Officer | June 23, 2022 | ||
Michael Vander Hoek | (Principal Financial and Accounting Officer) | |||
/s/ Chris Senanayake* | Director | June 23, 2022 | ||
Chris Senanayake, Ph.D. | ||||
/s/ Steven Richards* | Director | June 23, 2022 | ||
Steven Richards | ||||
/s/ Josh Schafer* | Director | June 23, 2022 | ||
Josh Schafer | ||||
/s/ Milton Brown* | Director | June 23, 2022 | ||
Milton Brown, M.D., Ph.D. | ||||
/s/ William Adkins* | Director | June 23, 2022 | ||
William H. Adkins |
*By: | /s/ Anatoly Dritschilo | |
Anatoly Dritschilo |
II-4 |
Exhibit 1.1
UNDERWRITING AGREEMENT
__________, 2022
Boustead Securities, LLC
6 Venture, Suite 265
Irvine, CA 92618
As Representative of the several Underwriters
named on Schedule 1 attached hereto
Ladies and Gentlemen:
The undersigned, Shuttle Pharmaceuticals Holdings, Inc., a Delaware corporation (the “Company”), hereby confirms its agreement (this “Agreement”) with Boustead Securities, LLC (hereinafter referred to as “you” (including its correlatives) or the “Representative”) and with the other underwriters named on Schedule 1 hereto for which the Representative is acting as representative (the Representative and such other underwriters being collectively called the “Underwriters” or, individually, an “Underwriter”) as follows:
1. Purchase and Sale of Shares.
1.1 Firm Shares.
1.1.1. Nature and Purchase of Firm Shares.
(i) On the basis of the representations and warranties herein contained, but subject to the terms and conditions herein set forth, the Company agrees to sell in the aggregate 2,7500,000 shares of common stock of the Company, par value $0.00001 per share (the “Common Stock”), in addition to 250,000 shares of the Company’s Common Stock being sold by certain selling stockholders, and each Underwriter agrees to purchase, severally and not jointly, at the Closing, an aggregate of 3,000,000 shares (“Firm Shares” or “Shares”) of the Common Stock. The offering and sale of the Shares is herein referred to as the “Offering.”
(ii) The Firm Shares are to be offered together to the public at the offering price per one Firm Share as set forth on Schedule 2-A hereto (the “Purchase Price”). The Underwriters, severally and not jointly, agree to purchase from the Company the number of Firm Shares set forth opposite their respective names on Schedule 1 attached hereto and made a part hereof at the purchase price for one Firm Share of $___ (or 93% of the Purchase Price).
1.1.2. Firm Shares Payment and Delivery.
(i) Delivery and payment for the Firm Shares shall be made at 10:00 a.m., Eastern time, on the second (2nd) Business Day following the effective date (the “Effective Date”) of the Registration Statement (as defined in Section 2.1.1 below) (or the third (3rd) Business Day following the Effective Date if the Registration Statement is declared effective after 4:01 p.m., Eastern time) or at such earlier time as shall be agreed upon by the Representative and the Company, at the offices of Olshan Frome Wolosky LLP, 1325 Avenue of the Americas, 15th Floor, New York, New York 10019 (“Representative’s Counsel”), or at such other place (or remotely by facsimile or other electronic transmission) as shall be agreed upon by the Representative and the Company. The hour and date of delivery and payment for the Firm Shares is called the “Closing Date.”
(ii) Payment for the Firm Shares shall be made on the Closing Date by wire transfer in Federal (same day) funds, payable to the order of the Company upon delivery of the certificates (in form and substance satisfactory to the Underwriters) representing the Firm Shares (or through the facilities of the Depository Trust Company (“DTC”)) for the account of the Underwriters. The Firm Shares shall be registered in such name or names and in such authorized denominations as the Representative may request in writing prior to the Closing Date. The Company shall not be obligated to sell or deliver the Firm Shares except upon tender of payment by the Representative for all of the Firm Shares. The term “Business Day” means any day other than a Saturday, a Sunday or a legal holiday or a day on which banking institutions are authorized or obligated by law to close in New York, New York.
1.2 Over-allotment Option.
1.2.1. Option Shares. For the purposes of covering any over-allotments in connection with the distribution and sale of the Firm Shares, the Company hereby grants to the Underwriters an option to purchase up to 450,000 additional shares of Common Stock, representing fifteen percent (15%) of the Firm Shares sold in the offering, from the Company (the “Over-allotment Option”). Such 450,000 additional shares of Common Stock, the net proceeds of which will be deposited with the Company’s account, are hereinafter referred to as “Option Shares.” The purchase price to be paid per Option Share shall be equal to the price per Firm Share set forth in Section 1.1.1 hereof.
1.2.2. Exercise of Option. The Over-allotment Option granted pursuant to Section 1.2.1 hereof may be exercised by the Representative as to all (at any time) or any part (from time to time) of the Option Shares within 45 days after the Effective Date. The purchase price to be paid per Option Share shall be equal to the Firm Share purchase price. The Underwriters shall not be under any obligation to purchase any Option Shares prior to the exercise of the Over-allotment Option. The Over-allotment Option granted hereby may be exercised by the giving of oral notice to the Company from the Representative, which must be confirmed in writing by overnight mail or facsimile or other electronic transmission setting forth the number of Option Shares to be purchased and the date and time for delivery of and payment for the Option Shares (the “Option Closing Date”), which shall not be later than five (5) full Business Days after the date of the notice or such other time as shall be agreed upon by the Company and the Representative, at the offices of Representative Counsel at such other place (including remotely by facsimile or other electronic transmission) as shall be agreed upon by the Company and the Representative. If such delivery and payment for the Option Shares does not occur on the Closing Date, the Option Closing Date will be as set forth in the notice. Upon exercise of the Over-allotment Option with respect to all or any portion of the Option Shares, subject to the terms and conditions set forth herein, (i) the Company shall become obligated to sell to the Underwriters the number of Option Shares specified in such notice and (ii) each of the Underwriters, acting severally and not jointly, shall purchase that portion of the total number of Option Shares then being purchased that the number of Firm Shares as set forth on Schedule 1 opposite the name of such Underwriter bears to the total number of Firm Shares (except as otherwise agreed to by the Underwriters).
1.2.3. Option Shares Payment and Delivery. Payment for the Option Shares shall be made on the Option Closing Date by wire transfer in Federal (same day) funds, payable to the order of the Company upon delivery to you of certificates (in form and substance satisfactory to the Underwriters) representing the Option Shares (or through the facilities of DTC) for the account of the Underwriters. The Option Shares shall be registered in such name or names and in such authorized denominations as the Representative may request in writing at least two (2) full Business Days prior to the Option Closing Date. The Company shall not be obligated to sell or deliver the Option Shares except upon tender of payment by the Representative for applicable Option Shares.
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1.3 Representative’s Warrants.
1.3.1. Purchase Warrants. The Company hereby agrees to issue and sell to the Representative (and/or its designees) on the Closing Date, or Option Closing Date, as applicable (“Representative’s Warrants”), five-year warrants for the purchase of a number of the Shares equal to 7.0% of the number of the Firm Shares issued in the Offering, pursuant to a warrant in the form attached hereto as Exhibit A, at an initial exercise price of $___ (or 100% of the public offering price per Firm Share). The Representative’s Warrants and the Shares issuable upon exercise thereof are hereinafter referred to together as the “Representative’s Securities.” The Representative understands and agrees that there are significant restrictions pursuant to FINRA Rule 5110 against transferring the Representative’s Warrants and the underlying Shares during the one hundred eighty (180) days after the Effective Date and by its acceptance thereof shall agree that it will not sell, transfer, assign, pledge or hypothecate the Representative’s Warrants, or any portion thereof, or be the subject of any hedging, short sale, derivative, put or call transaction that would result in the effective economic disposition of such securities for a period of one hundred eighty (180) days following the Effective Date to anyone other than (i) an Underwriter or a selected dealer in connection with the Offering, or (ii) an officer, partner, registered person or affiliate of the Representative or of any such Underwriter or selected dealer; and only if any such transferee agrees to the foregoing lock-up restrictions.
1.3.2. Delivery. Delivery of the Representative’s Warrants shall be made on the Closing Date and shall be issued in the name or names and in such authorized denominations as the Representative may request.
2. Representations and Warranties of the Company. The Company represents and warrants to the Underwriters as of the Applicable Time (as defined below), as of the Closing Date and as of the Option Closing Date, if any, as follows:
2.1. Filing of Registration Statement.
2.1.1. Pursuant to the Securities Act. The Company has filed with the U.S. Securities and Exchange Commission (the “Commission”) a registration statement, and an amendment or amendments thereto, on Form S-1 (File No. 333-265429), including any related prospectus or prospectuses, for the registration of the Shares and the Representative’s Securities under the Securities Act of 1933, as amended (the “Securities Act”), which registration statement and amendment or amendments have been prepared by the Company in all material respects in conformity with the requirements of the Securities Act and the rules and regulations of the Commission under the Securities Act (the “Securities Act Regulations”) and will contain all material statements that are required to be stated therein in accordance with the Securities Act and the Securities Act Regulations. Except as the context may otherwise require, such registration statement, as amended, on file with the Commission at the time the registration statement became effective (including the Preliminary Prospectus (as hereinafter defined) included in the registration statement, financial statements, schedules, exhibits and all other documents filed as a part thereof and all information deemed to be a part thereof as of the Effective Date pursuant to paragraph (b) of Rule 430A of the Securities Act Regulations (the “Rule 430A Information”)), is referred to herein as the “Registration Statement.” If the Company files any registration statement pursuant to Rule 462(b) of the Securities Act Regulations, then after such filing, the term “Registration Statement” shall include such registration statement filed pursuant to Rule 462(b). The Registration Statement has been declared effective by the Commission on the date hereof.
Each prospectus used prior to the effectiveness of the Registration Statement, and each prospectus that omitted the Rule 430A Information that was used after such effectiveness and prior to the execution and delivery of this Agreement, is herein called a “Preliminary Prospectus.” The Preliminary Prospectus, subject to completion, dated __________, 2022, that was included in the Registration Statement immediately prior to the Applicable Time is hereinafter called the “Pricing Prospectus.” The final prospectus in the form first furnished to the Underwriters for use in the Offering is hereinafter called the “Prospectus.” Any reference to the “most recent Preliminary Prospectus” shall be deemed to refer to the latest Preliminary Prospectus included in the Registration Statement.
“Applicable Time” means 4:00 p.m., Eastern time, on the date of this Agreement.
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“Issuer Free Writing Prospectus” means any “issuer free writing prospectus,” as defined in Rule 433 of the Securities Act Regulations (“Rule 433”), including without limitation any “free writing prospectus” (as defined in Rule 405 of the Securities Act Regulations) relating to the Shares that is (i) required to be filed with the Commission by the Company, (ii) a “road show that is a written communication” within the meaning of Rule 433(d)(8)(i), whether or not required to be filed with the Commission, or (iii) exempt from filing with the Commission pursuant to Rule 433(d)(5)(i) because it contains a description of the Shares or of the Offering that does not reflect the final terms, in each case in the form filed or required to be filed with the Commission or, if not required to be filed, in the form retained in the Company’s records pursuant to Rule 433(g).
“Issuer General Use Free Writing Prospectus” means any Issuer Free Writing Prospectus that is intended for general distribution to prospective investors (other than a “bona fide electronic road show,” as defined in Rule 433 (the “Bona Fide Electronic Road Show”)), as evidenced by its being specified in Schedule 2-B hereto.
“Issuer Limited Use Free Writing Prospectus” means any Issuer Free Writing Prospectus that is not an Issuer General Use Free Writing Prospectus.
“Pricing Disclosure Package” means any Issuer General Use Free Writing Prospectus issued at or prior to the Applicable Time, the Pricing Prospectus and the information included on Schedule 2-A hereto, all considered together.
2.1.2. Pursuant to the Exchange Act. The Company has filed with the Commission a Form 8-A (File Number 001-_____), dated ___________, 2022, providing for the registration pursuant to Section 12(b) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), of the Common Stock. The registration of the Common Stock under the Exchange Act has become effective on or prior to the date hereof. The Company has taken no action designed to, or likely to have the effect of, terminating the registration of the Common Stock under the Exchange Act, nor has the Company received any notification that the Commission is contemplating terminating such registration.
2.2. Stock Exchange Listing. The Shares and the shares of Common Stock underlying the Representative’s Warrants have been approved for listing on The Nasdaq Capital Market (the “Exchange”), and the Company has taken no action designed to, or likely to have the effect of, delisting of the Shares or the shares of Common Stock underlying the Representative’s Warrants from the Exchange, nor has the Company received any written notification that the Exchange is contemplating terminating such listing.
2.3. No Stop Orders, etc. Neither the Commission nor, to the Company’s knowledge, any state regulatory authority has issued any written order preventing or suspending the use of the Registration Statement, any Preliminary Prospectus or the Prospectus or has instituted or, to the Company’s knowledge, threatened to institute, any proceedings with respect to such an order. The Company has complied with each request (if any) from the Commission for additional information.
2.4. Disclosures in Registration Statement.
2.4.1. Compliance with Securities Act and 10b-5 Representation.
(i) Each of the Registration Statement and any post-effective amendment thereto, at the time it became effective, complied in all material respects with the requirements of the Securities Act and the Securities Act Regulations. Each Preliminary Prospectus, including the prospectus filed as part of the Registration Statement as originally filed or as part of any amendment or supplement thereto, and the Prospectus, at the time each was filed with the Commission, complied in all material respects with the requirements of the Securities Act and the Securities Act Regulations. Each Preliminary Prospectus delivered to the Underwriters for use in connection with this Offering and the Prospectus was or will be identical to the electronically transmitted copies thereof filed with the Commission pursuant to EDGAR, except to the extent permitted by Regulation S-T.
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(ii) Neither the Registration Statement nor any amendment thereto, at its effective time, as of the Applicable Time, at the Closing Date, contained, contains, or will contain an untrue statement of a material fact or omitted, omits or will omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading; provided, however, that this representation and warranty shall not apply to statements made in reliance upon and in conformity with written information furnished to the Company in writing with respect to the Underwriters by the Representative expressly for use in the Registration Statement, the Pricing Prospectus or the Prospectus or any amendment thereof or supplement thereto. The parties acknowledge and agree that such information provided by or on behalf of any Underwriter consists solely of the information in the table set forth in the second paragraph of the “Underwriting” section and the disclosure contained in the “Underwriting” subsections “- Discounts and Commissions,” “Representative’s Warrants,” and “Price Stabilization, Short Positions and Penalty Bids” of the Prospectus (the “Underwriters’ Information”)The Pricing Disclosure Package, as of the Applicable Time, at the Closing Date, did not, does not and will not include an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; and each Issuer Limited Use Free Writing Prospectus hereto does not conflict with the information contained in the Registration Statement, any Preliminary Prospectus, the Pricing Prospectus or the Prospectus, and each such Issuer Limited Use Free Writing Prospectus, as supplemented by and taken together with the Pricing Prospectus as of the Applicable Time, did not include an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading; provided, however, that this representation and warranty shall not apply to the Underwriters’ Information.
(iii) Neither the Prospectus nor any amendment or supplement thereto (including any prospectus wrapper), as of its issue date, at the time of any filing with the Commission pursuant to Rule 424(b), at the Closing Date, included, includes or will include an untrue statement of a material fact or omitted, omits or will omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided, however, that this representation and warranty shall not apply to the Underwriters’ Information.
2.4.2. Disclosure of Agreements. The agreements and documents described in the Registration Statement, the Pricing Disclosure Package and the Prospectus conform in all material respects to the descriptions thereof contained therein and there are no agreements or other documents required by the Securities Act and the Securities Act Regulations to be described in the Registration Statement, the Pricing Disclosure Package and the Prospectus or to be filed with the Commission as exhibits to the Registration Statement, that have not been so described or filed. Each agreement or other instrument (however characterized or described) to which the Company is a party or by which it is or may be bound or affected and (i) that is referred to in the Registration Statement, the Pricing Disclosure Package and the Prospectus, or (ii) is material to the Company’s business, has been duly authorized and validly executed by the Company, is in full force and effect in all material respects and is enforceable against the Company and, to the Company’s knowledge, the other parties thereto, in accordance with its terms, except (x) as such enforceability may be limited by bankruptcy, insolvency, reorganization or similar laws affecting creditors’ rights generally, (y) as enforceability of any indemnification or contribution provision may be limited under the federal and state securities laws, and (z) that the remedy of specific performance and injunctive and other forms of equitable relief may be subject to the equitable defenses and to the discretion of the court before which any proceeding therefor may be brought. Except as disclosed in the Registration Statement, the Pricing Disclosure Package or the Prospectus, none of such agreements or instruments has been assigned by the Company, and neither the Company nor, to the Company’s knowledge, any other party is in default thereunder and, to the Company’s knowledge, no event has occurred that, with the lapse of time or the giving of notice, or both, would constitute a default thereunder, except for any default or event which would not reasonably be expected to result in a Material Adverse Change (as defined below). To the Company’s knowledge, performance by the Company of the material provisions of such agreements or instruments will not result in a violation of any existing applicable law, rule, regulation, judgment, order or decree of any governmental agency or court, domestic or foreign, having jurisdiction over the Company or any of its assets or businesses (each, a “Governmental Entity”), including, without limitation, those relating to environmental laws and regulations, except for any violation which would not reasonably be expected to result in a Material Adverse Change (as defined below).
2.4.3. Prior Securities Transactions. During the past three (3) years from the date of this Agreement, no securities of the Company have been sold by the Company or by or on behalf of, or for the benefit of, any person or persons controlling, controlled by or under common control with the Company, except as disclosed in the Registration Statement, the Pricing Disclosure Package and any Preliminary Prospectus.
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2.4.4. Regulations. The disclosures in the Registration Statement, the Pricing Disclosure Package and the Prospectus concerning the effects of federal, state, local and all foreign regulation on the Offering and regulations applicable to the Company’s business as currently contemplated are correct in all material respects and no other such regulations are required to be disclosed in the Registration Statement, the Pricing Disclosure Package and the Prospectus which are not so disclosed
2.5. Changes after Dates in Registration Statement.
2.5.1. No Material Adverse Change. Since the respective dates as of which information is given in the Registration Statement, the Pricing Disclosure Package and the Prospectus, except as otherwise specifically stated therein: (i) there has been no material adverse change in the financial position or results of operations of the Company or its Subsidiaries taken as a whole, nor, to the Company’s knowledge, any change or development that, singularly or in the aggregate, would involve a material adverse change in or affecting the condition (financial or otherwise), results of operations, business, or assets of the Company or its Subsidiaries taken as a whole (a “Material Adverse Change”); (ii) there have been no material transactions entered into by the Company or its Subsidiaries, other than as contemplated pursuant to this Agreement; and (iii) no officer or director of the Company has resigned from any position with the Company.
2.5.2. Recent Securities Transactions, etc. Subsequent to the respective dates as of which information is given in the Registration Statement, the Pricing Disclosure Package and the Prospectus, and except as may otherwise be indicated or contemplated herein or disclosed in the Registration Statement, the Pricing Disclosure Package and the Prospectus, the Company has not: (i) issued any securities or incurred any liability or obligation, direct or contingent, for borrowed money; or (ii) declared or paid any dividend or made any other distribution on or in respect to its capital stock.
2.6. Independent Accountants. To the knowledge of the Company, BF Borgers CPA PC (“Auditor”), whose report is filed with the Commission as part of the Registration Statement, the Pricing Disclosure Package and the Prospectus, is an independent registered public accounting firm as required by the Securities Act and the Securities Act Regulations and the Public Company Accounting Oversight Board. The Auditor has not, during the periods covered by the financial statements included in the Registration Statement, the Pricing Disclosure Package and the Prospectus, provided to the Company any non-audit services, as such term is used in Section 10A(g) of the Exchange Act.
2.7. Financial Statements, etc. The financial statements, including the notes thereto and supporting schedules, if any, included in the Registration Statement, the Pricing Disclosure Package and the Prospectus, fairly present in all material respects the financial position and the results of operations of the Company at the dates and for the periods to which they apply; and such financial statements have been prepared in conformity with U.S. generally accepted accounting principles (“GAAP”), consistently applied throughout the periods involved (provided that unaudited interim financial statements are subject to year-end audit adjustments that are not expected to be material in the aggregate and do not contain all footnotes required by GAAP); and any supporting schedules included in the Registration Statement present fairly in all material respects the information required to be stated therein. Except as included therein, no historical or pro forma financial statements are required to be included in the Registration Statement, the Pricing Disclosure Package or the Prospectus under the Securities Act or the Securities Act Regulations. The pro forma and pro forma as adjusted financial information and the related notes, if any, included in the Registration Statement, the Pricing Disclosure Package and the Prospectus have been properly compiled and prepared in all material respects in accordance with the applicable requirements of the Securities Act and the Securities Act Regulations and present fairly in all material respects the information shown therein, and the assumptions used in the preparation thereof are reasonable and the adjustments used therein are appropriate to give effect to the transactions and circumstances referred to therein. All disclosures contained in the Registration Statement, the Pricing Disclosure Package or the Prospectus regarding “non-GAAP financial measures” (as such term is defined by the rules and regulations of the Commission), if any, comply with Regulation G of the Exchange Act and Item 10 of Regulation S-K of the Securities Act, to the extent applicable. Each of the Registration Statement, the Pricing Disclosure Package and the Prospectus discloses all material off-balance sheet transactions, arrangements, obligations (including contingent obligations), and other relationships of the Company with unconsolidated entities or other persons that may have a material current or future effect on the Company’s financial condition, changes in financial condition, results of operations, liquidity, capital expenditures, capital resources, or significant components of revenues or expenses. Except as disclosed in the Registration Statement, the Pricing Disclosure Package and the Prospectus, (a) neither the Company nor any of its subsidiaries listed in Exhibit 21.1 to the Registration Statement (each, a “Subsidiary” and, collectively, the “Subsidiaries”), has incurred any material liabilities or obligations, direct or contingent, or entered into any material transactions other than in the ordinary course of business, (b) the Company has not declared or paid any dividends or made any distribution of any kind with respect to its Common Stock or preferred stock (c) there has not been any change in the capital of the Company or any of its Subsidiaries, or, other than in the course of business, any grants under any stock compensation plan, and (d) there has not been any Material Adverse Change in the Company’s long-term or short-term debt. The Company represents that it has no direct or indirect subsidiaries other than those listed in Exhibit 21.1 to the Registration Statement.
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2.8. Authorized Capital; Options, etc. The Company had, at the date or dates indicated in the Registration Statement, the Pricing Disclosure Package and the Prospectus, the duly authorized, issued and outstanding capitalization as set forth therein. Based on the assumptions stated in the Registration Statement, the Pricing Disclosure Package and the Prospectus, the Company will have on the Closing Date the adjusted capitalization set forth therein. Except as set forth in, or contemplated by, the Registration Statement, the Pricing Disclosure Package and the Prospectus, on the Effective Date, as of the Applicable Time and on the Closing Date and any Option Closing Date, there will be no options, warrants, or other rights to purchase or otherwise acquire any authorized, but unissued Common Stock or any security convertible or exercisable into Common Stock, or any contracts or commitments to issue or sell Common Stock or any such options, warrants, rights or convertible securities.
2.9. Valid Issuance of Securities, etc.
2.9.1. Outstanding Securities. All issued and outstanding securities of the Company issued prior to the transactions contemplated by this Agreement have been duly authorized and validly issued and are fully paid and non-assessable; the holders thereof have no rights of rescission with respect thereto, and are not subject to personal liability by reason of being such holders; and none of such securities were issued in violation of the preemptive rights of any holders of any security of the Company or similar contractual rights granted by the Company. The Common Stock, preferred stock, and any other securities outstanding or to be outstanding upon consummation of the Offering conform in all material respects to all statements relating thereto contained in the Registration Statement, the Pricing Disclosure Package and the Prospectus. The offers and sales of the outstanding Common Stock were at all relevant times either registered under the Securities Act and the applicable state securities or “blue sky” laws or, based in part on the representations and warranties of the purchasers of such shares, exempt from such registration requirements.
2.9.2. Securities Sold Pursuant to this Agreement. The Shares and Representative’s Warrants have been duly authorized for issuance and sale and, when issued and paid for, will be validly issued, fully paid and non-assessable; the holders thereof are not and will not be subject to personal liability by reason of being such holders; the Shares and Representative’s Warrants are not and will not be subject to the preemptive rights of any holders of any security of the Company or similar contractual rights granted by the Company; and all corporate action required to be taken for the authorization, issuance and sale of the Shares and Representative’s Warrants has been duly and validly taken; the Common Stock issuable upon exercise of the Representative’s Warrants have been duly authorized and reserved for issuance by all necessary corporate action on the part of the Company and when issued in accordance with such Representative’s Warrants, as the case may be, such Common Stock will be validly issued, fully paid and non-assessable. The Shares and the Representative’s Warrants conform in all material respects to all statements with respect thereto contained in the Registration Statement, the Pricing Disclosure Package and the Prospectus.
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2.10. Registration Rights of Third Parties. Except as set forth in the Registration Statement, the Pricing Disclosure Package and the Prospectus, no holders of any securities of the Company or any rights exercisable for or convertible or exchangeable into securities of the Company have the right to require the Company to register any such securities of the Company under the Securities Act or to include any such securities in a registration statement to be filed by the Company.
2.11. Validity and Binding Effect of Agreements. This Agreement and the Representative’s Warrants have been duly and validly authorized by the Company, and, when executed and delivered, will constitute, the valid and binding agreements of the Company, enforceable against the Company in accordance with their respective terms, except: (i) as such enforceability may be limited by bankruptcy, insolvency, reorganization or similar laws affecting creditors’ rights generally; (ii) as enforceability of any indemnification or contribution provision may be limited under the federal and state securities laws; and (iii) that the remedy of specific performance and injunctive and other forms of equitable relief may be subject to the equitable defenses and to the discretion of the court before which any proceeding therefor may be brought.
2.12. No Conflicts, etc. The execution, delivery and performance by the Company of this Agreement and all ancillary documents, the consummation by the Company of the transactions herein and therein contemplated and the compliance by the Company with the terms hereof and thereof do not and will not, with or without the giving of notice or the lapse of time or both: (i) result in a material breach of, or conflict with any of the terms and provisions of, or constitute a material default under, or result in the creation, modification, termination or imposition of any lien, charge or encumbrance upon any property or assets of the Company pursuant to the terms of any agreement or instrument to which the Company is a party; (ii) result in any violation of the provisions of the Company’s Certificate of Incorporation (as the same may be amended or restated from time to time, the “Charter”) or the by-laws of the Company; or (iii) violate any existing applicable law, rule, regulation, judgment, order or decree of any Governmental Entity as of the date hereof.
2.13. No Defaults; Violations. No material default exists in the due performance and observance of any term, covenant or condition of any material license, contract, indenture, mortgage, deed of trust, note, loan or credit agreement, or any other agreement or instrument evidencing an obligation for borrowed money, or any other material agreement or instrument to which the Company is a party or by which the Company may be bound or to which any of the properties or assets of the Company is subject. The Company is not (i) in violation of any term or provision of its Charter or by-laws, or (ii) in violation of any franchise, license, permit, applicable law, rule, regulation, judgment or decree of any Governmental Entity, except in the cases of clause (ii) for such violations which would not reasonably be expected to cause a Material Adverse Change.
2.14. Corporate Power; Licenses; Consents.
2.14.1. Conduct of Business. Except as described in the Registration Statement, the Pricing Disclosure Package and the Prospectus, the Company has all requisite corporate power and authority, and has all necessary authorizations, approvals, orders, licenses, certificates and permits of and from all governmental regulatory officials and bodies that it needs as of the date hereof to conduct its business purpose as described in the Registration Statement, the Pricing Disclosure Package and the Prospectus, except for the absence of which would not reasonably be expected to result in a Material Adverse Change.
2.14.2. Transactions Contemplated Herein. The Company has all corporate power and authority to enter into this Agreement and to carry out the provisions and conditions hereof, and all consents, authorizations, approvals and orders required in connection therewith have been obtained. No consent, authorization or order of, and no filing with, any court, government agency, the Exchange or other body is required for the valid issuance, sale and delivery of the Shares and the consummation of the transactions and agreements contemplated by this Agreement and the delivery of the Representative’s Warrants and as contemplated by the Registration Statement, the Pricing Disclosure Package and the Prospectus, except with respect to applicable Securities Act Regulations, state securities laws and the rules and regulations of the Financial Industry Regulatory Authority, Inc. (“FINRA”).
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2.15. Directors & Officers Questionnaires. To the Company’s knowledge, all information contained in the questionnaires (the “Questionnaires”) completed by each of the Company’s directors and officers immediately prior to the Offering (the “Insiders”) as supplemented by all information concerning the Company’s directors, officers and principal shareholders as described in the Registration Statement, the Pricing Disclosure Package and the Prospectus, as well as in the Lock-Up Agreement (as defined in Section 2.24 below), provided to the Underwriters, is true and correct in all material respects and the Company has not become aware of any information which would cause the information disclosed in the Questionnaires to become materially inaccurate and incorrect.
2.16. Litigation; Governmental Proceedings. There is no action, suit, proceeding, inquiry, arbitration, investigation, litigation or governmental proceeding pending or, to the Company’s knowledge, threatened against, or involving the Company or, to the Company’s knowledge, any executive officer or director that is required to be disclosed in the Registration Statement, the Pricing Disclosure Package and the Prospectus which has not been disclosed.
2.17. Good Standing. The Company has been duly organized and is validly existing as a corporation and is in good standing under the laws of the State of Delaware as of the date hereof, and is duly qualified to do business and is in good standing in each other jurisdiction in which its ownership or lease of property or the conduct of business requires such qualification, except where the failure to qualify, singularly or in the aggregate, would not have or reasonably be expected to result in a Material Adverse Change.
2.18. Insurance. The Company carries or is entitled to the benefits of insurance, (including, without limitation, as to directors and officers insurance coverage), with, to the Company’s knowledge, reputable insurers, in such amounts and covering such risks which the Company believes are adequate, and all such insurance is in full force and effect. The Company has no reason to believe that it will not be able (i) to renew its existing insurance coverage as and when such policies expire or (ii) to obtain comparable coverage from similar institutions as may be necessary or appropriate to conduct its business as now conducted and at a cost that would not result in a Material Adverse Change.
2.19. Transactions Affecting Disclosure to FINRA.
2.19.1. Finder’s Fees. Except as described in the Registration Statement, the Pricing Disclosure Package and the Prospectus, there are no claims, payments, arrangements, agreements or understandings relating to the payment of a finder’s, consulting or origination fee by the Company or any Insider with respect to the sale of the Shares hereunder or any other arrangements, agreements or understandings of the Company or, to the Company’s knowledge, any of its shareholders that may affect the Underwriters’ compensation, as determined by FINRA.
2.19.2. Payments within Six (6) Months. Except as described in the Registration Statement, the Pricing Disclosure Package and the Prospectus, the Company has not made any direct or indirect payments (in cash, securities or otherwise) to: (i) any person, as a finder’s fee, consulting fee or otherwise, in consideration of such person raising capital for the Company or introducing to the Company persons who raised or provided capital to the Company; (ii) any FINRA member; or (iii) any person or entity that has any direct or indirect affiliation or association with any FINRA member, within the six (6) months immediately prior to the original filing of the Registration Statement, other than the payment to the Underwriters as provided hereunder in connection with the Offering.
2.19.3. Use of Proceeds. None of the net proceeds of the Offering will be paid by the Company to any participating FINRA member or its affiliates, except as specifically authorized herein.
2.19.4. FINRA Affiliation. To the Company’s knowledge, and except as may otherwise be disclosed in FINRA questionnaires provided to the Representative’s Counsel, there is no (i) officer or director of the Company, (ii) beneficial owner of 5% or more of any class of the Company’s securities or (iii) beneficial owner of the Company’s unregistered equity securities which were acquired during the 180-day period immediately preceding the filing of the Registration Statement that is an affiliate or associated person of a FINRA member participating in the Offering (as determined in accordance with the rules and regulations of FINRA).
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2.19.5. Information. To the Company’s knowledge, all information provided by the Company in its FINRA questionnaire to Representative’s Counsel specifically for use by Representative’s Counsel in connection with its Public Offering System filings (and related disclosure) with FINRA is true, correct and complete in all material respects.
2.20. Foreign Corrupt Practices Act. None of the Company and its Subsidiaries or, to the Company’s knowledge, any director, officer, agent, employee or affiliate of the Company and its Subsidiaries or any other person acting on behalf of the Company and its Subsidiaries, has, directly or indirectly, given or agreed to give any money, gift or similar benefit (other than legal price concessions to customers in the ordinary course of business) to any customer, supplier, employee or agent of a customer or supplier, or official or employee of any governmental agency or instrumentality of any government (domestic or foreign) or any political party or candidate for office (domestic or foreign) or other person who was, is, or may be in a position to help or hinder the business of the Company (or assist it in connection with any actual or proposed transaction) that (i) might subject the Company to any damage or penalty in any civil, criminal or governmental litigation or proceeding, (ii) if not given in the past, might have had a Material Adverse Change or (iii) if not continued in the future, might adversely affect the assets, business, operations or prospects of the Company. The Company has taken reasonable steps to ensure that its accounting controls and procedures are sufficient to cause the Company to comply in all material respects with the Foreign Corrupt Practices Act of 1977, as amended.
2.21. Compliance with OFAC. None of the Company and its Subsidiaries or, to the Company’s knowledge, any director, officer, agent, employee or affiliate of the Company and its Subsidiaries or any other person acting on behalf of the Company and its Subsidiaries, is currently subject to any U.S. sanctions administered by the Office of Foreign Assets Control of the U.S. Department of the Treasury (“OFAC”), and the Company will not, directly or indirectly, use the proceeds of the Offering hereunder, or lend, contribute or otherwise make available such proceeds to any subsidiary, joint venture partner or other person or entity, for the purpose of financing the activities of any person currently subject to any U.S. sanctions administered by OFAC.
2.22. Money Laundering Laws. The operations of the Company and its Subsidiaries are and have been conducted at all times in compliance with applicable financial recordkeeping and reporting requirements of the Currency and Foreign Transactions Reporting Act of 1970, as amended, the money laundering statutes of all jurisdictions, the rules and regulations thereunder and any related or similar rules, regulations or guidelines, issued, administered or enforced by any Governmental Entity (collectively, the “Money Laundering Laws”); and no action, suit or proceeding by or before any Governmental Entity involving the Company with respect to the Money Laundering Laws is pending or, to the best knowledge of the Company, threatened.
2.23. Officers’ Certificate. Any certificate signed by any duly authorized officer of the Company and delivered to you or to Representative’s Counsel shall be deemed a representation and warranty by the Company to the Underwriters as to the matters covered thereby.
2.24. Lock-Up Agreements. The Company has caused each of its officers, directors and owners of 1% or more of the Company’s outstanding Common Stock (or securities convertible or exercisable into Common Stock) (collectively, the “Lock-Up Parties”) to deliver to the Representative an executed Lock-Up Agreement, in forms substantially similar to those attached hereto as Exhibit B-1 for officers and directors and Exhibit B-2 for non-insider stockholders (together, the “Lock-Up Agreements”), prior to the execution of this Agreement.
2.25. Subsidiaries. All Subsidiaries of the Company are duly organized and in good standing under the laws of the place of organization or incorporation, and each Subsidiary is in good standing in each jurisdiction in which its ownership or lease of property or the conduct of business requires such qualification, except where the failure to qualify would not have a Material Adverse Change. The Company’s ownership and control of each Subsidiary is as described in the Registration Statement, the Pricing Disclosure Package and the Prospectus.
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2.26. Related Party Transactions. There are no business relationships or related party transactions involving the Company or any other person required to be described in the Registration Statement, the Pricing Disclosure Package and the Prospectus that have not been described as required by the Securities Act Regulations.
2.27. Board of Directors. The Board of Directors of the Company is comprised of the persons set forth under the heading of the Pricing Prospectus and the Prospectus captioned “Management.” The qualifications of the persons serving as board members and the overall composition of the board comply with the Exchange Act, the Exchange Act Regulations, the Sarbanes-Oxley Act of 2002 and the rules promulgated thereunder (the “Sarbanes-Oxley Act”) applicable to the Company and the listing rules of the Exchange. At least one member of the Audit Committee of the Board of Directors of the Company qualifies as an “audit committee financial expert,” as such term is defined under Regulation S-K and the listing rules of the Exchange. In addition, at least a majority of the persons serving on the Board of Directors qualify as “independent,” as defined under the listing rules of the Exchange.
2.28. Sarbanes-Oxley Compliance.
2.28.1. Disclosure Controls. Except as disclosed in the Registration Statement, Pricing Disclosure Package and the Prospectus, the Company has developed and currently maintains disclosure controls and procedures that will comply with Rule 13a-15 or 15d-15 under the Exchange Act Regulations, and such controls and procedures are effective to ensure that all material information concerning the Company will be made known on a timely basis to the individuals responsible for the preparation of the Company’s Exchange Act filings and other public disclosure documents.
2.28.2. Compliance. The Company is, or at the Applicable Time and on the Closing Date or the Option Closing Date will be, in material compliance with the provisions of the Sarbanes-Oxley Act applicable to it, and has implemented or will implement such programs and has taken reasonable steps to ensure the Company’s future compliance (not later than the relevant statutory and regulatory deadlines therefor) with all of the material provisions of the Sarbanes-Oxley Act.
2.29. Accounting Controls. Except as disclosed in the Registration Statement, Pricing Disclosure Package and the Prospectus, the Company maintains systems of “internal control over financial reporting” (as defined under Rules 13a-15 and 15d-15 under the Exchange Act Regulations) that comply in all material respects with the requirements of the Exchange Act and have been designed by, or under the supervision of, its respective principal executive and principal financial officers, or persons performing similar functions, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP, including, but not limited to, internal accounting controls sufficient to provide reasonable assurance that (i) transactions are executed in accordance with management’s general or specific authorizations; (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with GAAP and to maintain asset accountability; (iii) access to assets is permitted only in accordance with management’s general or specific authorization; and (iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences. Except as disclosed in the Registration Statement, the Pricing Disclosure Package and the Prospectus, the Company is not aware of any material weaknesses in its internal control over financial reporting, and, if applicable, with respect to such remedial actions disclosed in the Registration Statement, the Pricing Disclosure Package and the Prospectus, the Company represents that it has taken all remedial actions set forth in such disclosure. The Company’s auditors and the Audit Committee of the Board of Directors of the Company have been advised of: (i) all significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are known to the Company’s management and that have adversely affected or are reasonably likely to adversely affect the Company’ ability to record, process, summarize and report financial information; and (ii) any fraud known to the Company’s management, whether or not material, that involves management or other employees who have a significant role in the Company’s internal controls over financial reporting.
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2.30. No Investment Company Status. The Company is not and, after giving effect to the Offering and the application of the proceeds thereof as described in the Registration Statement, the Pricing Disclosure Package and the Prospectus, will not be, required to register as an “investment company,” as defined in the Investment Company Act of 1940, as amended.
2.31. No Labor Disputes. No labor dispute with the employees of the Company or any of its Subsidiaries exists or, to the knowledge of the Company, is imminent.
2.32. Intellectual Property Rights. The Company and each of its Subsidiaries owns or possesses or has valid rights to use all patents, patent applications, trademarks, service marks, trade names, trademark registrations, service mark registrations, copyrights, licenses, inventions, trade secrets and similar rights (“Intellectual Property Rights”) necessary for the conduct of the business of the Company and its Subsidiaries as currently carried on and as described in the Registration Statement, the Pricing Disclosure Package and the Prospectus. To the knowledge of the Company, no action or use by the Company or any of its Subsidiaries necessary for the conduct of its business as currently carried on and as described in the Registration Statement and the Prospectus will involve or give rise to any infringement of, or license or similar fees for, any Intellectual Property Rights of others. Neither the Company nor any of its Subsidiaries has received any written notice alleging any such infringement, fee or conflict with asserted Intellectual Property Rights of others. Except as would not reasonably be expected to result, individually or in the aggregate, in a Material Adverse Change (A) to the knowledge of the Company, there is no infringement, misappropriation or violation by third parties of any of the Intellectual Property Rights owned by the Company; (B) there is no pending or, to the knowledge of the Company, threatened action, suit, proceeding or claim by others challenging the rights of the Company in or to any such Intellectual Property Rights, and the Company is unaware of any facts which would form a reasonable basis for any such claim, that would, individually or in the aggregate, together with any other claims in this Section 2.32, reasonably be expected to result in a Material Adverse Change; (C) the Intellectual Property Rights owned by the Company and, to the knowledge of the Company, the Intellectual Property Rights licensed to the Company have not been adjudged by a court of competent jurisdiction invalid or unenforceable, in whole or in part, and there is no pending or, to the Company’s knowledge, threatened action, suit, proceeding or claim by others challenging the validity or scope of any such Intellectual Property Rights, and the Company is unaware of any facts which would form a reasonable basis for any such claim that would, individually or in the aggregate, together with any other claims in this Section 2.32, reasonably be expected to result in a Material Adverse Change; (D) there is no pending or, to the Company’s knowledge, threatened action, suit, proceeding or claim by others that the Company infringes, misappropriates or otherwise violates any Intellectual Property Rights or other proprietary rights of others, the Company has not received any written notice of such claim and the Company is unaware of any other facts which would form a reasonable basis for any such claim that would, individually or in the aggregate, together with any other claims in this Section 2.32, reasonably be expected to result in a Material Adverse Change; and (E) to the Company’s knowledge, no employee of the Company is in or has ever been in violation in any material respect of any term of any employment contract, patent disclosure agreement, invention assignment agreement, non-competition agreement, non-solicitation agreement, nondisclosure agreement or any restrictive covenant to or with a former employer where the basis of such violation relates to such employee’s employment with the Company, or actions undertaken by the employee while employed with the Company and could reasonably be expected to result, individually or in the aggregate, in a Material Adverse Change. To the Company’s knowledge, all material technical information developed by and belonging to the Company which has not been patented has been kept confidential. The Company is not a party to or bound by any options, licenses or agreements with respect to the Intellectual Property Rights of any other person or entity that are required to be set forth in the Registration Statement, the Pricing Disclosure Package and the Prospectus and are not described therein. The Registration Statement, the Pricing Disclosure Package and the Prospectus contain in all material respects the same description of the matters set forth in the preceding sentence. None of the technology employed by the Company has been obtained or is being used by the Company in violation of any contractual obligation binding on the Company or, to the Company’s knowledge, any of its officers, directors or employees, or otherwise in violation of the rights of any persons.
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2.33. Taxes. Each of the Company and its Subsidiaries has filed all returns (as hereinafter defined) required to be filed with taxing authorities prior to the date hereof or has duly obtained extensions of time for the filing thereof, except in any case in which the failure so to file would not reasonably be expected to cause a Material Adverse Change. Each of the Company and its Subsidiaries has paid all taxes (as hereinafter defined) shown as due on such returns that were filed and has paid all taxes imposed on or assessed against the Company or such respective Subsidiary, except for any such taxes that are currently being contested in good faith or as would not reasonably be expected to cause a Material Adverse Change. The provisions for taxes payable, if any, shown on the financial statements filed with or as part of the Registration Statement are sufficient for all accrued and unpaid taxes, whether or not disputed, and for all periods to and including the dates of such consolidated financial statements. Except as disclosed in writing to the Underwriters, (i) no issues have been raised (and are currently pending) by any taxing authority in connection with any of the returns or taxes asserted as due from the Company or its Subsidiaries, and (ii) no waivers of statutes of limitation with respect to the returns or collection of taxes have been given by or requested from the Company or its Subsidiaries. The term “taxes” means all federal, state, local, foreign and other net income, gross income, gross receipts, sales, use, ad valorem, transfer, franchise, profits, license, lease, service, service use, withholding, payroll, employment, excise, severance, stamp, occupation, premium, property, windfall profits, customs, duties or other taxes, fees, assessments or charges of any kind whatever, together with any interest and any penalties, additions to tax or additional amounts with respect thereto. The term “returns” means all returns, declarations, reports, statements and other documents required to be filed in respect to taxes.
2.34. ERISA Compliance. The Company is not subject to the Employee Retirement Income Security Act of 1974, as amended, or the regulations and published interpretations thereunder.
2.35. Compliance with Laws. Except as otherwise disclosed in the Registration Statement, Pricing Disclosure Package and Prospectus and as could not, individually or in the aggregate, be expected to result in a Material Adverse Change, each of the Company and each Subsidiary, the Company: (A) is and at all times has been in compliance with all statutes, rules, or regulations applicable to the services provided by the Company (“Applicable Laws”), except as could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Change; (B) has not received any warning letter, untitled letter or other correspondence or notice from any other governmental authority alleging or asserting noncompliance with any Applicable Laws or any licenses, certificates, approvals, clearances, authorizations, permits and supplements or amendments thereto required by any such Applicable Laws (“Authorizations”); (C) possesses all material Authorizations and such material Authorizations are valid and in full force and effect and are not in material violation of any term of any such Authorizations; (D) has not received written notice of any claim, action, suit, proceeding, hearing, enforcement, investigation, arbitration or other action from any governmental authority or third party alleging that any product operation or activity is in violation of any Applicable Laws or Authorizations and has no knowledge that any such governmental authority or third party is considering any such claim, litigation, arbitration, action, suit, investigation or proceeding that if brought would result in a Material Adverse Change; (E) has not received written notice that any Governmental Entity has taken, is taking or intends to take action to limit, suspend, modify or revoke any Authorizations and has no knowledge that any such Governmental Entity is considering such action ; (F) has filed, obtained, maintained or submitted all material reports, documents, forms, notices, applications, records, claims, submissions and supplements or amendments as required by any Applicable Laws or Authorizations and that all such reports, documents, forms, notices, applications, records, claims, submissions and supplements or amendments were complete and correct in all material respects on the date filed (or were corrected or supplemented by a subsequent submission); and (G) has not, either voluntarily or involuntarily, initiated, conducted, or issued or caused to be initiated, conducted or issued, any recall, market withdrawal or replacement, safety alert, post-sale warning, or other notice or action relating to the alleged lack of safety of any product or any alleged product defect or violation and, to the Company’s knowledge, no third party has initiated, conducted or intends to initiate any such notice or action.
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2.36. Ineligible Issuer. At the time of filing the Registration Statement and any post-effective amendment thereto, at the time of effectiveness of the Registration Statement and any amendment thereto, at the earliest time thereafter that the Company or another offering participant made a bona fide offer (within the meaning of Rule 164(h)(2) of the Securities Act Regulations) of the Shares and at the date hereof, the Company was not and is not an “ineligible issuer,” as defined in Rule 405, without taking account of any determination by the Commission pursuant to Rule 405 that it is not necessary that the Company be considered an ineligible issuer.
2.37. Real Property. Except as set forth in the Registration Statement, the Pricing Disclosure Package and the Prospectus, the Company and its Subsidiaries have good and marketable title in fee simple to, or have valid rights to lease or otherwise use, all items of real or personal property which are material to the business of the Company and its Subsidiaries taken as a whole, in each case free and clear of all liens, encumbrances, security interests, claims and defects that do not, singly or in the aggregate, materially affect the value of such property and do not interfere with the use made and proposed to be made of such property by the Company or its Subsidiaries; and all of the leases and subleases material to the business of the Company and its Subsidiaries, considered as one enterprise, and under which the Company or any of its Subsidiaries holds properties described in the Registration Statement, the Pricing Disclosure Package and the Prospectus, are in full force and effect, and neither the Company nor any Subsidiary has received any written notice of any material claim of any sort that has been asserted by anyone adverse to the rights of the Company or any Subsidiary under any of the leases or subleases mentioned above, or affecting or questioning the rights of the Company or such Subsidiary to the continued possession of the leased or subleased premises under any such lease or sublease, which would result in a Material Adverse Change.
2.38. Contracts Affecting Capital. There are no transactions, arrangements or other relationships between and/or among the Company, any of its affiliates (as such term is defined in Rule 405 of the Securities Act Regulations) and any unconsolidated entity, including, but not limited to, any structured finance, special purpose or limited purpose entity that could reasonably be expected to materially affect the Company’s or its Subsidiaries’ liquidity or the availability of or requirements for their capital resources required to be described or incorporated by reference in the Registration Statement, the Pricing Disclosure Package and the Prospectus which have not been described or incorporated by reference as required.
2.39. Loans to Directors or Officers. There are no outstanding loans, advances (except normal advances for business expenses in the ordinary course of business) or guarantees or indebtedness by the Company or its Subsidiaries to or for the benefit of any of the officers or directors of the Company, its Subsidiaries or any of their respective family members, except as disclosed in the Registration Statement, the Pricing Disclosure Package and the Prospectus.
2.40. Industry Data; Forward-looking Statements. The statistical and market-related data included in each of the Registration Statement, the Pricing Disclosure Package and the Prospectus are based on or derived from sources that the Company reasonably and in good faith believes are reliable and accurate or represent the Company’s good faith estimates that are made on the basis of data derived from such sources. No forward-looking statement (within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act) contained in the Prospectus has been made or reaffirmed without a reasonable basis or has been disclosed other than in good faith.
2.41. Testing-the-Waters Communications. The Company has not (i) alone engaged in any Testing-the-Waters Communications and (ii) authorized anyone to engage in Testing-the-Waters Communications. The Company confirms that the Representative has been authorized to act on its behalf in undertaking Testing-the-Waters Communications. The Company has not distributed any Written Testing-the-Waters Communications other than those listed on Schedule 2-C hereto. “Written Testing-the-Waters Communication” means any Testing-the-Waters Communication that is a written communication within the meaning of Rule 405 under the Securities Act; “Testing-the-Waters Communication” means any oral or written communication with potential investors undertaken in reliance on Section 5(d) of the Securities Act.
2.42. Emerging Growth Company. The Company has been and is an “emerging growth company,” as defined in Section 2(a) of the Securities Act.
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2.43. Electronic Road Show. The Company has made available a Bona Fide Electronic Road Show in compliance with Rule 433(d)(8)(ii) of the Securities Act Regulations such that no filing of any “road show” (as defined in Rule 433(h) of the Securities Act Regulations) is required in connection with the Offering.
2.44. Margin Securities. The Company owns no “margin securities” as that term is defined in Regulation U of the Board of Governors of the Federal Reserve System (the “Federal Reserve Board”), and none of the proceeds of Offering will be used, directly or indirectly, for the purpose of purchasing or carrying any margin security, for the purpose of reducing or retiring any indebtedness which was originally incurred to purchase or carry any margin security or for any other purpose which might cause any of the Common Stock to be considered a “purpose credit” within the meanings of Regulation T, U or X of the Federal Reserve Board.
2.45. Dividends and Distributions. Except as disclosed in the Pricing Disclosure Package, Registration Statement and the Prospectus, no Subsidiary of the Company is currently prohibited or restricted, directly or indirectly, from paying any dividends to the Company, from making any other distribution on such Subsidiary’s capital stock, from repaying to the Company any loans or advances to such Subsidiary from the Company or from transferring any of such Subsidiary’s property or assets to the Company or any other Subsidiary of the Company.
2.46. Lending Relationships. Except as disclosed in the Pricing Disclosure Package, Registration Statement and the Prospectus, the Company (i) does not have any material lending or other relationship with any bank or lending affiliate of the Underwriters and (ii) does not intend to use any of the proceeds from the sale of the Securities hereunder to repay any outstanding debt owed to any affiliate of the Underwriters.
2.47. Regulatory Compliance. Except as described in the Registration Statement, the Pricing Disclosure Package and the Prospectus, the Company (A) has not received any unresolved FDA Form 483, notice of observations, warning letter, untitled letter or other written correspondence from the U.S. Food and Drug Administration (“FDA”), or any other court or arbitrator or federal, state, local or foreign governmental or regulatory authority, alleging or asserting noncompliance with the Federal Food, Drug and Cosmetic Act (21 U.S.C. § 301 et seq.); (B) possesses all material licenses, certificates, registrations, approvals, clearances, authorizations, permits and supplements or amendments thereto, and has made all declarations and filings with, the appropriate federal, state, local or foreign governmental or regulatory authorities (including, without limitation, state or other food and drug regulatory authorities) that are necessary for the ownership or lease of its properties or the conduct of its business as described in the Registration Statement, the Pricing Disclosure Package and the Prospectus, and such Authorizations are valid and in full force and effect and the Company is not in material violation of any term of any such Authorizations; (C) has not received written notice of any ongoing claim, action, suit, proceeding, hearing, enforcement, investigation, arbitration or other action from any Governmental Entity or third party alleging that any product, operation or activity is in material violation of any FDA regulation or Authorizations and has no knowledge that any such Governmental Entity or third party is considering any such claim, litigation, arbitration, action, suit, investigation or proceeding; (D) has not received written notice that any Governmental Entity has taken, is taking or intends to take action to suspend, revoke or restrict any Authorizations and has no knowledge that any such Governmental Entity is considering such action; (E) has filed, obtained, maintained or submitted all material reports, schedules, statements, filings, registrations, documents, forms, notices, applications, records, claims, submissions and supplements or amendments thereto as required by any FDA regulation or Authorizations and that all such reports, documents, forms, notices, applications, records, claims, submissions and supplements or amendments were complete and correct on the date filed (or were corrected or supplemented by a subsequent submission); (F) has not, either voluntarily or involuntarily, initiated, conducted, or issued or caused to be initiated, conducted or issued, any recall, or market withdrawal or other notice or action relating to any alleged product defect or violation and, to the Company’s knowledge, no third party has initiated or conducted any such notice or action; (G) is not party to any corporate integrity agreement, deferred prosecution agreement, monitoring agreement, consent decree, settlement order, or similar agreements, or have any reporting obligations pursuant to any such agreement, plan or correction or other remedial measure entered into with any Governmental Entity; and (H) has not been convicted of any criminal offense relating to the delivery of any item or service reimbursable under a federal or state food and drug program.
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2.48. Clinical Trials. The clinical trials conducted by or on behalf of or sponsored by the Company or in which the Company or its product candidates have participated have been and, if still pending, are being conducted (i) in material compliance with all statutes, rules, regulations and guidance applicable thereto and (ii) in all material respects in accordance with medical and scientific research procedures that the Company reasonably believes are appropriate. The Company has not received any notices or other correspondence from the FDA or any other Governmental Entity requiring the termination, suspension or material modification of any clinical trials.
3. Covenants of the Company. The Company covenants and agrees as follows:
3.1. Amendments to Registration Statement. The Company shall deliver to the Representative, prior to filing, any amendment or supplement to the Registration Statement or Prospectus proposed to be filed after the Effective Date and not file any such amendment or supplement to which the Representative shall reasonably object in writing.
3.2. Federal Securities Laws.
3.2.1. Compliance. The Company, subject to Section 3.2.2, shall comply with the requirements of Rule 430A of the Securities Act Regulations, and will notify the Representative promptly, and confirm the notice in writing, (i) when any post-effective amendment to the Registration Statement shall become effective or any amendment or supplement to the Prospectus shall have been filed; (ii) of the receipt of any comments from the Commission; (iii) of any request by the Commission for any amendment to the Registration Statement or any amendment or supplement to the Prospectus or for additional information; (iv) of the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement or any post-effective amendment or of any order preventing or suspending the use of any Preliminary Prospectus or the Prospectus, or of the suspension of the qualification of the Shares and the Representative’s Warrants for offering or sale in any jurisdiction, or of the initiation or threatening of any proceedings for any of such purposes or of any examination pursuant to Section 8(d) or 8(e) of the Securities Act concerning the Registration Statement and (v) if the Company becomes the subject of a proceeding under Section 8A of the Securities Act in connection with the Offering of the Shares and Representative’s Warrants. The Company shall effect all filings required under Rule 424(b) of the Securities Act Regulations, in the manner and within the time period required by Rule 424(b) (without reliance on Rule 424(b)(8)), and shall take such steps as it deems necessary to ascertain promptly whether the form of prospectus transmitted for filing under Rule 424(b) was received for filing by the Commission and, in the event that it was not, it will promptly file such prospectus. The Company shall use its reasonable best efforts to prevent the issuance of any stop order, prevention or suspension and, if any such order is issued, to obtain the lifting thereof at the earliest possible moment.
3.2.2. Continued Compliance. The Company shall comply with the Securities Act, the Securities Act Regulations, the Exchange Act and the Exchange Act Regulations so as to permit the completion of the distribution of the Shares as contemplated in this Agreement and in the Registration Statement, the Pricing Disclosure Package and the Prospectus. If at any time when a prospectus relating to the Shares is (or, but for the exception afforded by Rule 172 of the Securities Act Regulations (“Rule 172”), would be) required by the Securities Act to be delivered in connection with sales of the Shares, any event shall occur or condition shall exist as a result of which it is necessary, in the opinion of counsel for the Underwriters or for the Company, to (i) amend the Registration Statement in order that the Registration Statement will not include an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading; (ii) amend or supplement the Pricing Disclosure Package or the Prospectus in order that the Pricing Disclosure Package or the Prospectus, as the case may be, will not include any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein not misleading in the light of the circumstances existing at the time it is delivered to a purchaser or (iii) amend the Registration Statement or amend or supplement the Pricing Disclosure Package or the Prospectus, as the case may be, in order to comply with the requirements of the Securities Act or the Securities Act Regulations, the Company will promptly (A) give the Representative notice of such event; (B) prepare any amendment or supplement as may be necessary to correct such statement or omission or to make the Registration Statement, the Pricing Disclosure Package or the Prospectus comply with such requirements and, a reasonable amount of time prior to any proposed filing or use, furnish the Representative with copies of any such amendment or supplement and (C) file with the Commission any such amendment or supplement; provided that the Company shall not file or use any such amendment or supplement to which the Representative or Representative’s Counsel shall reasonably object. The Company will furnish to the Underwriters such number of copies of such amendment or supplement as the Underwriters may reasonably request. The Company has given the Representative notice of any filings made pursuant to the Exchange Act or the Exchange Act Regulations within 48 hours prior to the Applicable Time. The Company shall give the Representative notice of its intention to make any such filing from the Applicable Time until the Closing Date and the exercise in full or expiration of the Over-allotment Option specified in Section 1.2 hereof and will furnish the Representative with copies of the related document(s) a reasonable amount of time prior to such proposed filing, as the case may be, and will not file or use any such document to which the Representative or counsel for the Underwriters shall reasonably object.
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3.2.3. Exchange Act Registration. Until three years after the date of this Agreement, the Company shall use its commercially reasonable efforts to maintain the registration of the Common Stock under the Exchange Act.
3.2.4. Free Writing Prospectuses. The Company agrees that, unless it obtains the prior consent of the Representative, it shall not make any offer relating to the Shares that would constitute an Issuer Free Writing Prospectus or that would otherwise constitute a “free writing prospectus,” or a portion thereof, required to be filed by the Company with the Commission or retained by the Company under Rule 433; provided that the Representative shall be deemed to have consented to each Issuer General Use Free Writing Prospectus set forth in Schedule 2-B. The Company represents that it has treated or agrees that it will treat each such free writing prospectus consented to, or deemed consented to, by the Underwriters as an “issuer free writing prospectus,” as defined in Rule 433, and that it has complied and will comply with the applicable requirements of Rule 433 with respect thereto, including timely filing with the Commission where required, legending and record keeping. If at any time following issuance of an Issuer Free Writing Prospectus there occurred or occurs an event or development as a result of which such Issuer Free Writing Prospectus conflicted or would conflict with the information contained in the Registration Statement or included or would include an untrue statement of a material fact or omitted or would omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances existing at that subsequent time, not misleading, the Company will promptly notify the Underwriters and will promptly amend or supplement, at its own expense, such Issuer Free Writing Prospectus to eliminate or correct such conflict, untrue statement or omission.
3.2.5. Testing-the-Waters Communications. If at any time following the distribution of any Written Testing-the-Waters Communication there occurred or occurs an event or development as a result of which such Written Testing-the-Waters Communication included or would include an untrue statement of a material fact or omitted or would omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances existing at that subsequent time, not misleading, the Company shall promptly notify the Representative and shall promptly amend or supplement, at its own expense, such Written Testing-the-Waters Communication to eliminate or correct such untrue statement or omission.
3.3. Delivery to the Underwriters of Registration Statements. The Company has delivered or made available or shall deliver or make available to the Representative and Representative’s Counsel, without charge, signed copies of the Registration Statement as originally filed and each amendment thereto (including exhibits filed therewith) and signed copies of all consents and certificates of experts, and upon request will also deliver to the Underwriters, without charge, a conformed copy of the Registration Statement as originally filed and each amendment thereto (without exhibits) for each of the Underwriters. The copies of the Registration Statement and each amendment thereto furnished to the Underwriters will be identical to the electronically transmitted copies thereof filed with the Commission pursuant to EDGAR, except to the extent permitted by Regulation S-T.
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3.4. Delivery to the Underwriters of Prospectuses. The Company has delivered or made available or will deliver or make available to each Underwriter, without charge, as many copies of each Preliminary Prospectus as such Underwriter reasonably requested, and the Company hereby consents to the use of such copies for purposes permitted by the Securities Act. The Company will furnish to each Underwriter, without charge, during the period when a prospectus relating to the Shares is (or, but for the exception afforded by Rule 172, would be) required to be delivered under the Securities Act, such number of copies of the Prospectus (as amended or supplemented) as such Underwriter may reasonably request. The Prospectus and any amendments or supplements thereto furnished to the Underwriters will be identical to the electronically transmitted copies thereof filed with the Commission pursuant to EDGAR, except to the extent permitted by Regulation S-T.
3.5. Effectiveness and Events Requiring Notice to the Representative. The Company shall use its commercially reasonable efforts to cause the Registration Statement covering the issuance of the shares of Common Stock underlying the Representative’s Warrants to remain effective with a current prospectus for at least nine (9) months after the Applicable Time, and shall notify the Representative immediately and confirm the notice in writing: (i) of the cessation of the effectiveness of the Registration Statement and any amendment thereto; (ii) of the issuance by the Commission of any stop order or of the initiation, or the threatening, of any proceeding for that purpose; (iii) of the issuance by any state securities commission of any proceedings for the suspension of the qualification of the shares underlying the Representative’s Warrants for offering or sale in any jurisdiction or of the initiation, or the threatening, of any proceeding for that purpose; (iv) of the mailing and delivery to the Commission for filing of any amendment or supplement to the Registration Statement or Prospectus; (v) of the receipt of any comments or request for any additional information from the Commission; and (vi) of the happening of any event during the period described in this Section 3.5 that, in the judgment of the Company, makes any statement of a material fact made in the Registration Statement, the Pricing Disclosure Package or the Prospectus untrue or that requires the making of any changes in (a) the Registration Statement in order to make the statements therein not misleading, or (b) in the Pricing Disclosure Package or the Prospectus in order to make the statements therein, in light of the circumstances under which they were made, not misleading. If the Commission or any state securities commission shall enter a stop order or suspend such qualification at any time, the Company shall make every reasonable effort to obtain promptly the lifting of such order.
3.6. Review of Financial Statements. For a period of three (3) years after the date of this Agreement, the Company, at its expense, shall cause its regularly engaged independent registered public accounting firm to review (but not audit) the Company’s financial statements for each of the three fiscal quarters immediately preceding the announcement of any quarterly financial information.
3.7. Listing. The Company shall use its commercially reasonable efforts to maintain the listing of the Shares and the shares of Common Stock underlying the Representative’s Warrant on the Exchange for at least three (3) years from the date of this Agreement.
3.8. Financial Public Relations Firm. As of the Effective Date, or promptly thereafter, the Company shall have retained a financial public relations firm reasonably acceptable to the Representative and the Company, which shall initially be [●], which firm shall be experienced in assisting issuers in initial public offerings of securities and in their relations with their security holders, and shall retain such firm or another firm reasonably acceptable to the Representative for a period of not less than two (2) years after the Effective Date.
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3.9. Reports to the Representative.
3.9.1. Periodic Reports, etc. For a period of three (3) years after the date of this Agreement, the Company shall furnish or make available to the Representative copies of such financial statements and other periodic and special reports as the Company from time to time furnishes generally to holders of any class of its securities and also furnish or make available to the Representative: (i) a copy of each periodic report the Company shall be required to file with the Commission under the Exchange Act and the Exchange Act Regulations; (ii) a copy of every press release and every news item and article with respect to the Company or its affairs which was released by the Company; (iii) a copy of each Form 8-K prepared and filed by the Company; (iv) a copy of each registration statement filed by the Company under the Securities Act; and (v) such additional documents and information with respect to the Company and the affairs of any future subsidiaries of the Company as the Representative may from time to time reasonably request; provided the Representative shall sign, if requested by the Company, a Regulation FD compliant confidentiality agreement which is reasonably acceptable to the Representative and Representative’s Counsel in connection with the Representative’s receipt of such information. Documents filed with the Commission pursuant to its EDGAR system shall be deemed to have been delivered to the Representative pursuant to this Section 3.9.1.
3.9.2. Transfer Agent; Transfer Sheets. For a period of three (3) years after the date of this Agreement, the Company shall retain a transfer agent and registrar acceptable to the Representative (the “Transfer Agent”) and shall furnish to the Representative at the Company’s sole cost and expense such transfer sheets of the Company’s securities as the Representative may reasonably request, including the daily and monthly consolidated transfer sheets of the Transfer Agent and DTC. Vstock Transfer, LLC is acceptable to the Representative to act as Transfer Agent for the Common Stock.
3.9.3. Trading Reports. For a period of six (6) months after the date hereof, during such time as the Shares are listed on the Exchange, the Company shall provide to the Representative, at the Company’s expense, such reports published by the Exchange relating to price trading of the Shares, as the Representative shall reasonably request.
3.10. Payment of Expenses
3.10.1. General Expenses Related to the Offering. The Company hereby agrees to pay on each of the Closing Date and the Option Closing Date, if any, to the extent not paid at the Closing Date, all expenses incident to the performance of the obligations of the Company under this Agreement, including, but not limited to: (a) all filing fees and communication expenses relating to the registration of the Shares to be sold in the Offering (including the Over-allotment Option) with the Commission; (b) all Public Filing System filing fees associated with the review of the Offering by FINRA; (c) all fees, expenses and disbursements relating to the registration, qualification or exemption of the Shares under the securities laws of such foreign jurisdictions as the Representative may reasonably designate; (d) all fees, expenses and disbursements relating to background checks of the Company’s officers and directors and other due diligence expenses; (e) the costs associated with receiving commemorative mementos and lucite tombstones; (f) fees and expenses of the Representative’s Counsel; (g) the Underwriters’ due diligence expenses; and (h) the Underwriters’ “road show” expenses for the Offering, with all of the Underwriters’ actual out-of-pocket expenses under subsections 3.10.1(d)-(h) not to exceed $255,000, of which $_____ has previously been paid. The Representative may deduct from the net proceeds of the Offering payable to the Company on the Closing Date, or the Option Closing Date, if any, the expenses set forth herein to be paid by the Company to the Underwriters; provided, however, that in the event that the Offering is terminated, the Company agrees to reimburse the Underwriters pursuant to Section 8.3 hereof. Notwithstanding the foregoing, any advance received by the Representative will be reimbursed to the Company to the extent not actually incurred in compliance with FINRA Rule 5110(g)(4)(A)..
3.10.2. Non-accountable Expenses. The Company further agrees that, in addition to the expenses payable pursuant to Section 3.10.1, on the Closing Date it shall pay to the Representative, by deduction from the net proceeds of the Offering contemplated herein, a non-accountable expense allowance equal to one percent (1.0%) of the gross proceeds received by the Company from the sale of the Firm Shares.
3.11. Application of Net Proceeds. The Company shall apply the net proceeds from the Offering received by it in a manner consistent with the application thereof described under the caption “Use of Proceeds” in the Registration Statement, the Pricing Disclosure Package and the Prospectus.
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3.12. Delivery of Earnings Statements to Security Holders. The Company will timely file such reports pursuant to the Exchange Act as are necessary in order to make generally available to its security holders as soon as practicable, an earnings statement (which need not be certified by independent registered public accounting firm unless required by the Securities Act or the Securities Act Regulations, but which shall satisfy the provisions of Rule 158(a) under Section 11(a) of the Securities Act) covering a period of at least twelve (12) consecutive months beginning after the date of this Agreement.
3.13. Stabilization. Neither the Company nor, to its knowledge, any of its employees, directors or shareholders has taken or shall take, directly or indirectly, any action designed to or that has constituted or that might reasonably be expected to cause or result in, under Regulation M of the Exchange Act, or otherwise, stabilization or manipulation of the price of any security of the Company to facilitate the sale or resale of the Shares.
3.14. Internal Controls. Except to the extent disclosed in the Registration Statement, Pricing Disclosure Package and Prospectus, the Company shall maintain a system of internal accounting controls sufficient to provide reasonable assurances that: (i) transactions are executed in accordance with management’s general or specific authorization; (ii) transactions are recorded as necessary in order to permit preparation of financial statements in accordance with GAAP and to maintain accountability for assets; (iii) access to assets is permitted only in accordance with management’s general or specific authorization; and (iv) the recorded accountability for assets is compared with existing assets at reasonable intervals and appropriate action is taken with respect to any differences.
3.15. Accountants. As of the date of this Agreement, the Company has retained an independent registered public accounting firm reasonably acceptable to the Representative, and the Company shall continue to retain a nationally recognized independent registered public accounting firm for a period of at least three (3) years after the date of this Agreement. The Representative acknowledges that the Auditor is acceptable to the Representative.
3.16. FINRA. For a period of ninety (90) days from the later of the Closing Date or the Option Closing Date, the Company shall advise the Representative (who shall make an appropriate filing with FINRA) if it is or becomes aware that (i) any officer or director of the Company, (ii) any beneficial owner of 5% or more of any class of the Company’s securities or (iii) any beneficial owner of the Company’s unregistered equity securities which were acquired during the 180 days immediately preceding the filing of the original Registration Statement is or becomes an affiliate or associated person of a FINRA member participating in the Offering (as determined in accordance with the rules and regulations of FINRA).
3.17. No Fiduciary Duties. The Company acknowledges and agrees that the Underwriters’ responsibility to the Company is solely contractual in nature and that none of the Underwriters or their affiliates or any selling agent shall be deemed to be acting in a fiduciary capacity, or otherwise owes any fiduciary duty to the Company or any of its affiliates in connection with the Offering and the other transactions contemplated by this Agreement.
3.18. Company Lock-Up. The Company, on behalf of itself and any successor entity, agrees that, without the prior written consent of the Representative, it will not, for a period of six (6) months after the date of this Agreement (the “Lock-Up Period”), (i) offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant or amend the terms of any option, right or warrant to purchase, lend, or otherwise transfer or dispose of, directly or indirectly, any shares of capital stock of the Company or any securities convertible into or exercisable or exchangeable for shares of capital stock of the Company; (ii) file or cause to be filed any registration statement with the Commission relating to the offering of any shares of capital stock of the Company or any securities convertible into or exercisable or exchangeable for shares of capital stock of the Company (other than pursuant to a registration statement on Form S-8 for employee benefit plans); or (iii) enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of capital stock of the Company, whether any such transaction described in clause (i), (ii) or (iii) above is to be settled by delivery of shares of capital stock of the Company or such other securities, in cash or otherwise. The restrictions contained in this section shall not apply to (i) the Shares and the Representative’s Warrants and shares underlying the Representative’s Warrants to be sold hereunder; (ii) the issuance by the Company of Common Stock upon the exercise of an outstanding option or warrant or the conversion of a security outstanding on the date hereof or disclosed in the Registration Statement and the Pricing Disclosure Package; and (iii) the issuance of Common Stock pursuant to the Company’s existing stock option, equity incentive or bonus plans as disclosed in the Registration Statement and the Pricing Disclosure Package. The Company agrees not to accelerate the vesting of any option or warrant or the lapse of any repurchase right prior to the expiration of the Lock-Up Period.
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3.19. Release of D&O Lock-up Period. If the Representative, in its sole discretion, agrees to release or waive the restrictions set forth in the Lock-Up Agreements described in Section 2.24 hereof for an officer or director of the Company and provides the Company with notice of the impending release or waiver at least three (3) Business Days before the effective date of the release or waiver, the Company agrees to announce the impending release or waiver by a press release through a major news service at least two (2) Business Days before the effective date of the release or waiver.
3.20. Blue Sky Qualifications. The Company shall use its reasonable best efforts, in cooperation with the Underwriters, if necessary, to qualify the Shares for offering and sale under the applicable securities laws of such states and other jurisdictions (domestic or foreign) as the Representative may designate and to maintain such qualifications in effect so long as required to complete the distribution of the Shares; provided, however, that the Company shall not be obligated to file any general consent to service of process or to qualify as a foreign corporation or as a dealer in securities in any jurisdiction in which it is not so qualified or to subject itself to taxation in respect of doing business in any jurisdiction in which it is not otherwise so subject.
3.21. Reporting Requirements. The Company, during the period when a prospectus relating to the Shares is (or, but for the exception afforded by Rule 172, would be) required to be delivered under the Securities Act, will file all documents required to be filed with the Commission pursuant to the Exchange Act within the time periods required by the Exchange Act and Exchange Act Regulations. Additionally, the Company shall report the use of proceeds from the issuance of the Shares as may be required under Rule 463 under the Securities Act Regulations.
4. Conditions of Underwriters’ Obligations. The obligations of the Underwriters to purchase and pay for the Shares, as provided herein, shall be subject to (i) the continuing accuracy of the representations and warranties of the Company as of the date hereof and as of each of the Closing Date and the Option Closing Date, if any; (ii) the accuracy of the statements of officers of the Company made pursuant to the provisions hereof; (iii) the performance by the Company of its obligations hereunder; and (iv) the following conditions:
4.1. Regulatory Matters.
4.1.1. Effectiveness of Registration Statement; Rule 430A Information. The Registration Statement has become effective not later than 5:00 p.m., Eastern time, on the date of this Agreement or such later date and time as shall be consented to in writing by you, and, at each of the Closing Date and any Option Closing Date, no stop order suspending the effectiveness of the Registration Statement or any post-effective amendment thereto has been issued under the Securities Act, no order preventing or suspending the use of any Preliminary Prospectus or the Prospectus has been issued and no proceedings for any of those purposes have been instituted or are pending or, to the Company’s knowledge, contemplated by the Commission. The Company has complied with each request (if any) from the Commission for additional information. The Prospectus containing the Rule 430A Information shall have been filed with the Commission in the manner and within the time frame required by Rule 424(b) (without reliance on Rule 424(b)(8)) or a post-effective amendment providing such information shall have been filed with, and declared effective by, the Commission in accordance with the requirements of Rule 430A.
4.1.2. FINRA Clearance. On or before the date of this Agreement, the Representative shall have received clearance from FINRA as to the amount of compensation allowable or payable to the Underwriters as described in the Registration Statement.
4.1.3. Exchange Share Market Clearance. On the Closing Date, the Firm Shares shall have been approved for listing on the Exchange, subject only to official notice of issuance.
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4.2. Company Counsel Matters.
4.2.1. Closing Date Opinions of Counsels. On the Closing Date, the Representative shall have received the favorable opinion of Michelman & Robinson LLP, counsel for the Company, in form and substance satisfactory to Representative’s Counsel addressed to the Representative and stating that such opinions may be relied upon by Representative’s Counsel.
4.2.2. Opinion of Company’s Intellectual Property Counsel. On the Closing Date, the Representative shall have received the favorable opinion of Morgan Lewis & Bockius, LLP, intellectual property counsel for the Company, in form and substance satisfactory to Representative’s Counsel addressed to the Representative and stating that such opinions may be relied upon by Representative’s Counsel.
4.2.3. Reliance. In rendering such opinions, such counsel may rely: (i) as to matters involving the application of laws other than the laws of the United States and jurisdictions in which they are admitted, to the extent such counsel deems proper and to the extent specified in such opinion, if at all, upon an opinion or opinions (in form and substance reasonably satisfactory to the Representative) of other counsel reasonably acceptable to the Representative, familiar with the applicable laws; and (ii) as to matters of fact, to the extent they deem proper, on certificates or other written statements of officers of the Company and officers of departments of various jurisdictions having custody of documents respecting the corporate existence or good standing of the Company, provided that copies of any such statements or certificates shall be delivered to Representative’s Counsel if requested.
4.3. Comfort Letters.
4.3.1. Cold Comfort Letter. At the time this Agreement is executed you shall have received a cold comfort letter containing statements and information of the type customarily included in accountants’ comfort letters with respect to the financial statements and certain financial information contained in the Registration Statement, the Pricing Disclosure Package and the Prospectus, addressed to the Representative and in form and substance satisfactory in all respects to you and to the Auditor, dated as of the date of this Agreement.
4.3.2. Bring-down Comfort Letter. At each of the Closing Date and Option Closing Date, if any, the Representative shall have received from the Auditor a letter, dated as of the Closing Date or the Option Closing Date, as applicable, to the effect that the Auditor reaffirms the statements made in the letter furnished pursuant to Section 4.3.1, except that the specified date referred to shall be a date not more than three (3) Business Days prior to the Closing Date or the Option Closing Date, as applicable
4.4. Officers’ Certificates.
4.4.1. Officers’ Certificate. The Company shall have furnished to the Representative a certificate, dated the Closing Date and any Option Closing Date (if such date is other than the Closing Date), of its Chief Executive Officer, its President and its Chief Financial Officer stating that (i) such officers have carefully examined the Registration Statement, the Pricing Disclosure Package, any Issuer Free Writing Prospectus and the Prospectus and, in their opinion, the Registration Statement and each amendment thereto, as of the Applicable Time and as of the Closing Date (or any Option Closing Date if such date is other than the Closing Date) did not include any untrue statement of a material fact and did not omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading, and the Pricing Disclosure Package, as of the Applicable Time and as of the Closing Date (or any Option Closing Date if such date is other than the Closing Date), any Issuer Free Writing Prospectus as of its date and as of the Closing Date (or any Option Closing Date if such date is other than the Closing Date), the Prospectus and each amendment or supplement thereto, as of the respective date thereof and as of the Closing Date, did not include any untrue statement of a material fact and did not omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances in which they were made, not misleading, (ii) since the effective date of the Registration Statement, no event has occurred which should have been set forth in a supplement or amendment to the Registration Statement, the Pricing Disclosure Package or the Prospectus, (iii) to the best of their knowledge after reasonable investigation, as of the Closing Date (or any Option Closing Date if such date is other than the Closing Date), the representations and warranties of the Company in this Agreement are true and correct in all material respects (except for those representations and warranties qualified as to materiality, which shall be true and correct in all respects and except for those representations and warranties which refer to facts existing at a specific date, which shall be true and correct as of such date) and the Company has complied with all agreements and satisfied all conditions on its part to be performed or satisfied hereunder at or prior to the Closing Date (or any Option Closing Date if such date is other than the Closing Date), and (iv) there has not been, subsequent to the date of the most recent audited financial statements included or incorporated by reference in the Pricing Disclosure Package, a Material Adverse Change.
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4.4.2. Secretary’s Certificate. At each of the Closing Date and the Option Closing Date, if any, the Representative shall have received a certificate of the Company signed by the Secretary of the Company, dated the Closing Date or the Option Closing Date, as the case may be, respectively, certifying: (i) that each of the Charter and Bylaws is true and complete, has not been modified and is in full force and effect; (ii) that the resolutions of the Company’s Board of Directors (and any pricing committee thereof) relating to the Offering are in full force and effect and have not been modified; and (iii) as to the incumbency of the officers of the Company. The documents referred to in such certificate shall be attached to such certificate.
4.5. No Material Changes. Prior to and on each of the Closing Date and the Option Closing Date, if any: (i) there shall have been no Material Adverse Change in the condition or prospects or the business activities, financial or otherwise, of the Company from the latest dates as of which such condition is set forth in the Registration Statement, the Pricing Disclosure Package and the Prospectus; (ii) no action, suit or proceeding, at law or in equity, shall have been pending or threatened against the Company or any Insider before or by any court or federal or state commission, board or other administrative agency wherein an unfavorable decision, ruling or finding may reasonably be expected to cause a Material Adverse Change, except as set forth in the Registration Statement, the Pricing Disclosure Package and the Prospectus; (iii) no stop order shall have been issued under the Securities Act and no proceedings therefor shall have been initiated or threatened by the Commission; and (iv) the Registration Statement, the Pricing Disclosure Package and the Prospectus and any amendments or supplements thereto shall contain all material statements which are required to be stated therein in accordance with the Securities Act and the Securities Act Regulations and shall conform in all material respects to the requirements of the Securities Act and the Securities Act Regulations, and neither the Registration Statement, the Pricing Disclosure Package nor the Prospectus nor any amendment or supplement thereto shall contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading.
4.6. Delivery of Agreements.
4.6.1. Lock-Up Agreements. On or before the date of this Agreement, the Company shall have delivered to the Representative executed copies of the Lock-Up Agreements.
4.6.2. Representative’s Warrant. On the Closing date, the Company shall have delivered to the Representative an executed copy of the Representative’s Warrant.
4.7. Additional Documents. At the Closing Date and at each Option Closing Date, if any, Representative’s Counsel shall have been furnished with such documents and opinions as they may require for the purpose of enabling Representative’s Counsel to deliver an opinion to the Underwriters, or in order to evidence the accuracy of any of the representations or warranties, or the fulfillment of any of the conditions, herein contained; and all proceedings taken by the Company in connection with the issuance and sale of the Shares and the Representative’s Warrants as herein contemplated shall be satisfactory in form and substance to the Representative and Representative’s Counsel.
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5. Indemnification.
5.1. Indemnification of the Underwriters.
5.1.1. General. Subject to the conditions set forth below, the Company agrees to indemnify and hold harmless each Underwriter, its affiliates and each of its and their respective directors, officers, members, employees, representatives, partners, shareholders, affiliates, counsel, and agents and each person, if any, who controls any such Underwriter within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act (collectively, the “Underwriter Indemnified Parties” and each, an “Underwriter Indemnified Party”), against any and all loss, liability, claim, damage and expense whatsoever (including but not limited to any and all legal or other expenses reasonably incurred in investigating, preparing or defending against any litigation, commenced or threatened, or any claim whatsoever, whether arising out of any action between any of the Underwriter Indemnified Parties and the Company or between any of the Underwriter Indemnified Parties and any third party, or otherwise) to which they or any of them may become subject under the Securities Act, the Exchange Act or any other statute or at common law or otherwise or under the laws of foreign countries (a “Claim”), arising out of or based upon any untrue statement or alleged untrue statement of a material fact contained, or the omission or alleged omission therefrom of a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, in (A) the Registration Statement, the Pricing Disclosure Package, any Preliminary Prospectus, the Prospectus, or in any Issuer Free Writing Prospectus or in any Written Testing-the-Waters Communication (as from time to time each may be amended and supplemented); (B) any materials or information provided to investors by, or with the approval of, the Company in connection with the marketing of the Offering, including any “road show” or investor presentations made to investors by the Company (whether in person or electronically); or (C) any application or other document or written communication (in this Section 5, collectively called “application”) executed by the Company or based upon written information furnished by the Company in any jurisdiction in order to qualify the Shares and Representative’s Warrants under the securities laws thereof or filed with the Commission, any state securities commission or agency, the Exchange or any other national securities exchange; unless, with respect to each subsection (A) through (C), such statement or omission was made in reliance upon, and in conformity with, the Underwriters’ Information. With respect to any untrue statement or omission or alleged untrue statement or omission made in the Registration Statement, Pricing Disclosure Package or Prospectus, the indemnity agreement contained in this Section 5.1.1 shall not inure to the benefit of any Underwriter Indemnified Party to the extent that any loss, liability, claim, damage or expense of such Underwriter Indemnified Party results from the fact that a copy of the Prospectus was not given or sent to the person asserting any such loss, liability, claim or damage at or prior to the written confirmation of sale of the Shares to such person as required by the Securities Act and the Securities Act Regulations, and if the untrue statement or omission has been corrected in the Prospectus, unless such failure to deliver the Prospectus was a result of non-compliance by the Company with its obligations under Section 3.3 hereof. The Company also agrees that it will reimburse each Underwriter Indemnified Party for all reasonable fees and expenses (including but not limited to any and all legal or other expenses reasonably incurred in investigating, preparing or defending against any litigation, commenced or threatened, or any claim whatsoever, whether arising out of any action between any of the Underwriter Indemnified Parties and the Company or between any of the Underwriter Indemnified Parties and any third party, or otherwise) (collectively, the “Expenses”), and further agrees wherever and whenever possible to advance payment of Expenses as they are incurred by an Underwriter Indemnified Party in investigating, preparing, pursuing or defending any Claim.
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5.1.2. Procedure. If any action is brought against an Underwriter Indemnified Party in respect of which indemnity may be sought against the Company pursuant to Section 5.1.1, such Underwriter Indemnified Party shall promptly notify the Company in writing of the institution of such action and the Company shall assume the defense of such action, including the employment and fees of counsel (subject to the approval of such Underwriter Indemnified Party (which approval shall not be unreasonably withheld)) and payment of actual expenses if an Underwriter Indemnified Party requests that the Company do so. Such Underwriter Indemnified Party shall have the right to employ its or their own counsel in any such case, and the fees and expenses of such counsel shall be at the expense of the Company and shall be advanced by the Company; provided, however, that the Company shall not be obligated to bear the reasonable fees and expenses of more than one firm of attorneys selected by the Underwriter Indemnified Party (in addition to local counsel). Notwithstanding anything to the contrary contained herein, and provided that the Company has timely honored its obligations under Section 5, the Underwriter Indemnified Party shall not enter into any settlement without the prior written consent (which shall not be unreasonably withheld) of the terms of any settlement by the Company. The Company shall not be liable for any settlement of any action effected without its prior written consent (which shall not be unreasonably delayed or withheld). In addition, the Company shall not, without the prior written consent of the Underwriters (which consent shall not be unreasonably withheld), settle, compromise or consent to the entry of any judgment in or otherwise seek to terminate any pending or threatened action in respect of which advancement, reimbursement, indemnification or contribution may be sought hereunder (whether or not such Underwriter Indemnified Party is a party thereto) unless such settlement, compromise, consent or termination (i) includes an unconditional release of each Underwriter Indemnified Party, acceptable to such Underwriter Indemnified Party, from all liabilities, expenses and claims arising out of such action for which indemnification or contribution may be sought and (ii) does not include a statement as to or an admission of fault, culpability or a failure to act, by or on behalf of any Underwriter Indemnified Party.
5.2. Indemnification of the Company. Each Underwriter, severally and not jointly, agrees to indemnify and hold harmless the Company, its directors, its officers who signed the Registration Statement and persons who control the Company within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act against any and all loss, liability, claim, damage and expense described in the foregoing indemnity from the Company to the several Underwriters, as incurred, but only with respect to such losses, liabilities, claims, damages and expenses (or actions in respect thereof) which arise out of or are based upon untrue statements or omissions, or alleged untrue statements or omissions made in the Registration Statement, any Preliminary Prospectus, the Pricing Disclosure Package or Prospectus or any amendment or supplement thereto or in any application, in reliance upon, and in conformity with, the Underwriters’ Information. In case any action shall be brought against the Company or any other person so indemnified based on any Preliminary Prospectus, the Registration Statement, the Pricing Disclosure Package or Prospectus or any amendment or supplement thereto or any application, and in respect of which indemnity may be sought against any Underwriter, such Underwriter shall have the rights and duties given to the Company, and the Company and each other person so indemnified shall have the rights and duties given to the several Underwriters by the provisions of Section 5.1.2. The Company agrees promptly to notify the Representative of the commencement of any litigation or proceedings against the Company or any of its officers, directors or any person, if any, who controls the Company within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act, in connection with the issuance and sale of the Shares or in connection with the Registration Statement, the Pricing Disclosure Package, the Prospectus, or any Issuer Free Writing Prospectus or any Written Testing-the-Waters Communication.
5.3. Contribution. If the indemnification provided for in this Section 5 shall for any reason be unavailable to or insufficient to hold harmless an indemnified party under Section 5.1 or Section 5.2 in respect of any liabilities and Expenses referred to therein, then each indemnifying party shall, in lieu of indemnifying such indemnified party, contribute to the amount paid or payable by such indemnified party as a result of such liabilities and Expenses, (i) in such proportion as shall be appropriate to reflect the relative benefits received by the Company, on the one hand, and each of the Underwriters, on the other hand, from the Offering, or (ii) if the allocation provided by clause (i) above is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) above but also the relative fault of the Company, on the one hand, and the Underwriters, on the other hand, in connection with the matters as to which such liabilities or Expenses relate, as well as any other relevant equitable considerations. The relative benefits received by the Company, on the one hand, and the Underwriters, on the other, with respect to such Offering shall be deemed to be in the same proportion as the total net proceeds actually received by the Company from the Offering of the Shares purchased under this Agreement (before deducting expenses) received by the Company bear to the total underwriting discounts and commissions actually received by the Underwriters in connection with the Offering, in each case as set forth in the table on the cover page of the Prospectus. The relative fault of the Company, on the one hand, and the Underwriters, on the other, shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Company, on the one hand, or the Underwriters, on the other, and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such untrue statement, omission, act or failure to act; provided that the parties hereto agree that the written information furnished to the Company through the Representative by or on behalf of any Underwriter for use in any Preliminary Prospectus, any Registration Statement or the Prospectus, or in any amendment or supplement thereto, consists solely of the Underwriters’ Information. The Company and the Underwriters agree that it would not be just and equitable if contributions pursuant to this subsection (d) were determined by pro rata allocation (even if the Underwriters were treated as one entity for such purpose) or by any other method of allocation which does not take into account the equitable considerations referred to above in this subsection (d). Notwithstanding the above, no person guilty of fraudulent misrepresentation within the meaning of Section 11(f) of the Securities Act shall be entitled to contribution from a party who was not guilty of such fraudulent misrepresentation.
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5.4. Limitation. The Company also agrees that no Underwriter Indemnified Party shall have any liability (whether direct or indirect, in contract or tort or otherwise) to the Company for or in connection with advice or services rendered or to be rendered by any Underwriter Indemnified Party pursuant to this Agreement, the transactions contemplated thereby or any Underwriter Indemnified Party’s actions or inactions in connection with any such advice, services or transactions, except to the extent that a court of competent jurisdiction has made a finding that liabilities (and related Expenses) of the Company have resulted from such Underwriter Indemnified Party’s fraud, bad faith, gross negligence or willful misconduct in connection with any such advice, actions, inactions or services or such Underwriter Indemnified Party’s breach of this Agreement or any obligations of confidentiality owed to the Company.
5.5. Survival and Third-Party Beneficiaries. The advancement, reimbursement, indemnity, and contribution obligations set forth in this Section 5 shall remain in full force and effect regardless of any termination of, or the completion of any Underwriter Indemnified Party’s services under or in connection with, this Agreement. Each Underwriter Indemnified Party is an intended third-party beneficiary of this Section 5, and has the right to enforce the provisions of Section 5, as if he/she/it was a party to this Agreement.
6. Default by an Underwriter.
6.1. Default Not Exceeding 10% of Firm Shares or Option Shares. If any Underwriter or Underwriters shall default in its or their obligations to purchase the Firm Shares or the Option Shares, if the Over-allotment Options is exercised hereunder, and if the number of the Firm Shares or Option Shares with respect to which such default relates does not exceed in the aggregate 10% of the number of Firm Shares or Option Shares that all Underwriters have agreed to purchase hereunder, then such Firm Shares or Option Shares to which the default relates shall be purchased by the non-defaulting Underwriters in proportion to their respective commitments hereunder.
6.2. Default Exceeding 10% of Firm Shares or Option Shares. In the event that the default addressed in Section 6.1 relates to more than 10% of the Firm Shares or Option Shares, you may in your discretion arrange for yourself or for another party or parties to purchase such Firm Shares or Option Shares to which such default relates on the terms contained herein. If, within one (1) Business Day after such default relating to more than 10% of the Firm Shares or Option Shares, you do not arrange for the purchase of such Firm Shares or Option Shares, then the Company shall be entitled to a further period of one (1) Business Day within which to procure another party or parties satisfactory to you to purchase said Firm Shares or Option Shares on such terms. In the event that neither you nor the Company arrange for the purchase of the Firm Shares or Option Shares to which a default relates as provided in this Section 6, this Agreement will automatically be terminated by you or the Company without liability on the part of the Company (except as provided in Section 5 and Section 8.3 hereof) or the several Underwriters (except as provided in Section 5 hereof); provided, however, that if such default occurs with respect to the Option Shares, this Agreement will not terminate as to the Firm Shares; and provided, further, that nothing herein shall relieve a defaulting Underwriter of its liability, if any, to the other Underwriters and to the Company for damages occasioned by its default hereunder.
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6.3. Postponement of Closing Date. In the event that the Firm Shares or Option Shares to which the default relates are to be purchased by the non-defaulting Underwriters, or are to be purchased by another party or parties as aforesaid, you or the Company shall have the right to postpone the Closing Date or Option Closing Date for a reasonable period, but not in any event exceeding five (5) Business Days, in order to effect whatever changes may thereby be made necessary in the Registration Statement, the Pricing Disclosure Package or the Prospectus or in any other documents and arrangements, and the Company agrees to file promptly any amendment to the Registration Statement, the Pricing Disclosure Package or the Prospectus that in the opinion of counsel for the Underwriter may thereby be made necessary. The term “Underwriter” as used in this Agreement shall include any party substituted under this Section 6 with like effect as if it had originally been a party to this Agreement with respect to such Firm Shares or Option Shares.
7. Additional Covenants.
7.1. Right of First Refusal. During the period ending two (2) years after the Closing Date, if and only if the closing of the purchase of the Firm Shares hereunder actually occurs, the Company grants the Representative the right of first refusal to act as financial advisor or to act as joint financial advisor, on at least equal economic terms on any public or private financing (debt or equity), merger, business combination, recapitalization or sale of some or all of the equity or assets of the Company (collectively, “Future Services”). In the event the Company notifies Representative of its intention to pursue an activity that would enable Representative to exercise its right of first refusal to provide Future Services, Representative shall notify the Company of its election to provide such Future Services, including notification of the compensation and other terms to which Representative shall be entitled, within thirty (30) days of written notice by the Company. In the event the Company engages Representative to provide such Future Services, Representative will be compensated consistent with the compensation in this Agreement, unless mutually agreed otherwise by the Company and Representative.
8. Effective Date of this Agreement and Termination Thereof.
8.1. Effective Date. This Agreement shall become effective when both the Company and the Representative have executed the same and delivered counterparts of such signatures to the other party.
8.2. Termination. The Representative shall have the right to terminate this Agreement at any time prior to any Closing Date, (i) if any domestic or international event or act or occurrence has materially disrupted, or in your opinion will in the immediate future materially disrupt, general securities markets in the United States; or (ii) if trading on the New York Share Exchange or the Nasdaq Stock Market LLC shall have been suspended or materially limited, or minimum or maximum prices for trading shall have been fixed, or maximum ranges for prices for securities shall have been required by FINRA or by order of the Commission or any other government authority having jurisdiction; or (iii) if the United States shall have become involved in a new war or an increase in major hostilities; or (iv) if a banking moratorium has been declared by a New York State or federal authority; or (v) if a moratorium on foreign exchange trading has been declared which materially adversely impacts the United States securities markets; or (vi) if the Company shall have sustained a material loss by fire, flood, accident, hurricane, earthquake, theft, sabotage or other calamity or malicious act which, whether or not such loss shall have been insured, will, in your opinion, make it inadvisable to proceed with the delivery of the Firm Shares; or (vii) if the Company is in material breach of any of its representations, warranties or covenants hereunder; or (viii) if the Representative shall have become aware after the date hereof of such a Material Adverse Change, or such adverse material change in general market conditions as in the Representative’s judgment would make it impracticable to proceed with the offering, sale and/or delivery of the Shares or to enforce contracts made by the Underwriters for the sale of the Shares.
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8.3. Expenses. Notwithstanding anything to the contrary in this Agreement, except in the case of a default by the Underwriters, pursuant to Section 6.2 above, in the event that this Agreement shall not be carried out for any reason whatsoever, within the time specified herein or any extensions thereof pursuant to the terms herein, the Company shall be obligated to pay to the Underwriters their actual and accountable out-of-pocket expenses related to the transactions contemplated herein then due and payable up to the amounts set forth in Section 3.10.1 and upon demand the Company shall pay such amount thereof to the Representative on behalf of the Underwriters; provided, however, that such expense cap in no way limits or impairs the indemnification and contribution provisions of this Agreement. Notwithstanding the foregoing, any advance received by the Representative will be reimbursed to the Company to the extent not actually incurred in compliance with FINRA Rule 5110(g)(4)(A).
8.4. Indemnification. Notwithstanding any contrary provision contained in this Agreement, any election hereunder or any termination of this Agreement, and whether or not this Agreement is otherwise carried out, the provisions of Section 5 shall remain in full force and effect and shall not be in any way affected by, such election or termination or failure to carry out the terms of this Agreement or any part hereof.
8.5. Representations, Warranties, Agreements to Survive. All representations, warranties and agreements contained in this Agreement or in certificates of officers of the Company submitted pursuant hereto, shall remain operative and in full force and effect regardless of (i) any investigation made by or on behalf of any Underwriter or its Affiliates or selling agents, any person controlling any Underwriter, its officers or directors or any person controlling the Company or (ii) delivery of and payment for the Shares.
9. Miscellaneous.
9.1. Notices. All communications hereunder, except as herein otherwise specifically provided, shall be in writing and shall be mailed (registered or certified mail, return receipt requested), emailed, personally delivered, or sent by facsimile transmission and confirmed and shall be deemed given when so delivered or faxed and confirmed or if mailed, two (2) days after such mailing.
If to the Representative:
Boustead Securities, LLC
6 Venture, Suite 265
Irvine, California 92618
Attn: Mr. Keith Moore, CEO
Fax No.: (949) ___-____
Email: keith@boustead1828.com
With a copy (which shall not constitute notice) to:
Olshan Frome Wolosky LLP
1325 Avenue of the Americas, 15th Floor
New York, New York 10019
Attention: Spencer G. Feldman, Esq.
Fax No.: (212) 451-2222
Email: sfeldman@olshanlaw.com
If to the Company:
Shuttle Pharmaceuticals Holdings, Inc.
One Research Court, Suite 450
Rockville, Maryland 20850
Attention: Anatoly Dritschilo, M.D., Chief Executive Officer
Fax No. (___) ___-____
Email: dritscha@georgetown.edu
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With a copy (which shall not constitute notice) to:
Michelman & Robinson LLP
800 Third Avenue, 24th Floor
New York, New York 10020
Attention: Megan J. Penick, Esq.
Fax No.: (212) 730-7725
Email: mpenick@mrllp.com
9.2. Headings. The headings contained herein are for the sole purpose of convenience of reference, and shall not in any way limit or affect the meaning or interpretation of any of the terms or provisions of this Agreement.
9.3. Amendment. This Agreement may only be amended by a written instrument executed by each of the parties hereto.
9.4. Entire Agreement. This Agreement (together with the other agreements and documents being delivered pursuant to or in connection with this Agreement) constitutes the entire agreement of the parties hereto with respect to the subject matter hereof and thereof, and supersedes all prior agreements and understandings of the parties, oral and written, with respect to the subject matter hereof. Notwithstanding anything to the contrary set forth herein, it is understood and agreed by the parties hereto that all other terms and conditions of that certain engagement letter between the Company and Representative dated as of November 10, 2021 shall remain in full force and effect.
9.5. Binding Effect. This Agreement shall inure solely to the benefit of and shall be binding upon the Representative, the Underwriters, the Company and the controlling persons, directors and officers referred to in Section 5 hereof, and their respective successors, legal representatives, heirs and assigns, and no other person shall have or be construed to have any legal or equitable right, remedy or claim under or in respect of or by virtue of this Agreement or any provisions herein contained. The term “successors and assigns” shall not include a purchaser, in its capacity as such, of securities from any of the Underwriters.
9.6. Governing Law; Consent to Jurisdiction; Trial by Jury. This Agreement shall be governed by and construed and enforced in accordance with the laws of the State of California, without giving effect to conflict of laws principles thereof. The Company hereby agrees that any action, proceeding or claim against it arising out of, or relating in any way to this Agreement shall be brought and enforced in the Los Angeles, California, or in the United States District Court located in Los Angeles, California, and irrevocably submits to such jurisdiction, which jurisdiction shall be exclusive. The Company hereby waives any objection to such exclusive jurisdiction and that such courts represent an inconvenient forum. Any such process or summons to be served upon the Company may be served by transmitting a copy thereof by registered or certified mail, return receipt requested, postage prepaid, addressed to it at the address set forth in Section 9.1 hereof. Such mailing shall be deemed personal service and shall be legal and binding upon the Company in any action, proceeding or claim. The Company agrees that the prevailing party(ies) in any such action shall be entitled to recover from the other party(ies) all of its reasonable attorneys’ fees and expenses relating to such action or proceeding and/or incurred in connection with the preparation therefor. The Company (on its behalf and, to the extent permitted by applicable law, on behalf of its shareholders and affiliates) and each of the Underwriters hereby irrevocably waives, to the fullest extent permitted by applicable law, any and all right to trial by jury in any legal proceeding arising out of or relating to this Agreement or the transactions contemplated hereby.
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9.7. Execution in Counterparts. This Agreement may be executed in one or more counterparts, and by the different parties hereto in separate counterparts, each of which shall be deemed to be an original, but all of which taken together shall constitute one and the same agreement, and shall become effective when one or more counterparts has been signed by each of the parties hereto and delivered to each of the other parties hereto. Delivery of a signed counterpart of this Agreement by facsimile or email/pdf transmission shall constitute valid and sufficient delivery thereof.
9.8. Waiver, etc. The failure of any of the parties hereto to at any time enforce any of the provisions of this Agreement shall not be deemed or construed to be a waiver of any such provision, nor to in any way effect the validity of this Agreement or any provision hereof or the right of any of the parties hereto to thereafter enforce each and every provision of this Agreement. No waiver of any breach, non-compliance or non-fulfillment of any of the provisions of this Agreement shall be effective unless set forth in a written instrument executed by the party or parties against whom or which enforcement of such waiver is sought; and no waiver of any such breach, non-compliance or non-fulfillment shall be construed or deemed to be a waiver of any other or subsequent breach, non-compliance or non-fulfillment.
[Signature Page Follows]
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If the foregoing correctly sets forth the understanding between the Underwriters and the Company, please so indicate in the space provided below for that purpose, whereupon this letter shall constitute a binding agreement between us.
Very truly yours, | ||
SHUTTLE PHARMACEUTICALS HOLDINGS, INC. | ||
By: | ||
Name: | Anatoly Dritschilo, M.D. | |
Title: | Chief Executive Officer |
Confirmed as of the date first written above mentioned, on behalf of itself and as Representative of the several Underwriters named on Schedule 1 hereto:
BOUSTEAD SECURITIES, LLC | ||
By: | ||
Name: | Keith Moore | |
Title: | Chief Executive Officer |
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SCHEDULE 1
Underwriter | Total Number of Firm Shares to be Purchased | |
Boustead Securities, LLC | ||
TOTAL |
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SCHEDULE 2-A
Pricing Information
Number of Firm Shares: 3,000,000
Public Offering Price per Firm Share: $_____
Underwriting Discount per Firm Share: $____
Non-Accountable Expense Allowance per Firm Share: $____
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SCHEDULE 2-B
Issuer General Use Free Writing Prospectuses
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SCHEDULE 2-C
Written Testing-the-Waters Communications
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EXHIBIT A
Form of Representative’s Warrant
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EXHIBIT B
Forms of Lock-Up Agreements
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Exhibit 3.5
CERTIFICATE OF AMENDMENT TO
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
SHUTTLE PHARMACEUTICALS HOLDINGS, INC.
The undersigned, being the Chief Executive Officer of Shuttle Pharmaceuticals Holdings, Inc., a corporation organized and existing under the laws of the State of Delaware (the “Corporation”), does hereby amend and certify as follows:
1. That the name of the Corporation is Shuttle Pharmaceuticals Holdings, Inc. and that the Corporation was originally incorporated pursuant to the Delaware General Corporation Law (“GCL”) on April 5, 2018.
2. That this Certificate of Amendment, which is being filed to amend the Corporation’s amended and restated certificate of incorporation, dated June 8, 2018 (the “Amended and Restated Articles of Incorporation”), as amended on March 30, 2022, has been duly adopted by the Corporation’s board of directors and stockholders in accordance with the provisions of section 242 and 245 of the GCL.
Article SEVENTH of the Amended and Restated Certificate of Incorporation will be amended to replace Section 7.2 as follows:
“7.2 Exclusive Jurisdiction. Unless the Corporation consents in writing to the selection of an alternative forum, and except for actions brought under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, the Court of Chancery of the State of Delaware shall, to the fullest extent permitted by law, be the sole and exclusive forum for (i) any derivative action or proceeding brought on behalf of the Corporation, (ii) any action asserting a claim of breach of a fiduciary duty owed by any director, officer or other employee or agent of the Corporation to the Corporation or the Corporation’s stockholders, (iii) any action asserting a claim against the Corporation arising pursuant to any provision of the DGCL or the Corporation’s Certificate of Incorporation or Bylaws, (iv) any action to interpret, apply, enforce or determine the validity of the Corporation’s Certificate of Incorporation or Bylaws, or (v) any action asserting a claim against the Corporation governed by the internal affairs doctrine, in each such case subject to said Court of Chancery having personal jurisdiction over the indispensable parties named as defendants therein. Any person or entity purchasing or otherwise acquiring any interest in shares of capital stock of the Corporation shall be deemed to have notice of and consented to the provisions of this Section 7.2.
4. Except as set forth in this Certificate of Amendment, the Amended and Restated Certificate of Incorporation, as previously amended, remains in full force and effect.
IN WITNESS WHEREOF, this Certificate of Amendment has been executed by a duly authorized officer of the Corporation on this 22nd day of June 2022.
/s/ Anatoly Dritschilo | |
Anatoly Dritschilo | |
Chief Executive Officer |
Exhibit 4.2
THE REGISTERED HOLDER OF THIS PURCHASE WARRANT BY ITS ACCEPTANCE HEREOF, AGREES THAT IT WILL NOT SELL, TRANSFER OR ASSIGN THIS PURCHASE WARRANT EXCEPT AS HEREIN PROVIDED AND THE REGISTERED HOLDER OF THIS PURCHASE WARRANT AGREES THAT IT WILL NOT SELL, TRANSFER, ASSIGN, PLEDGE OR HYPOTHECATE THIS PURCHASE WARRANT FOR A PERIOD OF ONE HUNDRED EIGHTY DAYS FOLLOWING [●], 2022 (THE “EFFECTIVE DATE”) TO ANYONE OTHER THAN (I) BOUSTEAD SECURITIES, LLC OR A SELECTED DEALER IN CONNECTION WITH THE OFFERING FOR WHICH THIS PURCHASE WARRANT WAS ISSUED TO THE UNDERWRITER AS CONSIDERATION (THE “OFFERING”), OR (II) AN OFFICER, PARTNER, REGISTERED PERSON OR AFFILIATE OF BOUSTEAD SECURITIES, LLC.
COMMON STOCK PURCHASE WARRANT
For the Purchase of [●] Shares of Common Stock
of
Shuttle Pharmaceuticals Holdings, Inc.
1. Purchase Warrant. THIS CERTIFIES THAT, in consideration of funds duly paid by or on behalf of [●] (“Holder”), as registered owner of this Purchase Warrant, to Shuttle Pharmaceuticals Holdings, Inc., a Delaware corporation (the “Company”), Holder is entitled, at any time or from time to time beginning [●], 2022 (the “Commencement Date”), and at or before 5:00 p.m., Eastern time, [●], 20271 (the “Expiration Date”), but not thereafter, to subscribe for, purchase and receive, in whole or in part, up to [●] shares of common stock of the Company, par value $0.00001 per share (the “Shares”), subject to adjustment as provided in Section 6 hereof. If the Expiration Date is a day on which banking institutions are authorized by law to close, then this Purchase Warrant may be exercised on the next succeeding day which is not such a day in accordance with the terms herein. During the period ending on the Expiration Date, the Company agrees not to take any action that would terminate this Purchase Warrant. This Purchase Warrant is initially exercisable at $[●] per Share; provided, however, that upon the occurrence of any of the events specified in Section 6 hereof, the rights granted by this Purchase Warrant, including the exercise price per Share and the number of Shares to be received upon such exercise, shall be adjusted as therein specified. The term “Exercise Price” shall mean the initial exercise price or the adjusted exercise price, depending on the context.
2. Exercise.
2.1 Exercise Form. In order to exercise this Purchase Warrant, the exercise form attached hereto must be duly executed and completed and delivered to the Company, together with this Purchase Warrant and payment of the Exercise Price for the Shares being purchased payable in cash by wire transfer of immediately available funds to an account designated by the Company or by certified check or official bank check. If the subscription rights represented hereby shall not be exercised at or before 5:00 p.m., Eastern time, on the Expiration Date, this Purchase Warrant shall become and be void without further force or effect, and all rights represented hereby shall cease and expire. Each exercise hereof shall be irrevocable.
1 [To be five years from the commencement of sales in the offering.]
2.2 Cashless Exercise. In lieu of exercising this Purchase Warrant by payment of cash or check payable to the order of the Company pursuant to Section 2.1 above, this Purchase Warrant may also be exercised, in whole or in part, at such time by means of a “cashless exercise” in which the Holder shall be entitled to receive a number of Shares equal to the quotient obtained by dividing [(A-B) (X)] by (A), where:
(A) = the FMV of one share of Common Stock;
(B) = the Exercise Price of this Purchase Warrant, as adjusted hereunder; and
(X) = the number of shares of Common Stock underlying the Purchase Warrant that would be issuable upon exercise of this Purchase Warrant in accordance with the terms of this Warrant if such exercise were by means of a cash exercise rather than a cashless exercise.
If Shares are issued in such a cashless exercise, the parties acknowledge and agree that in accordance with Section 3(a)(9) of the Securities Act, the Shares shall take on the registered characteristics of the Purchase Warrants being exercised. The Company agrees not to take any position contrary to this Section 2.2.
Notwithstanding anything herein to the contrary, on the Expiration Date, this Purchase Warrant shall be automatically exercised via cashless exercise pursuant to this Section 2.2.
“FMV” means, for any date, the price determined by the first of the following clauses that applies: (a) if the Common Stock is then listed or quoted on a Trading Market, the value shall be deemed to be the highest intra-day or closing price on any trading day on such Trading Market on which the Common Stock is then listed or quoted as reported by Bloomberg L.P. (based on a trading day from 9:30 a.m. (Eastern time) to 4:02 p.m. (Eastern time)) during the five trading days preceding the exercise, (b) if OTCQB or OTCQX is not a Trading Market, the value shall be deemed to be the highest intra-day or closing price on any trading day on the OTCQB or OTCQX on which the Common Stock is then quoted as reported by Bloomberg L.P. (based on a trading day from 9:30 a.m. (Eastern time) to 4:02 p.m. (Eastern time)) during the five trading days preceding the exercise, as applicable, (c) if the Common Stock is not then listed or quoted for trading on OTCQB or OTCQX and if prices for the Common Stock are then reported on the Pink Open Market operated by OTC Markets Group, Inc. (or a similar organization or agency succeeding to its functions of reporting prices), the “OTC Markets Group”, the value shall be deemed to be the highest intra-day or closing price on any trading day on the Pink Sheets on which the Common Stock is then quoted as reported by OTC Markets Group (based on a trading day from 9:30 a.m. (Eastern time) to 4:02 p.m. (Eastern time)) during the five trading days preceding the exercise, or (d) in all other cases, the fair market value of a share of Common Stock as determined by an independent appraiser selected in good faith by the Holder and reasonably acceptable to the Company, the fees and expenses of which shall be paid by the Company.
“Trading Market” means The Nasdaq Capital Market, or any of the following other markets or exchanges on which the Common Stock is listed or quoted for trading on the date in question: the NYSE American, The Nasdaq Global Market, The Nasdaq Global Select Market or the New York Stock Exchange (or any successors to any of the foregoing).
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2.3 Legend. Each certificate for the securities purchased under this Purchase Warrant shall bear a legend as follows unless such securities have been registered under the Securities Act of 1933, as amended (the “Act”):
“The securities represented by this certificate have not been registered under the Securities Act of 1933, as amended (the “Act”), or applicable state law. Neither the securities nor any interest therein may be offered for sale, sold or otherwise transferred except pursuant to an effective registration statement under the Act, or pursuant to an exemption from registration under the Act and applicable state law which, in the opinion of counsel to the Company, is available.”
2.4 Resale of Shares. Holder and the Company acknowledge that as of the date hereof the Staff of the Division of Corporation Finance of the SEC has published Compliance & Disclosure Interpretation 528.04 in the Securities Act Rules section thereof, stating that the holder of securities issued in connection with a public offering may not rely upon Rule 144 promulgated under the Act to establish an exemption from registration requirements under Section 4(a)(1) under the Act, but may nonetheless apply Rule 144 constructively for the resale of such shares in the following manner: (a) provided that six months has elapsed since the last sale under the registration statement, an underwriter or finder may resell the securities in accordance with the provisions of Rule 144(c), (e), and (f), except for the notice requirement; (b) a purchaser of the shares from an underwriter receives restricted securities unless the sale is made with an appropriate, current prospectus, or unless the sale is made pursuant to the conditions contained in (a) above; (c) a purchaser of the shares from an underwriter who receives restricted securities may include the underwriter’s holding period, provided that the underwriter or finder is not an affiliate of the issuer; and (d) if an underwriter transfers the shares to its employees, the employees may tack the firm’s holding period for purposes of Rule 144(d), but they must aggregate sales of the distributed shares with those of other employees, as well as those of the underwriter or finder, for a six-month period from the date of the transfer to the employees. Holder and the Company also acknowledge that the Staff of the Division of Corporation Finance of the SEC has advised in various no-action letters that the holding period associated with securities issued without registration to a service provider commences upon the completion of the services, which the Company agrees and acknowledges shall be the final closing of the Offering, and that Rule 144(d)(3)(ii) provides that securities acquired from the issuer solely in exchange for other securities of the same issuer shall be deemed to have been acquired at the same time as the securities surrendered for conversion (which the Company agrees is the date of the initial issuance of this Purchase Warrant). In the event that following a reasonably-timed written request by Holder to transfer the Shares in accordance with Compliance & Disclosure Interpretation 528.04 counsel for the Company in good faith concludes that Compliance & Disclosure Interpretation 528.04 no longer may be relied upon as a result of changes in applicable laws, regulations, or interpretations of the SEC Division of Corporation Finance, or as a result of judicial interpretations not known by the Company or its counsel on the date hereof (either, a “Registration Trigger Event”), then the Company shall promptly, and in any event within five (5) business days following the request, provide written notice to Holder of such determination. As a condition to giving such notice, the parties shall negotiate in good faith a single demand registration right pursuant to an agreement in customary form reasonably acceptable to the parties; provided that notwithstanding anything to the contrary, the obligations of the Company pursuant to this Section 2 shall terminate on the fifth anniversary of the Effective Date. In the absence of such conclusion by counsel for the Company, the Company shall, upon such a request of Holder given no earlier than six months after the final closing of the Offering, instruct its transfer agent to permit the transfer of such shares in accordance with Compliance & Disclosure Interpretation 528.04, provided that Holder has provided such documentation as shall be reasonably be requested by the Company to establish compliance with the conditions of Compliance & Disclosure Interpretation 528.04. Notwithstanding anything to the contrary, pursuant to FINRA Rule 5110(g)(8)(B)-(D), the Holder shall not be entitled to more than one demand registration right hereunder and the duration of the registration rights hereunder shall not exceed five years from the Effective Date.
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3. Transfer.
3.1 General Restrictions. The registered Holder of this Purchase Warrant agrees by his, her or its acceptance hereof, that such Holder will not: (a) sell, transfer, assign, pledge or hypothecate this Purchase Warrant for a period of one hundred eighty (180) days following the Effective Date to anyone other than: (i) Boustead Securities, LLC (“Boustead”) or an underwriter, placement agent, or a selected dealer participating in the Offering, or (ii) an officer, partner, registered person or affiliate of Boustead or of any such underwriter, placement agent or selected dealer, in each case in accordance with FINRA Conduct Rule 5110(e)(1), or (b) cause this Purchase Warrant or the securities issuable hereunder to be the subject of any hedging, short sale, derivative, put or call transaction that would result in the effective economic disposition of this Purchase Warrant or the securities hereunder, except as provided for in FINRA Rule 5110(e)(2). After 180 days after the Effective Date, transfers to others may be made subject to compliance with or exemptions from applicable securities laws. In order to make any permitted assignment, the Holder must deliver to the Company the assignment form attached hereto duly executed and completed, together with the Purchase Warrant and payment of all transfer taxes, if any, payable in connection therewith. The Company shall within five (5) Business Days transfer this Purchase Warrant on the books of the Company and shall execute and deliver a new Purchase Warrant or Purchase Warrants of like tenor to the appropriate assignee(s) expressly evidencing the right to purchase the aggregate number of Shares purchasable hereunder or such portion of such number as shall be contemplated by any such assignment.
3.2 Restrictions Imposed by the Act. The securities evidenced by this Purchase Warrant shall not be transferred unless and until: (i) if required by applicable law, the Company has received the opinion of counsel for the Company that the securities may be transferred pursuant to an exemption from registration under the Act and applicable state securities laws, or (ii) a registration statement or a post-effective amendment to the Registration Statement relating to the offer and sale of such securities has been filed by the Company and declared effective by the U.S. Securities and Exchange Commission (the “Commission”) and compliance with applicable state securities law has been established.
4. Piggyback Registration Rights.
4.1 Grant of Right. Whenever the Company proposes to register any shares of its common stock under the Act (other than (i) a registration effected solely to implement an employee benefit plan or a transaction to which Rule 145 of the Act is applicable, or (ii) a registration statement on Form S-4, S-8 or any successor form thereto or another form not available for registering the Shares issuable upon exercise of this Purchase Warrant for sale to the public, whether for its own account or for the account of one or more stockholders of the Company (a “Piggyback Registration”), the Company shall give prompt written notice (in any event no later than ten (10) Business Days prior to the filing of such registration statement) to the Holder of the Company’s intention to effect such a registration and, subject to the remaining provisions of this Section 4.1, shall include in such registration such number of Shares underlying this Purchase Warrant (the “Registrable Securities”) that the Holders have (within ten (10) Business Days of the respective Holder’s receipt of such notice) requested in writing (including such number) to be included within such registration. If a Piggyback Registration is an underwritten offering and the managing underwriter advises the Company that it has determined in good faith that marketing factors require a limit on the number of shares of common stock to be included in such registration, including all Shares issuable upon exercise of this Purchase Warrant (if the Holder has elected to include such shares in such Piggyback Registration) and all other shares of common stock proposed to be included in such underwritten offering, , the Company shall include in such registration (i) first, the number of shares of common stock that the Company proposes to sell and (ii) second, the number of shares of common stock, if any, requested to be included therein by selling stockholders (including the Holder) allocated pro rata among all such persons on the basis of the number of shares of common stock then owned by each such person. If any Piggyback Registration is initiated as a primary underwritten offering on behalf of the Company, the Company shall select the investment banking firm or firms to act as the managing underwriter or underwriters in connection with such offering. Notwithstanding anything to the contrary, the obligations of the Company pursuant to this Section 4.1 shall terminate on the earlier of (i) the third anniversary of the Effective Date and (ii) the date that Rule 144 would allow the Holder to sell its Registrable Securities during any ninety (90) day period.
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4.2 Indemnification. The Company shall indemnify the Holder(s) of the Registrable Securities to be sold pursuant to any registration statement hereunder and each person, if any, who controls such Holders within the meaning of Section 15 of the Act or Section 20 (a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), against all loss, claim, damage, expense or liability (including all reasonable attorneys’ fees and other out-of-pocket expenses reasonably incurred in investigating, preparing or defending against any claim whatsoever) to which any of them may become subject under the Act, the Exchange Act or otherwise, arising from such registration statement but only to the same extent and with the same effect as the provisions pursuant to which the Company has agreed to indemnify Boustead contained in the Underwriting Agreement between Boustead and the Company, dated as of [●], 2022. The Holder(s) of the Registrable Securities to be sold pursuant to such registration statement, and their successors and assigns, shall severally, and not jointly, indemnify the Company, against all loss, claim, damage, expense or liability (including all reasonable attorneys’ fees and other expenses reasonably incurred in investigating, preparing or defending against any claim whatsoever) to which they may become subject under the Act, the Exchange Act or otherwise, arising from information furnished by or on behalf of such Holders, or their successors or assigns, in writing, for specific inclusion in such registration statement to the same extent and with the same effect as the provisions contained in the Underwriting Agreement pursuant to which Boustead has agreed to indemnify the Company.
4.3 Exercise of Purchase Warrants. Nothing contained in this Purchase Warrant shall be construed as requiring the Holder(s) to exercise their Purchase Warrants prior to or after the initial filing of any registration statement or the effectiveness thereof.
4.4 Documents Delivered to Holders. The Company shall deliver promptly to each Holder participating in the offering requesting the correspondence and memoranda described below, copies of all correspondence between the Commission and the Company, its counsel or auditors and all memoranda relating to discussions with the Commission or its staff with respect to the registration statement and permit each Holder and underwriter to do such investigation, upon reasonable advance notice, with respect to information contained in or omitted from the registration statement as it deems reasonably necessary to comply with applicable securities laws or rules of FINRA. Such investigation shall include access to books, records and properties and opportunities to discuss the business of the Company with its officers and independent auditors, all to such reasonable extent and at such reasonable times, during normal business hours, as any such Holder shall reasonably request.
4.5 Underwriting Agreement. The Holders shall be parties to any underwriting agreement relating to a Piggyback Registration. Such Holders shall not be required to make any representations or warranties to or agreements with the Company or the underwriters except as they may relate to such Holders, their Shares and the amount and nature of their ownership thereof and their intended methods of distribution.
4.6 Documents to be Delivered by Holder(s). Each of the Holder(s) participating in any of the foregoing offerings shall furnish to the Company a completed and executed questionnaire provided by the Company requesting information customarily sought of selling security holders.
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4.7 Damages. Should the Company fail to comply with such provisions, the Holder(s) shall, in addition to any other legal or other relief available to the Holder(s), be entitled to obtain specific performance or other equitable (including injunctive) relief against the threatened breach of such provisions or the continuation of any such breach, without the necessity of proving actual damages and without the necessity of posting bond or other security.
5. New Purchase Warrants to be Issued.
5.1 Partial Exercise or Transfer. Subject to the restrictions in Section 3 hereof, this Purchase Warrant may be exercised or assigned in whole or in part. In the event of the exercise or assignment hereof in part only, upon surrender of this Purchase Warrant for cancellation, together with the duly executed exercise or assignment form and funds sufficient to pay any Exercise Price and/or transfer tax if exercised pursuant to Section 2.1 hereto, the Company shall cause to be delivered to the Holder without charge a new Purchase Warrant of like tenor to this Purchase Warrant in the name of the Holder evidencing the right of the Holder to purchase the number of Shares purchasable hereunder as to which this Purchase Warrant has not been exercised or assigned.
5.2 Lost Certificate. Upon receipt by the Company of evidence satisfactory to it of the loss, theft, destruction or mutilation of this Purchase Warrant and of reasonably satisfactory indemnification or the posting of a bond, determined in the sole discretion of the Company, the Company shall execute and deliver a new Purchase Warrant of like tenor and date. Any such new Purchase Warrant executed and delivered as a result of such loss, theft, mutilation or destruction shall constitute a substitute contractual obligation on the part of the Company.
6. Adjustments.
6.1 Adjustments to Exercise Price and Number of Securities. The Exercise Price and the number of Shares underlying the Purchase Warrant shall be subject to adjustment from time to time as hereinafter set forth:
6.1.1 Share Dividends; Split Ups. If, after the date hereof, and subject to the provisions of Section 6.3 below, the number of outstanding Shares is increased by a stock dividend payable in Shares or by a split up of Shares or other similar event, then, on the effective day thereof, the number of Shares purchasable hereunder shall be increased in proportion to such increase in outstanding Shares, and the Exercise Price shall be proportionately decreased.
6.1.2 Aggregation of Shares. If, after the date hereof, and subject to the provisions of Section 6.3 below, the number of outstanding Shares is decreased by a consolidation, combination or reclassification of Shares or other similar event, then, on the effective date thereof, the number of Shares purchasable hereunder shall be decreased in proportion to such decrease in outstanding Shares, and the Exercise Price shall be proportionately increased.
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6.1.3 Replacement of Securities upon Reorganization, etc. In case of any reclassification or reorganization of the outstanding Shares other than a change covered by Section 6.1.1 or 6.1.2 hereof or that solely affects the par value of such Shares, or in the case of any share reconstruction or amalgamation or consolidation or merger of the Company with or into another corporation (other than a consolidation or share reconstruction or amalgamation or merger in which the Company is the continuing corporation and that does not result in any reclassification or reorganization of the outstanding Shares), or in the case of any sale or conveyance to another corporation or entity of the property of the Company as an entirety or substantially as an entirety in connection with which the Company is dissolved, the Holder of this Purchase Warrant shall have the right thereafter (until the expiration of the right of exercise of this Purchase Warrant) to receive upon the exercise hereof, for the same aggregate Exercise Price payable hereunder immediately prior to such event, the kind and amount of shares of stock or other securities or property (including cash) receivable upon such reclassification, reorganization, share reconstruction or amalgamation, or consolidation, or upon a dissolution following any such sale or transfer, by a Holder of the number of Shares of the Company obtainable upon exercise of this Purchase Warrant immediately prior to such event; and if any reclassification also results in a change in Shares covered by Section 6.1.1 or 6.1.2, then such adjustment shall be made pursuant to Sections 6.1.1, 6.1.2 and this Section 6.1.3. The provisions of this Section 6.1.3 shall similarly apply to successive reclassifications, reorganizations, share reconstructions or amalgamations, or consolidations, sales or other transfers.
6.1.4 Changes in Form of Purchase Warrant. This form of Purchase Warrant need not be changed because of any change pursuant to this Section 6.1, and Purchase Warrants issued after such change may state the same Exercise Price and the same number of Shares as are stated in the Purchase Warrants initially issued pursuant to this Agreement. The acceptance by any Holder of the issuance of new Purchase Warrants reflecting a required or permissive change shall not be deemed to waive any rights to an adjustment occurring after the Commencement Date or the computation thereof.
6.2 Substitute Purchase Warrant. In case of any consolidation of the Company with, or share reconstruction or amalgamation or merger of the Company with or into, another corporation (other than a consolidation or share reconstruction or amalgamation or merger which does not result in any reclassification or change of the outstanding Shares), the corporation formed by such consolidation or share reconstruction or amalgamation shall execute and deliver to the Holder a supplemental Purchase Warrant providing that the holder of each Purchase Warrant then outstanding or to be outstanding shall have the right thereafter (until the stated expiration of such Purchase Warrant) to receive, upon exercise of such Purchase Warrant, the kind and amount of shares of stock and other securities and property receivable upon such consolidation or share reconstruction or amalgamation, by a holder of the number of Shares of the Company for which such Purchase Warrant might have been exercised immediately prior to such consolidation, share reconstruction or amalgamation or merger, sale or transfer. Such supplemental Purchase Warrant shall provide for adjustments which shall be identical to the adjustments provided for in this Section 6. The above provision of this Section shall similarly apply to successive consolidations or share reconstructions or amalgamations or mergers.
6.3 Elimination of Fractional Interests. The Company shall not be required to issue certificates representing fractions of Shares upon the exercise of the Purchase Warrant, nor shall it be required to issue scrip or pay cash in lieu of any fractional interests, it being the intent of the parties that all fractional interests shall be eliminated by rounding any fraction up or down, as the case may be, to the nearest whole number of Shares or other securities, properties or rights.
7. Reservation. The Company shall at all times reserve and keep available out of its authorized Shares, solely for the purpose of issuance upon exercise of the Purchase Warrants, such number of Shares or other securities, properties or rights as shall be issuable upon the exercise thereof. The Company covenants and agrees that, upon exercise of the Purchase Warrants and payment of the Exercise Price therefor, in accordance with the terms hereby, all Shares and other securities issuable upon such exercise shall be duly and validly issued, fully paid and non-assessable and not subject to preemptive rights of any shareholder.
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8. Certain Notice Requirements.
8.1 Holder’s Right to Receive Notice. Nothing herein shall be construed as conferring upon the Holders the right to vote or consent or to receive notice as a shareholder for the election of directors or any other matter, or as having any rights whatsoever as a shareholder of the Company. If, however, at any time prior to the expiration of the Purchase Warrants and their exercise, any of the events described in Section 8.2 shall occur, then, in one or more of said events, the Company shall deliver to each Holder a copy of each notice relating to such events given to the other shareholders of the Company at the same time and in the same manner that such notice is given to the shareholders.
8.2 Events Requiring Notice. The Company shall be required to give the notice described in this Section 8 upon one or more of the following events: (i) if the Company shall take a record of the holders of its Shares for the purpose of entitling them to receive a dividend or distribution payable otherwise than in cash, or a cash dividend or distribution payable otherwise than out of retained earnings, as indicated by the accounting treatment of such dividend or distribution on the books of the Company, or (ii) the Company shall offer to all the holders of its Shares any additional shares of capital stock of the Company or securities convertible into or exchangeable for shares of capital stock of the Company, or any option, right or warrant to subscribe therefor.
8.3 Notice of Change in Exercise Price. The Company shall, promptly after an event requiring a change in the Exercise Price pursuant to Section 6 hereof, send notice to the Holders of such event and change (“Price Notice”). The Price Notice shall describe the event causing the change and the method of calculating same.
8.4 Transmittal of Notices. All notices, requests, consents and other communications under this Purchase Warrant shall be in writing and shall be deemed to have been duly made when hand delivered, or mailed by express mail or private courier service: (i) if to the registered Holder of the Purchase Warrant, to the address of such Holder as shown on the books of the Company, or (ii) if to the Company, to following address or to such other address as the Company may designate by notice to the Holders:
If to the Representative:
Boustead Securities, LLC
6 Venture, Suite 265
Irvine, California 92618
Attn: Mr. Keith Moore, CEO
Fax No.: (949) ___-____
Email: keith@boustead1828.com
With a copy (which shall not constitute notice) to:
Olshan Frome Wolosky LLP
1325 Avenue of the Americas, 15th Floor
New York, New York 10019
Attention: Spencer G. Feldman, Esq.
Fax No.: (212) 451-2222
Email: sfeldman@olshanlaw.com
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If to the Company:
Shuttle Pharmaceuticals Holdings, Inc.
One Research Court, Suite 450
Rockville, Maryland 20850
Attention: Anatoly Dritschilo, M.D., Chief Executive Officer
Fax No. (___) ___-____
Email: dritscha@georgetown.edu
With a copy (which shall not constitute notice) to:
Michelman & Robinson LLP
800 Third Avenue, 24th Floor
New York, New York 10020
Attention: Megan J. Penick, Esq.
Fax No.: (212) 730-7250
Email: mpenick@mrllp.com
9. Miscellaneous.
9.1 Amendments. The Company and Boustead may from time to time supplement or amend this Purchase Warrant without the approval of any of the Holders in order to cure any ambiguity, to correct or supplement any provision contained herein that may be defective or inconsistent with any other provisions herein, or to make any other provisions in regard to matters or questions arising hereunder that the Company and Boustead may deem necessary or desirable and that the Company and Boustead deem shall not adversely affect the interest of the Holders. All other modifications or amendments shall require the written consent of and be signed by (i) the Company and (ii) the Holder(s) of Purchase Warrants then-exercisable for at least a majority of the Shares then-exercisable pursuant to all then-outstanding Purchase Warrants.
9.2 Headings. The headings contained herein are for the sole purpose of convenience of reference, and shall not in any way limit or affect the meaning or interpretation of any of the terms or provisions of this Purchase Warrant.
9.3. Entire Agreement. This Purchase Warrant (together with the other agreements and documents being delivered pursuant to or in connection with this Purchase Warrant) constitutes the entire agreement of the parties hereto with respect to the subject matter hereof, and supersedes all prior agreements and understandings of the parties, oral and written, with respect to the subject matter hereof.
9.4 Binding Effect. This Purchase Warrant shall inure solely to the benefit of and shall be binding upon, the Holder and the Company and their permitted assignees, respective successors, legal representative and assigns, and no other person shall have or be construed to have any legal or equitable right, remedy or claim under or in respect of or by virtue of this Purchase Warrant or any provisions herein contained.
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9.5 Governing Law; Submission to Jurisdiction; Trial by Jury. This Purchase Warrant shall be governed by and construed and enforced in accordance with the laws of the State of California, without giving effect to conflict of laws principles thereof. The Company hereby agrees that any action, proceeding or claim against it arising out of, or relating in any way to this Purchase Warrant shall be brought and enforced in the courts located in Los Angeles, California, or in the United States District Court located in Los Angeles, California, and irrevocably submits to such jurisdiction, which jurisdiction shall be exclusive. The Company hereby waives any objection to such exclusive jurisdiction and that such courts represent an inconvenient forum. Any process or summons to be served upon the Company may be served by transmitting a copy thereof by registered or certified mail, return receipt requested, postage prepaid, addressed to it at the address set forth in Section 8 hereof. Such mailing shall be deemed personal service and shall be legal and binding upon the Company in any action, proceeding or claim. The Company and the Holder agree that the prevailing party(ies) in any such action shall be entitled to recover from the other party(ies) all of its reasonable attorneys’ fees and expenses relating to such action or proceeding and/or incurred in connection with the preparation therefor. The Company (on its behalf and, to the extent permitted by applicable law, on behalf of its stockholders and affiliates) and the Holder hereby irrevocably waive, to the fullest extent permitted by applicable law, any and all right to trial by jury in any legal proceeding arising out of or relating to this Agreement or the transactions contemplated hereby.
9.6 Waiver, etc. The failure of the Company or the Holder to at any time enforce any of the provisions of this Purchase Warrant shall not be deemed or construed to be a waiver of any such provision, nor to in any way affect the validity of this Purchase Warrant or any provision hereof or the right of the Company or any Holder to thereafter enforce each and every provision of this Purchase Warrant. No waiver of any breach, non-compliance or non-fulfillment of any of the provisions of this Purchase Warrant shall be effective unless set forth in a written instrument executed by the party or parties against whom or which enforcement of such waiver is sought; and no waiver of any such breach, non-compliance or non-fulfillment shall be construed or deemed to be a waiver of any other or subsequent breach, non-compliance or non-fulfillment.
9.7 Exchange Agreement. As a condition of the Holder’s receipt and acceptance of this Purchase Warrant, Holder agrees that, at any time prior to the complete exercise of this Purchase Warrant by Holder, if the Company and Boustead enter into an agreement (“Exchange Agreement”) pursuant to which they agree that all outstanding Purchase Warrants will be exchanged for securities or cash or a combination of both, then Holder shall agree to such exchange and become a party to the Exchange Agreement.
[Signature Page Follows]
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IN WITNESS WHEREOF, the Company has caused this Purchase Warrant to be signed by its duly authorized officer as of the _____ day of _______ 2022.
SHUTTLE PHARMACEUTICALS HOLDINGS, INC. | ||
By: | ||
Name: | Anatoly Dritschilo, M.D. | |
Title: | Chief Executive Officer |
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[Form to be used to exercise Purchase Warrant]
Date: __________, 20___
The undersigned hereby elects irrevocably to exercise the Purchase Warrant for ______ shares of common stock, par value $0.00001 per share (the “Shares”), of Shuttle Pharmaceuticals Holdings, Inc., a Delaware corporation (the “Company”), and hereby makes payment of $____ (at the rate of $____ per Share) in payment of the Exercise Price pursuant thereto. Please issue the Shares as to which this Purchase Warrant is exercised in accordance with the instructions given below and, if applicable, a new Purchase Warrant representing the number of Shares for which this Purchase Warrant has not been exercised.
or
The undersigned hereby elects irrevocably to convert its right to purchase ___ Shares of the Company under the Purchase Warrant for ______ Shares, as determined in accordance with the following formula:
dividing [(A-B) (X)] by (A), where:
(A) = | the FMV; | |
(B) = | the Exercise Price of this Purchase Warrant, as adjusted hereunder; and | |
(X) = | the number of shares of Common Stock underlying the Purchase Warrant that would be issuable upon exercise of this Purchase Warrant in accordance with the terms of this Purchase Warrant if such exercise were by means of a cash exercise rather than a cashless exercise. |
The undersigned agrees and acknowledges that the calculation set forth above is subject to confirmation by the Company.
Please issue the Shares as to which this Purchase Warrant is exercised in accordance with the instructions given below and, if applicable, a new Purchase Warrant representing the number of Shares for which this Purchase Warrant has not been converted.
Signature |
Signature Guaranteed |
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INSTRUCTIONS FOR REGISTRATION OF SECURITIES
Name: | ||
(Print in Block Letters) |
Address: | ||
NOTICE: The signature to this form must correspond with the name as written upon the face of the Purchase Warrant without alteration or enlargement or any change whatsoever, and must be guaranteed by a bank, other than a savings bank, or by a trust company or by a firm having membership on a registered national securities exchange.
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[Form to be used to assign Purchase Warrant]
ASSIGNMENT
(To be executed by the registered Holder to effect a transfer of the within Purchase Warrant):
FOR VALUE RECEIVED, __________________ does hereby sell, assign and transfer unto _________________________ the right to purchase shares of Common Stock, par value $0.00001 per share, of Shuttle Pharmceuticals Holdings, Inc., a Delaware corporation (the “Company”), evidenced by the Purchase Warrant and does hereby authorize the Company to transfer such right on the books of the Company.
Dated: __________, 20__
Signature |
Signature Guaranteed |
NOTICE: The signature to this form must correspond with the name as written upon the face of the within Purchase Warrant without alteration or enlargement or any change whatsoever, and must be guaranteed by a bank, other than a savings bank, or by a trust company or by a firm having membership on a registered national securities exchange.
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Exhibit 5.1
New York Office 800 Third Avenue, 24th Floor New York, NY 10022 P 212.730.7700 F 212.730.7725 www.mrllp.com | |
June 23, 2022 |
Shuttle Pharmaceuticals Holdings, Inc.
One Research Court, Suite 450
Rockville, MD 20850
Re: | Shuttle Pharmaceuticals Holdings, Inc. | |
Registration Statement on Form S-1/A |
Ladies and Gentlemen:
We have acted as counsel to Shuttle Pharmaceuticals Holdings, Inc., a Delaware corporation (the “Company”), in connection with the Registration Statement on Form S-1, as amended (the “Registration Statement”), filed with the Securities and Exchange Commission (the “Commission”) for purposes of registering for the sale under the Securities Act of 1933, as amended (the “Act”), of 3,000,000 shares (the “Shares”) of common stock, par value $0.00001 per share (the “Common Stock”), of which 2,750,000 shares are being sold by the Company and 250,000 are being sold by certain selling stockholders.
This opinion letter is furnished in accordance with the requirements of Item 601(b)(5) of Regulation S-K under the Act.
In connection with this opinion letter, we have examined the Registration Statement and originals, or copies certified or otherwise identified to our satisfaction, of (i) the Certificate of Incorporation of the Company, as amended to date (the “Certificate of Incorporation”), (ii) the By-Laws of the Company, as amended to date (the “Bylaws”), (iii) certain resolutions of the Company’s board of directors (the “Board of Directors”) relating to the Registration Statement, and (iv) such other documents, records and other instruments as we have deemed appropriate for purposes of the opinions set forth herein.
We have assumed the genuineness of all signatures, the legal capacity of all natural persons, the authenticity of the documents submitted to us as originals, the conformity with the originals of all documents submitted to us as certified, facsimile or photostatic copies and the authenticity of the originals of all documents submitted to us as copies. With respect to matters of fact relevant to our opinions as set forth below, we have relied upon certificates of officers of the Company, representations made by the Company in documents examined by us, and representations of officers of the Company. We have also obtained and relied upon such certificates and assurances from public officials as we have deemed necessary for the purposes of our opinions set forth below.
Based solely upon the foregoing, and subject to the limitations and qualifications stated herein, we are of the opinion that the Shares have been duly authorized and, when issued and sold in the manner and under the terms described in the Registration Statement, the Prospectus and the Underwriting Agreement, will be validly issued, fully paid and non-assessable.
We hereby consent to the use of this opinion as Exhibit 5.1 to the Registration Statement and to the reference to us under the caption “Legal Matters” in the Prospectus and to the references to us in the Registration Statement. In giving such consents, we do not hereby admit that we are acting within the category of persons whose consent is required under Section 7 of the Act or the rules or regulations of the Commission thereunder.
Very truly yours, | |
/s/ Michelman & Robinson, LLP | |
MICHELMAN & ROBINSON, LLP |
Los Angeles | | | Orange County | | | San Francisco | | | Dallas | | | Houston | | | Chicago | | | New York |
Exhibit 10.4
EMPLOYMENT AGREEMENT
This Employment Agreement (the “Agreement”) is entered into as of the 31st day of May, 2019, by and between Shuttle Pharmaceuticals Holdings, Inc., a Delaware corporation (the “Company”), and Tyvin Rich, MD, an individual residing at the address set forth on Schedule A hereto (the “Executive”).
INTRODUCTION
WHEREAS, the Company is in the business of the development and commercialization of specialty pharmaceuticals (the “Business”);
WHEREAS, the Company wishes to employ the Executive under the title and capacity set forth on Schedule A hereto;
WHEREAS, the Executive desires to be employed by the Company in such capacity, subject to the terms of this Agreement; and
WHEREAS, the Executive acknowledges that he will not be entitled to compensation under this Agreement until such time as the Company either completes an initial public offering or otherwise becomes a publicly reporting company.
AGREEMENT
NOW, THEREFORE, in consideration of the premises and mutual promises herein below set forth, the parties hereby agree as follows:
1. Employment Period. The initial term of the Executive’s employment by the Company (directly or through its wholly-owned subsidiary Shuttle Pharmaceuticals, Inc.) pursuant to this Agreement shall commence upon the date hereof (the “Effective Date”) and shall continue for that period of calendar months the Effective Date set forth on Schedule A hereto (the “Employment Period”). Thereafter, the Employment Period shall automatically renew for successive periods of one (1) year each, unless either party shall have given to the other at least thirty (30) days’ prior written notice of their intention not to renew the Executive’s employment prior to the end of the Employment Period or the then applicable renewal term, as the case may be. In any event, the Employment Period may be terminated as provided herein.
2. Employment; Duties.
(a) Subject to the terms and conditions set forth herein, the Company hereby employs the Executive to act for the Company during the Employment Period in the capacity set forth on Schedule A hereto, and the Executive hereby accepts such employment. Executive shall be employed on a full-time basis, devoting approximately 100% of Executive’s business time to the performance of Executive’s services for the Company. The duties and responsibilities of the Executive shall include such duties and responsibilities as are appropriate to such office and as are normally associated with and appropriate for such position and as the Company’s board of directors (the “Board”) may from time to time reasonably assign to the Executive.
(b) Executive recognizes that during the period of Executive’s employment hereunder, Executive owes an undivided duty of loyalty to the Company, and Executive will use Executive’s good faith efforts to promote and develop the business of the Company and its subsidiaries (the Company’s subsidiaries from time to time, together with any other affiliates of the Company, the “Affiliates”). Recognizing and acknowledging that it is essential for the protection and enhancement of the brand name, reputation and business of the Company and the goodwill pertaining thereto, Executive shall perform the Executive’s duties under this Agreement professionally, in accordance with the applicable laws, rules and regulations and such standards, policies and procedures established by the Company and the industry from time to time.
(c) The parties expressly agree that: (i) Executive may continue to maintain his academic affiliation as Adjunct Professor at Georgetown University Medical Center and as radiation oncologist at Hampton University (without clinical duties) for purposes of Shuttle’s proton-related research and also may devote a reasonable amount of his time to civic, community, or charitable activities and may serve as a director of other corporations (provided that any such other corporation is not a competitor of the Company, as determined by the Board) and to other types of business or public activities not expressly mentioned in this paragraph and (ii) as a non-employee director and/or investor in other companies and projects as disclosed by Executive to, and approved by, the Board, so long as Executive’s responsibilities with respect thereto do not conflict or interfere with the faithful performance of his duties to the Company.
3. Place of Employment The Executive’s services shall be performed at the Company’s offices located at One Research Court, Suite 450, Rockville, MD 20850, at the Shady Grove Development Park, 15810 Gaither Road, Shady Grove, MD, at any other location at which the Company now or hereafter has a business facility, at employee’s home office, or at any other location where Executive’s presence is necessary to perform his duties. The parties acknowledge that the Executive may be required to travel in connection with the performance of his duties hereunder.
4. Base Salary. The Executive shall be entitled to receive a salary from the Company during the Employment Period at a rate per year indicated on Schedule A hereto (the “Base Salary”), which Base Salary shall commence upon the Company’s completion of a cross-over round of financing, an initial public offering (“IPO”) or upon the Company becoming a publicly reporting company under the Securities Exchange Act of 1934, as amended, whichever comes first. Once the Board has established the Base Salary, such Base Salary shall be payable in monthly installments in accordance with the Company’s customary payroll practices. The Executive’s Base Salary may be increased on each anniversary of the Effective Date, at the Board’s sole discretion.
5. Bonus.
(a) The Executive shall be eligible to receive an annual cash bonus (the “Annual Bonus”), which shall be earned by the Executive based upon the level of achievement of specific operational, financial or other milestones by the Company established by the Board in consultation with the Executive (the “Milestones”) indicated on the attached Schedule B, and based upon the Executive’s performance of the Executive Duties set forth on Schedule A. The amount of the Annual Bonus, if any, and the method of payment of all or any portion of any Annual Bonus (which will be paid in cash) shall be determined by the Board in its sole discretion. If the Board determines that any portion of the Annual Bonus is to be paid in cash, such amount shall be payable in U.S. dollars within ten (10) days of the filing with the Securities and Exchange Commission of the Company’s annual report on Form 10-K.
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(b) The Executive shall be eligible to participate in any other bonus or incentive program established by the Company for executives of the Company.
6. Other Benefits
(a) Grant of Restricted Stock Units. The Executive shall be entitled to receive a number of restricted stock units (“Restricted Stock Units”) as set forth on Schedule A hereto, issuable under the Company’s 2018 Equity Incentive Plan, which will vest annually in one-third increments commencing on the first anniversary date of the grant of Restricted Stock Units, in accordance with the terms of a separate Restricted Stock Unit Award Agreement, a form of which is attached hereto as Exhibit A. Any additional equity awards to the Executive shall be at the option of the Board.
(b) Restrictions. Any and all shares of stock, options, restricted stock units and other equity awards granted to or owned by the Executive will be subject to the share ownership guidelines and insider trading and blackout policies adopted from time to time by the Board of Directors for senior executives of the Company and will also be subject to applicable holding periods and transaction reporting requirements under applicable securities laws.
(c) Insurance and Other Benefits. During the Employment Period, the Executive and the Executive’s dependents shall be entitled to participate in any Company insurance programs and any applicable benefit plans, as the same may be adopted and/or amended from time to time (the “Benefits”). The Executive shall be bound by all of the policies and procedures relating to Benefits established by the Company from time to time.
(d) Vacation; Personal Days. During the Employment Period, the Executive shall be entitled to an annual vacation of such duration consistent with the Company’s policies from time to time, as determined by the Board. The Executive shall be entitled to paid personal days on a basis consistent with the Company’s other senior executives, as determined by the Board.
(e) Expense Reimbursement. The Company shall reimburse the Executive for all reasonable business, promotional, travel and entertainment expenses (“Reimbursable Expenses”) incurred or paid by the Executive during the Employment Period in the performance of Executive’s services under this Agreement on a basis consistent with the Company’s other senior executives, as determined by the Board, provided that the Executive furnishes to the Company appropriate documentation required by the Internal Revenue Code and/or other taxing authorities in a timely fashion in connection with such expenses and shall furnish such other documentation and accounting as the Company may from time to time reasonably request.
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7. Termination; Compensation Due Upon Termination of Employment. The Executive’s employment with the Company shall be entirely “at-will,” meaning that either the Executive or the Company may terminate such employment relationship by terminating this Agreement in writing delivered to the other party at any time for any reason or for no reason at all, subject, however, to the terms of this Section 7. The Executive’s right to compensation for periods after the date his employment with the Company terminates shall be determined in accordance with the provisions of paragraphs (a) through (e) below.
(a) Voluntary Resignation; Termination without Cause.
(i) Voluntary Resignation. The Executive may terminate his employment at any time upon thirty (30) days prior written notice to the Company. In the event of the Executive’s voluntary termination of employment other than for Good Reason (as defined below), the Company shall have no obligation to make payments to the Executive in accordance with the provisions of Sections 4 or 5, except as otherwise required by this Agreement or by applicable law, to provide the benefits described in Section 6 for periods after the date on which the Executive’s employment with the Company terminates due to the Executive’s voluntary resignation, except for the payment of the Executive’s Base Salary accrued through the date of such resignation.
(ii) Termination without Cause.
(A) If the Executive’s employment is terminated by the Company without Cause (as defined below): (1) the Company shall (x) continue to pay the Executive the Base Salary (at the rate in effect on the date the Executive’s employment is terminated) until the end of the Severance Period (as defined below), (y) with respect to the Annual Bonus, to the extent the Milestones are achieved or, in the absence of Milestones, the Board has, in its sole discretion, otherwise determined an amount for the Executive’s bonus for the current Employment Period, pay the Executive a pro rata portion of the Annual Bonus for the year of the Employment Period on the date such Annual Bonus would have been payable to the Executive had the Executive remained employed by the Company, and (z) pay any other accrued compensation and Benefits; and (2) any of the Executive’s unvested stock options as set forth on Schedule A attached hereto shall automatically vest upon the Executive’s termination without Cause. The Executive shall have no further rights under this Agreement or otherwise to receive any other compensation or benefits after such termination of employment.
(B) If, following a termination of employment without Cause, the Executive breaches the provisions of Sections 8, 9 or 10 hereof, the Executive shall not be eligible, as of the date of such breach, for the payments and benefits described in Section 7(a)(ii)(A) above, and any and all obligations and agreements of the Company with respect to such payments shall thereupon cease.
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(b) Discharge for Cause. Upon written notice to the Executive, the Company may terminate the Executive’s employment for “Cause” if any of the following events shall occur:
(i) any act or omission that constitutes a material breach by the Executive of any of his obligations under this Agreement;
(ii) the willful and continued failure or refusal of the Executive to satisfactorily perform the duties reasonably required of him as an employee of the Company;
(iii) the Executive’s conviction of, or plea of nolo contendere to, (i) any felony or (ii) a crime involving dishonesty or moral turpitude or which could reflect negatively upon the Company or otherwise impair or impede its operations;
(iv) the Executive’s engaging in any misconduct, negligence, act of dishonesty (including, without limitation, theft or embezzlement), violence, threat of violence or any activity that could result in any violation of federal securities laws, in each case, that is injurious to the Company or any of its Affiliates;
(v) the Executive’s material breach of a written policy of the Company or the rules of any governmental or regulatory body applicable to the Company;
(vi) the Executive’s refusal to follow the directions of the Board, unless such directions are, in the written opinion of legal counsel, illegal or in violation of applicable regulations;
(vii) any other willful misconduct by the Executive which is materially injurious to the financial condition or business reputation of the Company or any of its Affiliates, or
(viii) the Executive’s breach of his obligations under Section 8, 9 or 10 hereof.
In the event Executive is terminated for Cause, the Company shall have no obligation to make payments to Executive in accordance with the provisions of Sections 4 or 5, or, except as otherwise required by law, to provide the benefits described in Section 6, for periods after the Executive’s employment with the Company is terminated on account of the Executive’s discharge for Cause except for the Executive’s then applicable Base Salary accrued through the date of such termination.
(c) Disability. The Company shall have the right, but shall not be obligated to, terminate the Executive’s employment hereunder in the event the Executive becomes disabled such that he is unable to discharge his duties to the Company for a period of ninety (90) consecutive days or one hundred twenty (120) days in any one hundred eighty (180) consecutive day period (unless longer periods are not required under applicable local labor regulations) (a “Permanent Disability”). In the event of a termination of employment due to a Permanent Disability, the Company shall be obligated to continue to make payments to the Executive in an amount equal to the then applicable Base Salary for the Severance Period (as defined below), payable in the form of salary continuation for the applicable Severance Period after the Executive’s employment with the Company is terminated due to a Permanent Disability. A determination of a Permanent Disability shall be made by a physician satisfactory to both the Executive and the Company; provided, however, that if the Executive and the Company do not agree on a physician, the Executive and the Company shall each select a physician and those two physicians together shall select a third physician, whose determination as to a Permanent Disability shall be binding on all parties.
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(d) Death. The Executive’s employment hereunder shall terminate upon the death of the Executive. The Company shall have no obligation to make payments to the Executive in accordance with the provisions of Sections 4 or 5, or, except as otherwise required by law or the terms of any applicable benefit plan, to provide the benefits described in Section 6 for periods after the date of the Executive’s death except for then applicable Base Salary earned and accrued through the date of death, payable to the Executive’s beneficiary, as the Executive shall have indicated in writing to the Company (or if no such beneficiary has been designated, to Executive’s estate).
(e) Termination for Good Reason. The Executive may terminate this Agreement at any time for Good Reason. In the event of termination under this paragraph (e), the Company shall pay to the Executive severance in an amount equal to the Executive’s then applicable Base Salary for a period equal to the number of months set forth on Schedule A hereto (the “Severance Period”), subject to the Executive’s continued compliance with Sections 8, 9 and 10 of this Agreement, payable in the form of salary continuation for the applicable Severance Period following the Executive’s termination, and subject to the Company’s regular payroll practices and required withholdings. Such severance shall be reduced by any cash remuneration paid to the Executive because of the Executive’s employment or self-employment during the Severance Period. The Executive shall continue to receive all Benefits (either through the Company or an Affiliate) during the Severance Period. The Executive shall have no further rights under this Agreement or otherwise to receive any other compensation or benefits after such resignation. For the purposes of this Agreement, “Good Reason” shall mean any of the following (without Executive’s express written consent):
(i) the assignment to the Executive of duties that are significantly different from, and that result in a substantial diminution of, the duties that he assumed on the Effective Date;
(ii) removal of the Executive from his position as indicated on Schedule A hereto, or the assignment to the Executive of duties that are significantly different from, and that result in a substantial diminution of, the duties that he assumed under this Agreement, within twelve (12) months after a Change of Control (as defined below);
(iii) a reduction by the Company in the Executive’s then applicable Base Salary or other compensation, unless said reduction is pari passu with other senior executives of the Company;
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(iv) the taking of any action by the Company that would, directly or indirectly, materially reduce the Executive’s benefits, unless said reductions are pari passu with other senior executives of the Company; or
(v) a breach by the Company of any material term of this Agreement that is not cured by the Company within thirty (30) days following receipt by the Company of written notice thereof.
For purposes of this Agreement, “Change of Control” shall mean the occurrence of any one or more of the following: (i) the accumulation, whether directly, indirectly, beneficially or of record, by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) of 50% or more of the shares of the outstanding equity securities of the Company, (ii) a merger or consolidation of the Company in which the Company does not survive as an independent company or upon the consummation of which the holders of the Company’s outstanding equity securities prior to such merger or consolidation own less than 50% of the outstanding equity securities of the Company after such merger or consolidation, or (iii) a sale of all or substantially all of the assets of the Company; provided, however, that the following acquisitions shall not constitute a Change of Control for the purposes of this Agreement: (A) any acquisitions of common stock or securities convertible into common stock directly from the Company, or (B) any acquisition of common stock or securities convertible into common stock by any employee benefit plan (or related trust) sponsored by or maintained by the Company.
(f) Notice of Termination. Any termination of employment by the Company or the Executive shall be communicated by a written “Notice of Termination” to the other party hereto given in accordance with Section 16 of this Agreement. In the event of a termination by the Company for Cause, the Notice of Termination shall (i) indicate the specific termination provision in this Agreement relied upon, (ii) set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Executive’s employment under the provision so indicated and (iii) specify the date of termination, which date shall be the date of such notice. The failure by the Executive or the Company to set forth in the Notice of Termination any fact or circumstance which contributes to a showing of Cause shall not waive any right of the Executive or the Company, respectively, hereunder or preclude the Executive or the Company, respectively, from asserting such fact or circumstance in enforcing the Executive’s or the Company’s rights hereunder.
(g) Resignation of Executive Officer. The termination of the Executive’s employment for any reason will constitute the Executive’s resignation from (i) any director, officer or employee position the Executive has with the Company or any of its Affiliates, and (ii) all fiduciary positions (including as a trustee) the Executive holds with respect to any employee benefit plans or trusts established by the Company. The Executive agrees that this Agreement shall serve as written notice of resignation in this circumstance, unless otherwise required by any plan or applicable law.
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8. Non-Competition; Non-Solicitation.
(a) For the duration of the Employment Period and, unless the Company terminates the Executive’s employment without Cause, during the Severance Period (the “Non-compete Period”), the Executive shall not, directly or indirectly, except as specifically provided in the last sentence of Section 2(c) hereof, engage or invest in, own, manage, operate, finance, control or participate in the ownership, management, operation, financing, or control of, be employed by, associated with, or in any manner connected with, lend any credit to, or render services or advice to, any business, firm, corporation, partnership, association, joint venture or other entity that engages or conducts any business the same as or substantially similar to the Business or any other business engaged in or proposed to be engaged in or conducted by the Company and/or any of its Affiliates during the Employment Period, or then included in the future strategic plan of the Company and/or any of its Affiliates, anywhere within North America; provided, however, that the Executive may own less than 5% in the aggregate of the outstanding shares of any class of securities of any enterprise (but without otherwise participating in the activities of such enterprise), other than any such enterprise with which the Company competes or is currently engaged in a joint venture, if such securities are of a class listed on any national or regional securities exchange or have been registered under Section 12(b) or (g) of the Exchange Act.
(b) During the Employment Period and for a period of twelve (12) months following termination of the Executive’s employment with the Company, the Executive shall not:
(i) solicit or hire, or attempt to recruit, persuade, solicit or hire, any employee, or independent contractor of, or consultant to, the Company, or its Affiliates, to leave the employment (or independent contractor relationship) thereof, whether or not any such employee or independent contractor is party to an employment agreement; or
(ii) attempt in any manner to solicit or accept from any customer or client of the Company or any of its Affiliates, with whom the Company or any of its Affiliates had significant contact during the term of this Agreement, business of the kind or competitive with the business done by the Company or any of its Affiliates with such customer or to persuade or attempt to persuade any such customer to cease to do business or to reduce the amount of business which such customer has customarily done or is reasonably expected to do with the Company or any of its Affiliates or if any such customer elects to move its business to a person other than the Company or any of its Affiliates, provide any services (of the kind or competitive with the Business of the Company or any of its Affiliates) for such customer, or have any discussions regarding any such service with such customer, on behalf of such other person.
(c) The Executive recognizes and agrees that because a violation by the Executive of his obligations under this Section will cause irreparable harm to the Company that would be difficult to quantify and for which money damages would be inadequate, the Company shall have the right to injunctive relief to prevent or restrain any such violation, without the necessity of posting a bond. The Non-compete Period will be extended by the duration of any violation by the Executive of any of his obligations under this Section.
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(d) The Executive expressly agrees that the character, duration and scope of the covenant not to compete are reasonable in light of the circumstances as they exist at the date upon which this Agreement has been executed. However, should a determination nonetheless be made by a court of competent jurisdiction at a later date that the character, duration or geographical scope of the covenant not to compete is unreasonable in light of the circumstances as they then exist, then it is the intention of the Executive, on the one hand, and the Company, on the other, that the covenant not to compete shall be construed by the court in such a manner as to impose only those restrictions on the conduct of the Executive which are reasonable in light of the circumstances as they then exist and necessary to assure the Company of the intended benefit of the covenant not to compete.
9. Inventions and Patents. The Executive acknowledges that all inventions, innovations, improvements, know-how, plans, development, methods, designs, analyses, specifications, software, drawings, reports and all similar or related information (whether or not patentable or reduced to practice) which related to any of the Company’s actual or proposed business activities and which are created, designed or conceived, developed or made by the Executive during the Executive’s past or future employment by the Company or any Affiliates, or any predecessor thereof (“Work Product”), belong to the Company, or its Affiliates, as applicable. Any copyrightable work falling within the definition of Work Product shall be deemed a “work made for hire” and ownership of all right title and interest shall rest in the Company. The Executive hereby irrevocably assigns, transfers and conveys, to the full extent permitted by law, all right, title and interest in the Work Product, on a worldwide basis, to the Company to the extent ownership of any such rights does not automatically vest in the Company under applicable law. The Executive will promptly disclose any such Work Product to the Company and perform all actions requested by the Company (whether during or after employment) to establish and confirm ownership of such Work Product by the Company (including, without limitation, assignments, consents, powers of attorney and other instruments).
10. Confidentiality.
(a) The Executive understands that the Company and/or its Affiliates, from time to time, may impart to the Executive confidential information, whether such information is written, oral, electronic or graphic.
(b) For purposes of this Agreement, “Confidential Information” means information, which is used in the business of the Company or its Affiliates and (i) is proprietary to, about or created by the Company or its Affiliates, (ii) gives the Company or its Affiliates some competitive business advantage or the opportunity of obtaining such advantage or the disclosure of which could be detrimental to the interests of the Company or its Affiliates, (iii) is designated as Confidential Information by the Company or its Affiliates, is known by the Executive to be considered confidential by the Company or its Affiliates, or from all the relevant circumstances should reasonably be assumed by the Executive to be confidential and proprietary to the Company or its Affiliates, or (iv) is not generally known by non-Company personnel. Such Confidential Information includes, without limitation, the following types of information and other information of a similar nature (whether or not reduced to writing or designated as confidential):
(i) internal personnel and financial information of the Company or its Affiliates, vendor information (including vendor characteristics, services, prices, lists and agreements), purchasing and internal cost information, internal service and operational manuals, and the manner and methods of conducting the business of the Company or its Affiliates;
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(ii) marketing and development plans, price and cost data, price and fee amounts, pricing and billing policies, bidding, quoting procedures, marketing techniques, forecasts and forecast assumptions and volumes, and future plans and potential strategies (including, without limitation, all information relating to any oil and gas prospect and the identity of any key contact within the organization of any acquisition prospect) of the Company or its Affiliates which have been or are being discussed;
(iii) names of customers and their representatives, contracts (including their contents and parties), customer services, and the type, quantity, specifications and content of products and services purchased, leased, licensed or received by customers of the Company or its Affiliates; and
(iv) confidential and proprietary information provided to the Company or its Affiliates by any actual or potential customer, government agency or other third party (including businesses, consultants and other entities and individuals).
The Executive hereby acknowledges the Company’s exclusive ownership of such Confidential Information.
(c) The Executive agrees as follows: (1) only to use the Confidential Information to provide services to the Company and its Affiliates; (2) only to communicate the Confidential Information to fellow employees, agents and representatives on a need-to-know basis; and (3) not to otherwise disclose or use any Confidential Information, except as may be required by law or otherwise authorized by the Board. Upon demand by the Company or upon termination of the Executive’s employment, the Executive will deliver to the Company all manuals, photographs, recordings and any other instrument or device by which, through which or on which Confidential Information has been recorded and/or preserved, which are in the Executive’s possession, custody or control.
11. Executive’s Representation. The Executive hereby represents that the Executive’s entry into this Agreement and performance of the services hereunder will not violate the terms or conditions of any other agreement to which the Executive is a party.
12. Arbitration. In the event of any breach arising from the performance of this Agreement, either party may request arbitration. In such event, the parties will submit to arbitration by a qualified arbitrator with the definition and laws of the State of Maryland. Such arbitration shall be final and binding on both parties.
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13. Governing Law/Jurisdiction. This Agreement and any disputes or controversies arising hereunder shall be construed and enforced in accordance with and governed by the internal laws of the State of Maryland without regard to the conflicts of laws principles thereof.
14. Public Company Obligations; Indemnification.
(a) Executive acknowledges that the Company intends to become a publicly reporting company whose shares of common stock will be registered under the U.S. Securities Act of 1933, as amended (the “Securities Act”), and whose common stock will be registered under the Exchange Act, and that, after the Company becomes a publicly reporting company, this Agreement will be subject to the public filing requirements of the Exchange Act. In addition, both parties acknowledge that the Executive’s compensation and perquisites (each as determined by the rules of the US Securities and Exchange Commission (the “SEC”) or any other regulatory body or exchange having jurisdiction) (which may include benefits or regular or occasional aid/assistance, such as recreation, club memberships, meals, education for his family, vehicle, lodging or clothing, occasional bonuses or anything else he receives, during the Employment Period and any renewals thereof, in cash or in kind) paid or payable or received or receivable under this Agreement or otherwise, and his transactions and other dealings with the Company, may be required to be publicly disclosed.
(b) Executive acknowledges and agrees that the applicable insider trading rules, transaction reporting rules, limitations on disclosure of non-public information and other requirements set forth in the Securities Act, the Exchange Act and rules and regulations promulgated by the SEC may apply to this Agreement and Executive’s employment with the Company.
(c) Executive (on behalf of himself, as well as the Executive’s executors, heirs, administrators and assigns) absolutely and unconditionally agrees to indemnify and hold harmless the Company and all of its past, present and future affiliates, executors, heirs, administrators, shareholders, employees, officers, directors, attorneys, accountants, agents, representatives, predecessors, successors and assigns from any and all claims, debts, demands, accounts, judgments, causes of action, equitable relief, damages, costs, charges, complaints, obligations, controversies, actions, suits, proceedings, expenses, responsibilities and liabilities of every kind and character whatsoever (including, but not limited to, reasonable attorneys’ fees and costs) in the event of Executive’s breach of any obligation of Executive under the Securities Act, the Exchange Act, any rules promulgated by the SEC and any other applicable federal, state or foreign laws, rules, regulations or orders.
15. Entire Agreement. This Agreement constitutes the entire agreement between the parties hereto with respect to the subject matter hereof and thereof and supersedes and cancels any and all previous agreements, both written and oral, regarding the subject matter hereof between the parties hereto. This Agreement shall not be changed, altered, modified or amended, except by a written agreement signed by both parties hereto.
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16. Notices. All notices, requests, demands and other communications called for or contemplated hereunder shall be in writing and shall be deemed to have been given when delivered to the party to whom addressed or when sent by telecopy (if promptly confirmed by registered or certified mail, return receipt requested, prepaid and addressed) to the parties, their successors in interest, or their assignees at the following addresses, or at such other addresses as the parties may designate by written notice in the manner aforesaid:
(a) | to the Company at: | |
Shuttle Pharmaceuticals Holdings, Inc. | ||
One Research Court, Suite 450 | ||
Rockville, MD 20850 | ||
Attn: Chief Executive Officer | ||
Email: anatoly.dritschilo@shuttlepharma.org | ||
with a copy to: | ||
CKR Law LLP | ||
1330 Avenue of the Americas, 14th Floor | ||
New York, NY 10019 | ||
Attn: Megan J. Penick, Esq. | ||
Email: mpenick@ckrlaw.com | ||
(b) | to the Executive as set forth on Schedule A hereto. |
All such notices, requests and other communications will (i) if delivered personally to the address as provided in this Section, be deemed given upon delivery, (ii) if delivered by facsimile transmission to the facsimile number as provided for in this Section, be deemed given upon facsimile confirmation, (iii) if delivered by mail in the manner described above to the address as provided for in this Section, be deemed given on the earlier of the third business day following mailing or upon receipt and (iv) if delivered by overnight courier to the address as provided in this Section, be deemed given on the earlier of the first business day following the date sent by such overnight courier or upon receipt (in each case regardless of whether such notice, request or other communication is received by any other person to whom a copy of such notice is to be delivered pursuant to this Section). Either party may, by notice given to the other party in accordance with this Section, designate another address or person for receipt of notices hereunder.
17. Severability. If any term or provision of this Agreement, or the application thereof to any person or under any circumstance, shall to any extent be invalid or unenforceable, the remainder of this Agreement, or the application of such terms to the persons or under circumstances other than those as to which it is invalid or unenforceable, shall be considered severable and shall not be affected thereby, and each term of this Agreement shall be valid and enforceable to the fullest extent permitted by law. The invalid or unenforceable provisions shall, to the extent permitted by law, be deemed amended and given such interpretation as to achieve the economic intent of this Agreement.
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18. Waiver. The failure of any party to insist in any one instance or more upon strict performance of any of the terms and conditions hereof, or to exercise any right or privilege herein conferred, shall not be construed as a waiver of such terms, conditions, rights or privileges, but same shall continue to remain in full force and effect. Any waiver by any party of any violation of, breach of or default under any provision of this Agreement by the other party shall not be construed as, or constitute, a continuing waiver of such provision, or waiver of any other violation of, breach of or default under any other provision of this Agreement.
19. Successors and Assigns. This Agreement shall be binding upon the Company and any successors and assigns of the Company. Neither this Agreement nor any right or obligation hereunder may be assigned by the Executive. The Company may assign this Agreement and its right and obligations hereunder, in whole or in part.
20. Counterparts. This Agreement may be executed in multiple counterparts, each of which shall be deemed an original, and all of which together shall constitute one and the same instrument. Additionally, a facsimile counterpart of this Agreement shall have the same effect as an originally executed counterpart.
21. Headings. Headings in this Agreement are for reference purposes only and shall not be deemed to have any substantive effect.
22. Opportunity to Seek Advice. The Executive acknowledges and confirms that he has had the opportunity to seek such legal, financial and other advice and representation as he has deemed appropriate in connection with this Agreement, that the Executive is fully aware of its legal effect, and that Executive has entered into it freely based on the Executive’s judgment and not on any representations or promises other than those contained in this Agreement.
23. Withholding and Payroll Practices. All salary, severance payments, bonuses or benefits payments made by the Company under this Agreement shall be net of any tax or other amounts required to be withheld by the Company under applicable law and shall be paid in the ordinary course pursuant to the Company’s then existing payroll practices.
[The next page is the signature page.]
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above.
SHUTTLE PHARMACEUTICALS HOLDINGS, INC. | ||
By: | /s/ Anatoly Dritschilo | |
Name: | Anatoly Dritschilo | |
Title: | Chief Executive Officer |
EXECUTIVE: | ||
/s/ Ty Rich | ||
Tyvin Rich, MD |
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Schedule A
1. | Employment Period: 36 months |
2. | Employment |
a. | Title: Chief Clinical Officer | |
b. | Executive Duties: | |
In his capacity as Chief Clinical Officer, the Executive shall perform such services consistent with his office, as from time to time shall be assigned to him by the Board of Directors of the Company, devoting approximately 40 hours per week, and all of the functions of the offices held by him, as directed by the Board of Directors from time-to-time. |
3. | Base Salary: $ 218,000 per year. |
Target Bonus: $ 43,000 | |
5(a). | Initial Restricted Stock Unit Grant: $ 87,000 worth of Restricted Stock Units issuable under the Company’s 2018 Equity Incentive Plan, vesting annually in one-third increments commencing on the first anniversary date of the grant of Restricted Stock Units, in accordance with the terms of the Restricted Stock Unit Award Agreement. |
6(e). | Severance Period: Twelve months |
15(b). | Executive Contact Information: |
20 Betz Lane, | |
Hampton, VA 23666 | |
(434) 996-9145 |
Schedule B
Milestones
Key Performance Indicators | Level
to be Achieved by the Company |
Year | ||
KPI #3. Prepare Clinical Trials w/CRO a. Ropidoxuridine + RT for GBM b. Ropidoxuridine + RT for sarcoma C. Rpoidoxuridine + RT for pancreas |
50% | 2020 | ||
KPI #9. Initiate IND-enabling studies of Heavy Ropidoxuridine and Proton Therapy and Prepare Phase I clinical trial |
50% | 2020 | ||
Scientific Milestones IND-enabling Ropidoxuridine & O18-IPdR (a) Ropidoxuridine (per GAP analysis) (b) Ropidoxuridine/TPI (c) Doranidazole (per GAP analysis) (d) Heavy Ropidoxuridine (O18-IPdR) |
Exhibit A
Form of Restricted Stock Award Agreement
Exhibit 10.5
CONTRACT TABLE OF CONTENTS
PART I - THE SCHEDULE | 4 | ||
SECTION B - SUPPLIES OR SERVICES AND PRICES/COSTS | 4 | ||
ARTICLE B.1. BRIEF DESCRIPTION OF SUPPLIES OR SERVICES | 4 | ||
ARTICLE B.2. PRICES | 4 | ||
ARTICLE B.3. OPTION FOR PHASE II | 5 | ||
ARTICLE B.4. ADVANCE UNDERSTANDINGS | 5 | ||
ARTICLE B.5. PROVISIONS APPLICABLE TO DIRECT COSTS | 7 | ||
SECTION C - DESCRIPTION/SPECIFICATIONS/WORK STATEMENT | 8 | ||
ARTICLE C.1. STATEMENT OF WORK | 8 | ||
ARTICLE C.2. REPORTING REQUIREMENTS | 8 | ||
ARTICLE C.3. INVENTION REPORTING REQUIREMENT | 15 | ||
SECTION D - PACKAGING, MARKING AND SHIPPING | 15 | ||
SECTION E - INSPECTION AND ACCEPTANCE | 15 | ||
SECTION F - DELIVERIES OR PERFORMANCE | 16 | ||
ARTICLE F.1. PERIOD OF PERFORMANCE | 16 | ||
ARTICLE F.2. DELIVERIES | 16 | ||
ARTICLE F.3. CLAUSES INCORPORATED BY REFERENCE, FAR 52.252-2 (FEBRUARY 1998) | 18 | ||
SECTION G - CONTRACT ADMINISTRATION DATA | 18 | ||
ARTICLE G.1. CONTRACTING OFFICER’S REPRESENTATIVE (COR) | 18 | ||
ARTICLE G.2. KEY PERSONNEL, HHSAR 352.242-70 (January 2006) | 18 | ||
ARTICLE G.3. INVOICE SUBMISSION/CONTRACT FINANCING REQUEST AND CONTRACT FINANCIAL REPORT | 19 | ||
ARTICLE G.4. PROVIDING ACCELERATED PAYMENT TO SMALL BUSINESS SUBCONTRACTORS, FAR 52.232-40 (December 2013) | 21 | ||
ARTICLE G.5. GOVERNMENT PROPERTY | 21 | ||
ARTICLE G.6. POST AWARD EVALUATION OF CONTRACTOR PERFORMANCE | 22 | ||
SECTION H - SPECIAL CONTRACT REQUIREMENTS | 22 | ||
ARTICLE H.1. PROTECTION OF HUMAN SUBJECTS, HHSAR 352.270-4(b) (January 2006) | 22 | ||
ARTICLE H.2. HUMAN SUBJECTS | 23 | ||
ARTICLE H.3. RESTRICTION ON USE OF HUMAN SUBJECTS, HHSAR 352.270-6 (January 2006) | 23 | ||
ARTICLE H.4. REQUIRED EDUCATION IN THE PROTECTION OF HUMAN RESEARCH PARTICIPANTS | 23 | ||
ARTICLE H.5. DATA AND SAFETY MONITORING IN CLINICAL TRIALS | 24 | ||
ARTICLE H.6. REGISTRATION AND RESULTS REPORTING FOR APPLICABLE CLINICAL TRIALS IN CLINICALTRIALS.GOV | 24 | ||
ARTICLE H.7. NIH POLICY ON ENHANCING PUBLIC ACCESS TO ARCHIVED PUBLICATIONS RESULTING FROM NIH-FUNDED RESEARCH | 24 | ||
ARTICLE H.8. NEEDLE DISTRIBUTION | 25 | ||
ARTICLE H.9. ACKNOWLEDGEMENT OF FEDERAL FUNDING | 25 | ||
ARTICLE H.10. RESTRICTION ON ABORTIONS | 25 | ||
ARTICLE H.11. CONTINUED BAN ON FUNDING OF HUMAN EMBRYO RESEARCH | 25 | ||
ARTICLE H.12. DISSEMINATION OF FALSE OR DELIBERATELY MISLEADING INFORMATION | 25 | ||
ARTICLE H.13. PRIVACY ACT, HHSAR 352.224-70 (January 2006) | 25 |
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ARTICLE H.14. OMB CLEARANCE | 26 | ||
ARTICLE H.18. OPTION PROVISION | 26 | ||
ARTICLE H.19. LIMITATIONS ON SUBCONTRACTING - SBIR | 26 | ||
ARTICLE H.20. ELECTRONIC AND INFORMATION TECHNOLOGY ACCESSIBILITY, HHSAR 352.239-73(b) | |||
(January 2010) | 27 | ||
ARTICLE H.21. CONFIDENTIALITY OF INFORMATION | 27 | ||
ARTICLE H.22. INSTITUTIONAL RESPONSIBILITY REGARDING INVESTIGATOR FINANCIAL CONFLICTS | |||
OF INTEREST - PHASE II | 28 | ||
ARTICLE H.23. PUBLICATION AND PUBLICITY | 30 | ||
ARTICLE H.24. REPORTING MATTERS INVOLVING FRAUD, WASTE AND ABUSE | 30 | ||
ARTICLE H.25. YEAR 2000 COMPLIANCE | 31 | ||
ARTICLE H.26. USE OF FUNDS FOR PROMOTIONAL ITEMS | 31 | ||
PART II - CONTRACT CLAUSES | 32 | ||
SECTION I - CONTRACT CLAUSES | 32 | ||
PART III - LIST OF DOCUMENTS, EXHIBITS AND OTHER ATTACHMENTS | 40 | ||
SECTION J - LIST OF ATTACHMENTS | 40 | ||
1. Statement of Work | 40 | ||
2. Invoice Instructions for NIH Fixed-Price Contracts, NIH(RC)-2 | 40 | ||
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3. Invoice/Financing Request and Contract Financial Reporting Instructions for NIH Cost-Reimbursement Type Contracts, NIH(RC)-4 | 40 |
4. Cumulative Inclusion Enrollment Report | 40 | ||
5. Privacy Act System of Records, Number | 40 | ||
6. Research Patient Care Costs | 40 | ||
7. Disclosure of Lobbying Activities, SF-LLL | 40 | ||
8. Government Property - Schedule IB | 40 | ||
9. Report of Government Owned, Contractor Held Property | 40 | ||
PART IV - REPRESENTATIONS AND INSTRUCTIONS | 42 | ||
SECTION K - REPRESENTATIONS AND CERTIFICATIONS | 42 | ||
1. Annual Representations and Certifications | 42 | ||
2. Annual Representations and Certifications, FAR Clause 52.204-8 | 42 | ||
3. Human Subjects Assurance Identification Number | 42 |
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PART I - THE SCHEDULE
SECTION B - SUPPLIES OR SERVICES AND PRICES/COSTS
ARTICLE B.1. BRIEF DESCRIPTION OF SUPPLIES OR SERVICES
Phase I: To advance commercialization efforts for IPdR (5-iodo-2-pyrimidinone-2’-deoxyribose), a prodrug of the radiosensitizer IUdR (5-iodo-2’-deoxyuridine). The Phase I will determine the scientific merit, feasibility and potential for commercialization of oral IPdR as a radiation sensitizer for use in cancer treatment. Administrative tasks will be completed to enable an IND for the Contractor; formulation of GMP manufactured IPdR into 250 mg capsules; submission of a letter of intent (LOI) to CTEP; protocol preparation and IRB approval for the proposed Phase I clinical trial and establishment of companion diagnostics for analyzing clinical specimens from Phase I patients.
Phase II: To perform the first-in-human therapeutic trial assessing safety and pharmacokinetics of 5-iodo-2- pyrimidinone-2’-deoxyribose (IPdR), as a radiosensitizer for cancer treatment. The Phase I clinical trial and PK study will be performed as the first step in the plan to commercialize IPdR.
ARTICLE B.2. PRICES
a. | The total fixed price of this contract is $191,971. | |
b. | Upon delivery and acceptance of the item specified in the DELIVERY Article in SECTION F and described in SECTION C of this contract and identified in the schedule of charges below, the Government shall pay to the Contractor the unit prices set forth below: |
PAYMENT SCHEDULE
Description | Invoice # | Period Covered | Amount | |||||||
PDF Kick-Off Presentation | HHSN261201400013C - 01 | Month 1 | $ | 47,993 | ||||||
Quarterly Report 1 | HHSN261201400013C - 02 | Month 2-3 | $ | 47,993 | ||||||
Quarterly Report 2 | HHSN261201400013C - 03 | Month 4-6 | $ | 47,993 | ||||||
Draft Commercialization Plan, Draft Final Report | HHSN261201400013C - 04 | Start date of contract through one month prior to contract completion date | $ | 23,996 | ||||||
PDF
of Final Presentation, Final Report, Summary of Salient Results, Final Commercialization Plan | HHSN261201400013C - 05 | Entire Contract Period of Performance | $ | 23,996 | ||||||
TOTAL FIXED PRICE | $ | 191,971 |
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ARTICLE B.3. OPTION FOR PHASE II
a. | The fixed price of the Base Period (Phase I) of this contract is $191,971. | |
b. | If the Government exercises its option pursuant to the OPTION PROVISION Article in SECTION H of this contract, the Government’s total estimated contract amount represented by the sum of the estimated cost plus the fixed fee will be increased as follows: |
Estimated Cost ($) | Fixed Fee ($) | Estimated Cost Plus Fixed Fee ($) | ||||||||||
Base Period 9/19/2014 - 6/18/2015 | $ | 181,105 | $ | 10,866 | $ | 191,971 | ||||||
Option Period: 6/19/2015 - 6/18/2017 | $ | 1,347,280 | $ | 80,837 | $ | 1,428,117 | ||||||
Total
[Base Period and Option] | $ | 1,528,385 | $ | 91,703 | $ | 1,620,088 |
ARTICLE B.4. ADVANCE UNDERSTANDINGS
Other provisions of this contract notwithstanding, approval of the following items within the limits set forth is hereby granted without further authorization from the Contracting Officer.
a. | Indirect Costs |
1. | In no event shall the final amount reimbursable for indirect costs exceed ceiling rates of 15% of Direct Labor for Fringe Benefits, 30% of Direct Labor for Overhead, and 12% of Direct Labor for G&A. | |
2. | The Government is not obligated to pay any additional amount should the final indirect cost rates exceed these negotiated ceiling rates. In the event that the final indirect cost rates are less than these negotiated ceiling rates, the Government’s obligation shall be reduced to conform to the lower rate. | |
Any costs over and above this cost ceiling shall not be reimbursed under this contract or any other Government contract, grant, or cooperative agreement. | ||
3. | The Contractor shall complete all work in accordance with the Statement of Work, terms and conditions of this contract. |
b. | Subcontract |
To negotiate a fixed price type subcontract with with Rhode Island Hospital for Phase I for an amount not to exceed $65,549 for the period 9/19/2014-6/18/2015 . Award of the subcontract shall not proceed without the prior written consent of the Contracting Officer upon review of the supporting documentation required by FAR Clause 52.244-2, Subcontracts. After receiving written consent of the subcontract by the Contracting Officer, a copy of the signed, executed subcontract shall be provided to the Contracting Officer.
If the Government exercises its option for Phase II pursuant to the Option Provision Article in Section H of this contract, the total estimated Subcontract amount will be increased as follows:
Option - 6/19/2015-6/18/2017 - $623,269
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Consultant
c. | Consultants Consultant fee(s) to be paid to the following individual(s): Phase II only |
Name | Rate Per Hour | Number of Hours | Total Cost Including Travel Not to Exceed | |||||||||
Carl Schmidt, Commercialization Consultant, Phase II | $ | 200 | 100 | $ | 20,000 |
d. | Scientific Meetings |
a. | Travel to general scientific meetings shall be unallowable without the prior written approval of the Contracting Officer. No retroactive approvals will be issued, and no travel costs incurred without prior Contracting Officer approval will be paid. | |
b. | All travel requests shall be sent to both the Contracting Officer and the Contracting Officer’s Representative (COR) 90 calendar days prior to the planned start date of the travel. If it is determined that the travel is allowable, then the Contracting Officer will issue written approval. |
e. | Contract Number Designation |
On all correspondence submitted under this contract, the Contractor agrees to clearly identify the two contract numbers that appear on the face page of the contract as follows:
Contract No. HHSN261201400013C
NCI Control No. N01CO-2014-00013.
f. | SBIR Funding Agreement Certification |
The SBIR Funding Agreement Certification form, located in SECTION J, must be completed at the time of award prior to the performance of work under this contract, in accordance with the SBIR Policy Directive issued by SBA (October 18, 2012).
For additional information, see NIH Policy Notice NOT-OD-13-116, entitled, “New Program Certifications Required for SBIR and STTR Awards,” located at: http://grants.nih.gov/qrants/quide/notice-files/NQT- OD-13-116.html.
g. | SBIR Fast Track Recertification Requirement |
Phase I and Phase II SBIR awards are considered separate funding agreements under the Fast-Track Initiative. Therefore, Phase I Fast-Track awardees must recertify that they meet all of the eligibility criteria for an SBIR or STTR award prior to issuance of the Phase II award.
h. | Software Purchases |
All software purchases must first be approved in writing by the Contracting Officer.
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ARTICLE B.5. PROVISIONS APPLICABLE TO DIRECT COSTS
a. | Items Unallowable Unless Otherwise Provided |
Notwithstanding the clauses, ALLOWABLE COST AND PAYMENT, and FIXED FEE, incorporated in this contract, unless authorized in writing by the Contracting Officer, the costs of the following items or activities shall be unallowable as direct costs:
1. | Conferences and Meetings | |
2. | Food for Meals, Light Refreshments, and Beverages | |
3. | Promotional Items [includes, but is not limited to: clothing and commemorative items such as pens, mugs/cups, folders/folios, lanyards, and conference bags that are sometimes provided to visitors, employees, grantees, or conference attendees.] | |
4. | Acquisition, by purchase or lease, of any interest in real property; | |
5. | Special rearrangement or alteration of facilities; | |
6. | Purchase or lease of any item of general purpose office furniture or office equipment regardless of dollar value. (General purpose equipment is defined as any items of personal property which are usable for purposes other than research, such as office equipment and furnishings, pocket calculators, etc.); | |
7. | Travel to attend general scientific meetings; | |
8. | Foreign travel; | |
9. | Consultant costs; | |
10. | Subcontracts; | |
11. | Patient care costs; | |
12. | Accountable Government Property (defined as non-expendable personal property with an acquisition cost of $1,000 or more and “sensitive items” (defined as items of personal property (supplies and equipment that are highly desirable and easily converted to person use), regardless of acquisition value. | |
13. | Printing Costs (as defined in the Government Printing and Binding Regulations). |
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b. | Travel Costs |
1. | Domestic Travel |
Total expenditures for domestic travel (transportation, lodging, subsistence, and incidental expenses) incurred in direct performance of this contract shall not exceed $9,600 in Phase II without the prior written approval of the Contracting Officer.
2. | The Contractor shall invoice and be reimbursed for all travel costs in accordance with Federal Acquisition Regulations (FAR) 31.2 - Contracts with Commercial Organizations, Subsection 31.205-46, Travel Costs. |
SECTION C - DESCRIPTION/SPECIFICATIONS/WORK STATEMENT
ARTICLE C.1. STATEMENT OF WORK
a. | Independently and not as an agent of the Government, the Contractor shall furnish all the necessary services, qualified personnel, material, equipment, and facilities, not otherwise provided by the Government as needed to perform the Statement of Work, set forth in SECTION J-List of Attachments, attached hereto and made a part of this contract. |
Document Title | Date | |
Statement of Work - Phase I | August 25, 2014 | |
Statement of Work - Phase II | August 25, 2014 |
b. | Privacy Act System of Records Number 09-25-0200 is applicable to this contract and shall be used in any design, development, or operation work to be performed under the resultant contract. Disposition of records shall be in accordance with SECTION C of the contract, and by direction of the Contracting Officer’s Representative (COR). |
ARTICLE C.2. REPORTING REQUIREMENTS
All reports required herein shall be submitted in an electronic format via email as attachments to the following designated NCI Branch Distribution Mailbox.: Ncibranchbinvoices@mail.nih.gov
Each email submission shall contain only one deliverable. If the attached file for the deliverable exceeds 50 MB, the Contractor shall divide the deliverable into files of 50 MB each. All deliverables shall be limited to five file attachments or less.
The subject line of the email shall read as follows:
Deliverable_Contract Number_VendorJs Name_Deliverable Description_Due Date
All electronic reports submitted shall be compliant with Section 508 of the Rehabilitation Act of 1973. Additional information about testing documents for Section 508 compliance, including guidance and specific checklists, by application, can be found at: http://www.hhs.gov/web/508/index.html under “Making Files Accessible.”
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a. | Technical Reports |
In addition to those reports required by the other terms of this contract, the Contractor shall prepare and submit the following reports in the manner stated below and in accordance with the DELIVERIES Article in SECTION F of this contract:
[Note: Beginning May 25, 2008, the Contractor shall include, in any technical progress report submitted, the applicable PubMed Central (PMC) or NIH Manuscript Submission reference number when citing publications that arise from its NIH funded research.]
1. | Kick-off Presentation |
The Contractor shall prepare and submit a kick-off presentation. Presentation of the slides will occur either in-person, through Webinar, or teleconference. The presentation shall cover the following:
a. | Discussion of the Contractor’s organization/project status, particularly changes that occurred since the proposal submission. | |
b. | The Contractor’s recent achievements (patents, publications, sales, regulatory approvals, partnerships, awards, etc.). | |
c. | Status of the field. | |
d. | Status of commercial and academic competitors. | |
e. | Where is the proposed project positioned against the state of the art. | |
f. | Intellectual property landscape. | |
g. | Refresher on the proposed technology/ R&D. | |
h. | Detailed plan for the first budget period of the contract. | |
i. | Milestones (technical and commercial) to be achieved by the end of the first budget period of the contract. | |
j. | Discussion of anticipated technical risks and alternative approaches. | |
k. | Questions to the NCI |
2. | Quarterly Report |
Phase I
The Contractor shall submit two (2) Quarterly Reports which shall include:
a. | Summary of technical objectives with status of each objective clearly marked (e.g. previously complete, complete during the reporting period, not started, etc.). |
b. | Clear description of activities accomplished in the quarter. |
c. | Analysis of experimental data and presentation of selected data. |
d. | Comments regarding the timeliness of performance. |
e. | Brief explanation of objectives/activities to be pursued in the next reporting period. |
The report shall generally be no longer than five (5) pages excluding tables presenting the data, figures, images, and graphs.
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Phase II
The Contractor shall submit Quarterly Reports which shall include the same information as required for the Phase I Quarterly Reports. The first reporting period in Phase II consists of the first full three (3) months of performance including any fractional part of the initial month. Thereafter, the reporting period shall consist of three (3) full calendar months.
The first Phase II Quarterly Report shall be due 15 calendar days after the first complete reporting period. Thereafter, report shall be due on or before the 15th calendar day following each reporting period.
3. | Draft Updated Commercialization Plan |
The Contractor shall submit an updated commercialization plan which shall include:
a. | Value of the SBIR Project, Expected Outcomes, and Impact |
Describe, in layperson’s terms, the proposed project and its key technology objectives. State the product, process, or service to be developed in Phase III. Clarify the need addressed, specifying weaknesses in the current approaches to meet this need. In addition, describe the commercial applications of the research and the innovation inherent in this application. Be sure to also specify the potential societal, educational, and scientific benefits of this work. Explain the non-commercial impacts to the overall significance of the project. Explain how the SBIR contract integrates with the overall business plan of the company.
b. | Organization |
Give a brief description of the Contractor’s organization including corporate objectives, core competencies, present size (annual sales level and number and types of employees), history of previous Federal and non-Federal funding, regulatory experience, and subsequent commercialization, and any current products/services that have significant sales. Include a short description of the origins of the Contractor’s organization. Indicate the Contractor’s vision for the future, how the Contractor will grow/maintain a sustainable business entity, and how the Contractor will meet critical management functions as the Contractor’s organization evolves from a small technology R&D business to a successful commercial entity.
c. | Market. Customer, and Competition |
Describe the market and/or market segments being targeted and provide a brief profile of the potential customer. Tell what significant advantages the Contractor’s innovation will bring to the market, e.g., better performance, lower cost, faster, more efficient or effective, new capability. Explain the hurdles the Contractor will have to overcome in order to gain market/customer acceptance of the Contractor’s innovation. Describe any strategic alliances, partnerships, or licensing agreements the Contractor has in place to get FDA approval (if required) and to market and sell the Contractor’s product. Briefly describe the Contractor’s marketing and sales strategy. Give an overview of the current competitive landscape and any potential competitors over the next several years.
d. | Intellectual Property (IP) Protection |
Describe how the Contractor is going to protect the IP that results from the Contractor’s innovation. Also note other actions the Contractor may consider taking that will constitute at least a temporal barrier to others aiming to provide a solution similar to the Contractor’s.
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e. | Finance Plan |
Describe the necessary financing the Contractor will require to commercialize the product, process, or service, and when it will be required. Describe the Contractor’s plans to raise the requisite financing to launch the Contractor’s innovation into Phase III and begin the revenue stream. Plans for this financing stage may be demonstrated in one or more of the following ways:
● | Letter of commitment of funding. | |
● | Letter of intent or evidence of negotiations to provide funding, should the Phase II project be successful and the market need still exist. | |
● | Letter of support for the project and/or some in-kind commitment, e.g., to test or evaluate the innovation. | |
● | Specific steps the Contractor is going to take to secure Phase III funding. |
f. | Production and Marketing Plan |
Describe how the production of the Contractor’s product/process/service will occur (e.g., in-house manufacturing, contract manufacturing). Describe the steps the Contractor will take to market and sell the Contractor’s product/process/service. For example, explain plans for licensing, Internet sales, etc.
g. | Revenue Stream |
Explain how the Contractor plans to generate a revenue stream for the Contractor’s organization should this project be a success. Examples of revenue stream generation include, but are not limited to; manufacture and direct sales, sales through value added resellers or other distributors, joint venture, licensing, service. Describe how the Contractor’s staffing will change to meet the Contractor’s revenue expectations.
The Draft Updated Commercialization Plan shall be submitted one (1) month before the the Phase I completion date. The Contracting Officer’s Representative (COR) will provide comments regarding the Draft Updated Commercialization Plan within two (2) weeks from the receipt date of the document.
4. | Draft Final Report and Draft Summary of Salient Results |
Phase I
The Draft Final Report for Phase I shall consist of the work performed and results obtained for the entire contract period of performance of Phase I as stated in SECTION F of this contract. This report shall be in sufficient detail to describe comprehensively the results achieved.
The Draft Summary of Salient Results for Phase I shall be consist of a summary (not to exceed 200 words) of salient results achieved during the performance of the contract.
Both the Draft Final Report and Draft Summary of Salient Results for Phase I shall be submitted one (1) month before the the Phase I completion date. A Quarterly Report shall not be required for the period when the Phase I Final Report is due. The COR will provide comments regarding the Draft Final Report and Draft Summary of Salient Results for Phase I within two (2) weeks from the receipt date of the document.
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Phase II
The Draft Final Report for Phase II shall consist of the work performed and results obtained for the entire contract period of performance of Phase II as stated in SECTION F of this contract. This report shall be in sufficient detail to describe comprehensively the results achieved.
The Draft Summary of Salient Results for Phase II shall consist of a summary (not to exceed 200 words) of salient results achieved during the performance of the contract.
Both the Draft Final Report and Draft Summary of Salient Results for Phase II shall be submitted one (1) month before the Phase II contract completion date. A Quarterly Report shall not be required for the period when the Phase II Final Report is due. The COR will provide comments regarding the Draft Final Report and Draft Summary of Salient Results for Phase II within two (2) weeks from the receipt date of the document.
5. | Final Commercialization Plan |
The Contractor shall provide the Final Commercialization Plan by the completion date of the Phase I portion of the contract. This document shall include the changes required in the Draft Updated Commercialization Plan as well as the comments provided by the COR.
6. | Final Report |
Phase I
The Contractor shall provide the Phase I Final Report by the completion date of the Phase I portion of the contract. This document shall include the changes required in the Phase I Draft Final Report as well as the comments provided by the COR.
Phase II
The Contractor shall provide the Phase II Final Report by the completion date of the Phase II portion of the contract. This document shall include the changes required in the Phase II Draft Final Report as well as the comments provided by the COR.
7. | Final Presentation |
Phase I
The Contractor shall prepare and submit a final presentation which shall be due on or before the completion date of Phase I portion of the contract. Presentation of the slides shall occur either in-person, through Webinar, or teleconference. The presentation shall cover the following:
a. | Discussion of the Contractor’s organization/project status. | |
b. | The Contractor’s achievements during the Phase I performance period (patents, publications, sales, regulatory approvals, partnerships, awards, etc.) | |
c. | Detailed results of the performed research and development. | |
d. | Discussion of proposed milestones and whether they were achieved during the contract performance. | |
e. | Summary of submitted commercialization plan. | |
f. | If the Contractor is interested in pursuing Phase II research, detailed discussion of the anticipated Phase II technical activities with emphasis on how they fit in the commercialization plan. The Phase II research plan and commercialization plan shall be included in the final presentation for Phase I. | |
g. | Questions to the NCI. |
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Phase II
The Contractor shall prepare and submit a final presentation which shall be due on or before the completion date of Phase II portion of the contract. Presentation of the slides shall occur either in-person, through webinar, or teleconference. The presentation shall cover the following:
a. | Discussion of the Contractor’s/project status. | |
b. | The Contractor’s achievements during the performance period (patents, publications, sales, regulatory approvals, partnerships, awards, etc.). | |
c. | Detailed technical results of the performed research and development. | |
d. | Discussion of proposed milestones and whether they were achieved during the contract performance. | |
e. | Summary of progress towards commercialization. | |
f. | Questions to the NCI. |
8. | Final Summary of Salient Results |
Phase I
The Contractor shall submit, with the Phase I Final Report, a final summary (not to exceed 200 words) of salient results achieved during the performance of the contract.
Phase II
The Contractor shall submit, with the Phase II Final Report, a final summary (not to exceed 200 words) of salient results achieved during the performance of the contract.
9. | Annual Technical Progress Report for Clinical Research Study Populations |
The Contractor shall submit information about the inclusion of women and members of minority groups and their subpopulations for each study being performed under this contract. The Contractor shall submit this information in the format indicated in the attachment entitled, “Cumulative Inclusion Enrollment Report,” which is set forth in SECTION J of this contract. The Contractor also shall use this format, modified to indicate that it is a final report, for reporting purposes in the final report.
The Contractor shall submit the report in accordance with the DELIVERIES Article in SECTION F of this contract.
In addition, the NIH Policy and Guidelines on the Inclusion of Women and Minorities as Subjects in Clinical Research, Amended, October, 2001 applies. If this contract is for Phase III clinical trials, see II.B of these guidelines. The Guidelines may be found at the following website:
http://grants.nih.gov/grants/funding/women_min/guidelines_amended_10_2001.htm
Include a description of the plans to conduct analyses, as appropriate, by sex/gender and/or racial/ethnic groups in the clinical trial protocol as approved by the IRB, and provide a description of the progress in the conduct of these analyses, as appropriate, in the annual progress report and the final report. If the analysis reveals no subset differences, a brief statement to that effect, indicating the subsets analyzed, will suffice. The Government strongly encourages inclusion of the results of subset analysis in all publication submissions. In the final report, the Contractor shall include all final analyses of the data on sex/gender and race/ethnicity.
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b. | Other Reports/Deliverables |
1. | Reporting of Financial Conflict of Interest (FCOI) - Phase II |
All reports and documentation required by 45 CFR Part 94, Responsible Prospective Contractors including, but not limited to, the New FCOI Report, Annual FCOI Report, Revised FCOI Report, and the Mitigation Report, shall be submitted to the Contracting Officer in Electronic format. Thereafter, reports shall be due in accordance with the regulatory compliance requirements in 45 CFR Part 94.
45 CFR Part 94 is available at: http://www.ecfr.gov/cqi-bin/text-idx?
c=ecfr&SID=0af84ca649a74846f102aaf664da1623&rgn=div5&view=text&node=45:1.0.1.1.51 &idno=45.
See Part 94.5, Management and reporting of financial conflicts of interest for complete information on reporting requirements.
(Reference subparagraph g. of the INSTITUTIONAL RESPONSIBILITY REGARDING INVESTIGATOR FINANCIAL CONFLICTS OF INTEREST Article in SECTION H of this contract.)
2. | Section 508 Annual Report |
The Contractor shall submit an annual Section 508 report in accordance with the schedule set forth in the ELECTRONIC AND INFORMATION TECHNOLOGY ACCESSIBILITY Article in SECTION H of this contract. The Section 508 Report Template and Instructions for completing the report are available at: http://www.hhs.gov/web/508/contracting/technology/vendors.html under “Vendor Information and Documents.”
3. | NIH Small Business Innovation Research (SBIR) Program Life Cycle Certification |
In accordance with the SBIR/STTR Reauthorization Act of 2011, the Contractor shall complete and submit the NIH Small Business Innovation Research (SBIR) Life Cycle Certification form, located in SECTION J of the contract, to the Contracting Officer. This certification is required to ensure the Contractor is meeting the program’s requirements during the life cycle of the contract.
The Life Cycle Certification form shall be submitted as follows:
● | Phase I SBIR Contractors shall submit the Certification at the time of receiving final payment or disbursement. | |
● | Phase II SBIR Contractors shall submit the Certification prior to receiving more than 50% of the total contract amount AND prior to final payment or disbursement. |
The Contracting Officer, may, at any time after award request further clarifications and supporting documentation in order to assist in the verification of any information provided by the Contractor.
For additional information, see NIH Policy Notice NOT-OD-13-116, entitled, “New Program Certifications Required for SBIR and STTR Awards,” located at: http://grants.nih.gov/grants/guide/ notice-files/NOT-OD-13-116.html.
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ARTICLE C.3. INVENTION REPORTING REQUIREMENT
All reports and documentation required by FAR Clause 52.227-11, Patent Rights - Ownership by the Contractor including, but not limited to, the invention disclosure report, the confirmatory license, and the Government support certification, shall be directed to the Division of Extramural Inventions and Technology Resources (DEITR), OPERA, OER, NIH, 6705 Rockledge Drive, Suite 310, MSC 7980, Bethesda, Maryland 20892-7980 (Telephone: 301-435-1986). In addition, one copy of an annual utilization report, and a copy of the final invention statement, shall be submitted to the Contracting Officer. The final invention statement (see FAR 27.303(b)(2)(H)) shall be submitted to the Contracting Officer on the completion date of the contract.
All reports shall be submitted in accordance with the DELIVERIES Article in SECTION F
If no invention is disclosed or no activity has occurred on a previously disclosed invention during the applicable reporting period, a negative report shall be submitted to the Contracting Officer at the email address specified in SECTION F.
To assist contractors in complying with invention reporting requirements of the clause, the NIH has developed “Interagency Edison,” an electronic invention reporting system. Use of Interagency Edison is encouraged as it streamlines the reporting process and greatly reduces paperwork. Access to the system is through a secure interactive Web site to ensure that all information submitted is protected. Interagency Edison and information relating to the capabilities of the system can be obtained from the Web ( http://www.iedison.gov). or by contacting the Extramural Inventions and Technology Resources Branch, OPERA, NIH.
SECTION D - PACKAGING, MARKING AND SHIPPING
All deliverables required under this contract shall be packaged, marked and shipped in accordance with Government specifications. At a minimum, all deliverables shall be marked with the contract number and Contractor name.
The Contractor shall guarantee that all required materials shall be delivered in immediate usable and acceptable condition.
SECTION E - INSPECTION AND ACCEPTANCE
a. | The Contracting Officer or the duly authorized representative will perform inspection and acceptance of materials and services to be provided. | |
b. | For the purpose of this SECTION, the Contracting Officer’s Representative (COR) is the authorized representative of the Contracting Officer. | |
c. | Inspection and acceptance will be performed at: |
National Cancer Institute
9609 Medical Center Drive, Room 1W542, MSC 9706
Bethesda, MD 20892-9706
Acceptance may be presumed unless otherwise indicated in writing by the Contracting Officer or the duly authorized representative within 30 days of receipt. |
d. | This contract incorporates the following clause by reference, with the same force and effect as if it were given in full text. Upon request, the Contracting Officer will make its full text available. |
FAR Clause 52.246-9, Inspection of Research and Development (Short Form) (April 1984).
FAR Clause 52.246-16, Responsibility for Supplies (April 1984).
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SECTION F - DELIVERIES OR PERFORMANCE
ARTICLE F.1. PERIOD OF PERFORMANCE
a. | The period of performance of this contract shall be from 09/19/2014 through 06/18/2015. | |
b. | If the Government exercises its option pursuant to the OPTION PROVISION Article in Section H of this contract, the period of performance will be increased as listed below: |
Option | Option Period | |
Option for Phase II | June 19, 2015 - June 18, 2017 |
ARTICLE F.2. DELIVERIES
Satisfactory performance of the final contract shall be deemed to occur upon performance of the work described in the Statement of Work Article in SECTION C of this contract and upon delivery and acceptance by the Contracting Officer, or the duly authorized representative, of the following items in accordance with the stated delivery schedule:
a. | The items specified below as described in the REPORTING REQUIREMENTS Article in SECTION C of this contract will be required to be delivered F.o.b. Destination as set forth in FAR 52.247-35, F.o.b. DESTINATION, WITHIN CONSIGNEES PREMISES (APRIL 1984), and in accordance with and by the dates specified below: |
Item No. |
Description | Delivery Schedule | ||
1. | SBIR Funding Agreement Certification | At time of award, prior to the performance of any work under this contract. | ||
2. | Kick Off Presentation | Due at the conclusion of the Kick- Off presentation which shall be completed within 30 calendar days of contract award. | ||
3. | Quarterly Report One - Phase 1 | Due within 15 calendar days of completion of month 3 of performance. | ||
4. | Quarterly Report Two - Phase 1 | Due within 15 calendar days of completion of month 6 of performance. | ||
5. | Draft Updated Commercialization Plan, Draft Summary of Salient Results, and Draft Final Report and Draft Final Report - Phase 1 |
Due one (1) month before the Phase I completion date. | ||
6. | Final Presentation, Final Summary of Salient Results, Final Report and Final Presentation - Phase 1 |
Due on or before Phase I completion date. | ||
7. | Quarterly Reports - Phase II | Within 15 calendar days after each reporting period. | ||
8. | Draft Summary of Salient Results, and Draft Final Report and Draft Final Report - Phase II |
One month prior to the Phase II completion date. | ||
9. | Final Summary of Salient Results, Final Report and Final Presentation - Phase II | Due on or before the Phase II completion date. | ||
10. | Final Presentation- Phase II | Due on or before the completion of Phase II. |
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Item No. |
Description | Delivery Schedule | ||
11. | Annual Technical Progress Report for Clinical Research Study Population (Cumulative Inclusion Enrollment Report) - Phase II |
Due one year after the start of Phase II. | ||
12. | Protection of Human Subjects Assurance Identification/IRB Certification/Declaration of Exemption”, Form OMB No. 0990-0263 | Prior to starting any work involving human subjects. | ||
13. | Annual Utilization Report | Due one year after the start of Phase II. | ||
14. | Final Invention Statement | Due on or before contract completion date. | ||
15. | Invention Disclosure Report | Due on or before contract completion date. | ||
16. | Section 508 Annual Report | Due one year after the start of Phase II. | ||
17. | Section 508 Conformance Certification | Due on or before Phase I completion date. | ||
18. | New or Revised Financial Conflict of Interest (FCOI) Report and Mitigation Report |
Due as FCOI arises. | ||
19. | SBIR Program Life Cycle Certification - Phase 1 |
Due on or before Phase I completion date. | ||
20. | SBIR Program Life Cycle Certification - Phase II - Report 1 |
Due prior to receiving 50% of the total contract amount. | ||
21. | SBIR Program Life Cycle Certification - Phase II - Report 2 |
Due on or before Phase II completion date. |
b. | The above items shall be addressed and emailed to ncibranchbinvoices@mail.nih.gov .The following addresses are provided for general correspondence and other deliveries: |
Addressee | Deliverable Item No | Quantity | ||
Andrea Giuliano, Contract Specialist National Cancer Institute Office of Acquisitions, Room 1E148 9609 Medical Center Drive, MSC 9705 Bethesda, MD 20892-9705 |
1-14, 16-21 | Electronically | ||
Deepa Narayanan, COR National Cancer Institute NCI SBIR & STTR Programs, Room 1W542 9609 Medical Center Drive, MSC 9705 Bethesda, MD 20892-9705 |
2-12 | Electronically | ||
OPERA, OEH, NIH 6705 Rockledge Drive Suite 310, MSC 7980 Bethesda, Maryland 20892-7980 |
13-15 | 1 Hard Copy |
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ARTICLE F.3. CLAUSES INCORPORATED BY REFERENCE, FAR 52.252-2 (FEBRUARY 1998)
This contract incorporates the following clause(s) by reference, with the same force and effect as if it were given in full text. Upon request, the Contracting Officer will make its full text available. Also, the full text of a clause may be accessed electronically at this address: http://www.acguisition.gov/far.
FEDERAL ACQUISITION REGULATION (48 CFR CHAPTER 1) CLAUSE:
52.242-15, Stop Work Order (August 1989) (Applicable to Phase I)
52.242-15, Stop WorkOrder, Alternate I (April 1984) is applicable to Phase II of this contract.
52.242-17, Government Delay of Work (April 1984).
SECTION G - CONTRACT ADMINISTRATION DATA
ARTICLE G.1. CONTRACTING OFFICER’S REPRESENTATIVE (COR)
The following Contracting Officer’s Representative (COR) will represent the Government for the purpose of this contract:
Deepa Narayanan, Ph.D.
The COR is responsible for: (1) monitoring the Contractor’s technical progress, including the surveillance and assessment of performance and recommending to the Contracting Officer changes in requirements; (2) interpreting the statement of work and any other technical performance requirements; (3) performing technical evaluation as required; (4) performing technical inspections and acceptances required by this contract; and (5) assisting in the resolution of technical problems encountered during performance.
The Contracting Officer is the only person with authority to act as agent of the Government under this contract. Only the Contracting Officer has authority to: (1) direct or negotiate any changes in the statement of work; (2) modify or extend the period of performance; (3) change the delivery schedule; (4) authorize reimbursement to the Contractor for any costs incurred during the performance of this contract; (5) otherwise change any terms and conditions of this contract; or (6) sign written licensing agreements. Any signed agreement shall be incorporated by reference in Section K of the contract
The Government may unilaterally change its COR designation.
ARTICLE G.2. KEY PERSONNEL, HHSAR 352.242-70 (January 2006)
The key personnel specified in this contract are considered to be essential to work performance. At least 30 days prior to diverting any of the specified individuals to other programs or contracts (or as soon as possible, if an individual must be replaced, for example, as a result of leaving the employ of the Contractor), the Contractor shall notify the Contracting Officer and shall submit comprehensive justification for the diversion or replacement request (including proposed substitutions for key personnel) to permit evaluation by the Government of the impact on performance under this contract. The Contractor shall not divert or otherwise replace any key personnel without the written consent of the Contracting Officer. The Government may modify the contract to add or delete key personnel at the request of the Contractor or Government.
(End of Clause)
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The following individual is considered to be essential to the work being performed hereunder:
Name | Title | |
Theodore L. Phillips, M.D. | Principal Investigator |
ARTICLE G.3. INVOICE SUBMISSION/CONTRACT FINANCING REQUEST AND CONTRACT FINANCIAL REPORT
a. | Invoice Instructions for NIH Fixed-Price Type Contracts, NIH(RC)-2 (Phase I) and Invoice/Financing Request Instructions and Contract Financial Reporting for NIH Cost-Reimbursement Type Contracts NIH(RC)-4 (Phase II), are attached and made part of this contract The Contractor shall follow the attached instructions and submission procedures specified below to meet the requirements of a “proper invoice” pursuant to FAR Subpart 32.9, Prompt Payment. |
1. | Payment requests shall be submitted to the offices identified below. Do not submit supporting documentation (e.g., receipts, time sheets, vendor invoices, etc.) with your payment request unless specified elsewhere in the contract or requested by the Contracting Officer. |
a. | The original invoice shall be submitted to the following designated billing office: |
National Institutes of Health
Office of Financial Management
Commercial Accounts
2115 East Jefferson Street, Room 4B-432, MSC 8500
Bethesda, MD 20892-8500
b. | One courtesy copy of the original invoice shall be submitted electronically as follows: |
1. | The Contractor shall scan the original payment request (invoice) in Adobe Portable Document Format (PDF) along with the necessary supporting documentation as one single attachment. | |
2. | Save the single attachment (scanned invoice along with any supporting documentation) in the following format: YourVendorName_Invoice number (e.g., if you are submitting invoice 123456, save the single attachment as “Contractor Name_Invoice 123456”) [Note: Please do not use special characters such as (#, $, %,*, &, I) when saving your attachment. Only the underscore symbol (_) is permitted.] | |
3. | Transmit the saved single attachment via e-mail to the appropriate branch’s Central Point of Distribution. For the purpose of this contract, the Central Point of Distribution is NCI OA Branch B - ncibranchbinvoices@mail.nih.gov . Only one payment request shall be submitted per e-mail and the subject line of the e-mail shall include the Contract Number_ Contract Title_ Contractor’s Name_ unique Invoice number |
(e.g, HHSN261201400013C_Clinical Development of IPdR for Radiosensitization_Shuttle Pharmaceuticals, LLS_Invoice 12345) [Note: The original payment request must still be submitted in hard copy and mailed to the designated billing office listed in subparagraph a, above, to meet the requirements of a “proper invoice.” Also, The Contractor must certify on the payment request that the electronic courtesy copy is a duplicate of the original invoice mailed to NIH’s Office of Financial Management.]
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2. | In addition to the requirements specified in FAR 32.905 for a proper invoice, the Contractor shall include the following information on the face page of all payment requests: |
a. | Name of the Office of Acquisitions. The Office of Acquisitions for this contract is National Cancer Institute. | |
b. | Federal Taxpayer Identification Number (TIN). If the Contractor does not have a valid TIN, it shall identify the Vendor Identification Number (VIN) on the payment request. The VIN is the number that appears after the Contractor’s name on the face page of the contract. [Note: A VIN is assigned to new contracts awarded on or after June 4, 2007, and any existing contract modified to include the VIN number.] If the Contractor has neither a TIN, DUNS, or VIN, contact the Contracting Officer. | |
c. | DUNS or DUNS+4 Number. The DUNS number must identify the Contractor’s name and address exactly as stated in the contract and as registered in the Central Contractor Registration (CCR) database. If the Contractor does not have a valid DUNS number, it shall identify the Vendor Identification Number (VIN) on the payment request. The VIN is the number that appears after the Contractor’s name on the face page of the contract. [ Note: A VIN is assigned to new contracts awarded on or after June 4, 2007, and any existing contract modified to include the VIN number.] If the Contractor has neither a TIN, DUNS, or VIN, contact the Contracting Officer. | |
d. | Invoice Matching Option. This contract requires a two-way match. | |
e. | Unique Invoice Number. Each payment request must be identified by a unique invoice number, which can only be used one time regardless of the number of contracts or orders held by an organization. | |
f. | The contract period of performance is: 9/19/2014 - 6/18/2015 | |
g. | The Contract Title is: | |
Clinical Development of IPdR for Radiosensitization | ||
h. | Contract Line Items as follows: |
Line Item # | Line Item Description | ||
1 | Clinical Development of IPdR for Radiosensitization |
b. | Inquiries regarding payment of invoices shall be directed to the designated billing office, (301) 496-6452. |
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c. | The Contractor shall include the following certification on every invoice for reimbursable costs incurred with Fiscal Year funds subject to HHSAR Clause 352.231-70, Salary Rate Limitation in SECTION I of this contract. For billing purposes, certified invoices are required for the billing period during which the applicable Fiscal Year funds were initially charged through the final billing period utilizing the applicable Fiscal Year funds: |
“I hereby certify that the salaries charged in this invoice are in compliance with HHSAR
Clause 352.231-70, Salary Rate Limitation in SECTION I of the above referenced contract.”
ARTICLE G.4. PROVIDING ACCELERATED PAYMENT TO SMALL BUSINESS
SUBCONTRACTORS, FAR 52.232-40 (December 2013)
a. | Upon receipt of accelerated payments from the Government, the Contractor shall make accelerated payments to its small business subcontractors under this contract, to the maximum extent practicable and prior to when such payment is otherwise required under the applicable contract or subcontract, after receipt of a proper invoice and all other required documentation from the small business subcontractor. | |
b. | The acceleration of payments under this clause does not provide any new rights under the prompt Payment Act. | |
c. | Include the substance of this clause, include this paragraph c, in all subcontracts with small business concerns, including subcontracts with small business concerns for the acquisition of commercial items. |
(End of Clause)
ARTICLE G.5. GOVERNMENT PROPERTY
a. | In addition to the requirements of the clause, GOVERNMENT PROPERTY, incorporated in SECTION I of this contract, the Contractor shall comply with the provisions of HHS Publication, “HHS Contracting Guide for Contract of Government Property,” which is incorporated into this contract by reference. This document can be accessed at: http://www.hhs.gov/hhsmanuals/loqisticsmanual/Appendix Q HHS Contracting Guide.pdf. Among other issues, this publication provides a summary of the Contractor’s responsibilities regarding purchasing authorizations and inventory and reporting requirements under the contract.
Requests for information regarding property under this contract should be directed to the following office: |
Division of Logistics Services, NIH | |
Property Management Branch | |
6011 Building, Suite 639 | |
6011 EXECUTIVE BLVD MSC 7670 | |
BETHESDA MD 20892-7670 | |
nihcontractproperty@nih.gov |
b. | Notwithstanding the provisions outlined in the HHS Publication, “HHS Contracting Guide for Contract of Government Property,” which is incorporated in this contract in paragraph a. above, the Contractor shall use the form entitled, “Report of Government Owned, Contractor Held Property” for submitting summary reports required under this contract, as directed by the Contracting Officer or his/her designee. This form is included as an attachment in SECTION J of this contract. | |
c. | Contractor-Acquired Government Property - Schedule l-B | |
Pursuant to the clause, GOVERNMENT PROPERTY, incorporated in this contract, the Contractor will be authorized to acquire the property listed in the attached Schedule l-B for use in direct performance of the contract, following receipt of the Contracting Officer’s written approval, based on contractor-furnished prices and evidence of competition. Schedule l-B is included as an attachment in SECTION J of this contract. |
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ARTICLE G.6. POST AWARD EVALUATION OF CONTRACTOR PERFORMANCE
a. | Contractor Performance Evaluations | |
Interim and Final evaluations of Contractor performance will be prepared on this contract in accordance with FAR Subpart 42.15. The Final performance evaluation will be prepared at the time of completion of work. In addition to the Final evaluation, Interim evaluations will be prepared Annually as determined by the Contracting Officer. | ||
Interim and Final evaluations will be provided to the Contractor as soon as practicable after completion of the evaluation. The Contractor will be permitted thirty days to review the document and to submit additional information or a rebutting statement. If agreement cannot be reached between the parties, the matter will be referred to an individual one level above the Contracting Officer, whose decision will be final. | ||
Copies of the evaluations, Contractor responses, and review comments, if any, will be retained as part of the contract file, and may be used to support future award decisions. | ||
b. | Electronic Access to Contractor Performance Evaluations | |
Contractors may access evaluations through a secure Web site for review and comment at the following address: | ||
http://www.cpars.gov |
SECTION H - SPECIAL CONTRACT REQUIREMENTS
ARTICLE H.1. PROTECTION OF HUMAN SUBJECTS, HHSAR 352.270-4(b) (January 2006)
a. | The Contractor agrees that the rights and welfare of human subjects involved in research under this contract shall be protected in accordance with 45 CFR Part 46 and with the Contractor’s current Assurance of Compliance on file with the Office for Human Research Protections (OHRP), Department of Health and Human Services. The Contractor further agrees to provide certification at least annually that the Institutional Review Board has reviewed and approved the procedures, which involve human subjects in accordance with 45 CFR Part 46 and the Assurance of Compliance. | |
b. | The Contractor shall bear full responsibility for the performance of all work and services involving the use of human subjects under this contract and shall ensure that work is conducted in a proper manner and as safely as is feasible. The parties hereto agree that the Contractor retains the right to control and direct the performance of all work under this contract. The Contractor shall not deem anything in this contract to constitute the Contractor or any subcontractor, agent or employee of the Contractor, or any other person, organization, institution, or group of any kind whatsoever, as the agent or employee of the Government. The Contractor agrees that it has entered into this contract and will discharge its obligations, duties, and undertakings and the work pursuant thereto, whether requiring professional judgment or otherwise, as an independent contractor without imputing liability on the part of the Government for the acts of the Contractor or its employees. | |
c. | If at any time during the performance of this contract, the Contracting Officer determines, in consultation with OHRP that the Contractor is not in compliance with any of the requirements and/or standards stated in paragraphs (a) and (b) above, the Contracting Officer may immediately suspend, in whole or in part, work and further payments under this contract until the Contractor corrects the noncompliance. The Contracting Officer may communicate the notice of suspension by telephone with confirmation in writing. If the Contractor fails to complete corrective action within the period of time designated in the Contracting Officer’s written notice of suspension, the Contracting Officer may, after consultation with OHRP, terminate this contract in whole or in part, and the Contractor’s name may be removed from the list of those contractors with approved Human Subject Assurances. |
(End of clause)
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ARTICLE H.2. HUMAN SUBJECTS
Research involving human subjects shall not be conducted under this contract until the protocol developed in Phase I has been approved by the National Cancer Institute, written notice of such approval has been provided by the Contracting Officer, and the Contractor has provided to the Contracting Officer a properly completed “Protection of Human Subjects Assurance Identification/IRB Certification/Declaration of Exemption”, Form OMB No. 0990-0263 (formerly Optional Form 310) certifying IRB review and approval of the protocol. The human subject certification can be met by submission of the Contractor’s self designated form, provided that it contains the information required by the “Protection of Human Subjects Assurance Identification/IRB Certification/Declaration of Exemption”, Form OMB No. 0990-0263 (formerly Optional Form 310).
When research involving Human Subjects will take place at collaborating sites or other performance sites, the Contractor shall obtain, and keep on file, a properly completed “Protection of Human Subjects Assurance Identification/IRB Certification/Declaration of Exemption”, Form OMB No. 0990-0263 (formerly Optional Form 310) certifying IRB review and approval of the research.
ARTICLE H.3. RESTRICTION ON USE OF HUMAN SUBJECTS, HHSAR 352.270-6 (January 2006)
Pursuant to 45 CFR part 46, Protection of Human Research Subjects, the Contractor shall not expend funds under this award for research involving human subjects or engage in any human subjects research activity prior to the Contracting Officer’s receipt of a certification that the research has been reviewed and approved by the Institutional Review Board (IRB) designated under the Contractor’s Federal-wide assurance of compliance. This restriction applies to all collaborating sites, whether domestic or foreign, and subcontractors. The Contractor must ensure compliance by collaborators and subcontractors.
(End of clause)
Prisoners shall not be enrolled in any HHS research activities until all requirements of HHS Regulations at 45 CFR PART 46, Subpart C have been met. If a Research Subject becomes a prisoner during the period of this contract, 45 CFR PART 46, Subpart C will apply to research involving that individual.
ARTICLE H.4. REQUIRED EDUCATION IN THE PROTECTION OF HUMAN RESEARCH PARTICIPANTS
NIH policy requires education on the protection of human subject participants for all investigators receiving NIH contract awards for research involving human subjects. For a complete description of the NIH Policy announcement on required education in the protection of human subject participants, the Contractor should access the NIH Guide for Grants and Contracts Announcement dated June 5, 2000 at the following website:
httD://grants.nih.qov/qrants/guide/notice-files/NOT-OD-OQ-039.html.
The information below is a summary of the NIH Policy Announcement:
The Contractor shall maintain the following information: (1) a list of the names and titles of the principal investigator and any other individuals working under the contract who are responsible for the design and/or conduct of the research; (2) the title of the education program(s) in the protection of human subjects that has been completed for each named personnel and; (3) a one sentence description of the educational program(s) listed in (2) above. This requirement extends to investigators and all individuals responsible for the design and/or conduct of the research who are working as subcontractors or consultants under the contract.
Prior to any substitution of the Principal Investigator or any other individuals responsible for the design and/or conduct of the research under the contract, the Contractor shall provide the following written information to the Contracting Officer: the title of the education program and a one sentence description of the program that has been completed by the replacement.
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ARTICLE H.5. DATA AND SAFETY MONITORING IN CLINICAL TRIALS
The Contractor is directed to the full text of the NIH Policy regarding Data and Safety Monitoring and Reporting of Adverse Events, which may be found at the following web sites:
http://qrants.nih.gov/grants/guide/notice-files/not98-Q84.html
http://grants.nih.gov/grants/guide/notice-files/not99-1Q7.html
http://grants.nih.gov/grants/guide/notice-files/NQT-QD-00-038.html
The Contractor must comply with the NIH Policy cited in these NIH Announcements and any other data and safety monitoring requirements found elsewhere in this contract.
Data and Safety Monitoring shall be performed in accordance with the approved Data and Safety Monitoring Plan.
The Data and Safety Monitoring Board shall be established and approved prior to beginning the conduct of the clinical trial.
ARTICLE H.6. REGISTRATION AND RESULTS REPORTING FOR APPLICABLE CLINICAL TRIALS IN CLINICALTRIALS.GOV
The Food and Drug Administration Amendments Act of 2007 (FDAAA) at: http://frwebgate.access.gpo.gov/cgi-bin/ getdoc.cgiVdbname^HO cong public Iaws&docid=f:publ085.110.pdf. Title VIII, expands the National Institutes of Health’s (NIH’s) clinical trials registry and results database known as ClinicalTrials.gov and imposes new requirements that apply to specified “applicable clinical trials,” including those supported in whole or in part by NIH funds. FDAAA requires:
● | the registration of certain “applicable clinical trials” (see Definitions at: http://grants.nih.gov/ClinicalTrials .fdaaa/ definitions.htm) in ClinicalTrials.gov no later than 21 days after the first subject is enrolled; and | |
● | the reporting of summary results information (including adverse events) no later than 1 year after the completion date (See Definitions at link above) for registered applicable clinical trials involving drugs that are approved under section 505 of the Food, Drug and Cosmetic Act (FDCA) or licensed under section 351 of the PHS Act, biologies, or of devices that are cleared under section 510k of FDCA. |
In addition, the Contractor shall notify the Contracting Officer’s Representative (COR), with the trial registration number (NCT number), once the registration is accomplished. This notification may be included in the Technical Progress Report covering the period in which registration occurred, or as a stand alone notification.
The Contractor is the Sponsor, therefore the “Responsible Party” for the purposes of compliance with FDAAA which includes registration (and results reporting, if required) of applicable clinical trial(s) performed under this contract in the Government database, ClinicalTrials.gov ( http://www.ClinicalTrials.gov).
Additional information is available at: http://prsinfo.clinicaltrials.gov .
ARTICLE H.7. NIH POLICY ON ENHANCING PUBLIC ACCESS TO ARCHIVED PUBLICATIONS RESULTING FROM NIH-FUNDED RESEARCH
NIH-funded investigators shall submit to the NIH National Library of Medicine’s (NLM) PubMed Central (PMC) an electronic version of the author’s final manuscript, upon acceptance for publication, resulting from research supported in whole or in part with direct costs from NIH. NIH defines the author’s final manuscript as the final version accepted for journal publication, and includes all modifications from the publishing peer review process. The PMC archive will preserve permanently these manuscripts for use by the public, health care providers, educators, scientists, and NIH. The Policy directs electronic submissions to the NIH/NLM/PMC: http://www.pubmedcentral.nih.gov.
Additional information is available at http://grants.nih.gov/grants/guide/notice-files/NOT-OD-08-Q33.html.
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ARTICLE H.8. NEEDLE DISTRIBUTION
The Contractor shall not use contract funds to carry out any program of distributing sterile needles or syringes for the hypodermic injection of any illegal drug.
ARTICLE H.9. ACKNOWLEDGEMENT OF FEDERAL FUNDING
The Contractor shall clearly state, when issuing statements, press releases, requests for proposals, bid solicitations and other documents describing projects or programs funded in whole or in part with Federal money: (1) the percentage of the total costs of the program or project which will be financed with Federal money; (2) the dollar amount of Federal funds for the project or program; and (3) the percentage and dollar amount of the total costs of the project or program that will be financed by nongovernmental sources.
ARTICLE H.10. RESTRICTION ON ABORTIONS
The Contractor shall not use contract funds for any abortion.
ARTICLE H.11. CONTINUED BAN ON FUNDING OF HUMAN EMBRYO RESEARCH
The Contractor shall not use contract funds for (1) the creation of a human embryo or embryos for research purposes; or (2) research in which a human embryo or embryos are destroyed, discarded, or knowingly subjected to risk of injury or death greater than that allowed for research on fetuses in utero under 45 CFR 46.204(b) and Section 498(b) of the Public Health Service Act (42 U.S.C. 289g(b)). The term “human embryo or embryos” includes any organism, not protected as a human subject under 45 CFR 46 as of the date of the enactment of this Act, that is derived by fertilization, parthenogenesis, cloning, or any other means from one or more human gametes or human diploid cells.
Additionally, in accordance with a March 4,1997 Presidential Memorandum, Federal funds may not be used for cloning of human beings.
ARTICLE H.12. DISSEMINATION OF FALSE OR DELIBERATELY MISLEADING INFORMATION
The Contractor shall not use contract funds to disseminate information that is deliberately false or misleading.
ARTICLE H.13. PRIVACY ACT, HHSAR 352.224-70 (January 2006)
This contract requires the Contractor to perform one or more of the following: (a) Design; (b) develop; or (c) operate a Federal agency system of records to accomplish an agency function in accordance with the Privacy Act of 1974 (Act) (5 U.S.C. 552a(m)(1)) and applicable agency regulations. The term “system of records” means a group of any records under the control of any agency from which information is retrieved by the name of the individual or by some identifying number, symbol, or other identifying particular assigned to the individual. Violations of the Act by the Contractor and/or its employees may result in the imposition of criminal penalties (5 U.S.C. 552a(i)). The Contractor shall ensure that each of its employees knows the prescribed rules of conduct and that each employee is aware that he/she is subject to criminal penalties for violation of the Act to the same extent as Department of Health and Human Services employees. These provisions also apply to all subcontracts the Contractor awards under this contract which require the design, development or operation of the designated system(s) of records [5 U.S.C. 552a(m)(1)j. The contract work statement: (a) identifies the system(s) of records and the design, development, or operation work the Contractor is to perform; and (b) specifies the disposition to be made of such records upon completion of contract performance.
(End of clause)
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45 CFR Part 5b contains additional information which includes the rules of conduct and other Privacy Act requirements and can be found at: http://www.access.gpo.gov/nara/cfr/waisidx_06/45cfr5b_06.html.
The Privacy Act System of Records applicable to this project is Number 09-25-0200. This document is incorporated into this contract as an Attachment in SECTION J of this contract. This document is also available at: http://oma.od.nih.gov/public/MS/privacy/PAfiles/read02systems.htm.
ARTICLE H.14. OMB CLEARANCE
In accordance with HHSAR 352.201-70, Paperwork Reduction Act, the Contractor shall not proceed with surveys or interviews until such time as Office of Management and Budget (OMB) Clearance for conducting interviews has been obtained by the Contracting Officer’s Representative (COR) and the Contracting Officer has issued written approval to proceed.
ARTICLE H.15. RESTRICTION ON PORNOGRAPHY ON COMPUTER NETWORKS
The Contractor shall not use contract funds to maintain or establish a computer network unless such network blocks the viewing, downloading, and exchanging of pornography.
ARTICLE H.16. GUN CONTROL
The Contractor shall not use contract funds in whole or in part, to advocate or promote gun control.
ARTICLE H.17. CERTIFICATION OF FILING AND PAYMENT OF TAXES
The contractor must be in compliance with Section 518 of the Consolidated Appropriations Act of FY 2014.
ARTICLE H.18. OPTION PROVISION
Unless the Government exercises its option pursuant to the Option Clause set forth in SECTION I., the contract will consist only of the Base Period of the Statement of Work as defined in Sections C and F of the contract. Pursuant to FAR Clause 52.217-9, Option to Extend the Term of the Contract set forth in SECTION I. of this contract, the Government may, by unilateral contract modification, require the Contractor to perform additional options set forth in the Statement of Work and also defined in Sections C and F of the contract. If the Government exercises this option, notice must be given at least 30 calendar days prior to the expiration date of this contract, and the estimated cost plus fixed fee of the contract will be increased as set forth in the OPTION FOR PHASE II Article in SECTION B of this contract.
ARTICLE H.19. LIMITATIONS ON SUBCONTRACTING - SBIR
Phase I - The Contractor shall perform a minimum of two-thirds of the research and/or analytical effort (total contract price less profit/fee) conducted under this contract. Any deviation from this requirement must be approved in writing by the Contracting Officer.
Phase II - The Contractor shall perform a minimum of one-half of the research and/or analytical effort (total contract price less profit/fee) conducted under this contract. Any deviation from this requirement must be approved in writing by the Contracting Officer.
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ARTICLE H.20. ELECTRONIC AND INFORMATION TECHNOLOGY ACCESSIBILITY, HHSAR 352.239-73(b) (January 2010)
a. | Pursuant to Section 508 of the Rehabilitation Act of 1973 (29 U.S.C. 794d), as amended by the Workforce Investment Act of 1998, all electronic and information technology (EIT) products and services developed, acquired, maintained, or used under this contract/order must comply with the “Electronic and Information Technology Accessibility Provisions” set forth by the Architectural and Transportation Barriers Compliance Board (also referred to as the “Access Board”) in 36 CFR part 1194. Information about Section 508 provisions is available at http://www.section508.qov/. The complete text of Section 508 Final provisions can be accessed at http://www.access-board.gov/quidelines-and-standards. | |
b. | The Section 508 standards applicable to this contract/order are identified in the Statement of Work. The contractor must provide a written Section 508 conformance certification due at the end of each contract/ order exceeding $100,000 when the contract/order duration is one year or less. If it is determined by the Government that EIT products and services provided by the Contractor do not conform to the described accessibility standards in the Product Assessment Template, remediation of the products or services to the level of conformance specified in the Contractor’s Product Assessment Template will be the responsibility of the Contractor at its own expense. | |
c. | In the event of a modification(s) to this contract/order, which adds new EIT products or services or revises the type of, or specifications for, products or services the Contractor is to provide, including EIT deliverables such as electronic documents and reports, the Contracting Officer may require that the contractor submit a completed HHS Section 508 Product Assessment Template to assist the Government in determining that the EIT products or services support Section 508 accessibility standards. Instructions for documenting accessibility via the HHS Section 508 Product Assessment Template may be found on the HHS Web site ( http://www.hhs.gov/ web/508/contracting/technoloqy/vendors.html). | |
[(End of HHSAR 352.239-73(b)] | ||
d. | Prior to the Contracting Officer exercising an option for a subsequent performance period/additional quantity or adding funding for a subsequent performance period under this contract, as applicable, the Contractor must provide a Section 508 Annual Report to the Contracting Officer and Project Officer. Unless otherwise directed by the Contracting Officer in writing, the Contractor shall provide the cited report in accordance with the following schedule. Instructions for completing the report are available in the Section 508 policy on the HHS Office on Disability Web site under the heading Vendor Information and Documents. The Contractor’s failure to submit a timely and properly completed report may jeopardize the Contracting Officer’s exercising an option or adding funding, as applicable. | |
Schedule for Contractor Submission of Section 508 Annual Report: Annually [End of HHSAR 352.239-73(c)j |
ARTICLE H.21. CONFIDENTIALITY OF INFORMATION
a. | Confidential information, as used in this article, means information or data of a personal nature about an individual, or proprietary information or data submitted by or pertaining to an institution or organization. | |
b. | The Contracting Officer and the Contractor may, by mutual consent, identify elsewhere in this contract specific information and/or categories of information which the Government will furnish to the Contractor or that the Contractor is expected to generate which is confidential. Similarly, the Contracting Officer and the Contractor may, by mutual consent, identify such confidential information from time to time during the performance of the contract. Failure to agree will be settled pursuant to the “Disputes” clause. |
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c. | If it is established elsewhere in this contract that information to be utilized under this contract, or a portion thereof, is subject to the Privacy Act, the Contractor will follow the rules and procedures of disclosure set forth in the Privacy Act of 1974, 5 U.S.C. 552a, and implementing regulations and policies, with respect to systems of records determined to be subject to the Privacy Act. | |
d. | Confidential information, as defined in paragraph (a) of this article, shall not be disclosed without the prior written consent of the individual, institution, or organization. | |
e. | Whenever the Contractor is uncertain with regard to the proper handling of material under the contract, or if the material in question is subject to the Privacy Act or is confidential information subject to the provisions of this article, the Contractor should obtain a written determination from the Contracting Officer prior to any release, disclosure, dissemination, or publication. | |
f. | Contracting Officer determinations will reflect the result of internal coordination with appropriate program and legal officials. | |
g. | The provisions of paragraph (d) of this article shall not apply to conflicting or overlapping provisions in other Federal, State or local laws. |
The following information is covered by this article:
All data on participants in the clinical trial(s) performed under this contract.
ARTICLE H.22. INSTITUTIONAL RESPONSIBILITY REGARDING INVESTIGATOR FINANCIAL CONFLICTS OF INTEREST - PHASE II
The Institution (includes any contractor, public or private, excluding a Federal agency) shall comply with the requirements of 45 CFR Part 94, Responsible Prospective Contractors, which promotes objectivity in research by establishing standards to ensure that Investigators (defined as the project director or principal Investigator and any other person, regardless of title or position, who is responsible for the design, conduct, or reporting of research funded under NIH contracts, or proposed for such funding, which may include, for example, collaborators or consultants) will not be biased by any Investigator financial conflicts of interest. 45 CFR Part 94 is available at the following Web site:: http://www.ecfr.gov/cgi-bin/text-idx? c=ecfr&S I D=0af84ca649a74846f 102aaf664da 1623&rgn=div5&view=text&node=45:1.0.1.1.51 &idno=45
As required by 45 CFR Part 94, the Institution shall, at a minimum:
a. | Maintain an up-to-date, written, enforceable policy on financial conflicts of interest that complies with 45 CFR Part 94, inform each Investigator of the policy, the Investigator’s reporting responsibilities regarding disclosure of significant financial interests, and the applicable regulation, and make such policy available via a publicly accessible Web site, or if none currently exist, available to any requestor within five business days of a request. A significant financial interest means a financial interest consisting of one or more of the following interests of the Investigator (and those of the Investigator’s spouse and dependent children) that reasonably appears to be related to the Investigator’s institutional responsibilities: |
1. | With regard to any publicly traded entity, a significant financial interest exists if the value of any remuneration received from the entity in the twelve months preceding the disclosure and the value of any equity interest in the entity as of the date of disclosure, when aggregated, exceeds $5,000. Included are payments and equity interests; | |
2. | With regard to any non-publicly traded entity, a significant financial interest exists if the value of any remuneration received from the entity in the twelve months preceding the disclosure, when aggregated, exceeds $5,000, or when the Investigator (or the Investigator’s spouse or dependent children) holds any equity interest; or | |
3. | Intellectual property rights and interests, upon receipt of income related to such rights and interest. |
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Significant financial interests do not include the following:
1. | Income from seminars, lectures, or teaching, and service on advisory or review panels for government agencies, Institutions of higher education, academic teaching hospitals, medical centers, or research institutes with an Institution of higher learning; and | |
2. | Income from investment vehicles, such as mutual funds and retirement accounts, as long as the Investigator does not directly control the investment decisions made in these vehicles. |
b. | Require each Investigator to complete training regarding the Institution’s financial conflicts of interest policy prior to engaging in research related to any NIH-funded contract and at least every four years. The Institution must take reasonable steps [see Part 94.4(c)] to ensure that investigators working as collaborators, consultants or subcontractors comply with the regulations. | |
c. | Designate an official(s) to solicit and review disclosures of significant financial interests from each Investigator who is planning to participate in, or is participating in, the NIH-funded research. | |
d. | Require that each Investigator who is planning to participate in the NIH-funded research disclose to the Institution’s designated official(s) the Investigator’s significant financial interest (and those of the Investigator’s spouse and dependent children) no later than the date of submission of the Institution’s proposal for NIH- funded research. Require that each Investigator who is participating in the NIH-funded research to submit an updated disclosure of significant financial interests at least annually, in accordance with the specific time period prescribed by the Institution during the period of the award as well as within thirty days of discovering or acquiring a new significant financial interest. | |
e. | Provide guidelines consistent with the regulations for the designated official(s) to determine whether an Investigator’s significant financial interest is related to NIH-funded research and, if so related, whether the significant financial interest is a financial conflict of interest. An Investigator’s significant financial interest is related to NIH-funded research when the Institution, thorough its designated official(s), reasonably determines that the significant financial interest: Could be affected by the NIH-funded research; or is in an entity whose financial interest could be affected by the research. A financial conflict of interest exists when the Institution, through its designated official(s), reasonably determines that the significant financial interest could directly and significantly affect the design, conduct, or reporting of the NIH-funded research. | |
f. | Take such actions as necessary to manage financial conflicts of interest, including any financial conflicts of a subcontractor Investigator. Management of an identified financial conflict of interest requires development and implementation of a management plan and, if necessary, a retrospective review and mitigation report pursuant to Part 94.5(a). | |
g. | Provide initial and ongoing FCOI reports to the Contracting Officer pursuant to Part 94.5(b). | |
h. | Maintain records relating to all Investigator disclosures of financial interests and the Institution’s review of, and response to, such disclosures, and all actions under the Institution’s policy or retrospective review, if applicable, for at least 3 years from the date of final payment or, where applicable, for the other time periods specified in 48 CFR Part 4, subpart 4.7, Contract Records Retention. | |
i. | Establish adequate enforcement mechanisms and provide for employee sanctions or other administrative actions to ensure Investigator compliance as appropriate. | |
j. | Complete the certification in Section K - Representations, Certifications, and Other Statements of Offerors titled “Certification of Institutional Policy on Financial Conflicts of Interest”. |
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If the failure of an Institution to comply with an Institution’s financial conflicts of interest policy or a financial conflict of interest management plan appears to have biased the design, conduct, or reporting of the NIH-funded research, the Institution must promptly notify the Contracting Officer of the corrective action taken or to be taken. The Contracting Officer will consider the situation and, as necessary, take appropriate action or refer the matter to the Institution for further action, which may include directions to the Institution on how to maintain appropriate objectivity in the NIH- funded research project.
The Contracting Officer and/or HHS may inquire at any time before, during, or after award into any Investigator disclosure of financial interests, and the Institution’s review of, and response to, such disclosure, regardless of whether the disclosure resulted in the Institution’s determination of a financial conflict of interests.. The Contracting Officer may require submission of the records or review them on site. On the basis of this review of records or other information that may be available, the Contracting Officer may decide that a particular financial conflict of interest will bias the objectivity of the NIH-funded research to such an extent that further corrective action is needed or that the Institution has not managed the financial conflict of interest in accordance with Part 94.6(b). The issuance of a Stop Work Order by the Contracting Officer may be necessary until the matter is resolved.
If the Contracting Officer determines that NIH-funded clinical research, whose purpose is to evaluate the safety or effectiveness of a drug, medical device, or treatment, has been designed, conducted, or reported by an Investigator with a financial conflict of interest that was not managed or reported by the Institution, the Institution shall require the Investigator involved to disclose the financial conflict of interest in each public presentation of the results of the research and to request an addendum to previously published presentations.
ARTICLE H.23. PUBLICATION AND PUBLICITY
In addition to the requirements set forth in HHSAR Clause 352.227-70, Publications and Publicity incorporated by reference in SECTION I of this contract, the Contractor shall acknowledge the support of the National Institutes of Health whenever publicizing the work under this contract in any media by including an acknowledgment substantially as follows:
“This project has been funded in whole or in part with Federal funds from the National Cancer Institute, National
Institutes of Health, Department of Health and Human Services, under Contract No. HHSN261201400013C”
ARTICLE H.24. REPORTING MATTERS INVOLVING FRAUD, WASTE AND ABUSE
Anyone who becomes aware of the existence or apparent existence of fraud, waste and abuse in NIH funded programs is encouraged to report such matters to the HHS Inspector General’s Office in writing or on the Inspector General’s Hotline. The toll free number is 1-800-HHS-TIPS (1-800-447-8477). All telephone calls will be handled confidentially. The website to file a complaint on-line is: http://oig.hhs.gov/fraud/hotline/ and the mailing address is:
US Department of Health and Human Services
Office of Inspector General
ATTN: OIG HOTLINE OPERATIONS
P.O. Box 23489
Washington, D.C. 20026
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ARTICLE H.25. YEAR 2000 COMPLIANCE
In accordance with FAR 39.106, Information Technology acquired under this contract must be Year 2000 compliant as set forth in the following clause(s):
1. | Service Involving the Use of Information Technology | |
YEAR 2000 COMPLIANCE - SERVICE INVOLVING THE USE OF INFORMATION TECHNOLOGY | ||
The Contractor agrees that each item of hardware, software, and firmware used under this contract shall be able to accurately process date data (including, but not limited to, calculating, comparing and sequencing) from, into and between the twentieth and twenty-first centuries and the Year 1999 and the Year 2000 and leap year calculations. |
(End of Clause)
ARTICLE H.26. USE OF FUNDS FOR PROMOTIONAL ITEMS
The Contractor shall not use contract funds to purchase promotional items. Promotional items include, but are not limited to: clothing and commemorative items such as pens, mugs/cups, folders/folios, lanyards, and conference bags that are sometimes provided to visitors, employees, grantees, or conference attendees. This includes items or tokens given to individuals as these are considered personal gifts for which contract funds may not be expended.
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PART II - CONTRACT CLAUSES
SECTION I - CONTRACT CLAUSES
ARTICLE 1.1. GENERAL CLAUSES FOR A FIXED-PRICE RESEARCH AND DEVELOPMENT SBIR PHASE I CONTRACT
This contract incorporates the following clauses by reference, with the same force and effect as if they were given in full text. Upon request, the Contracting Officer will make their full text available. Also, the full text of a clause may be accessed electronically as follows: FAR Clauses at: http://www.acquisition, gov/far/. HHSAR Clauses at: http:// www.hhs.gov/nolicies/hhsar/subr)art352.html.
a. FEDERAL ACQUISITION REGULATION (FAR) (48 CFR CHAPTER 1) CLAUSES:
FAR
CLAUSE NO. |
DATE | TITLE | ||
52.202-1 | Nov 2013 | Definitions (Over the Simplified Acquisition Threshold) | ||
52.203-12 | Oct 2010 | Limitation on Payments to Influence Certain Federal Transactions (Over $150,000) | ||
52.203-17 | Apr 2014 | Contractor Employee Whistleblower Rights and Requirements to Inform Employees of Whistleblower Rights (Over the Simplified Acquisition Threshold) | ||
52.204-10 | Jul 2013 | Reporting Executive Compensation and First-Tier Subcontract Awards ($25,000 or more) | ||
52.204-13 | Jul 2013 | System for Award Management Maintenance | ||
52.209-6 | Aug 2013 | Protecting the Government’s Interest When Subcontracting With Contractors Debarred, Suspended, or Proposed for Debarment (Over $30,000) | ||
52.215-8 | Oct 1997 | Order of Precedence - Uniform Contract Format | ||
52.219-6 | Jul 1996 | Notice of Total Small Business Set-Aside | ||
52.222-3 | Jun 2003 | Convict Labor | ||
52.222-21 | Feb 1999 | Prohibition of Segregated Facilities | ||
52.222-26 | Mar 2007 | Equal Opportunity | ||
52.222-35 | Jul 2014 | Equal Opportunity for Veterans ($100,000 or more) | ||
52.222-36 | Jul 2014 | Equal Opportunity for Workers with Disabilities | ||
52.222-37 | Jul 2014 | Employment Reports on Veterans ($100,000 or more) | ||
52.222-50 | Feb 2009 | Combating Trafficking in Persons | ||
52.222-54 | Aug 2013 | Employment Eligibility Verification (Over the Simplified Acquisition Threshold) | ||
52.223-6 | May 2001 | Drug-Free Workplace | ||
52.223-18 | Aug 2011 | Encouraging Contractor Policies to Ban Text Messaging While Driving | ||
52.225-1 | May 2014 | Buy American - Supplies | ||
52.225-13 | Jun 2008 | Restrictions on Certain Foreign Purchases | ||
52.227-1 | Dec 2007 | Authorization and Consent, Alternate 1 (Apr 1984) | ||
52.227-2 | Dec 2007 | Notice and Assistance Regarding Patent and Copyright Infringement | ||
52.227-11 | May 2014 | Patent Rights - Ownership by the Contractor (Note: In accordance with FAR 27.303(b)(2), paragraph (e) is modified to include the requirements |
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FAR
CLAUSE NO. |
DATE | TITLE | ||
in FAR 27.303(b)(2)(i) through (iv). The frequency of reporting in (i) is annual. | ||||
52.227-20 | May 2014 | Rights in Data - SBIR Program | ||
52.232-9 | Apr 1984 | Limitation on Withholding of Payments | ||
52.232-23 | May 2014 | Assignment of Claims | ||
52.232-25 | Jul 2013 | Prompt Payment | ||
52.232-33 | Jul 2013 | Payment by Electronic Funds Transfer-System for Award Management | ||
52.232-39 | Jun 2013 | Unenforceability of Unauthorized Obligations | ||
52.233-1 | May 2014 | Disputes | ||
52.233-3 | Aug 1996 | Protest After Award | ||
52.233-4 | Oct 2004 | Applicable Law for Breach of Contract Claim | ||
52.243-1 | Aug 1987 | Changes - Fixed Price, Alternate V (Apr 1984) | ||
52.244-6 | Jul 2014 | Subcontracts for Commercial Items | ||
52.249-1 | Apr 1984 | Termination for the Convenience of the Government (Fixed-Price) (Short Form) | ||
52.249-9 | Apr 1984 | Default (Fixed-Price Research and Development) (Over the Simplified Acquisition Threshold) | ||
52.253-1 | Jan 1991 | Computer Generated Forms |
b. DEPARTMENT OF HEALTH AND HUMAN SERVICES ACQUISITION REGULATION (HHSAR) (48 CFR CHAPTER 3) CLAUSES:
HHSAR
|
DATE | TITLE | ||
352.202-1 | Jan 2006 | Definitions | ||
352.203-70 | Mar 2012 | Anti-Lobbying | ||
352.222-70 | Jan 2010 | Contractor Cooperation in Equal Employment Opportunity Investigations | ||
352.227-70 | Jan 2006 | Publications and Publicity | ||
352.231-71 | Jan 2001 | Pricing of Adjustments | ||
352.242-70 | Jan 2006 | Key Personnel | ||
352.242-73 | Jan 2006 | Withholding of Contract Payments |
[End of GENERAL CLAUSES FOR A FIXED-PRICE RESEARCH AND DEVELOPMENT SBIR PHASE I CONTRACT Rev. 08/2014].
-33- |
ARTICLE 1.1. GENERAL CLAUSES FOR A COST-REIMBURSEMENT SBIR PHASE II CONTRACT
This contract incorporates the following clauses by reference, with the same force and effect as if they were given in full text. Upon request, the Contracting Officer will make their full text available. Also, the full text of a clause may be accessed electronically as follows: FAR Clauses at: http://www.acquisition, gov/far/. HHSAR Clauses at: http:// www.hhs. gov/policies/hhsar/subpart352. html.
a.FEDERAL ACQUISITION REGULATION (FAR) (48 CFR CHAPTER 1) CLAUSES:
FAR
CLAUSE NO. |
DATE | TITLE | ||
52.202-1 | Nov 2013 | Definitions (Over the Simplified Acquisition Threshold) | ||
52.203-3 | Apr 1984 | Gratuities (Over the Simplified Acquisition Threshold) | ||
52.203-5 | May 2014 | Covenant Against Contingent Fees (Over the Simplified Acquisition Threshold) | ||
52.203-6 | Sep 2006 | Restrictions on Subcontractor Sales to the Government (Over the Simplified Acquisition Threshold) | ||
52.203-7 | May 2014 | Anti-Kickback Procedures (Over the Simplified Acquisition Threshold) | ||
52.203-8 | May 2014 | Cancellation, Rescission, and Recovery of Funds for Illegal or Improper Activity (Over the Simplified Acquisition Threshold) | ||
52.203-10 | May 2014 | Price or Fee Adjustment for Illegal or Improper Activity (Over the Simplified Acquisition Threshold) | ||
52.203-12 | Oct 2010 | Limitation on Payments to Influence Certain Federal Transactions (Over $150,000) | ||
52.203-17 | Apr 2014 | Contractor Employee Whistleblower Rights and Requirements to Inform Employees of Whistleblower Rights (Over the Simplified Acquisition Threshold) | ||
52.204-4 | May 2011 | Printed or Copied Double-Sided on Postconsumer Fiber Content Paper (Over the Simplified Acquisition Threshold) | ||
52.204-10 | Jul 2013 | Reporting Executive Compensation and First-Tier Subcontract Awards ($25,000 or more) | ||
52.204-13 | Jul 2013 | System for Award Management Maintenance | ||
52.209-6 | Aug 2013 | Protecting the Government’s Interest When Subcontracting With Contractors Debarred, Suspended, or Proposed for Debarment (Over $30,000) | ||
52.215-2 | Oct 2010 | Audit and Records - Negotiation [Note: Applies to ALL contracts funded in whole or in part with Recovery Act funds, regardless of dollar value, AND contracts over the Simplified Acquisition Threshold funded exclusively with non-Recovery Act funds.] | ||
52.215-8 | Oct 1997 | Order of Precedence - Uniform Contract Format | ||
52.215-10 | Aug 2011 | Price Reduction for Defective Certified Cost or Pricing Data (Over $700,000) | ||
52.215-12 | Oct 2010 | Subcontractor Cost or Pricing Data (Over $700,000) | ||
52.215-14 | Oct 2010 | Integrity of Unit Prices (Over the Simplified Acquisition Threshold) | ||
52.215-15 | Oct 2010 | Pension Adjustments and Asset Reversions (Over $700,000) | ||
52.215-18 | Jul 2005 | Reversion or Adjustment of Plans for Post-Retirement Benefits (PRB) other than Pensions | ||
52.215-19 | Oct 1997 | Notification of Ownership Changes |
-34- |
FAR
|
DATE | TITLE | ||
52.215-21 | Oct 2010 | Requirements for Certified Cost or Pricing Data and Data Other Than Certified Cost or Pricing Data - Modifications | ||
52.215-23 | Oct 2009 | Limitations on Pass-Through Charges (Over the Simplified Acquisition Threshold) | ||
52.216-7 | Jun 2013 | Allowable Cost and Payment | ||
52.216-8 | Jun 2011 | Fixed Fee | ||
52.219-6 | Jut 1996 | Notice of Total Small Business Set-Aside | ||
52.219-8 | May 2014 | Utilization of Small Business Concerns (Over the Simplified Acquisition Threshold) | ||
52.219-14 | Dec 1996 | Limitations on Subcontracting | ||
52.222-2 | Jul 1990 | Payment for Overtime Premium (Over the Simplified Acquisition Threshold) (Note: The dollar amount in paragraph (a) of this clause is $0 unless otherwise specified in the contract.) | ||
52.222-3 | Jun 2003 | Convict Labor | ||
52.222-21 | Feb 1999 | Prohibition of Segregated Facilities | ||
52.222-26 | Mar 2007 | Equal Opportunity | ||
52.222-35 | Jul 2014 | Equal Opportunity for Veterans ($100,000 or more) | ||
52.222-36 | Jul 2014 | Equal Opportunity for Workers with Disabilities | ||
52.222-37 | Jul 2014 | Employment Reports on Veterans ($100,000 or more) | ||
52.222-40 | Dec 2010 | Notification of Employee Rights Under the National Labor Relations Act (Over the Simplified Acquisition Threshold) | ||
52.222-50 | Feb 2009 | Combating Trafficking in Persons | ||
52.222-54 | Aug 2013 | Employment Eligibility Verification (Over the Simplified Acquisition Threshold) | ||
52.223-6 | May 2001 | Drug-Free Workplace | ||
52.223-18 | Aug 2011 | Encouraging Contractor Policies to Ban Text Messaging While Driving | ||
52.225-1 | May 2014 | Buy American - Supplies | ||
52.225-13 | Jun 2008 | Restrictions on Certain Foreign Purchases | ||
52.227-1 | Dec 2007 | Authorization and Consent, Alternate 1 (Apr 1984) | ||
52.227-2 | Dec 2007 | Notice and Assistance Regarding Patent and Copyright Infringement | ||
52.227-11 | May 2014 | Patent Rights - Ownership by the Contractor (Note: In accordance with FAR 27.303(b)(2), paragraph (e) is modified to include the requirements in FAR 27.303(b)(2)(i) through (iv). The frequency of reporting in (i) is annual. | ||
52.227-20 | May 2014 | Rights in Data - SBIR Program | ||
52.232-9 | Apr 1984 | Limitation on Withholding of Payments | ||
52.232-17 | May 2014 | Interest (Over the Simplified Acquisition Threshold) | ||
52.232-20 | Apr 1984 | Limitation of Cost | ||
52.232-23 | May 2014 | Assignment of Claims | ||
52.232-25 | Jul 2013 | Prompt Payment, Alternate 1 (Feb 2002) | ||
52.232-33 | Jul 2013 | Payment by Electronic Funds Transfer-System for Award Management | ||
52.232-39 | Jun 2013 | Unenforceability of Unauthorized Obligations | ||
52.233-1 | May 2014 | Disputes |
-35- |
FAR
CLAUSE NO. |
DATE | TITLE | ||
52.233-3 | Aug 1996 | Protest After Award, Alternate 1 (Jun 1985) | ||
52.233-4 | Oct 2004 | Applicable Law for Breach of Contract Claim | ||
52.242-1 | Apr 1984 | Notice of Intent to Disallow Costs | ||
52.242-3 | May 2014 | Penalties for Unallowable Costs (Over $700,000) | ||
52.242-4 | Jan 1997 | Certification of Final Indirect Costs | ||
52.242-13 | Jul1995 | Bankruptcy (Over the Simplified Acquisition Threshold) | ||
52.243-2 | Aug 1987 | Changes - Cost Reimbursement, Alternate V (Apr 1984) | ||
52.244-2 | Oct 2010 | Subcontracts (Over the Simplified Acquisition Threshold), Alternate 1 (June 2007) | ||
52.244-5 | Dec 1996 | Competition in Subcontracting (Over the Simplified Acquisition Threshold) | ||
52.244-6 | Jul 2014 | Subcontracts for Commercial Items | ||
52.245-1 | Apr 2012 | Government Property | ||
52.245-9 | Apr 2012 | Use and Charges | ||
52.249-6 | May 2004 | Termination (Cost-Reimbursement) | ||
52.249-14 | Apr 1984 | Excusable Delays | ||
52.253-1 | Jan 1991 | Computer Generated Forms |
b. DEPARTMENT OF HEALTH AND HUMAN SERVICES ACQUISITION REGULATION (HHSAR) (48 CFR CHAPTER 3) CLAUSES:
HHSAR
CLAUSE NO. |
DATE | TITLE | ||
352.202-1 | Jan 2006 | Definitions - with Alternate paragraph (h) (Jan 2006) | ||
352.203-70 | Mar 2012 | Anti-Lobbying | ||
352.216-70 | Jan 2006 | Additional Cost Principles | ||
352.222-70 | Jan 2010 | Contractor Cooperation in Equal Employment Opportunity Investigations | ||
352.227-70 | Jan 2006 | Publications and Publicity | ||
352.228-7 | Dec 1991 | Insurance - Liability to Third Persons | ||
352.233-71 | Jan 2006 | Litigation and Claims | ||
352.242-70 | Jan 2006 | Key Personnel | ||
352.242-73 | Jan 2006 | Withholding of Contract Payments | ||
352.242-74 | Apr 1984 | Final Decisions on Audit Findings |
[End of GENERAL CLAUSES FOR A COST-REIMBURSEMENT SBIR PHASE II CONTRACT- Rev. 08/2014].
-36- |
ARTICLE 1.2. AUTHORIZED SUBSTITUTION OF CLAUSES
ARTICLE 1.1. of this SECTION is hereby modified as follows:
a. | Alternate I (October 1997) of FAR Clause 52.215-14, Integrity of Unit Prices (October 2010) is added. | |
b. | The following clauses are added to this contract (Phase I only): |
● | FAR Clause 52.203-3, Gratuities (April 1984) | |
● | FAR Clause 52.203-5, Covenant Against Contingent Fees (May 2014) | |
● | FAR Clause 52.203-6, Restrictions on Subcontractor Sales to the Government (September 2006) | |
● | FAR Clause 52.203-7, Anti-Kickback Procedures (May 2014) | |
● | FAR Clause 52.203-8, Cancellation, Recission, and Recovery of Funds for Illegal or Improper Activity (May 2014) | |
● | FAR Clause 52.203-10, Price or Fee Adjustment for Illegal or improper Activity (May 2014) | |
● | FAR Clause 52.204-4, Printed or copied Double-Sided on Postconsumer Fiber Content Paper (May 2011) | |
● | FAR Clause 52.215-2, Audit and Records Negotiation (October 2010) | |
● | FAR Clause 52.215-14, Integrity of Unit Prices (October 2010) | |
● | FAR Clause 52.219-8, Utilization of Small Business Concerns (May 2014) | |
● | FAR Clause 52.219-14, Limitations on Subcontracting (December 1996) | |
● | FAR Clause 52.222-40, Notification of Employee Rights Under the National Labor Relations Act (December 2010) | |
● | FAR Clause 52.229-3, Federal, State and Local Taxes (February 2013) | |
● | FAR Clause 52.232-2, Payments under Fixed-Price Research and Development Contracts (April 1984) | |
● | FAR Clause 52.232-17, Interest (May 2014) | |
● | FAR Clause 52.242-13, Bankruptcy (July 1995) | |
● | FAR Clause 52.244-5, Competition in Subcontracting (December 2010) |
The following clause(s) is substituted as follows:
● | FAR Clause 52.249-1, Termination for the Convenience of the Government (Fixed-Price)(Short Form) (April 1984) is deleted in its entirety and FAR Clause 52.249-2, Termination for the Convenience of the Government (Fixed Price) (April 2012) is substituted therefor. |
c. | Alternate I (February 2002), of FAR Clause 52.232-25, Prompt Payment (July 2013) is deleted. |
-37- |
ARTICLE 1.3. ADDITIONAL CONTRACT CLAUSES
This contract incorporates the following clauses by reference, with the same force and effect, as if they were given in full text. Upon request, the Contracting Officer will make their full text available.
a. | FEDERAL ACQUISITION REGULATION (FAR) (48 CFR CHAPTER 1) CLAUSES |
1. | FAR Clause 52.215-17, Waiver of Facilities Capital Cost of Money (October 1997). | |
2. | FAR Clause 52.219-28, Post-Award Small Business Program Rerepresentation (July 2013). | |
3. | FAR Clause 52.224-1, Privacy Act Notification (April 1984). | |
4. | FAR Clause 52.224-2, Privacy Act (April 1984). | |
5. | FAR Clause 52.239-1, Privacy or Security Safeguards (August 1996). | |
6. | FAR Clause 52.242-3, Penalties for Unallowable Costs (May 2001). | |
7. | FAR Clause 52.244-5, Competition in Subcontracting (December 1996). | |
8. | Alternate I (April 2012), FAR Clause 52.245-1, Government Property (April 2012). | |
9. | FAR Clause 52.246-23, Limitation of Liability (February 1997). |
b. | DEPARTMENT OF HEALTH AND HUMAN SERVICES ACQUISITION REGULATION (HHSAR) (48 CHAPTER 3) CLAUSES: |
1. | HHSAR Clause 352.201-70, Paperwork Reduction Act (January 2006). | |
2. | HHSAR Clause 352.231-70, Salary Rate Limitation (August 2012). |
Note: P.L. 113-76 sets forth the Salary Rate Limitation at the Executive Level II Rate, effective January 17, 2014. See the following website for Executive Schedule rates of pay: http://www.oDm.ciov/oca/ . | |
(For current year rates, click on Salaries and Wages/Executive Schedule/Rates of Pay for the Executive Schedule. For prior year rates, click on Salaries and Wages/select Another Year at the top of the page/Executive Schedule/Rates of Pay for the Executive Schedule. Rates are effective January 1 of each calendar year unless otherwise noted.) |
c. | NATIONAL INSTITUTES OF HEALTH (NIH) RESEARCH CONTRACTING (RC) CLAUSES: |
The following clauses are attached and made a part of this contract:
1. | NIH(RC)-11, Research Patient Care Costs (4/1/84). |
-38- |
ARTICLE 1.4. ADDITIONAL FAR CONTRACT CLAUSES INCLUDED IN FULL TEXT
This contract incorporates the following clauses in full text.
a. | FEDERAL ACQUISITION REGULATION (FAR) (48 CFR CHAPTER 1) CLAUSES |
1. | FAR Clause 52.217-9, Option to Extend the Term of the Contract (March 2000). |
a. | The Government may extend the term of this contract by written notice to the Contractor within 15 calendar days before the contract expires; provided that the Government gives the Contractor a preliminary written notice of its intent to extend at least 30 calendar days before the contract expires. The preliminary notice does not commit the Government to an extension. | |
b. | If the Government exercises this option, the extended contract shall be considered to include this option clause. | |
c. | The total duration of this contract, including the exercise of any options under this clause, shall not exceed five (5) years. |
b. | DEPARTMENT OF HEALTH AND HUMAN SERVICES ACQUISITION REGULATION (HHSAR) (48 CHAPTER 3) CLAUSES: | |
THERE ARE NO APPLICABLE CLAUSES IN THIS SECTION. |
-39- |
PART III - LIST OF DOCUMENTS, EXHIBITS AND OTHER ATTACHMENTS
SECTION J - LIST OF ATTACHMENTS
The following documents are attached and incorporated in this contract:
1. Statement of Work
Statement of Work - Phase I, dated 08/25/2014, 2 pages.
Statement of Work - Phase II, dated 08/25/2014, 3 pages.
2. Invoice Instructions for NIH Fixed-Price Contracts, NIH(RC)-2
Invoice Instructions for NIH Fixed-Price Contracts, NIH(RC)-2, (8/12), 3 pages.
3. Invoice/Financing Request and Contract Financial Reporting Instructions for NIH Cost- Reimbursement Type Contracts, NIH(RC)-4
Invoice/Financing Request and Contract Financial Reporting Instructions for NIH Cost-Reimbursement Type Contracts, NIH(RC)-4, (8/12), 6 pages.
4. Cumulative Inclusion Enrollment Report
Cumulative Inclusion Enrollment Report, PHS 398/2590, (Rev. 08/12), 1 page. Located at:
http://qrants.nih.qov/qrants/fundinq/phs398/CumulativelnclusionEnrollmentReport.pdf
5. Privacy Act System of Records, Number
Privacy Act System of Records, Number 09-25-0200,10 pages.
6. Research Patient Care Costs
Research Patient Care Costs, NIH(RC)-11, 4/1/84,1 page.
7. Disclosure of Lobbying Activities, SF-LLL
Disclosure of Lobbying Activities, SF-LLL, dated 7/97, 2 pages.
8. Government Property - Schedule IB
Government Property - Schedule IB, dated September 19, 2014, 1 page.
9. Report of Government Owned, Contractor Held Property
Report of Government Owned, Contractor Held Property, dated 3/2008,1 page. Located at: http://oamp.od.nih.gov/ sites/default/files/DGS/contracting-forms/Govt-Owned-Prop.pdf
10. NIH Small Business Innovation Research (SBIR) Program Funding Agreement Certification
NIH Small Business Innovative Research (SBIR) Program Funding Agreement Certification, 3 pages.
11. NIH Small Business Innovation Research (SBIR) Program Life Cycle Certification
NIH Small Business Innovative Research (SBIR) Program Life Cycle Certification, 3 pages.
-40- |
PART IV - REPRESENTATIONS AND INSTRUCTIONS
SECTION K - REPRESENTATIONS AND CERTIFICATIONS
The following documents are incorporated by reference in this contract:
1. | Annual Representations and Certifications are completed and located in The System for Award Management (SAM) website ( http://www.sam.gov). This includes the changes identified in paragraph (b) of the FAR provision 52.204-8, Annual Representations and Certifications, contained in the Contractor’s proposal. | |
2. | NIH Representations & Certifications, dated February 2013 | |
4. | Human Subjects Assurance Identification Number FWA00022203. |
END of the SCHEDULE
(CONTRACT)
-41- |
Shuttle Pharmaceuticals,
LLC HHSN261201400013C
August 25, 2014
STATEMENT OF WORK - PHASE I SBIR
I. Background Information and Objectives
A. Background information
The objective of this project is to advance commercialization efforts for IPdR (5 -iodo- 2pyrimidinone-2’-deoxyribose), a prod rug of the radiosensitizer ILIdR (5-iodo-2- deoxyuridine). In Phase I, the Contractor shall determine the scientific merit, feasibility and potential for commercialization of oral IPdR as a radiation sensitizer for use in cancer treatment. Administrative tasks shall be completed to enable an IND for the Contractor; formulation of GMP manufactured IPdR into 300 mg capsules; submission of a letter of intent (LOI) to CTEP; protocol preparation and IRB approval for the proposed Phase I clinical trial and establishment of companion diagnostics for analyzing clinical specimens from Phase I patients. The tasks detailed for the Phase I effort are intended to facilitate an IND for IPdR for the Contractor.
B. Technical Objectives
Objective 1. Activate the IPdR IND to enable the Contractor to provide GMP IPdR to the sub-contractor (BrUOG/RiH) for the Phase I and PK clinical trial.
Task 1.1. The Contractor shall file administrative documents to initially cross-file (IND 70,333) and obtain an IND for IPdR to enable performance of the Phase I and PK study at Brown University (Lifespan/RIH).
Milestone 1.1. The Contractor shall cross-file on the IPdR IND currently held by CTEP to permit performance of the Phase I clinical trial in Phase II of this contract.
Task 1.2. The Contractor shall negotiate an agreement with CTEP to transfer sufficient cGMP clinical product IPdR from the NCI DTP to the Contractor for performance of the clinical trial.
Milestone 1.2. Bulk cGMP drug shall be formulated into clinical product (encapsulated) IPdR, 250 mg capsules, for use in the proposed Phase I and PK clinical trial.
Task 1.3. The Contractor shall formulate and encapsulate cGMP IPdR into capsules (250 and 500 mg).
Milestone 1.3. IPdR in capsules of 300 mg shall be available for the Phase I and PK clinical trial.
Objective 2. Obtain approvals for the Phase I and PK clinical protocol from Brown University (Lifespan/Rhode Island Hospital) and CTEP. Develop efficacy protocols satisfying FDA “Orphan Drug” status.
Task 2.1. The Contractor shall submit a Letter of Intent (LOI) to NCI CTEP for approval of the Phase I and PK clinical studies of IPdR.
Milestone 2.1. The Contractor shall obtain a favorable response to an LOI to NCI CTEP for Phase I and PK studies.
Task 2.2. The Contractor shall obtain IRB approval of the complete Phase I and PK study Milestone 2.2. IRB approved Phase I for safety and feasibility of IPdR + RT.
Task 2.3. The Contractor shall consult with the FDA regarding “Orphan Drug” status for IPdR as a radiosensitizing drug for use in rectal cancer treatment
Attachment 1 - Phase I | Page 1 |
Milestone 2.3. The Contractor shall obtain FDA guidance on requirements for IPdR approval as an “Orphan Drug” leading to a strategy to accomplish this task.
Objective 3. Establish the in-house (Shuttle Pharmaceuticals, LLC Laboratories) biomarker assays for evaluating clinical specimens to be obtained from patients entering IPdR clinical trials.
Task 3.1. The Contractor shall establish plasma IPdR^IUdR—>IU PK and %IUdR-DNA cellular incorporation assays in the Contractor’s laboratories for use in patient plasma and tissue samples during the IPdR Phase I and PK dose escalation.
Milestone 3.1. The Contractor shall optimize LC/MS/MS PK, HPLC and flow cytometry assays for %IUdR-DNA incorporation in cells.
Task 3.1. The Contractor shall complete the Phase I work plan and report progress and achieved milestones to NIH to allow the project to progress to the Phase II work plan.
Milestone 3.2. The Contractor shall prepare a written report of Phase I progress and achieved milestones submitted and accepted by NIH.
II. Services to be performed
A. General Requirements
1. The Contractor shall independently perform all work and furnish all labor, materials, supplies, equipment and services (except as otherwise specified in the contract)
2. All work shall be monitored by the Government Contracting Officer’s Representative.
B. Specific Requirements are summarized in Gantt Chart 1:
Chart 1. Phase I. Milestones, Deliverables, Timeline and Work Distribution between the Contractor and Lifespan/Rhode Island Hospital (L/RIH).
Site | Milestones and Deliverables | Months | ||||||||
1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | ||
SP, L/RIH |
Objective 1. Task 1.1. Milestone 1.1. Activation of the IPdR IND |
|||||||||
SP | Objective 1. Task 1.2. Milestone 1.2. IPdR clinical product is obtained from CTEP suitable for use in the Phase I clinical trial |
|||||||||
SP | Objective 1. Task 1.3. Milestone 1.3. Sufficient quantity of 300 mg capsules of IPdR are provided to complete the Phase I clinical trial. |
|||||||||
SP, L/RIH |
Objective 2. Task 2.1. Milestone 2.1. NCI CTEP approval of the Phase I and PK LOI. |
|||||||||
SP, L/RIH |
Objective 2. Task 2.2. Milestone 5. The Phase I clinical trial receives IRB approval. |
|||||||||
SP | Objective 2. Task 2.3. Milestone 6. FDA provided advice for “Orphan Drug” status for IPdR in rectal cancer treatment. |
|||||||||
SP | Objective 3. Task 3.1. Milestone 3.1. The %IUdR-DNA cellular incorporation assays for Phase II is established in Shuttle Pharmaceuticals laboratories. |
|||||||||
SP | Objective 3. Task 3.2. Milestone 3.2. Written final report of achieved Phase I SBIR milestones to advance to the Phase II SBIR.work plan. |
Attachment 1 - Phase I | Page 2 |
Shuttle
Pharmaceuticals,
LLC HHSN261201400013C
August 25, 2014
STATEMENT OF WORK - PHASE II SBIR
I. Background Information and Objectives
A. Background information
Although radiosensitization is integral to the treatment of many types of human cancers, the drugs currently available are also cytotoxic, and there is no drug with FDA approval for the indication of radiosensitization. IPdR represents a potential first-in-class non-cytotoxic radiation sensitizer to biologically enhance radiation therapy effects on cancers. In Phase II, the Phase I clinical trial will be performed to determine safety and feasibility. This shall allow the Contractor to advance its proposed commercialization plan and to raise capital for efficacy clinical trials leading to FDA approval.
B. Technical Objectives
Objective 1: Perform the Phase I and PK clinical trial of IPdR-mediated radiosensitization in patients with locally advanced gastrointestinal cancers. presenting for palliative radiation therapy to the abdominal and/or pelvic regions.
The Contractor shall:
Task 1.1. Perform the Phase I clinical trial.
Milestone 1.1. Initiation and performance of the Phase I and PK clinical trial of lUdR with RT.
Milestone 1.3. Collect and transfer clinical samples to the Contractor’s laboratories for analysis.
Objective 2: Perform PK analyses to determine optimal dosing schedule of IPdR and perform biomarker assays of %IUdR-DNA cellular incorporation in clinical specimens.
The Contractor shall:
Task 2.1. Determine pharmacokinetics (PK) and %IUdR-DNA for biomarker analysis.
Milestone 2.1. Obtain and analyze clinical specimens for PK & %IUdR-DNA determinations.
Milestone 2.2. Perform PK analyses.
Milestone 2.3. Determine and correlate %IUdR-DNA incorporation with clinical observations.
Attachment 1 - Phase II | Page 1 |
Objective 3: Use results of the Phase l and PK clinical trial to design the Phase IB/II clinical trials in patients with rectal cancers.
The Contractor shall:
Task 3.1. Analyze the PK data to determine optimal IPdR dosing.
Milestone 3.1. Establish optimum dosing schedule of IPdR, based on PK data.
Task 3.2. Design and write the Phase IB/II protocol for efficacy determination.
Milestone 3.2. Write Phase IB/II clinical protocol for IPdR and RT in rectal cancer.
Objective 4: Advance the business development and commercialization plan for
company sustainability
The Contractor shall:
Task 4.1. Advance results of the Phase I clinical trial to raise capital for efficacy clinical trials of IPdR and RT.
Milestone 4.1. Ensure that the written business development and commercialization plan is available for entering capital markets to commercialize IPdR.
Task 4.2. Prepare and submit a final written report to the Government at the conclusion of the Phase II contract.
Milestone 4.1. Submit written final progress report.
II. Services to be performed
A. General Requirements
1. The Contractor shall independently perform all work and furnish all labor, materials, supplies, equipment and services (except as otherwise specified in the contract)
2. All work shall be monitored by the Contracting Officer’s Representative.
Attachment 1 - Phase II | Page 2 |
B. Specific Requirements
The tasks are detailed for the Phase II effort, intended to perform the Phase I clinical trial and PK study for IPdR for Shuttle Pharmaceuticals are summarized in Gantt Chart 2:
Chart 2. Phase II Milestones, Deliverables and Work Distribution between the Contractor and Lifespan/Rhode Island Hospital (L/RIH) for Clinical Development of IPdR as a Radiosensitizer.
Site | Milestones and Deliverables | Delivery Schedule (months) | |||||||||||
2 | 4 | 6 | 8 | 10 | 12 | 14 | 16 | 18 | 20 | 22 | 24 | ||
L/RIH | Obiective 1. Task 1.1
Milestone 1,1. Initiation and performance of the Phase I and PK clinical trial of lUdR with RT.
Milestone 1.2. Safety and MTD parameters for IPdR with RT.
Milestone 1.3. Collect and transfer clinical samples to SP Labs. |
||||||||||||
L/RIH
SP |
Obiective 2. Task 2.1.
Milestone 2.1. Obtain clinical specimens for PK & %IUdR-DNA
Milestone 2.2. PK analyses
Milestone 2.3. %IUdR-DNA incorporation is determined and correlated with clinical observations. |
||||||||||||
SP | Obiective 3: Task 3.1.
Milestone 3.1. Dosing schedule of IPdR is established, based on PK |
||||||||||||
SP | Obiective 3: Task 3.2.
Milestone 3.2. Written Phase IB/II clinical protocol |
||||||||||||
SP | Obiective 4: Task 4.1.
Milestone 4.1 Written business and commercialization plan. |
||||||||||||
SP,
L/RIH |
Obiective 4: Task 4.2.
Milestone 4.2. Final report submitted to NIH. |
Attachment 1 - Phase II | Page 3 |
INVOICE INSTRUCTIONS FOR NIH FIXED-PRICE CONTRACTS, NIHfRC)-2
Format: Submit payment requests on Standard Form 1034, Public Voucher for Purchases and Services Other Than Personal, or the Contractor’s self-generated form provided it contains all of the information prescribed herein. DO NOT include a cover letter with the payment request.
Number of Copies: Submit payment requests in the quantity specified in the Invoice Submission Instructions in Section G of the Contract Schedule.
Frequency: Submit payment requests upon delivery and acceptance of goods or services unless otherwise authorized by the Contracting Officer.
Currency: All NIH contracts are expressed in United States dollars. When the Government pays in a currency other than United States dollars, billings shall be expressed, and payment by the Government shall be made, in that other currency at amounts coincident with actual costs incurred. Currency fluctuations may not be a basis of gain or loss to the Contractor. Notwithstanding the above, the total of all invoices paid under this contract may not exceed the United States dollars authorized.
Preparation and Itemization of the Payment Request: Prepare payment requests as follows:
Note: All information must be legible or the invoice will be considered improper and returned to the Contractor.
(a) | Designated Billing Office Name and Address: Enter the designated billing office name and address, as identified in the Invoice Submission Instructions in Section G of the Contract Schedule. |
(b) | Contractor’s Name, Address, Point of Contact, TIN, and DUNS or DUNS+4 Number: Show the Contractor’s name and address exactly as they appear in the contract. Any invoice identified as improper will be sent to this address. Also include the name, title, phone number, and e-mail address of the Point of Contact in case of questions. If the remittance name differs from the legal business name, both names must appear on the invoice. Provide the Contractor’s Federal Taxpayer Identification Number (TIN) and Data Universal Numbering System (DUNS) or DUNS+4 number. The DUNS number must identify the Contractor’s name and address exactly as stated in the contract, and as registered in the System for Acquisition Management (SAM) database. |
When an approved assignment of claims has been executed, the Contractor shall provide the same information for the assignee as is required for the Contractor (i.e., name, address, point of contact, TIN, and DUNS number), with the remittance information clearly identified as such.
(c) | Invoice/Voucher Number: Identify each payment request by a unique invoice number, which can only be used one time regardless of the number of contracts or orders held by an organization. For example, if a contractor has already submitted invoice number 05 on one of its contracts or orders, it cannot use that same invoice number on any other contract or order. Payment requests with duplicate invoice numbers will be considered improper and returned to the contractor. |
NIH(RC)-2 Revised 7/2013 |
Attachment 2 |
1 |
The NIH does not prescribe a particular numbering format but suggests using a job or account number for each contract and order followed by a sequential invoice number (example: 8675309-05). Invoice numbers are limited to 30 characters. There are no restrictions on the use of special characters, such as colons, dashes, forward slashes, or parentheses.
If all or part of an invoice is suspended and the contractor chooses to reclaim those costs on a supplemental invoice, the contractor may use the same unique invoice number followed by an alpha character, such as “R” for revised (example: 8675309-05R).
(d) | Date Invoice/Voucher Prepared: Insert the date the payment request is prepared. |
(e) | Contract Number and Order Number (if applicable): Insert the contract number and order number (as applicable). |
(f) | Contract Title: Insert the contract title listed on the cover page of the contract and/or Section G of the Contract Schedule. |
(g) | Current Contract Period of Performance: Insert the contract start date/effective date through the current completion date of the contract. |
(h) | Total Fixed-Price of Contract/Order: Insert the total fixed-price of the contract/order. |
(i) | Two-Way/Three-Way Match: Identify whether payment is to be made using a two-way or three-way match. To determine required payment method, refer to the Invoice Submission Instructions in Section G of the Contract Schedule. |
(j) | Office of Acquisitions: Insert the name of the Office of Acquisitions, as identified in the Invoice Submission Instructions in Section G of the Contract Schedule. |
(k) | Central Point of Distribution: Identify the Central Point of Distribution, as specified in the Invoice Submission Instructions in Section G of the Contract Schedule. |
(l) | Billing Period: Insert the beginning and ending dates (month, day, and year) of the period in which costs were incurred and for which reimbursement is claimed. |
(m) | Description of Supplies or Services: Provide a description of the supplies or services, by line item (if applicable), quantity, unit price (where appropriate), and total amount. The item description, unit of measure, and unit price must match those specified in the contract. For example, if the contract specifies 1 box of hypodermic needles (100/box) with a unit price of $50.00, then the invoice must state 1 box, hypodermic needles (100/box), $50.00, not 100 syringes at $0.50 each. Invoices that do not match the line item pricing in the contract will be considered improper and will be returned to the Contractor. |
(n) | Amount Billed - Current Period: Insert the amount claimed for the current billing period, including any adjustments, if applicable. If the Contract Schedule contains separately priced line items, identify the contract line item(s) on the payment request. |
(o) | Amount Billed - Cumulative: Insert the cumulative amounts claimed to date, including any adjustments as applicable. If the Contract Schedule contains separately priced line items,identify the contract line item(s) on the payment request. |
(p) | Freight or Delivery Charges: Identify all charges for freight or express shipments, other than f.o.b. destination, as a separate line item on the invoice. (If shipped by freight or express, and charges are more than $25, attach prepaid bill.) |
(q) | Government Property: If the contract authorizes the purchase of any item of Government Property (e.g., equipment), the invoice must list each item for which reimbursement is requested. Include reference to the following (as applicable): |
- | item number for the specific piece of equipment listed in the Property Schedule, and | |
- | Contracting Officer Authorization (COA) Number, if the equipment is not covered by the Property Schedule. |
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INVOICE/FINANCING REQUEST AND CONTRACT FINANCIAL REPORTING INSTRUCTIONS
FOR NIH COST-REIMBURSEMENT CONTRACTS, NIH(RC)-4
Format: Submit payment requests on the Contractor’s self-generated form in the manner and format prescribed herein and as illustrated in the Sample Invoice/Financing Request. Standard Form 1034, Public Voucher for Purchases and Services Other Than Personal, may be used in lieu of the Contractor’s self-generated form provided it contains all of the information shown on the Sample Invoice/Financing Request. DO NOT include a cover letter with the payment request.
Number of Copies: Submit payment requests in the quantity specified in the Invoice Submission Instructions in Section G of the Contract Schedule.
Frequency: Payment requests shall not be submitted more frequently than once every two weeks in accordance with the Allowable Cost and Payment Clause incorporated into this contract. Small business concerns may submit invoices/financing requests more frequently than every two weeks.
Cost Incurrence Period: Costs incurred must be within the contract performance period or covered by precontract cost provisions.
Billing of Costs Incurred: : If billed costs include (1) costs of a prior billing period, but not previously billed, or (2) costs incurred during the contract period and claimed after the contract period has expired, the Contractor shall cite the amount(s) and month(s) in which the costs were incurred.
Contractor’s Fiscal Year: Prepare payment requests in such a manner that the Government can identify costs claimed with the Contractor’s fiscal year.
Currency: All NIH contracts are expressed in United States dollars. When the Government pays in a currency other than United States dollars, billings shall be expressed, and payment by the Government shall be made, in that other currency at amounts coincident with actual costs incurred. Currency fluctuations may not be a basis of gain or loss to the Contractor. Notwithstanding the above, the total of all invoices paid under this contract shall not exceed the United States dollars authorized.
Costs Requiring Advance Approval: Costs requiring advance approval by the Contracting Officer, which are not set forth in the Contract Schedule shall be identified by the Contracting Officer’s Authorization (COA) Number as a separate expenditure category on the payment request. In addition, the Contractor shall show any cost limitation or ceiling set forth in the Contract Schedule, i.e. an Advance Understanding, as a separate expenditure category on the payment request.
Invoice/Financing Request Identification: Identify each payment as either:
(a) | Interim Invoice/Contract Financing Request: These are interim payment requests submitted during the contract performance period. |
(b) | Completion Invoice: Submit the completion invoice promptly upon completion of the work, but no later than one year from the contract completion date, or within 120 days after settlement of the final indirect cost rates covering the year in which the contract is physically complete (whichever date is later). The Contractor shall submit the completion invoice when all costs have been assigned to the contract and all performance provisions have been completed. |
(c) | Final Invoice: A final invoice may be required after the amounts owed have been settled between the Government and the Contractor (e.g., resolution of all suspensions and audit exceptions). |
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Preparation and Itemization of the Invoice/Financing Request:
The Contractor shall furnish the information set forth in the instructions below. The instructions are keyed to the entries on the Sample Invoice/Financing Request. All information must be legible or the invoice will be considered improper and returned to the Contractor.
(a) | Designated Billing Office Name and Address: Enter the designated billing office name and address, as identified in the Invoice Submission Instructions in Section G of the Contract Schedule. |
(b) | Contractor’s Name, Address, Point of Contact, TIN, and DUNS or DUNS+4 Number: Show the Contractor’s name and address exactly as they appear in the contract. Any invoice identified as improper will be sent to this address. Also include the name, title, phone number, and e- mail address of the Point of Contact in case of questions. If the remittance name differs from the legal business name, both names must appear on the invoice. Provide the Contractor’s Federal Taxpayer Identification Number (TIN) and Data Universal Numbering System (DUNS) or DUNS+4 number. The DUNS number must identify the Contractor’s name and address exactly as stated in the contract, and as registered in the System for Award Management (SAM) database. |
When an approved assignment of claims has been executed, the Contractor shall provide the same information for the assignee as is required for the Contractor (i.e., name, address, point of contact, TIN, and DUNS number), with the remittance information clearly identified as such.
(c) | Invoice/Financing Request Number: Identify each payment request by a unique invoice number, which can only be used one time regardless of the number of contracts or orders held by an organization. For example, if a contractor has already submitted invoice number 05 on one of its contracts or orders, it cannot use that same invoice number on any other contract or order. Payment requests with duplicate invoice numbers will be considered improper and returned to the contractor. |
The NIH does not prescribe a particular numbering format but suggests using a job or account number for each contract and order followed by a sequential invoice number (example: 8675309-05). Invoice numbers are limited to 30 characters. There are no restrictions on the use of special characters, such as colons, dashes, forward slashes, or parentheses.
If all or part of an invoice is suspended and the contractor chooses to reclaim those costs on a supplemental invoice, the contractor may use the same unique invoice number followed by an alpha character, such as “R” for revised (example: 8675309-05R).
(d) | Date Invoice/Financing Request Prepared: Insert the date the payment request is prepared. |
(e) | Contract Number and Order Number (if applicable): Insert the contract number and order number (as applicable). |
(f) | Contract Title: Insert the contract title exactly as it appears on the cover page of the contract and/or Section G of the Contract Schedule. |
(g) | Current Contract Period of Performance: Insert the contract start date/effective date through the current completion date of the contract. |
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(h) | Total Estimated Cost of Contract/Order: Insert the total estimated cost of the contract,exclusive of fee. If billing under an order, insert the total estimated cost of the order, exclusive of fee. For contracts/orders with options or incremental funding provisions, enter the amount currently obligated and available for payment. |
(i) | Total Fixed-Fee: Insert the total fixed-fee (where applicable). For contracts/orders with options or incremental funding provisions, enter the amount currently obligated and available for payment (where applicable). Note: If the contract provides for another type of Fee, i.e. Award or Incentive Fee, insert the amount available to be earned as identified in the contract and indicate the type of fee to be billed on the payment request. |
(j) | Two-Way/Three-Way Match: Identify whether payment is to be made using a two-way or three-way match. To determine required payment method, refer to the Invoice Submission Instructions in Section G of the Contract Schedule. |
(k) | Office of Acquisitions: Insert the name of the Office of Acquisitions, as identified in the Invoice Submission Instructions in Section G of the Contract Schedule. |
(l) | Central Point of Distribution: Insert the Central Point of Distribution, as identified in the Invoice Submission Instructions in Section G of the Contract Schedule. |
(m) | Billing Period: Insert the beginning and ending dates (month, day, and year) of the period in which costs were incurred and for which reimbursement is claimed. |
(n) | Amount Billed - Current Period: Insert the amount claimed for the current billing period by major cost element, including any adjustments and fee. If the Contract Schedule contains separately priced line items, identify the contract line item(s) on the payment request and include a separate breakdown (by major cost element) for each line item. |
(o) | Amount Billed - Cumulative: Insert the cumulative amounts claimed by major cost element, including any adjustments and fee. If the Contract Schedule contains separately priced line items, identify the contract line item(s) on the payment request and include a separate breakdown (by major cost element) for each line item. |
(p) | Direct Costs: Insert the major cost elements. For each element, consider the application of the paragraph entitled “Costs Requiring Prior Approval” on page 1 of these instructions. |
1) | Direct Labor: Include salaries and wages paid (or accrued) for direct performance of the contract. | |
For Level of Effort contracts only, the Contractor shall provide the following information on a separate sheet of paper attached to the payment request: |
- | hours or percentage of effort and cost by labor category (as specified in the Level of Effort Article in Section F of the Contract Schedule) for the current billing period, and |
- | hours or percentage of effort and cost by labor category from contract inception through the current billing period. (NOTE: The Contracting Officer may require the Contractor to provide additional breakdown for direct labor, such as position title, employee name, and salary or hourly rate.) |
2) | Fringe Benefits: List any fringe benefits applicable to direct labor and billed as a direct cost. Cite the rate(s) used to calculate fringe benefit costs, if applicable. |
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3) | Accountable Personal Property: Include permanent research equipment and general purpose equipment having a unit acquisition cost of $1,000 or more, with a life expectancy of more than two years, and sensitive property regardless of cost (see the HHS Contractor’s Guide for Contract of Government Property). Show permanent research equipment separate from general purpose equipment. |
On a separate sheet of paper attached to the payment request, list each item for which reimbursement is requested. Precede the item with an asterisk (*) if the equipment is below the $1,000 approval level. Include reference to the following (as applicable):
- | item number for the specific piece of equipment listed in the Property Schedule, and, | |
- | Contracting Officer Authorization (COA) number, if the equipment is not covered by the Property Schedule. |
The Contracting Officer may require the Contractor to provide further itemization of property having specific limitations set forth in the contract.
4) | Materials and Supplies: Include equipment with unit costs of less than $1,000 or an expected service life of two years or less, and consumable material and supplies regardless of amount. |
5) | Premium Pay: List remuneration in excess of the basic hourly rate. |
6) | Consultant Fee: List fees paid to consultants. Identify consultant by name or category as set forth in the contract or COA, as well as the effort (i.e., number of hours, days, etc.) and rate billed. |
7) | Travel: Include domestic and foreign travel. Foreign travel is travel outside of the United States and its territories and possessions. However, for an organization located outside the United States and its territories and possessions, foreign travel means travel outside that country. Foreign travel must be billed separately from domestic travel. |
8) | Subcontract Costs: List subcontractor(s) by name and amount billed. |
9) | Other: List all other direct costs in total unless exceeding $1,000 in amount. If over $1,000, list cost elements and dollar amounts separately. If the contract contains restrictions on any cost element, that cost element must be listed separately. |
(q) | Cost of Money (COM): Cite the COM factor and base in effect during the time the cost was incurred and for which reimbursement is claimed. |
(r) | Indirect Costs: Identify the indirect cost base (IDC), indirect cost rate, and amount billed for each indirect cost category. |
(s) | Fixed-Fee: Cite the formula or method of computation for fixed-fee, if applicable. The fixed-fee must be claimed as provided for by the contract. Note: If the contract provides for another type of Fee, i.e. Award or Incentive Fee, provide the same documentation for the amount claimed. |
(t) | Total Amounts Claimed: Insert the total amounts claimed for the current and cumulative periods. |
(u) | Adjustments: Include amounts conceded by the Contractor, outstanding suspensions, and/or disapprovals subject to appeal. |
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(v) | Grand Totals |
(w) | Certification: The Contractor shall include the following certification at the bottom of each payment request: |
“Pursuant to authority vested in me, I certify that this voucher is correct and proper for payment.” | |
Note: The contract may require additional certifications (See Invoice Submission Instructions in Section G of the Contract Schedule) |
The Contracting Officer may require the Contractor to submit detailed support for costs claimed on one or more interim payment requests.
FINANCIAL REPORTING INSTRUCTIONS:
These instructions correspond to the Columns on the Sample Invoice/Financing Request.
Column A - Expenditure Category: Enter the expenditure categories required by the contract.
Column B - Cumulative Percentage of Effort/Hrs. - Negotiated: Enter the percentage of effort or number of hours agreed to for each employee or labor category listed in Column A.
Column C - Cumulative Percentage of Effort/Hrs. - Actual: Enter the percentage of effort or number of hours worked by each employee or labor category listed in Column A.
Column D - Amount Billed - Current: Enter amounts billed during the current period.
Column E - Amount Billed - Cumulative: Enter the cumulative amounts to date.
Column F - Cost at Completion: Enter data only when the Contractor estimates that a particular expenditure category will vary from the amount negotiated. Realistic estimates are essential.
Column G - Contract Amount: Enter the costs agreed to for all expenditure categories listed in Column A.
Column H - Variance (Over or Under): Show the difference between the estimated costs at completion (Column F) and negotiated costs (Column G) when entries have been made in Column F. This column need not be filled in when Column F is blank. When a line item varies by plus or minus 10 percent, i.e., the percentage arrived at by dividing Column F by Column G, an explanation of the variance should be submitted. In the case of an overrun (net negative variance), this submission shall not be deemed as notice under the Limitation of Cost Clause in the contract.
Modifications: List all new modification(s) (not previously reported) in the amount negotiated for an item in the appropriate cost category.
Expenditures Not Negotiated: An expenditure for an item for which no amount was negotiated (e.g., at the discretion of the Contractor in performance of its contract) should be listed in the appropriate cost category and all columns filled in, except for G. Column H will of course show a 100 percent variance and will be explained along with those identified under H above.
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SAMPLE INVOICE/FINANCING REQUEST AND CONTRACT FINANCIAL REPORT
(a) | Designated Billing Office Name and Address: National Institutes of Health |
(c) | Invoice/Financing Request No.:_________ |
Office of Financial Management Commercial Accounts |
(d) |
Date Invoice/Financing Request Prepared: _________________________________ | |
2115 East Jefferson Street, Room 4B432, MSC 8500 Bethesda, MD 20892-8500 |
(e) |
Contract No. and Order No. (if applicable): __________________ | |
(f) |
Contract Title: __________________ | ||
(b) | Contractor’s Name, Address, Point of Contact, TIN, and DUNS or DUNS+4 Number: | (g) |
Current Contract Period of Performance: ___________________ |
(h) |
Total Estimated Cost of Contract/Order: _________________________________ | ||
ABC CORPORATION 100 Main Street |
(i) |
Total Fixed Fee (if applicable):___________
| |
Anywhere, U.S.A. Zip+4 Name, Title, Phone Number, and E-mail |
(j) |
Two-Way Match:_____ Three-Way Match:_______
| |
Address of Contractor’s Point of Contact. | (k) | Office of Acquisitions:_________________ | |
DUNS or DUNS+4: ________________ | |||
TIN:_____________________________________ | (l) | Central Point Distribution |
(m) This invoice/financing request represents reimbursable costs for the period from to
“Pursuant to authority vested in me, I certify that this voucher is correct and proper for payment.”
(Name of Official) | (Title) |
* Attach details as specified in the contract or requested by the Contracting Officer
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Cumulative Inclusion Enrollment Report
This report format should NOT be used for collecting data from study participants.
Study Title:
Comments:
Ethnic Categories | Total | |||||||||
Racial Categories | Not Hispanic or Latino | Hispanic or Latino | Unknown/Not Reported Ethnicity | |||||||
Female | Male | Unknown/ Not Reported |
Female | Male | Unknown/ Not Reported |
Female | Male | Unknown/ Not Reported | ||
American Indian/ Alaska Native | 0 | |||||||||
Asian | 0 | |||||||||
Native Hawaiian or Other Pacific islander | 0 | |||||||||
Black or African American | 0 | |||||||||
White | 0 | |||||||||
More Than One
Race |
0 | |||||||||
Unknown or Not Reported | 0 | |||||||||
Total | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
PHS 398 / PHS 2590 (Rev. 08/12 Approved Through 8/31/2015)
OMB
No. 0925-0001/0002
Cumulative Inclusion Enrollment Report
Page
09-25-0200 SYSTEMS LISTING
SYSTEM NAME:
Clinical, Basic and Population-based Research Studies of the National Institutes of Health (NIH), HHS/NIH/OD.
SECURITY CLASSIFICATION:
None.
SYSTEM LOCATION:
Records are located at NIH and Contractor research facilities which collect or provide research data for this system. Contractors may include, but are not limited to: Research centers, clinics, hospitals, universities, medical schools, research institutions/foundations, national associations, commercial organizations, collaborating State and Federal Government agencies, and coordinating centers. A current list of sites, including the address of any Federal Records Center where records from this system may be stored, is available by writing to the appropriate Coordinator listed under Notification Procedure.
CATEGORIES OF INDIVIDUALS COVERED BY THE SYSTEM:
Adults and/or children who are the subjects of clinical, basic, or population-based research studies of the NIH. Individuals with disease. Individuals who are representative of the general population or of special groups including, but not limited to: normal controls, normal volunteers, family members and relatives; providers of services (e.g., health care and social work); health care professionals and educators, and demographic sub-groups as applicable, such as age, sex, ethnicity, race, occupation, geographic location; and groups exposed to real and/or hypothesized risks (e.g., exposure to biohazardous microbial agents).
CATEGORIES OF RECORDS IN THE SYSTEM:
The system contains data about individuals as relevant to a particular research study. Examples include, but are not limited to: name, study identification number, address, relevant telephone numbers, social security number (voluntary), driver’s license number, date of birth, weight, height, sex, race; medical, psychological and dental information, laboratory and diagnostic testing results; registries; social, economic and demographic data; health services utilization; insurance and hospital cost data, employers, conditions of the work environment, exposure to hazardous substances/compounds; information pertaining to stored biologic specimens (including blood, urine, tissue and genetic materials), characteristics and activities of health care providers and educators and trainers (including curricula vitae); and associated correspondence.
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09-25-0200 SYSTEMS LISTING | Page 1 of 10 |
AUTHORITY FOR MAINTENANCE OF THE SYSTEM:
“Research and Investigation,” “Appointment and Authority of the Directors of the National Research Institutes,” “National Cancer Institute,” “National Eye Institute,” “National Heart, Lung and Blood Institute,” “National Institute on Aging,” “National Institute on Alcohol Abuse and Alcoholism,” “National Institute on Allergy and Infectious Diseases,” “National Institute of Arthritis and Musculoskeletal and Skin Diseases,” “National Institute of Child Health and Human Development,” “National Institute on Deafness and Other Communication Disorders,” “National Institute of Dental and Craniofacial Research,” “National Institute of Diabetes, and Digestive and Kidney Diseases,” “National Institute of Drug Abuse,” “National Institute of Environmental Health Sciences,” “National Institute of Mental Health,” “National Institute of Neurological Disorders and Stroke,” and the “National Human Genome Research Institute” of the Public Health Service Act. (42 U.S.C. 241,242,248,281, 282,284, 285a, 285b, 285c, 285d, 285e, 285f, 285g, 285h, 285i, 285j, 2851, 285m, 285n, 285o, 285p, 285q, 287, 287b, 287c, 289a, 289c, and 44 U.S.C. 3101.)
PURPOSE(S):
To document, track, monitor and evaluate NIH clinical, basic, and population-based research activities.
ROUTINE USES OF RECORDS MAINTAINED IN THE SYSTEM, INCLUDING
CATEGORIES OF USERS AND THE PURPOSES OF SUCH USES:
1. | Are cord may be disclosed for a research purpose, when the Department: (A) has determined that the use or disclosure does not violate legal or policy limitations under which the record was provided, collected, or obtained; e.g., disclosure of alcohol or drug abuse patient records will be made only in accordance with the restrictions of confidentiality statutes and regulations 42 U.S.C. 241,42 U.S.C. 290dd-2,42 CFR Part 2, and where applicable, no disclosures will be made inconsistent with an authorization of confidentiality under 42 U.S.C. 241 and 42 CFR Part 2a; (B) has determined that the research purpose (1) cannot be reasonably accomplished unless the record is provided in individually identifiable form, and (2) warrants the risk to the privacy of the individual that additional exposure of the record might bring; (C) has required the recipient to (1) establish reasonable administrative, technical, and physical safeguards to prevent unauthorized use or disclosure of the record, (2) remove or destroy the information that identifies the individual at the earliest time at which removal or destruction can be accomplished consistent with the purpose of the research project, unless the recipient has presented adequate justification of a research or health nature for retaining such information, and (3) make no further use or disclosure of the record except (a) in emergency circumstances affecting the health or safety of any individual, (b) for use in another research project, under these same conditions, and with written authorization of the Department, (c) for disclosure to a properly identified person for the purpose of an audit related to the research project, if information that would enable research subjects to be identified is removed or destroyed at the earliest opportunity consistent with the purpose of the audit, or (d) when required by law; and (D) has secured a written statement attesting to the recipient’s understanding of, and willingness to abide by, these provisions. |
2. | Disclosure may be made to a Member of Congress or to a Congressional staff member in response to an inquiry of the Congressional office made at the written request of the constituent about whom the record is maintained. |
3. | The Department of Health and Human Services (HHS) may disclose information from this system of records to the Department of Justice when: (a) The agency or any component thereof; or (b) any employee of the agency in his or her official capacity where the Department of Justice has agreed to represent the employee; or (c) the United States Government, is a party to litigation or has an interest in such litigation, and by careful review, the agency determines that the records are both relevant and necessary to the litigation and the use of such records by the Department of Justice is, therefore, deemed by the agency to be for a purpose that is compatible with the purpose for which the agency collected the records. |
4. | Disclosure may be made to agency contractors, grantees, experts, consultants, collaborating researchers, or volunteers who have been engaged by the agency to assist in the performance of a service related to this system of records and who need to have access to the records in order to perform the activity. Recipients shall be required to comply with the requirements of the Privacy Act of 1974, as amended, pursuant to 5 U.S.C. 552a(m). |
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5. | Information from this system may be disclosed to Federal agencies, State agencies (including the Motor Vehicle Administration and State vital statistics offices, private agencies, and other third parties (such as current or prior employers, acquaintances, relatives), when necessary to obtain information on morbidity and mortality experiences and to locate individuals for follow-up studies. Social security numbers, date of birth and other identifiers may be disclosed: (1) to the National Center for Health Statistics to ascertain vital status through the National Death Index; (2) to the Health Care Financing Agency to ascertain morbidities; and (3) to the Social Security Administration to ascertain disabilities and/or location of participants. Social security numbers may also be given to other Federal agencies, and State and local agencies when necessary to locating individuals for participation in follow-up studies. |
6. | Medical information may be disclosed in identifiable form to tumor registries for maintenance of health statistics, e.g., for use in research studies. |
7. | PHS may inform the sexual and/or needle-sharing partner(s) of a subject individual who is infected with the human immunodeficiency virus (HIV) of their exposure to HIV, under the following circumstances: (1) The information has been obtained in the course of clinical activities at PHS facilities carried out by PHS personnel or contractors; (2) The PHS employee or contractor has made reasonable efforts to counsel and encourage the subject individual to provide the information to the individual’s sexual or needle-sharing partner(s); (3) The PHS employee or contractor determines that the subject individual is unlikely to provide the information to the sexual or needle-sharing partner(s) or that the provision of such information cannot reasonably be verified; and (4) The notification of the partner(s) is made, whenever possible, by the subject individual’s physician or by a professional counselor and shall follow standard counseling practices. |
PHS may disclose information to State or local public health departments, to assist in the notification of the subject individual’s sexual and/or needle-sharing partner(s), or in the verification that the subject individual has notified such sexual or needle-sharing partner(s). | |
8. | Certain diseases and conditions, including infectious diseases, may be reported to appropriate representatives of State or Federal Government as required by State or Federal law. |
9. | Disclosure may be made to authorized organizations which provide health services to subject individuals or provide third-party reimbursement or fiscal intermediary functions, for the purpose of planning for or providing such services, billing or collecting third-party reimbursements. |
10. | The Secretary may disclose information to organizations deemed qualified to carry out quality assessment, medical audits or utilization reviews. |
11. | Disclosure may be made for the purpose of reporting child, elder or spousal abuse or neglect or any other type of abuse or neglect as required by State or Federal law. |
POLICIES AND PRACTICES FOR STORING, RETRIEVING, ACCESSING, RETAINING, AND DISPOSING OF RECORDS IN THE SYSTEM:
STORAGE:
Records may be stored on index cards, file folders, computer tapes and disks (including optical disks), photography media, microfiche, microfilm, and audio and video tapes. For certain studies, factual data with study code numbers are stored on computer tape or disk, while the key to personal identifiers is stored separately, without factual data, in paper/computer files.
RETRIEVABILITY:
During data collection stages and follow-up, retrieval is by personal identifier (e.g., name, social security number, medical record or study identification number, etc.). During the data analysis stage, data are normally retrieved by the variables of interest (e.g., diagnosis, age, occupation).
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SAFEGUARDS:
1. | Authorized Users: Access to identifiers and to link files is strictly limited to the authorized personnel whose duties require such access. Procedures for determining authorized access to identified data are established as appropriate for each location. Personnel, including contractor personnel, who may be so authorized include those directly involved in data collection and in the design of research studies, e.g., interviewers and interviewer supervisors; project managers; and statisticians involved in designing sampling plans. Other one-time and special access by other employees is granted on a need-to-know basis as specifically authorized by the system manager. Researchers authorized to conduct research on biologic specimens will typically access the system through the use of encrypted identifiers sufficient to link individuals with records in such a manner that does not compromise confidentiality of the individual. | |
2. | Physical Safeguards: Records are either stored in locked rooms during off-duty hours, locked file cabinets, and/or secured computer facilities. For certain studies, personal identifiers and link files are separated and stored in locked files. Computer data access is limited through the use of key words known only to authorized personnel. | |
3. | Procedural Safeguards: Collection and maintenance of data is consistent with legislation and regulations in the protection of human subjects, informed consent, confidentiality, and confidentiality specific to drug and alcohol abuse patients where these apply. When anonymous data is provided to research scientists for analysis, study numbers which can be matched to personal identifiers will be eliminated, scrambled, or replaced by the agency or contractor with random numbers which cannot be matched. Contractors who maintain records in this system are instructed to make no further disclosure of the records. Privacy Act requirements are specifically included in contracts for survey and research activities related to this system. The OHS project directors, contract officers, and project officers oversee compliance with these requirements. Personnel having access are trained in Privacy Act requirements. Depending upon the sensitivity of the information in the record, additional safeguard measures may be employed. | |
4. | Implementation Guidelines: These practices are in compliance with the standards of Chapter 45- 13 of the HHS General Administration Manual, “Safeguarding Records Contained in Systems of Records,” supplementary Chapter PHS hf: 45-13, and the HHS Automated Information Systems Security Program Handbook. |
RETENTION AND DISPOSAL:
Records are retained and disposed of under the authority of the NIH Records Control Schedule contained in NIH Manual Chapter 1743, Appendix IB “Keeping and Destroying Records” (HHS Records Management Manual, Appendix B-361), item 3000-G-3, which allows records to be kept as long as they are useful in scientific research. Collaborative Perinatal Project records are retained in accordance with item 3000-G-4, which does not allow records to be destroyed. Refer to the NIH Manual Chapter for specific conditions on disposal or retention instructions.
SYSTEM MANAGER(S) AND ADDRESS(ES):
See Appendix I for a listing of current System Managers. This system is for use by all NIH Institutes and Centers.
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NOTIFICATION PROCEDURE:
To determine if a record exists, write to the appropriate IC Privacy Act Coordinator listed below. In cases where the requester knows specifically which System Manager to contact, he or she may contact the System Manager directly (See Appendix I). Notification requests should include: individual’s name; current address; date of birth; date, place and nature of participation in specific research study; name of individual or organization administering the research study (if known); name or description of the research study (if known); address at the time of participation; and in specific cases, a notarized statement (some highly sensitive systems require two witnesses attesting to the individual’s identity). A requester must verify his or her identity by providing either a notarization of the request or by submitting a written certification that the is who he or she claims to be and understands that the knowing and willful request for acquisition of a record pertaining to an individual under false pretenses is a criminal offense under the Act, subject to a five thousand dollar fine.
Individuals will be granted direct access to their medical records unless the System Manager determines that such access is likely to have an adverse effect (i.e., could cause harm) on the individual. In such cases when the System Manager has determined that the nature of the record information requires medical interpretation, the subject of the record shall be requested to designate, in writing, a responsible representative who will be willing to review the record and inform the subject individual of its contents at the representative’s discretion. The representative may be a physician, other health professional, or other responsible individual. In this case, the medical/dental record will be sent to the designated representative. Individuals will be informed in writing if the record is sent to the representative. This same procedure will apply in cases where a parent or guardian requests notification of, or access to, a child’s or incompetent person’s medical record. The parent or guardian must also verify (provide adequate documentation) their relationship to the child or incompetent person as well as his or her own identity to prove their relationship.
If the requester does not know which Institute or Center Privacy Act Coordinator to contact for notification purposes, he or she may contact directly the NIH Privacy Act Officer at the following address: NIH Privacy Act Officer, Office of Management Assessment, 6011 Executive Blvd., Room 601L, Rockville, MD 20852.
NIH Privacy Act Coordinators
Associate Director for Disease Prevention, Office of the Director (OD), Building 1, Room 260, 1 Center Drive, Bethesda, MD 20892.
Privacy Act Coordinator, Clinical Center (CC), Building 10, Room 1N208,10 Center Drive, Bethesda, MD 20892.
Privacy Act Coordinator, National Center for Complementary and Alternative Medicine (NCCAM), Building 31, Room 2B11, 31 Center Drive, Bethesda, MD 20892-2182.
Privacy Act Coordinator, National Cancer Institute (NCI), Building 31, Room 10A3 4, 31 Center Drive, Bethesda, MD 20892,
Privacy Act Coordinator, National Center on Minority Health and Health Disparities (NCMHD), Democracy Plaza II, Room 800, 6707 Democracy Boulevard, Bethesda, MD 20892-5465.
Privacy Act Coordinator, National Center for Research Resources (NCRR), Rockledge I, Room 5140, 6705 Rockledge Drive, Bethesda, MD 20892.
Privacy Act Coordinator, National Eye Institute (NEI), Building 31, Room 6A32,31 Center Drive, Bethesda, MD 20892-2510.
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Privacy Act Coordinator, National Human Genome Research Institute (NHGRI), Building 10,3C710, 10 Center Drive, Bethesda, MD 20892.
Privacy Act Coordinator, National Heart, Lung, and Blood Institute (NHLBI), Building 31, Room 5 A3 3, 31 Center Drive, Bethesda, MD 20892.
Privacy Act Coordinator, National Institute on Aging (NIA), Gateway Building 31, Room 2C234, 7201 Wisconsin Avenue, Bethesda, MD 20892.
Privacy Act Coordinator, National Institute on Alcohol Abuse and Alcoholism (NIAAA), Willco Building, Room 400, 6000 Executive Boulevard, Bethesda, MD 20892-7003.
Privacy Act Coordinator, National Institute of Allergy and Infectious Diseases (NIAID), 6700-B Rockledge Drive, Room 2143, Bethesda, MD 20892.
Privacy Act Coordinator, National Institute of Arthritis and Musculoskeletal and Skin Diseases (NIAMS), Natcher Building, Room 5AS49,45 Center Drive, Bethesda, MD 20892.
Privacy Act Coordinator, National Institute of Biomedical Imaging and Bioengineering (NIBIB), Building 31, Room 1B37, 31 Center Drive, Bethesda, MD 20892-2077.
Privacy Act Coordinator, National Institute of Child Health and Human Development (NICHD), Building 31, Room 2A11, 31 Center Drive, Bethesda, MD 20892.
Privacy Act Coordinator, Office of Extramural Affairs, National Institute on Drug Abuse (NIDA), Neuroscience Center, 6001 Executive Boulevard, Room 3158, Bethesda, MD 20892-9547.
Privacy Act Coordinator, National Institute on Deafness and Other Communication Disorders (NIDCD), Building 31, Room 3C02, 31 Center Drive, Bethesda, MD 20892.
Privacy Act Coordinator, National Institute of Dental and Craniofacial Research (NIDCR), Natcher Building, Room 4AS25,45 Center Drive, Bethesda, MD 20892-6401.
Privacy Act Coordinator, National Institute of Diabetes and Digestive and Kidney Disease (NIDDK), Building 31, Room 9A47, 31 Center Drive, Bethesda, MD 20892.
Privacy Act Coordinator, National Institute of Environmental Health Sciences (NIEHS), P.O. Box 12233, Research Triangle Park, NC 27709.
Privacy Act Coordinator, National Institute of General Medical Sciences (NIGMS), Natcher Building, Room 2AN32, 45 Center Drive, Bethesda, MD 20892.
Privacy Act Coordinator, National Institute of Mental Health (NIMH), Neuroscience Center, 6001 Executive Boulevard, Room 8102, Bethesda, MD 20892.
Privacy Act Coordinator, National Institute of Neurological Disorders and Stroke (NINDS), Building 31, Room 8A33, 31 Center Drive, Bethesda, MD 20892.
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Privacy Act Coordinator, National Institute of Nursing Research (NINR), Rockledge II, Room 710, 6701 Rockledge Drive, Bethesda, MD 20892.
RECORD ACCESS PROCEDURE:
Same as Notification Procedures. Requesters should reasonably specify the record contents being sought. An individual may also request an accounting of disclosures of his/her record, if any.
CONTESTING RECORD PROCEDURE:
Contact the appropriate official at the address specified under Notification Procedure, and reasonably identify the record, specify the information being contested, and state corrective action sought, with supporting information to show how the record is inaccurate, incomplete, untimely, or irrelevant.
RECORD SOURCE CATEGORIES:
The system contains information obtained directly from the subject individual by interview (face-to-face or telephone), written questionnaire, or by other tests, recording devices or observations, consistent with legislation and regulation regarding informed consent and protection of human subjects. Information is also obtained from other sources, including but not limited to: referring medical physicians, mental health/alcohol/drug abuse or other health care providers; hospitals; organizations providing biological specimens; relatives; guardians; schools; and clinical medical research records.
SYSTEMS EXEMPTED FROM CERTAIN PROVISIONS OF THE ACT:
None.
Appendix I: System Manager(s) and Address(es)
Associate Director for Disease Prevention, Office of the Director (OD), Building 1, Room 260,1 Center Drive, Bethesda, MD 20892.
Computer Systems Analyst, Division of Cancer Treatment and Diagnosis, National Cancer Institute (NCI), Executive Plaza North, Room 344, 6130 Executive Boulevard, Bethesda, MD 20892.
American Burkitt’s Lymphoma Registry, Division of Cancer Etiology, National Cancer Institute (NCI), Executive Plaza North, Suite 434, 6130 Executive Boulevard, Bethesda, MD 20892.
Chief, Genetic Epidemiology Branch, Division of Cancer Epidemiology and Genetics, National Cancer Institute (NCI), Executive Plaza South, Room 7122, 6120 Executive Boulevard, Bethesda, MD 20892- 7236.
Program Director, Research Resources, Biological Carcinogenesis Branch, Division of Cancer Etiology, National Cancer Institute (NCI), Executive Plaza North, Room 540, 6130 Executive Boulevard, Bethesda, MD 20892.
Chief, Environmental Epidemiology Branch, Division of Cancer Etiology, National Cancer Institute (NCI), Executive Plaza North, Room 443,6130 Executive Boulevard, Bethesda, MD 20892.
Associate Director, Surveillance Program, Division of Cancer Prevention, National Cancer Institute (NCI), Executive Plaza North, Room 343K, 6130 Executive Boulevard, Bethesda, MD 20892.
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Head, Biostatistics and Data Management Section, Center for Cancer Research, National Cancer Institute (NCI), Building 6116, Room 702, 6116 Executive Boulevard, Bethesda, MD 20892.
Chief, Clinical Research Branch, Center for Cancer Research, Frederick Cancer Research and Development Center, National Cancer Institute (NCI), 501 W. 7th Street, Room 3, Frederick, MD 21702.
Deputy Branch Chief, Navy Hospital, NCI-Naval Medical Oncology Branch, Center for Cancer Research, National Cancer Institute (NCI), Building 8, Room 5101, Bethesda, MD 20814.
Chief, Pharmaceutical Management Branch, Cancer Therapy Evaluation Program, Division of Cancer Treatment and Diagnosis, National Cancer Institute (NCI), Executive Plaza North, Room 804,6130 Executive Boulevard, Bethesda, MD 20892.
Director, Extramural Clinical Studies, Frederick Cancer Research and Development Center, National Cancer Institute (NCI), Fort Detrick, Frederick, MD 21702.
Clinical Operations Manager, National Eye Institute (NEI), Building 10, Room 10S224,10 Center Drive, Bethesda, MD 20892.
Director, Division of Biometry and Epidemiology, National Eye Institute (NEI), Building 31, Room 6A52, 31 Center Drive, Bethesda, MD 20892.
Associate Director, Office of Clinical Affairs, National Heart, Lung, and Blood Institute (NHLBI), Building 10, Room 8004,10 Center Drive, Bethesda, MD 20892-1754.
Senior Scientific Advisor, Office of the Director, Division of Epidemiology and Clinical Applications, National Heart, Lung, and Blood Institute (NHLBI), Federal Building, Room 220, 7550 Wisconsin Avenue, Bethesda, MD 20892.
Chief Laboratory of Epidemiology, Demography and Biometry, National Institute on Aging (NIA), Gateway Building, Room 3C309, 7201 Wisconsin Avenue, Bethesda, MD 20892.
Chief, Research Resources Branch, Intramural Research Program, National Institute on Aging (NIA), 5600 Nathan Shock Drive, Baltimore, MD 21224.
Clinical Director, National Institute on Aging (NIA), 5600 Nathan Shock Drive, Baltimore, MD 21224.
Deputy Director, Division of Biometry and Epidemiology, National Institute on Alcohol Abuse and Alcoholism (NIAAA), Willco Building, Room 514, 6000 Executive Boulevard, Bethesda, MD 20892- 7003.
Deputy Director, Division of Clinical and Prevention Research, National Institute on Alcohol Abuse and Alcoholism (NIAAA), Willco Building, Room 505, 6000 Executive Boulevard, Bethesda, MD 20892- 7003.
Chief, Respiratory Viruses Section, Laboratory of Infectious Diseases, National Institute of Allergy and Infectious Diseases (NIAID), Building 7, Room 106,7 Memorial Drive, Bethesda, MD 20892.
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Chief, Hepatitis Virus Section, Laboratory of Infectious Diseases, National Institute of Allergy and Infectious Diseases (NIAID), Building 7, Room 202,7 Memorial Drive, Bethesda, MD 20892.
Chief, Biometry Branch, Division of Microbiology and Infectious Diseases, National Institute of Allergy and Infectious Diseases (NIAID), 6700-B Rockledge Drive, Room 3120, Bethesda, MD 20892.
Clinical Director, National Institute of Arthritis and Musculoskeletal and Skin Diseases (NIAMS), Building 10, Room 9S205,10 Center Drive, Bethesda, MD 20892.
Chief, Contracts Management Branch, National Institute of Child Health and Human Development (NICHD), Executive Plaza North, Room 7A07, 6130 Executive Boulevard, Bethesda, MD 20892.
Director of Intramural Research, National Institute on Deafness and Other Communication Disorders (NIDCD), Building 31, Room 3C02, 31 Center Drive, Bethesda, MD 20892.
Chief, Scientific Programs Branch, National Institute on Deafness and Other Communication Disorders (NIDCD), Executive Plaza South, Room 400C, 6120 Executive Boulevard, Bethesda, MD 20892-7180.
Clinical Director, National Institute of Dental and Craniofacial Research (NIDCR), Building 10, Room INI 17,10 Center Drive, Bethesda, MD 20892-1191.
Chief, Scientific Review Branch, National Institute of Dental and Craniofacial Research (NIDCR), Building 10, Room INI 17,10 Center Drive, Bethesda, MD 20892-1191.
Research Psychologist, Gene Therapy and Therapeutics Branch, National Institute of Dental and Craniofacial Research (NIDCR), Building 10, Room 1N105,10 Center Drive, Bethesda, MD 20892- 1190.
Chief, Clinical Investigations, National Institute of Diabetes and Digestive and Kidney Diseases (NIDDK), Building 10, Room 9N222,10 Center Drive, Bethesda, MD 20892.
Chief, Phoenix Clinical Research Section, National Institute of Diabetes and Digestive and Kidney Diseases (NIDDK), Phoenix Area Indian Hospital, Room 541, 4212 North 16th Street, Phoenix, AZ 85016.
Chief, Diabetes Research Section, Division of Diabetes, Endocrinology, and Metabolic Diseases, National Institute of Diabetes and Digestive and Kidney Disease (NIDDK), Natcher Building, Room 5AN18G, 45 Center Drive, Bethesda, MD 20892-6600.
Privacy Act Coordinator, Office of Extramural Affairs, National Institute on Drug Abuse (NIDA), 6001 Executive Boulevard, Room 3158, Bethesda, MD 20892-9547.
Chief, Epidemiology Branch, National Institute of Environmental Health Sciences (NIEHS), P.O. Box 12233, Research Triangle Park, NC 27709.
Director, Intramural Research Program, National Institute of Mental Health (NIMH), Building 10, Room 4N224,10 Center Drive, Bethesda, MD 20892.
Privacy Act Coordinator, National Institute of Mental Health (NIMH), Neuroscience Center, Room 8102,6001 Executive Boulevard, Bethesda, MD 20982.
Privacy Act Coordinator, National Institute of Neurological Disorders and Stroke (NINDS), Building 31, Room 8A33, 31 Center Drive, Bethesda, MD 20892.
Chief, Epilepsy Branch, National Institute of Neurological Disorders and Stroke (NINDS), Neuroscience Center, 6001 Executive Boulevard, Suite 2110, Bethesda, MD 20892-9523.
Assistant Director, Clinical Neurosciences Program, Division of Intramural Research, National Institute of Neurological Disorders and Stroke (NINDS), Building 10, Room 5N234,10 Center Drive, Bethesda, MD 20892.
Acting Chief, Laboratory of Central Nervous Systems Studies, Intramural Research Program, National Institute of Neurological Disorders and Stroke (NINDS), Building 36, Room 4A21, 36 Convent Drive, Bethesda, MD 20892-4123.
Clinical Director, National Human Genome Research Institute (NHGRI), Building 10, Room 10C101D, 10 Center Drive, Bethesda, MD 20892.
Deputy Director, Division of Extramural Research, National Institute of Neurological Disorders and Stroke (NINDS), Neuroscience Center, Room 3307, 6001 Executive Boulevard, Bethesda, MD 20892.
Director, Office of Clinical and Regulatory Affairs, Division of Extramural Research and Training, Democracy Plaza II, Room 401,6707 Democracy Boulevard, Bethesda, MD 20892-5475.
Privacy Act Coordinator, National Institute of Biomedical Imaging and Bioengineering (NIBIB), Building 31, Room 1B37,31 Center Drive, Bethesda, MD 20892-2077.
Privacy Act Coordinator, National Center on Minority Health and Health Disparities (NCMHD), Democracy Plaza II, Room 800, 6707 Democracy Boulevard, Bethesda, MD 20892-5465.
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RESEARCH PATIENT CARE COSTS - NIH(RC)-11
(a) | Research patient care costs are the costs of routine and ancillary services provided to patients participating in research programs described in this contract. |
(b) | Patient care costs shall be computed in a manner consistent with the principles and procedures used by the Medicare Program for determining the part of Medicare reimbursement based on reasonable costs. The Diagnostic Related Group (DRG) prospective reimbursement method used to determine the remaining portion of Medicare reimbursement shall not be used to determine patient care costs. Patient care rates or amounts shall be established by the Secretary of HHS or his duly authorized representative. |
(c) | Prior to submitting an invoice for patient care costs under this contract, the contracto r must make every reasonable effort to obtain third party payment, where third party payors (including Government agencies) are authorized or are under a legal ob ligation to pay all or a portion of the charges incurred under this contract for patient care. |
(d) | The contractor must maintain adequate procedures to identify those research patients participating in this contract who are eligible for third party reimbursement. |
(e) | Only those charges not recoverable from third party payors or patients and which are consistent with the terms and conditions of the contract are chargeable to this contract. |
NIH(RC)-11, Research Patient Care Costs | Page 1 of 1 |
4/1/84 | Attachment 6 |
INSTRUCTIONS FOR COMPLETION OF SF-LLL, DISCLOSURE OF LOBBYING ACTIVITIES
This disclosure form shall be completed by the reporting entity, whether subawardee or prime Federal recipient, at the initiation or receipt of a covered Federal action, or a material change to a previous filing, pursuant to title 31 U.S.C. section 1352. The filing of a form is required for each payment or agreement to make payment to any lobbying entity for influencing or attempting to influence an officer or employee of any agency, a Member of Congress, an officer or employee of Congress, or an employee of a Member of Congress in connection with a covered Federal action. Complete all items that apply for both the initial filing and material change report. Refer to the implementing guidance published by the Office of Management and Budget for additional information.
1. | Identify the type of covered Federal action for which lobbying activity is and/or has been secured to influence the outcome of a covered Federal action. | |
2. | Identify the status of the covered Federal action. | |
3. | Identify the appropriate classification of this report. If this is a followup report caused by a material change to the information previously reported, enter the year and quarter in which the change occurred. Enter the date of the last previously submitted report by this reporting entity for this covered Federal action. | |
4. | Enter the full name, address, city, State and zip code of the reporting entity. Include Congressional District, if known. Check the appropriate classification of the reporting entity that designates if it is, or expects to be, a prime or subaward recipient. Identify the tier of the subawardee, e.g., the first subawardee of the prime is the 1 st tier. Subawards include but are not limited to subcontracts, subgrants and contract awards under grants. | |
5. | If the organization filing the report in item 4 checks “Subawardee,”then enter the full name, address, city, State and zip code of the prime Federal recipient. Include Congressional District, if known. | |
6. | Enter the name of the Federal agency making the award or loan commitment. Include at least one organizational level below agency name, if known. For example, Department of Transportation, United States Coast Guard. | |
7. | Enter the Federal program name or description for the covered Federal action (item 1). If known, enter the full Catalog of Federal Domestic Assistance (CFDA) number for grants, cooperative agreements, loans, and loan commitments. | |
8. | Enter the most appropriate Federal identifying number available for the Federal action identified in item 1 (e.g., Request for Proposal (RFP) number; Invitation for Bid (IFB) number; grant announcement number; the contract, grant, or loan award number; the application/proposal control number assigned by the Federal agency). Include prefixes, e.g., “RFP-DE-90-001.” | |
9. | For a covered Federal action where there has been an award or loan commitment by the Federal agency, enter the Federal amount of the award/loan commitment for the prime entity identified in item 4 or 5. |
10. | (a) | Enter the full name, address, city, State and zip code of the lobbying registrant under the Lobbying Disclosure Act of 1995 engaged by the reporting entity identified in item 4 to influence the covered Federal action. |
(b) | Enter the full names of the individual(s) performing services, and include full address if different from 10 (a). Enter Last Name, First Name, and Middle Initial (Ml). |
11. | The certifying official shall sign and date the form, print his/her name, title, and telephone number. |
According to the Paperwork Reduction Act, as amended, no persons are required to respond to a collection of information unless it displays a valid OMB Control Number. The valid OMB control number for this information collection is OMB No. 0348-0046. Public reporting burden for this collection of information is estimated to average 10 minutes per response, including time for reviewing instructions, searching existing data sources, gathering and maintaining the data needed, and completing and reviewing the collection of information. Send comments regarding the burden estimate or any other aspect of this collection of information, including suggestions for reducing this burden, to the Office of Management and Budget, Paperwork Reduction Project (0348-0046), Washington, DC 20503.
Schedule l-B
Contractor Acquired Government Property
Biological Specimen Freezer (-80) (For purchase in Phase II) | $12,000 |
Attachment 8 September 19, 2014 |
SBIR Funding Agreement Certification
Contract Number:
Program Director(s)/Principal Investigators) (PD(s)/PI(s)):
All small businesses that are selected for award of an SBIR funding agreement must complete this certification at the time of award and any other time set forth in the contract that is prior to performance of work under this contract This includes checking all of the boxes and having an authorized officer of the contractor sign and date the certification each time it is requested.
Please read carefully the following certification statements. The Federal government relies on this information to determine whether the business is eligible for a Small Business Innovation Research (SBIR) Program award. A similar certification will be used to ensure continued compliance with specific program requirements during the life of the funding agreement The definitions for the terms used in this certification are set forth in the Small Business Act, SBA regulations (13 C.F.R. Part 121), the SBIR Policy Directive and also any statutory and regulatory provisions references in those authorities.
If the Contracting Officer believes that the business may not meet certain eligibility requirements at the time of award, they are required to file a size protest with the U.S. Small Business Administration (SBA), who will determine eligibility. At that time, SBA will request further clarification and supporting documentation in order to assist in the verification of any of the information provided as part of a protest If the Contracting Officer believes, after award, that the business is not meeting certain contract requirements, the agency may request further clarification and supporting documentation in order to assist in the verification of any of the information provided.
Even if correct information has been included in other materials submitted to die Federal government, any action taken with respect to this certification does not affect the Government’s right to pursue criminal, civil, or administrative remedies for incorrect or incomplete information given in the certification. Each person signing this certification may be prosecuted if they have provided false information.
The undersigned has reviewed, verified and certifies that fall boxes must be checked):
1. | The business concern meets the ownership and control requirements set forth in 13 C.F.R. § 121.702. | |
☒ Yes ☐ No | ||
2. | If a corporation, all corporate documents (articles of incorporation and any amendments, articles of conversion, by-laws and amendments, shareholder meeting minutes showing director elections, shareholder meeting minutes showing officer elections, organizational meeting minutes, all issued stock certificates, stock ledger, buy-sell agreements, stock transfer agreements, voting agreements, and documents relating to stock options, including the right to convert non-voting stock or debentures into voting stock) evidence that it meets the ownership and control requirements set forth in 13C.F.R. § 121.702. | |
☒ Yes ☐ No ☐ N/A Explain why N/A: | ||
3. | If a partnership, the partnership agreement evidences that it meets the ownership and control requirements set forth in 13 C.F.R. § 121.702. , | |
☒ Yes ☐ No ☐ N/A Explain why N/A: (LLC) | ||
4. | If a limited liability company, the articles of organization and any amendments, and operating agreements and amendments, evidence that it meets the ownership and control requirements set forth in 13 C.F.R. § 121.702. | |
☒ Yes ☐ No ☐ N/A Explain why N/A: | ||
5. | The birth certificates, naturalization papers, or passports show that any individuals it relies upon to meet the eligibility requirements are U.S. citizens or permanent resident aliens in toe United States. | |
☒ Yes ☐ No ☐ N/A Explain why N/A: |
Attachment 10 | Page 1 |
6. | It has no more than 500 employees, including the employees of its affiliates. | |
☒ Yes ☐ No | ||
7. | SBA has not issued a size determination currently in effect finding that this business concern exceeds the 500 employee size standard. | |
☒ Yes ☐ No | ||
8. | During the performance of the award, the principal investigator will spend more than half of his/her time as an employee of the awardee or has requested and received a written deviation from this requirement from the Contracting Officer. | |
☒ Yes ☐ No Deviation approved in writing by Contracting Officer: % | ||
9. | All, essentially equivalent work, or a portion of the work proposed under this project (check the applicable line):
| |
☒ Has not been submitted for funding by another Federal agency. | ||
☐ Has been submitted for funding by another Federal agency but has not been funded under any other Federal grant, contract, subcontract, or other transaction. | ||
☐ A portion has been funded by another grant, contract, or subcontract as described in detail in the proposal and approved in writing by the Contracting Officer. | ||
10. | During the performance of award, it will perform the applicable percentage of work unless a deviation from this requirement is approved in writing by the Contracting Officer (check the applicable line and fill in if needed): | |
☒ SI SBIR Phase I: at least two-thirds (66 2/3%) of the research | ||
☒ SBIR Phase II: at least half (5 0%) of the research | ||
☐ Deviation approved in writing by the Contracting Officer: % | ||
11. | During performance of award, the research/research and development will be performed in the United States unless a deviation is approved in writing by the Contracting Officer. | |
☒ Yes ☐ No | ||
12. | During the performance of award, the research/research and development will be performed at my facilities with my employees, except as otherwise indicated in the SBIR proposal and approved in the Notice of Award. | |
☒ Yes ☐ No | ||
13. | It has registered itself on SBA’s database as majority-owned by venture capital operating companies, hedge funds or private equity firms. | |
☐ Yes ☒ No ☐ N/A Explain why N/A: | ||
14. | It is a Covered Small Business Concern (a small business concern that (a) was not majority-owned by multiple venture capital operating companies (VCOCs), hedge funds, or private equity firms on the data on which it submitted a proposal in response to an SBIR solicitation; and (b) on the date of the SBIR award, which is made more than 9 months after the closing date of the solicitation, is majority-owned by multiple venture capital operating companies, hedge funds, or private equity firms). | |
☒ Yes ☐ No | ||
It will notify the Federal agency immediately if all or a portion of the work proposed is subsequently funded by another Federal agency. | ||
☒ Yes ☐ No |
I understand that the information submitted may be given to Federal, State and local agencies for determining violations of law and other purposes.
I am an officer of the business concern authorized to represent it and sign this certification on its behalf. By signing this certification, I am representing on my own behalf, and on behalf of die business concern that the information provided in this certification, the proposal, and all other information submitted in connection with this proposal is true and correct as of the date of submission. I acknowledge that any intentional or negligent misrepresentation of the information contained in this certification may result in criminal, civil or administrative sanctions, including but not limited to: (1) fines, restitution and/or imprisonment under 18 U.S.C. § 1001; (2) treble damages and civil penalties under the False Claims Act (31 U.S.C. § 3729 et seq); (3) double damages and civil penalties under the Program Fraud Civil Remedies Act (31 U.S.C. §380 1 et seq); (4) civil recovery of award funds; (5) suspension and/or debarment from all Federal procurement and nonprocurement transactions (FAR Subpart 9.4 or 2 C.F.R. part 180; and (6) other administrative penalties including termination of SBIR/STTR. awards.
Date | 9/19/2014 |
Signature | ![]() |
Printed Name (First, Middle, Last) | ANATOLY DRITSCHILO |
Title | CEO |
Organization Name | Shuttle Pharmaceuticals, LLC |
Page 1 | SBIR Funding Agreement Certification |
NIH Small Business Innovation Research Program
Life Cycle Certification
All SBIR Phase I and Phase II Contractors must complete this certification at all times set forth in the funding agreement (see § 8(h) of the SBIR Policy Directive). This includes checking all of the boxes and having an authorized officer of the Contractor sign and date the certification each time it is required.
A certification is required at the following times:
● | For SBIR Phase I Contractors: At the time of receiving final payment or disbursement. | |
● | For SBIR Phase II Contractors: prior to receiving more than 50% of the total contract amount and prior to final payment or disbursement. |
If the Contractor cannot complete this certification or cannot ensure compliance with the certification process, it should notify the Contracting Officer immediately. If resolution cannot be reached, the Contracting Officer will void or terminate the award, as appropriate.
Contract Number:
Program Director(s)/Principal Investigators) (PD(s)/PI(s)):
Please read carefully the following certification statements. The Federal government relies on the information to ensure compliance with specific program requirements during the life of the funding agreement. The definitions for the terms used in this certification are set forth in the Small Business Act, the SBIR Policy Directive, and also any statutory and regulatory provisions referenced in those authorities.
If the Contracting Officer believes that the business is not meeting certain funding agreement requirements, the agency may request further clarification and supporting documentation in order to assist in the verification of any of the information provided.
Even if correct information has been included in other materials submitted to the Federal government, any action taken with respect to this certification does not affect the Government’s right to pursue criminal, civil or administrative remedies for incorrect or incomplete information given in the certification. Each person signing this certification may be prosecuted if they have provided false information.
The undersigned has reviewed, verified and certifies that (all boxes must be checked):
1. | The principal investigator spent more than one half of his/her time as an employee of the Contractor or has requested and received a written deviation from this requirement from the Contracting Officer. |
☐ Yes ☐ No Deviation approved in writing by Contracting Officer: % |
2. | All, essentially equivalent work, or a portion of the work performed under this project (check the applicable line): |
☐ Has not been submitted for funding by another Federal agency. |
Attachment 11 | Page 1 |
☐ Has been submitted for funding by another Federal agency but has not been funded under any other Federal grant, contract, subcontract, or other transaction. |
☐ A portion has been funded by another grant, contract, or subcontract as described in detail in the proposal and approved in writing by the Contracting Officer. |
3. | Upon completion of the contract it will have performed the applicable percentage of work, unless a deviation from this requirement is approved in writing by the Contracting Officer (check the applicable line and fill in if needed): |
☐ SBIR Phase I: at least two-thirds (66 2/3%) of the research | |
☐ SBIR Phase II: at least half (50%) of the research | |
☐ Deviation approved in writing by the Contracting Officer: % |
4. | The work is completed and it has performed the applicable percentage of work, unless a deviation from this requirement is approved in writing by the Contracting Officer (check the applicable line and fill in if needed). |
☐ SBIR Phase I: at least two-thirds (66 2/3%) of the research | |
☐ SBIR Phase II: at least half (50%) of the research | |
☐ Deviation approved in writing by the Contracting Officer: % | |
☐ N/A because work is not completed |
5. | The research/research and development is performed in the United States unless a deviation is approved in writing by the Contracting Officer. |
☐ Yes ☐ No Waiver has been granted |
6. | The research/research and development is performed at my facilities with my employees, except as otherwise indicated in the SBIR proposal and approved in the contract. |
☐ Yes ☐ No |
☐ I will notify the Federal agency immediately if all or a portion of the work proposed is subsequently funded by another Federal agency.
☐ I understand that the information submitted may be given to Federal, State and local agencies for
determining violations of law and other purposes.
☐ I am an officer of the business concern authorized to represent it and sign this certification on its behalf. By signing this certification, I am representing on my own behalf, and on behalf of the business concern that the information provided in this certification, the proposal, and all other information submitted in connection with the award, is true and correct as of the date of submission. I acknowledge that any intentional or negligent misrepresentation of the information contained in this certification may result in criminal, civil or administrative sanctions, including but not limited to: (1) fines, restitution and/or imprisonment under 18 U.S.C. § 1001; (2) treble damages and civil penalties under the False Claims Act (31 U.S.C. § 3729 et seq.); (3) double damages and civil penalties under the Program Fraud Civil Remedies Act (31 U.S.C. §3801 et seq.); (4) civil recovery of award funds; (5) suspension and/or debarment from all Federal procurement and nonprocurement transactions (FAR Subpart 9.4 or 2 C.F.R. part 180); and (6) other administrative penalties including termination of SBIR/STTR awards.
Date | |
Signature | |
Printed Name (First, Middle, Last) | |
Title | |
Business Name |
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Exhibit 10.6
BEGINNING WITH THE EFFECTIVE DATE OF THIS MODIFICATION, THE GOVERNMENT AND THE CONTRACTOR MUTUALLY AGREE AS FOLLOWS:
ARTICLE B.3. OPTION FOR PHASE II subparagraph d is revised as follows:
d. If the Government exercises its option pursuant to the OPTION PROVISION Article in SECTION H of this contract, the Government’s total estimated contract amount represented by the sum of the estimated cost plus the fixed fee will be increased as follows:
Estimated Cost($) | Fixed Fee($) | Estimated Cost Plus Fixed Fee($) | ||||||||||
Base Period 9/19/2014-8/03/2015 | $ | 181,105 | $ | 10,866 | $ | 191,971 | ||||||
Option Period: 8/04/2015-8/03/2017 | $ | 1,347,280 | $ | 80,837 | $ | 1,428,117 | ||||||
Total [Base Period and Option] | $ | 1,528,385 | $ | 91,703 | $ | 1,620,088 |
ARTICLE B.4. ADVANCE UNDERSTANDINGS, subparagraph b., is revised as follows:
b. Subcontract
A fixed type subcontract with Rhode Island Hospital for Phase I for an amount not to exceed $65,549 for the period for the period 9/19/2014-8/03/2015.
If the Government exercises its option for Phase II pursuant to the Option Provision Article in Section H of this contract, the total estimated Subcontract amount will be increased as follows:
Option - 8/04/2015-8/03/2017 - $623,269
ARTICLE F.1. PERIOD OF PERFORMANCE- is revised as follows:
a. | The period of performance of this contract shall be from 09/19/2014 through 08/03/2017. |
b. | If the Government exercises its option pursuant to the OPTION PROVISION Article in Section H of this contract, the period of performance will be increased as listed below: |
Option | Option Period | |
Option for Phase II | August 04, 2015 - August 03, 2017 |
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ARTICLE F.2. DELIVERIES-subparagraph b is revised as follows:
b. The above items shall be addressed and emailed to ncibranchbinvoices@mail.nih.gov .The following addresses are provided for general correspondence and other deliveries:
Addressee | Deliverable Item No | Quantity | ||
Sandra Addae, Contract Specialist National Cancer Institute Office of Acquisitions, 9609 Medical Center Drive, Room 1E632 MSC 9705 Bethesda, MD 20892-9705 |
1-14, 16-21 | Electronically | ||
Deepa Narayanan, COR National Cancer Institute NCI SBIR & STTR Programs, Room1W5429609 Medical Center Drive, MSC9705Bethesda, MD 20892-9705 |
2-12 | Electronically | ||
OPERA, OEH, NIH6705 Rockledge DriveSuite 310, MSC 7980Bethesda, Maryland 20892- 7980 |
13-15 | Electronically |
ARTICLE G.3. INVOICE SUBMISSION/CONTRACT FINANCING REQUEST AND CONTRACTFINANCIAL REPORT - 2.f. and 2.h are revised as follows:
2.f. The contract period of performance is: 9/19/2014 - 08/03/2017 2.h. Contract line items as follows:
Line Item # | Line Item Description | |
1 | Clinical Development of IPdR for Radiosensitization | |
2 | Phase II Clinical Development of IPdR for Radiosensitization |
ARTICLE l.l. GENERAL CLAUSES FOR A FIXED-PRICE RESEARCH AND DEVELOPMENT SBIR PHASE II CONTRACT- is deleted and replaced in its entirety.
This contract incorporates the following clauses by reference, with the same force and effect as if they were given in full text. Upon request, the Contracting Officer will make their full text available. Also, the full text of a clause may be accessed electronically as follows: FAR Clauses at: http://www.acquisition.RQv/far/ . HHSAR Clauses at: http: //ww w. h hs.RQv/policies/ h hsarZsubpart352.htm I
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a. FEDERAL ACQUISITION REGULATION (FAR) (48 CFR CHAPTER 1) CLAUSES:
FAR CLAUSE NO. | DATE | TITLE | ||
52.202-1 | Nov 2013 | Definitions (Over the Simplified Acquisition Threshold) | ||
52.203-3 | Apr 1984 | Gratuities (Over the Simplified Acquisition Threshold) | ||
52.203-5 | May 2014 | Covenant Against Contingent Fees (Over the Simplified Acquisition Threshold) | ||
52.203-6 | Sep 2006 | Restrictions on Subcontractor Sales to the Government (Over the Simplified Acquisition Threshold) | ||
52.203-7 | May 2014 | Anti-Kickback Procedures (Over the Simplified Acquisition Threshold) | ||
52.203-8 | May 2014 | Cancellation, Rescission, and Recovery of Funds for Illegal or Improper Activity (Over the Simplified Acquisition Threshold) | ||
52.203-10 | May 2014 | Price or Fee Adjustment for Illegal or Improper Activity (Over the Simplified Acquisition Threshold) | ||
52.203-12 | Oct 2010 | Limitation on Payments to Influence Certain Federal Transactions (Over $150,000) | ||
52.203-17 | Apr 2014 | Contractor Employee Whistleblower Rights and Requirements to Inform Employees of Whistleblower Rights (Over the Simplified Acquisition Threshold) | ||
52.203-99 | Feb 2015 | Prohibition on Contracting with Entities That Require Certain Internal Confidentiality Agreements | ||
52.204-4 | May 2011 | Printed or Copied Double-Sided on Postconsumer Fiber Content PaperfOver the Simplified Acquisition Threshold) | ||
52.204-10 | Jul 2013 | Reporting Executive Compensation and First-Tier Subcontract Awards ($25,000 or more) | ||
52.204-13 | Jul 2013 | System for Award Management Maintenance | ||
52.209-6 | Aug 2013 | Protecting the Government’s Interest When Subcontracting With Contractors Debarred, Suspended, or Proposed for Debarment (Over $30,000) | ||
52.215-2 | Oct 2010 | Audit and Records - Negotiation [Note: Applies to ALL contracts funded in whole or in part with Recovery Act funds, regardless of dollar value, AND contracts over the Simplified Acquisition Threshold funded exclusively with non-Recovery Act funds.] | ||
52.215-8 | Oct 1997 | Order of Precedence - Uniform Contract Format | ||
52.215-10 | Aug 2011 | Price Reduction for Defective Certified Cost or Pricing Data (Over $700,000) | ||
52.215-12 | Oct 2010 | Subcontractor Cost or Pricing Data (Over $700,000) | ||
52.215-14 | Oct 2010 | Integrity of Unit Prices (Over the Simplified Acquisition Threshold) | ||
52.215-15 | Oct 2010 | Pension Adjustments and Asset Reversions (Over $700,000) | ||
52.215-18 | Jul2005 | Reversion or Adjustment of Plans for Post-Retirement Benefits (PRB) other than Pensions | ||
52.215-19 | Oct 1997 | Notification of Ownership Changes | ||
52.215-21 | Oct 2010 | Requirements for Certified Cost or Pricing Data and Data Other Than Certified Cost or Pricing Data - Modifications | ||
52.219-6 | Jul 1996 | Notice of Total Small Business Set-Aside |
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FAR CLAUSE NO. | DATE | TITLE | ||
52.219-8 | Oct 2014 | Utilization of Small Business Concerns (Over the Simplified Acquisition Threshold) | ||
52.219-14 | Dec 1996 | Limitations on Subcontracting | ||
52.222-3 | Jun 2003 | Convict Labor | ||
52.222-21 | Apr 2015 | Prohibition of Segregated Facilities | ||
52.222-26 | Apr 2015 | Equal Opportunity | ||
52.222-35 | Jul 2014 | Equal Opportunity for Veterans ($100,000 or more) | ||
52.222-36 | Jul 2014 | Equal Opportunity for Workers with Disabilities | ||
52.222-37 | Jul 2014 | Employment Reports on Veterans ($100,000 or more) | ||
52.222-40 | Dec 2010 | Notification of Employee Rights Under the National Labor Relations Act (Over the Simplified Acquisition Threshold) | ||
52.222-50 | Mar 2015 | Combating Trafficking in Persons | ||
52.222-54 | Aug 2013 | Employment Eligibility Verification (Over the Simplified Acquisition Threshold) | ||
52.223-6 | May 2001 | Drug-Free Workplace | ||
52.223-18 | Aug 2011 | Encouraging Contractor Policies to Ban Text Messaging While Driving | ||
52.225-1 | May 2014 | Buy American - Supplies | ||
52.225-13 | Jun 2008 | Restrictions on Certain Foreign Purchases | ||
52.227-1 | Dec 2007 | Authorization and Consent, Alternate 1 (Apr 1984) | ||
52.227-2 | Dec 2007 | Notice and Assistance Regarding Patent and Copyright Infringement | ||
52.227-11 | May 2014 | Patent Rights - Ownership by the Contractor (Note: In accordance with FAR 27.303(b)(2), paragraph (e) is modified to include the requirements in FAR 27.303(b)(2)(i) through (iv). The frequency of reporting in (i) is annual. | ||
52.227-20 | May 2014 | Rights in Data - SBIR Program | ||
52.229-3 | Feb 2013 | Federal, State and Local Taxes (Over the Simplified Acquisition Threshold) | ||
52.232-2 | Apr 1984 | Payments under Fixed-Price Research and Development Contracts | ||
52.232-9 | Apr 1984 | Limitation on Withholding of Payments | ||
52.232-17 | May 2014 | Interest (Over the Simplified Acquisition Threshold) | ||
52.232-23 | May 2014 | Assignment of Claims | ||
52.232-25 | Jul 2013 | Prompt Payment | ||
52.232-33 | Jul 2013 | Payment by Electronic Funds Transfer-System for Award Management | ||
52.232-39 | Jun 2013 | Unenforceability of Unauthorized Obligations | ||
52.233-1 | May 2014 | Disputes | ||
52.233-3 | Aug 1996 | Protest After Award | ||
52.233-4 | Oct 2004 | Applicable Law for Breach of Contract Claim | ||
52.242-13 | Jul 1995 | Bankruptcy (Over the Simplified Acquisition Threshold) | ||
52.243-1 | Aug 1987 | Changes - Fixed Price, Alternate V (Apr 1984) | ||
52.244-5 | Dec 1996 | Competition in Subcontracting (Over the Simplified Acquisition Threshold) | ||
52.244-6 | Apr 2015 | Subcontracts for Commercial Items | ||
52.249-2 | Apr 2012 | Termination for the Convenience of the Government (Fixed-Price) | ||
52.249-9 | Apr 1984 | Default (Fixed-Price Research and Development)(Over the Simplified Acquisition Threshold) | ||
52.253-1 | Jan 1991 | Computer Generated Forms |
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HHSN261201400013C
Modification 2
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b. DEPARTMENT OF HEALTH AND HUMAN SERVICES ACQUISITION REGULATION (HHSAR) (48 CFR CHAPTER 3) CLAUSES:
HHSAR CLAUSE NO. | DATE | TITLE | ||
352.202-1 | Jan 2006 | Definitions | ||
352.203-70 | Mar 2012 | Anti-Lobbying | ||
352.222-70 | Jan 2010 | Contractor Cooperation in Equal Employment Opportunity Investigations | ||
352.227-70 | Jan 2006 | Publications and Publicity | ||
352.231-71 | Jan 2001 | Pricing of Adjustments | ||
352.242-70 | Jan 2006 | Key Personnel | ||
352.242-73 | Jan 2006 | Withholding of Contract Payments |
[End of GENERAL CLAUSES FOR A FIXED-PRICE RESEARCH AND DEVELOPMENTSBIR PHASE II CONTRACT- Rev. 04/2015].
All other terms and conditions of this contract remain unchanged and in full force and effect.
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Exhibit 10.7
Contract Number : HHSN261201600027C |
NCI Number : N43CO-2016-00027C |
CONTRACT TABLE OF CONTENTS
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Contract Number : HHSN261201600027C |
NCI Control Number : N43CO-2016-00027C |
PART I - THE SCHEDULE
SECTION B - SUPPLIES OR SERVICES AND PRICES/COSTS
ARTICLE B.1. BRIEF DESCRIPTION OF SUPPLIES OR SERVICES
The objective of this Phase I SBIR application is to determine the technical and commercial feasibility for developing a metabolite panel predictive of clinical outcomes in patients treated with radiation therapy for prostate cancer.
ARTICLE B.2. PRICES
a. | The total fixed price of this contract is $299,502. | |
b. | Upon delivery and acceptance of the item(s) and/or service(s) specified in the DELIVERY Article in SECTION F and described in SECTION C of this contract and identified in the schedule of charges below, the Government shall pay to the Contractor the unit prices set forth below: |
PAYMENT SCHEDULE
Description | Invoice # | Period Covered | Amount | |||||
PDF Kick-Off Presentation | HHSN261201600027C - 01 | Month 1 | $ | 74,876 | ||||
Quarterly Report 1 | HHSN261201600027C - 02 | Months 1-3 | $ | 74,876 | ||||
Quarterly Report 2 | HHSN261201600027C - 03 | Months 4-6 | $ | 74,876 | ||||
Draft Final Report | HHSN261201600027C - 04 | Effective date of contract through one month prior to completion date of contract | $ | 37,437 | ||||
Final Report, Contract Outcomes Report, Final Presentaton, and all other contract deliverables | HHSN261201600027C - 05 | Entire Period of Performance of contract | $ | 37,437 | ||||
TOTAL FIXED PRICE | $ | 299,502 |
ARTICLE B.3. ADVANCE UNDERSTANDINGS
Other provisions of this contract notwithstanding, approval of the following items within the limits set forth is hereby granted without further authorization from the Contracting Officer.
a. | Contract Number Designation |
On all correspondence submitted under this contract, the Contractor agrees to clearly identify the two contract numbers that appear on the face page of the contract as follows:
Contract No. HHSN261201600027C .
NCI Control No. N43CO-2016-00027 .
b. | SBIR Funding Agreement Certification |
The SBIR Funding Agreement Certification form, located in SECTION J, must be completed at the time of award prior to the performance of work under this contract, in accordance with the SBIR Policy Directive issued by SBA (October 18, 2012).
For additional information, see NIH Policy Notice NOT-OD-13-116, entitled, “New Program Certifications Required for SBIR and STTR Awards,” located at: http://grants.nih.gov/grants/guide/notice-files/NOT-OD-13-116.html.
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Contract Number : HHSN261201600027C |
NCI Control Number : N43CO-2016-00027C |
SECTION C - DESCRIPTION/SPECIFICATIONS/WORK STATEMENT
ARTICLE C.1. STATEMENT OF WORK
a. | Independently and not as an agent of the Government, the Contractor shall furnish all the necessary services, qualified personnel, material, equipment, and facilities, not otherwise provided by the Government as needed to perform the Statement of Work, dated 09/16/2016, set forth in SECTION J-List of Attachments, attached hereto and made a part of this contract. |
ARTICLE C.2. REPORTING REQUIREMENTS
All reports required herein shall be submitted in electronic format via e-mail, as attachments, to the following designated NCI Branch Distribution Mailbox: NCIbranchbinvoices@mail.nih.gov.
Each e-mail submission shall contain only one deliverable. If the attached file for the deliverable exceeds 50 MB, the Contractor shall divide the deliverable into files of 50 MB each. All deliverables shall be limited to five file attachments or less.
The subject line of the e-mail shall read as follows: Deliverable_Contract Number_Vendor’s Name_Deliverable Description_Due Date .
All electronic reports submitted shall be compliant with Section 508 of the Rehabilitation Act of 1973. Additional information about testing documents for Section 508 compliance, including guidance and specific checklists, by application, can be found at: http://www.hhs.gov/web/508/index.html under “Making Files Accessible.”
a. | Technical Reports |
In addition to those reports required by the other terms of this contract, the Contractor shall prepare and submit the following reports in the manner stated below and in accordance with the DELIVERIES Article in SECTION F of this contract:
[Note: The Contractor shall include, in any technical progress report submitted, the applicable PubMed Central (PMC) or NIH Manuscript Submission reference number when citing publications that arise from its NIH funded research.]
1. | Kick-Off Presentation |
The Contractor shall prepare and submit a kick-off presentation. Slides shall be prepared and presentation of the slides shall occur either in-person or through webinar or teleconference. The presentation shall cover the following:
a. | Discussion of the Contractor’s organization and project status, particularly changes that occurred since the proposal submission; | |
b. | Contractor’s recent achievements (patents, publications, sales, regulatory approvals, partnerships, awards, etc.); | |
c. | Status of the field; | |
d. | Status of commercial and academic competitors; | |
e. | Where the proposed project is positioned against the state of the art; |
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Contract Number : HHSN261201600027C |
NCI Control Number : N43CO-2016-00027C |
f. | Intellectual property landscape; | |
g. | Refresher on the proposed technology/R&D; | |
h. | Detailed plan for the first budget period of the contract; | |
i. | Milestones (technical and commercial) to be achieved by the end of the first budget period of the contract; | |
j. | Discussion of anticipated technical risks and alternative approaches; | |
k. | Questions to the NCI. |
2. | Quarterly Reports |
The Contractor shall submit Quarterly Reports, which shall include:
a. | Summary of technical objectives with status of each objective clearly marked ( e.g. previously completed, completed during this reporting period, not started, etc); | |
b. | Clear description of activities accomplished in the quarter; | |
c. | Analysis of experimental data and presentation of selected data; | |
d. | Comments regarding the timeliness of performance; | |
e. | Brief explanation of objectives/activities to be pursued in the next reporting period. |
This report shall generally be no longer than five (5) pages, excluding tables, figures, images and graphs used to present data.
3. | Draft Final Report |
The Contractor shall submit a Draft Final Report. The Government Contracting Officer’s Representative (COR) will review and provide comments on the Draft Final Report, which the Contractor shall incorporate into a revised Final Report (- see Reporting Requirement Item 4).
The Draft Final Report shall include the following three sections:
Section 1: Summary of Salient Results
The Summary of Salient Results shall summarize in 200 words or less the salient results achieved during performance of the contract.
Section 2: Final Technical Report
The Final Technical Report shall set forth the work performed and results obtained for the entire contract period of performance. This report shall be in sufficient detail to describe comprehensively the results achieved.
Section 3: Draft Commercialization Plan
a. | Value of the SBIR Project, Expected Outcomes, and Impact |
Describe, in layperson’s terms, the proposed project and its key technology objectives. State the product, process, or service to be developed in Phases II and III. Clarify the need addressed, specifying weaknesses in the current approaches to meet this need. In addition, describe the commercial applications of the research and the innovation inherent in this application. Be sure to also specify the potential societal, educational, and scientific benefits of this work. Explain the non-commercial impacts to the overall significance of the project. Explain how the SBIR contract integrates with the overall business plan of the company.
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Contract Number : HHSN261201600027C |
NCI Control Number : N43CO-2016-00027C |
b. | Organization |
Give a brief description of the Contractor’s organization, including corporate objectives, core competencies, present size (annual sales level and number and types of employees), history of previous Federal and non-Federal funding, regulatory experience and subsequent commercialization, and any current products/services that have significant sales. Include a short description of the origins of th(e Contractor’s organization. Indicate the Contractor’s vision for the future, how the Contractor will grow/maintain a sustainable business entity, and how the Contractor will meet critical management functions as the Contractor’s organization evolves from a small technology R&D business to a successful commercial entity.
c. | Market, Customer, and Competition |
Describe the market and/or market segments being targeted and provide a brief profile of the potential customer. Tell what significant advantages the Contractor’s innovation will bring to the market - e.g., better performance, lower cost, faster, more efficient or effective, new capability. Explain the hurdles the Contractor will have to overcome in order to gain market/customer acceptance of the Contractor’s innovation. Describe any strategic alliances, partnerships, or licensing agreements the Contractor has in place to get FDA approval (if required) and to market and sell the Contractor’s product. Briefly describe the Contractor’s marketing and sales strategy. Give an overview of the current competitive landscape and any potential competitors over the next several years.
d. | Intellectual Property (IP) Protection |
Describe how the Contractor is going to protect the IP that results from the Contractor’s innovation. Also, note other actions the Contractor may consider taking that will constitute at least a temporal barrier to others aiming to provide a solution similar to the Contractor’s.
e. | Finance Plan |
Describe the necessary financing the Contractor will require to commercialize the product, process, or service, and when it will be required. Describe the Contractor’s plans to raise the requisite financing to launch the Contractor’s innovation into Phase III and begin the revenue stream. Plans for this financing stage may be demonstrated in one or more of the following ways:
● | Letter of commitment of funding. | |
● | Letter of intent or evidence of negotiations to provide funding, should the Phase II project be successful and the market need still exist. | |
● | Letter of support for the project and/or some in-kind commitment, e.g., to test or evaluate the innovation. | |
● | Specific steps the Contractor is going to take to secure Phase III funding. |
f. | Production and Marketing Plan |
Describe how the production of the Contractor’s product/process/service will occur ( e.g., in house manufacturing, contract manufacturing). Describe the steps the Contractor will take to market and sell the Contractor’s product/process/service. For example, explain plans for licensing, Internet sales, etc.
g. | Revenue Stream |
Explain how the Contractor plans to generate a revenue stream for the Contractor’s organization should this project be a success. Examples of revenue stream generation include, but are not limited to; manufacture and direct sales, sales through value added resellers or other distributors, joint venture, licensing, service. Describe how the Contractor’s staffing will change to meet the Contractor’s revenue expectations.
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Contract Number : HHSN261201600027C |
NCI Control Number : N43CO-2016-00027C |
4. | Final Report |
The Contractor shall submit a Final Report. This document shall incorporate revisions in response to the comments provided by the Government COR after review of the Draft Final Report (- see Reporting Requirements Item 3).
5. | Contract Outcomes Report |
The Contractor shall submit a Contract Outcomes Report using a fillable PDF form to be provided by the Government. The Contract Outcomes Report must be provided as a filled-in version of the PDF form provided and not as a printed or scanned copy of this document.
6. | Final Presentation |
The Contractor shall prepare and submit a final presentation. Slides shall be prepared and presentation of the slides shall occur either in-person or through webinar or teleconference. The presentation shall cover the following:
a. | Discussion of the Contractor’s organization and project status; | |
b. | Contractor’s achievements during the performance period (patents, publications, sales, regulatory approvals, partnerships, awards, etc.); | |
c. | Detailed results of the performed research and development; | |
d. | Discussion of proposed milestones and whether they were achieved during the contract performance; | |
e. | Summary of submitted commercialization plan; | |
f. | Discussion of the anticipated Phase II activities with emphasis on how they fit into the commercialization plan, if Contractor is interested in pursuing Phase II research; | |
g. | Questions to the NCI. |
b. | Other Reports/Deliverables |
1. | Section 508 Annual Report |
The contractor shall submit an annual Section 508 report in accordance with the schedule set forth in the ELECTRONIC AND INFORMATION TECHNOLOGY ACCESSIBILITY Article in SECTION H of this contract. The Section 508 Report Template and Instructions for completing the report are available at: http://www.hhs.gov/web/508/contracting/technoloqy/vendors.html under “Vendor Information and Documents.”
2. | NIH Small Business Innovation Research (SBIR) Program Life Cycle Certification |
In accordance with the SBIR/STTR Reauthorization Act of 2011, the contractor shall complete and submit the NIH Small Business Innovation Research (SBIR) Life Cycle Certification form, located in SECTION J, of the contract to the Contracting Officer. This certification is required to ensure the contractor is meeting the program’s requirements during the life cycle of the contract.
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Contract Number : HHSN261201600027C |
NCI Control Number : N43CO-2016-00027C |
The Life Cycle Certification form shall be submitted as follows:
● | Phase I SBIR Contractors shall submit the Certification at the time of receiving final payment or disbursement. | |
● | Phase II SBIR Contractors shall submit the Certification prior to receiving more than 50% of the total contract amount AND prior to final payment or disbursement. |
The Contracting Officer, may, at any time after ward request further clarifications and supporting documentation in order to assist in the verification of any information provided by the contractor.
For additional information, see NIH Policy Notice NOT-OD-13-116, entitled, “New Program Certifications Required for SBIR and STTR Awards,” located at: http://grants.nih.gov/grants/guide/notice-files/NQT-OD-13-116.html.
ARTICLE C.3. INVENTION REPORTING REQUIREMENT
All reports and documentation required by FAR Clause 52.227-11, Patent Rights-Ownership by the
Contractor including, but not limited to, the invention disclosure report, the confirmatory license, and the Government support certification, shall be directed to the Division of Extramural Inventions and Technology Resources (DEITR), OPERA, OER, NIH, 6705 Rockledge Drive, Suite 310, MSC 7980, Bethesda, Maryland 20892-7980 (Telephone: 301-435-1986). In addition, one copy of an annual utilization report, and a copy of the final invention statement, shall be submitted to the Contracting Officer. The final invention statement (see FAR 27.303(b)(2)(ii)) shall be submitted to the Contracting Officer on or before the completion date of the contract.
If no invention is disclosed or no activity has occurred on a previously disclosed invention during the applicable reporting period, a negative report shall be submitted to the Contracting Officer via e-mail.
To assist contractors in complying with invention reporting requirements of the clause, the NIH has developed “Interagency Edison,” an electronic invention reporting system. Use of Interagency Edison is required as it streamlines the reporting process and greatly reduces paperwork. Access to the system is through a secure interactive Web site to ensure that all information submitted is protected. Interagency Edison and information relating to the capabilities of the system can be obtained from the Web ( http://www.iedison.gov). or by contacting the Extramural Inventions and Technology Resources Branch, OPERA, NIH.
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SECTION D - PACKAGING, MARKING AND SHIPPING
All deliverables required under this contract shall be packaged, marked and shipped in accordance with Government specifications. At a minimum, all deliverables shall be marked with the contract number and Contractor name. The Contractor shall guarantee that all required materials shall be delivered in immediate usable and acceptable condition.
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SECTION E - INSPECTION AND ACCEPTANCE
a. | The Contracting Officer or the duly authorized representative will perform inspection and acceptance of materials and services to be provided. | |
b. | For the purpose of this SECTION, the Contracting Officer’s Representative (COR) is the authorized representative of the Contracting Officer. | |
c. | Inspection and acceptance will be performed at: |
National Cancer Institute
9609 Medical Center Drive
Rockville, MD 20850
Acceptance may be presumed unless otherwise indicated in writing by the Contracting Officer or the duly authorized representative within 30 days of receipt.
d. | This contract incorporates the following clause by reference, with the same force and effect as if it were given in full text. Upon request, the Contracting Officer will make its full text available. |
FAR Clause 52.246-9, Inspection of Research and Development (Short Form) (April 1984).
FAR Clause 52.246-16, Responsibility for Supplies (April 1984).
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SECTION F - DELIVERIES OR PERFORMANCE
ARTICLE F.1. PERIOD OF PERFORMANCE
The period of performance of this contract shall be from 09/19/2106 through 09/18/2017.
ARTICLE F.2. DELIVERIES
Satisfactory performance of the final contract shall be deemed to occur upon performance of the work described in the Statement of Work Article in SECTION C of this contract and upon delivery and acceptance by the Contracting Officer, or the duly authorized representative, of the following items in accordance with the stated delivery schedule:
a. | The items specified below as described in the REPORTING REQUIREMENTS Article in SECTION C of this contract will be required to be delivered F.o.b. Destination as set forth in FAR 52.247-35, F.o.b. DESTINATION, WITHIN CONSIGNEES PREMISES (APRIL 1984), and in accordance with and by the date(s) specified below: |
Item | Description | Delivery Schedule | ||
(1) | SBIR Funding Agreement Certification | Due at time of award, prior to performance of any work under this contract. | ||
(2) | Kick-Off Presentation | Due on or before 30 calendar days following the effective date of the contract. | ||
(3) | Quarterly Report One | Due on or before 15 calendar days following completion of 3 full months of contract performance. | ||
(4) | Quarterly Report Two | Due on or before 15 calendar days following completion of 6 full months of contract performance. | ||
(5) | Draft Final Report | Due on or before 1 month prior to the contract completion date. | ||
(6) | Final Report | Due on or before the contract completion date. | ||
(7) | Contract Outcomes Report | Due on or before the contract completion date. | ||
(8) | Final Presentation | Due on or before the contract completion date. | ||
(9) | Final Invention Statement | Due on or before the contract completion date. | ||
(10) | Invention Disclosure Report | Due on or before the contract completion date. | ||
(11) | SBIR Program Life Cycle Certification | Due on or before the contract completion date. | ||
(12) | Section 508 Annual Report | Due on or before the contract completion date. |
b. | The above items shall be addressed and delivered to ncibranchbinvoices@mail.nih.gov. as well as to the following addressees: |
Addressee | Deliverables | |
Miguel Diaz Office
of Acquisitions |
All deliverables, in electronic format. | |
Deepa Narayanan, PhD NCI
SBIR & STTR Programs |
All deliverables, in electronic format. | |
OPERA, OEH, NIH 6705 Rockledge Drive Suite 310, MSC 7980 Bethesda, MD 20892-7980 |
Items 9 and 10, in hard copy. |
ARTICLE F.3. CLAUSES INCORPORATED BY REFERENCE, FAR 52.252-2 (FEBRUARY 1998)
This contract incorporates the following clause(s) by reference, with the same force and effect as if it were given in full text. Upon request, the Contracting Officer will make its full text available. Also, the full text of a clause may be accessed electronically at this address: http://www.acquisition.gov/far.
FEDERAL ACQUISITION REGULATION (48 CFR CHAPTER 1) CLAUSE:
52.242-15, Stop Work Order (August 1989)
Alternate I (April 1984) is not applicable to this contract.
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SECTION G - CONTRACT ADMINISTRATION DATA
ARTICLE G.1. CONTRACTING OFFICER’S REPRESENTATIVE (COR)
The following Contracting Officer’s Representative (COR) will represent the Government for the purpose of this contract:
Deepa Narayanan, Ph.D.
The COR is responsible for: (1) monitoring the Contractor’s technical progress, including the surveillance and assessment of performance and recommending to the Contracting Officer changes in requirements; (2) interpreting the statement of work and any other technical performance requirements; (3) performing technical evaluation as required; (4) performing technical inspections and acceptances required by this contract; and (5) assisting in the resolution of technical problems encountered during performance.
The Contracting Officer is the only person with authority to act as agent of the Government under this contract. Only the Contracting Officer has authority to: (1) direct or negotiate any changes in the statement of work; (2) modify or extend the period of performance; (3) change the delivery schedule; (4) authorize reimbursement to the Contractor for any costs incurred during the performance of this contract; (5) otherwise change any terms and conditions of this contract; or (6) sign written licensing agreements. Any signed agreement shall be incorporated by reference in Section K of the contract
The Government may unilaterally change its COR designation.
ARTICLE G.2. KEY PERSONNEL, HHSAR 352.237-75 (December 2015)
The key personnel specified in this contract are considered to be essential to work performance. At least 30 days prior to the contractor voluntarily diverting any of the specified individuals to other programs or contracts the Contractor shall notify the Contracting Officer and shall submit a justification for the diversion or replacement and a request to replace the individual. The request must identify the proposed replacement and provide an explanation of how the replacement’s skills, experience, and credentials meet or exceed the requirements of the contract (including, when applicable, Human Subjects Testing requirements). If the employee of the contractor is terminated for cause or separates from the contractor voluntarily with less than thirty days notice, the Contractor shall provide the maximum notice practicable under the circumstances. The Contractor shall not divert, replace, or announce any such change to key personnel without the written consent of the Contracting Officer. The contract will be modified to add or delete key personnel as necessary to reflect the agreement of the parties.
(End of Clause)
The following individual(s) is/are considered to be essential to the work being performed hereunder:
Name | Title | |
Scott Grindrod, Ph.D. | Principal Investigator |
ARTICLE G.3. INVOICE SUBMISSION
a. | Invoice Instructions for NIH Fixed-Price Type Contracts, NIH(RC)-2, are attached and made part of this contract. The Contractor shall follow the attached instructions and submission procedures specified below to meet the requirements of a “proper invoice” pursuant to FAR Subpart 32.9, Prompt Payment. |
1. | Payment requests shall be submitted to the offices identified below. Do not submit supporting documentation (e.g., receipts, time sheets, vendor invoices, etc.) with your payment request unless specified elsewhere in the contract or requested by the Contracting Officer. |
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a. | The original invoice shall be submitted to the following designated billing office: |
National Institutes of Health
Office of Financial Management
Commercial Accounts
2115 East Jefferson Street, Room 4B-432, MSC 8500
Bethesda, MD 20892-8500
b. | One courtesy copy of the original invoice shall be submitted electronically as follows: |
1. | The Contractor shall scan the original payment request (invoice) in Adobe Portable Document Format (PDF) along with the necessary supporting documentation as one single attachment. | |
2. | Save the single attachment (scanned invoice along with any supporting documentation) in the following format: YourVendorName_lnvoice number (e.g., if you are submitting Invoice 123456, save the single attachment as “Contractor Name_invoice 123456”).
[Note: Please do not use special characters (such as #, $, %, *, &,!) when saving your attachment. Only the underscore symbol (_) is permitted.] | |
3. | Transmit the saved single attachment via e-mail to the appropriate branch’s Central Point of Distribution. For the purpose of this contract, the Central Point of Distribution is NCI OA Branch B - ncibranchbinvoices@mail.nih.gov. Only one payment request shall be submitted per e-mail and the subject line of the e-mail shall include the Contract Number_Contract Title_Contractor’s Name_unique Invoice number. |
Note: The original payment request must still be submitted in hard copy and mailed to the designated billing office listed in subparagraph a., above, to meet the requirements of a “proper invoice.” Also, the Contractor must certify on the payment request that the electronic courtesy copy is a duplicate of the original invoice mailed to NIH’s Office of Financial Management.
2. | In addition to the requirements specified in FAR 32.905 for a proper invoice, the Contractor shall include the following information on the face page of all payment requests: |
a. | Name of the Office of Acquisitions. The Office of Acquisitions for this contract is National Cancer Institute. | |
b. | Federal Taxpayer Identification Number (TIN). If the Contractor does not have a valid TIN, it shall identify the Vendor Identification Number (VIN) on the payment request. The VIN is the number that appears after the Contractor’s name on the face page of the contract. If the Contractor has neither a TIN, DUNS, or VIN, contact the Contracting Officer. | |
c. | DUNS or DUNS+4 Number. The DUNS number must identify the Contractor’s name and address exactly as stated in the contract and as registered in the Central Contractor Registration (CCR) database. If the Contractor does not have a valid DUNS number, it shall identify the Vendor Identification Number (VIN) on the payment request. The VIN is the number that appears after the Contractor’s name on the face page of the contract. If the Contractor has neither a TIN, DUNS, or VIN, contact the Contracting Officer. | |
d. | Invoice Matching Option. This contract requires a two-way match. | |
e. | Unique Invoice Number. Each payment request must be identified by a unique invoice number, which can only be used one time regardless of the number of contracts or orders held by an organization. | |
f. | The contract period of performance. | |
g. | The contract title. |
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b. | Inquiries regarding payment of invoices shall be directed to the designated billing office, (301) 496-6452. | |
c. | The Contractor shall include the following certification on every invoice for reimbursable costs incurred with Fiscal Year funds subject to HHSAR Clause 352.231-70, Salary Rate Limitation in SECTION I of this contract. For billing purposes, certified invoices are required for the billing period during which the applicable Fiscal Year funds were initially charged through the final billing period utilizing the applicable Fiscal Year funds: |
“I hereby certify that the salaries charged in this invoice are in compliance with HHSAR Clause 352.231-70, Salary Rate Limitation in SECTION I of the above referenced contract.”
ARTICLE G.4. PROVIDING ACCELERATED PAYMENT TO SMALL BUSINESS
SUBCONTRACTORS, FAR 52.232-40 (December 2013)
a. | Upon receipt of accelerated payments from the Government, the Contractor shall make accelerated payments to its small business subcontractors under this contract, to the maximum extent practicable and prior to when such payment is otherwise required under the applicable contract or subcontract, after receipt of a proper invoice and all other required documentation from the small business subcontractor. | |
b. | The acceleration of payments under this clause does not provide any new rights under the prompt Payment Act. | |
c. | Include the substance of this clause, include this paragraph c, in all subcontracts with small business concerns, including subcontracts with small business concerns for the acquisition of commercial items. |
(End of Clause)
ARTICLE G.5. POST AWARD EVALUATION OF CONTRACTOR PERFORMANCE
a. | Contractor Performance Evaluations |
A Final evaluation of Contractor performance will be prepared on this contract in accordance with FAR Subpart 42.15. The Final performance evaluation will be prepared at the time of completion of work.
The Final evaluation will be provided to the Contractor as soon as practicable after completion of the evaluation. The Contractor will be permitted thirty days to review the document and to submit additional information or a rebutting statement. If agreement cannot be reached between the parties, the matter will be referred to an individual one level above the Contracting Officer, whose decision will be final.
Copies of the evaluation, Contractor responses, and review comments, if any, will be retained as part of the contract file, and may be used to support future award decisions.
b. | Electronic Access to Contractor Performance Evaluations |
Contractors may access evaluations through a secure Web site for review and comment at the following address:
http://www.cpars.gov
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SECTION H - SPECIAL CONTRACT REQUIREMENTS
ARTICLE H.1. PROTECTION OF HUMAN SUBJECTS, HHSAR 352.270-4(b) (December 2015)
a. | The Contractor agrees that the rights and welfare of human subjects involved in research under this contract shall be protected in accordance with 45 CFR part 46 and with the Contractor’s current Federal-wide Assurance (FWA) on file with the Office for Human Research Protections (OHRP), Department of Health and Human Services. The Contractor further agrees to provide certification at least annually that the Institutional Review Board has reviewed and approved the procedures, which involve human subjects in accordance with 45 CFR part 46 and the Assurance of Compliance. | |
b. | The Contractor shall bear full responsibility for the performance of all work and services involving the use of human subjects under this contract and shall ensure that work is conducted in a proper manner and as safely as is feasible. The parties hereto agree that the Contractor retains the right to control and direct the performance of all work under this contract. Nothing in this contract shall create an agency or employee relationship between the Government and the Contractor, or any subcontractor, agent or employee of the Contractor, or any other person, organization, institution, or group of any kind whatsoever. The Contractor agrees that it has entered into this contract and will discharge its obligations, duties, and undertakings and the work pursuant thereto, whether requiring professional judgment or otherwise, as an independent Contractor without creating liability on the part of the Government for the acts of the Contractor or its employees. | |
c. | Contractors involving other agencies or institutions in activities considered to be engaged in research involving human subjects must ensure that such other agencies or institutions obtain their own FWA if they are routinely engaged in research involving human subjects or ensure that such agencies or institutions are covered by the Contractors’ FWA via designation as agents of the institution or via individual investigator agreements (see OHRP Website at: http://www.hhs.qov/ohrp/policy/quidanceonalternativetofwa.pdf). | |
d. | If at any time during the performance of this contract the Contractor is not in compliance with any of the requirements and or standards stated in paragraphs (a) and (b) above, the Contracting Officer may immediately suspend, in whole or in part, work and further payments under this contract until the Contractor corrects the noncompliance. The Contracting Officer may communicate the notice of suspension by telephone with confirmation in writing. If the Contractor fails to complete corrective action within the period of time designated in the Contracting Officer’s written notice of suspension, the Contracting Officer may, after consultation with OHRP, terminate this contract in whole or in part. | |
e. | (End of clause) |
ARTICLE H.2. HUMAN MATERIALS
The acquisition and supply of all human specimen material (including fetal material) used under this contract shall be obtained by the Contractor in full compliance with applicable State and Local laws and the provisions of the Uniform Anatomical Gift Act in the United States, and no undue inducements, monetary or otherwise, will be offered to any person to influence their donation of human material.
ARTICLE H.3. HUMAN MATERIALS (ASSURANCE OF OHRP COMPLIANCE)
The acquisition and supply of all human specimen material (including fetal material) used under this contract shall be obtained by the Contractor in full compliance with applicable State and Local laws and the provisions of the Uniform Anatomical Gift Act in the United States, and no undue inducements, monetary or otherwise, will be offered to any person to influence their donation of human material.
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The Contractor shall provide written documentation that all human materials obtained as a result of research involving human subjects conducted under this contract, by collaborating sites, or by subcontractors identified under this contract, were obtained with prior approval by the Office for Human Research Protections (OHRP) of an Assurance to comply with the requirements of 45 CFR 46 to protect human research subjects. This restriction applies to all collaborating sites without OHRP-approved Assurances, whether domestic or foreign, and compliance must be ensured by the Contractor.
Provision by the Contractor to the Contracting Officer of a properly completed “Protection of Human Subjects Assurance Identification/IRB Certification/Declaration of Exemption”, Form OMB No. 0990-0263(formerly Optional Form 310), certifying IRB review and approval of the protocol from which the human materials were obtained constitutes the written documentation required. The human subject certification can be met by submission of a self designated form, provided that it contains the information required by the “Protection of Human Subjects Assurance Identification/IRB Certification/Declaration of Exemption”, Form OMB No. 0990-0263(formerly Optional Form 310).
ARTICLE H.4. NIH POLICY ON ENHANCING REPRODUCIBILITY THROUGH RIGOR AND TRANSPARENCY
Contractors shall adhere to the NIH policy of enhancing reproducibility through rigor and transparency by addressing each of the four areas of the policy in performance of the Statement of Work and in publications, as applicable: 1) Scientific Premise; 2) Scientific Rigor; 3) Consideration of Relevant Biological Variables, including Sex; and 4) Authentication of Key Biological and/or Chemical Resources. This policy applies to all NIH funded research and development, from basic through advanced clinical studies. See NIH Guide Notice, NQT-QD-15-103, “Enhancing Reproducibility through Rigor and Transparency” and NQT-QD-15-102. “Consideration of Sex as a Biological Variable in NIH-funded Research” for more information. In addition, publications are expected to follow the guidance at http:// www.nih.gov/research-traininq/riqor-reproducibility/principles-quidelines-reporting-preclinical-research, whether preclinical or otherwise, as appropriate. More information is available at http://qrants.nih.gov/reproducibility/index.htm, including FAQs and a General Policy Overview.
ARTICLE H.5. NIH POLICY ON ENHANCING PUBLIC ACCESS TO ARCHIVED
PUBLICATIONS RESULTING FROM NIH-FUNDED RESEARCH
NIH-funded investigators shall submit to the NIH National Library of Medicine’s (NLM) PubMed Central (PMC) an electronic version of the author’s final manuscript, upon acceptance for publication, resulting from research supported in whole or in part with direct costs from NIH. NIH defines the author’s final manuscript as the final version accepted for journal publication, and includes all modifications from the publishing peer review process. The PMC archive will preserve permanently these manuscripts for use by the public, health care providers, educators, scientists, and NIH. The Policy directs electronic submissions to the NIH/NLM/PMC: http://www.pubmedcentral.nih.gov.
Additional information is available at http://qrants.nih.gov/qrants/guide/notice-files/NOT-OD-09-071.html and http:// publicaccess.nih.gov.
ARTICLE H.6. NEEDLE EXCHANGE, HHSAR 352.270-12 (December 2015)
The Contractor shall not use any funds obligated under this contract to carry out any program of distributing sterile needles or syringes for the hypodermic injection of any illegal drug.
(End of clause)
ARTICLE H.7. ACKNOWLEDGEMENT OF FEDERAL FUNDING
The Contractor shall clearly state, when issuing statements, press releases, requests for proposals, bid solicitations and other documents describing projects or programs funded in whole or in part with Federal money: (1) the percentage of the total costs of the program or project which will be financed with Federal money; (2) the dollar amount of Federal funds for the project or program; and (3) the percentage and dollar amount of the total costs of the project or program that will be financed by nongovernmental sources.
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ARTICLE H.8. CONTINUED BAN ON FUNDING ABORTION AND CONTINUED BAN ON FUNDING OF HUMAN EMBRYO RESEARCH, HHSAR 352.270-13 (December 2015)
a. | The Contractor shall not use any funds obligated under this contract for any abortion. | |
b. | The Contractor shall not use any funds obligated under this contract for the following: |
1. | The creation of a human embryo or embryos for research purposes; or | |
2. | Research in which a human embryo or embryos are destroyed, discarded, or knowingly subjected to risk of injury of death greater than that allowed for research on fetuses in utero under 45 CFR part 46 and Section 498(b) of the Public Health Service Act (42 U.S.C. 289g(b)). |
c. | The term “human embryo or embryos” includes any organism, not protected as a human subject under 45 CFR part 46 as of the date of the enactment of this Act, that is derived by fertilization, parthenogenesis, cloning, or any other means from one or more human gametes of human diploid cells. | |
d. | The Contractor shall not use any Federal funds for the cloning of human beings. |
(End of clause)
ARTICLE H.9. DISSEMINATION OF FALSE OR DELIBERATELY MISLEADING INFORMATION
The Contractor shall not use contract funds to disseminate information that is deliberately false or misleading.
ARTICLE H.10. RESTRICTION ON PORNOGRAPHY ON COMPUTER NETWORKS
The Contractor shall not use contract funds to maintain or establish a computer network unless such network blocks the viewing, downloading, and exchanging of pornography.
ARTICLE H.11. GUN CONTROL
The Contractor shall not use contract funds in whole or in part, to advocate or promote gun control.
ARTICLE H.12. LIMITATIONS ON SUBCONTRACTING - SBIR
The Contractor shall perform a minimum of two-thirds of the research and/or analytical effort conducted under this contract, as measured by total contract dollars. Any deviation from this requirement must be approved in writing by the Contracting Officer.
ARTICLE H.13. ELECTRONIC AND INFORMATION TECHNOLOGY ACCESSIBILITY, HHSAR 352.239-74 (December 2015)
a. | Pursuant to Section 508 of the Rehabilitation Act of 1973(29 U.S.C. 794d), as amended by the Workforce Investment Act of 1998, all electronic and information technology (EIT) supplies and services developed, acquired, or maintained under this contract or order must comply with the “Architectural and Transportation Barriers Compliance Board Electronic and Information Technology (EIT) Accessibility Standards” set forth by the Architectural and Transportation Barriers Compliance Board (also referred to as the “Access Board”) in 36 CFR part 1194. Information about Section 508 is available at http://www.hhs.gov/web/508. The complete text of Section 508 Final Provisions can be accessed at http://www.access-board.gov/quidelines-and-standards/ communications-and-it/about-the-section-508-standards. |
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b. | The Section 508 accessibility standards applicable to this contract or order are identified in the Statement of Work or Specification or Performance Work Statement. The contractor must provide any necessary updates to the submitted HHS Product Assessment Template(s) at the end of each contract or order exceeding the simplified acquisition threshold (see FAR 2.101) when the contract or order duration is one year or less. If it is determined by the Government that EIT supplies and services provided by the Contractor do not conform to the described accessibility standards in the contract, remediation of the supplies or services to the level of conformance specified in the contract will be the responsibility of the Contractor at its own expense. | |
c. | The Section 508 accessibility standards applicable to this contract are: None. | |
d. | In the event of a modification(s) to this contract or order,which adds new EIT supplies or services or revises the type of, or specifications for, supplies or services, the Contracting Officer may require that the contractor submit a completed HHS Section 508 Product Assessment Template and any other additional information necessary to assist the Government in determining that the EIT supplies or services conform to Section 508 accessibility standards. Instructions for documenting accessibility via the HHS Section 508 Product Assessment Template may be found under Section 508 policy on the HHS Web site: ( http://www.hhs.gov/web/508). If it is determined by the Government that EIT supplies and services provided by the Contractor do not conform to the described accessibility standards in the contract, remediation of the supplies or services to the level of conformance specified in the contract will be the responsibility of the Contractor at its own expense. | |
e. | If this is an Indefinite Delivery contract, a Blanket Purchase Agreement or a Basic Ordering Agreement, the task/delivery order requests that include EIT supplies or services will define the specifications and accessibility standards for the order. In those cases, the Contractor may be required to provide a completed HHS Section 508 Product Assessment Template and any other additional information necessary to assist the Government in determining that the EIT supplies or services conform to Section 508 accessibility standards. Instructions for documenting accessibility via the HHS Section 508 Product Assessment Template may be found at http:// www.hhs.gov/web/508. If it is determined by the Government that EIT supplies and services provided by the Contractor do not conform to the described accessibility standards in the provided documentation, remediation of the supplies or services to the level of conformance specified in the contract will be the responsibility of the Contractor at its own expense. |
(End of clause)
ARTICLE H.14. CONFIDENTIALITY OF INFORMATION
a. | Confidential information, as used in this article, means information or data of a personal nature about an individual, or proprietary information or data submitted by or pertaining to an institution or organization. | |
b. | The Contracting Officer and the Contractor may, by mutual consent, identify elsewhere in this contract specific information and/or categories of information which the Government will furnish to the Contractor or that the Contractor is expected to generate which is confidential. Similarly, the Contracting Officer and the Contractor may, by mutual consent, identify such confidential information from time to time during the performance of the contract. Failure to agree will be settled pursuant to the “Disputes” clause. | |
c. | If it is established elsewhere in this contract that information to be utilized under this contract, or a portion thereof, is subject to the Privacy Act, the Contractor will follow the rules and procedures of disclosure set forth in the Privacy Act of 1974, 5 U.S.C. 552a, and implementing regulations and policies, with respect to systems of records determined to be subject to the Privacy Act. | |
d. | Confidential information, as defined in paragraph (a) of this article, shall not be disclosed without the prior written consent of the individual, institution, or organization. | |
e. | Whenever the Contractor is uncertain with regard to the proper handling of material under the contract, or if the material in question is subject to the Privacy Act or is confidential information subject to the provisions of this article, the Contractor should obtain a written determination from the Contracting Officer prior to any release, disclosure, dissemination, or publication. |
f. | Contracting Officer determinations will reflect the result of internal coordination with appropriate program and legal officials. | |
g. | The provisions of paragraph (d) of this article shall not apply to conflicting or overlapping provisions in other Federal, State or local laws. |
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The following information is covered by this article:
All patient related information
ARTICLE H.15. PUBLICATION AND PUBLICITY
In addition to the requirements set forth in HHSAR Clause 352.227-70, Publications and Publicity incorporated by reference in SECTION I of this contract, the Contractor shall acknowledge the support of the National Institutes of Health whenever publicizing the work under this contract in any media by including an acknowledgment substantially as follows:
“This project has been funded in whole or in part with Federal funds from the National Cancer Institute, National Institutes of Health, Department of Health and Human Services, under Contract No. HHSN261201600027C.”
Press releases shall be considered to include the public release of information to any medium, excluding peer- reviewed scientific publications. The Contractor shall not publish a press release related to this contract without receiving prior concurrence from the Contracting Officer. The Contractor shall submit an advance copy of the press release to the Contracting Officer and Contracting Officer’s Representative (COR). Upon acknowledgment of receipt, the Contracting Officer will have five (5) working days to respond with concurrence or comments. In the event that the Contracting Officer does not communicate concurrence or comments to the Contractor within five (5) working days following acknowledgement of receipt of the press release advance copy, concurrence may be presumed.
ARTICLE H.16. REPORTING MATTERS INVOLVING FRAUD, WASTE AND ABUSE
Anyone who becomes aware of the existence or apparent existence of fraud, waste and abuse in NIH funded programs is encouraged to report such matters to the HHS Inspector General’s Office in writing or on the Inspector General’s Hotline. The toll free number is 1-800-HHS-TIPS (1-800-447-8477). All telephone calls will be handled confidentially. The website to file a complaint on-line is: http://oig.hhs.gov/fraud/hotline/ and the mailing address is:
US Department of Health and Human Services
Office of Inspector General
ATTN: OIG HOTLINE OPERATIONS
P.O. Box 23489
Washington, D.C. 20026
ARTICLE H.17. OBTAINING AND DISSEMINATING BIOMEDICAL RESEARCH RESOURCES
Unique research resources arising from NIH-funded research are to be shared with the scientific research community. NIH provides guidance, entitled, “Principles and Guidelines for Recipients of NIH Research Grants and Contracts on Obtaining and Disseminating Biomedical Research Resources: Final Notice,” (Federal Register Notice, December 23, 1999 [64 FR 72090]), concerning the appropriate terms for disseminating and acquiring these research resources. This guidance, found at: http://www.gpo.gov/fdsys/pkg/FR-1999-12-23/pdf/99-33292.pdf is intended to help contractors ensure that the conditions they impose and accept on the transfer of research tools will facilitate further biomedical research, consistent with the requirements of the Bayh-Dole Act and NIH funding policy.
Note: For the purposes of this Article, the terms, “research tools”, “research materials”, and “research resources” are used interchangeably and have the same meaning.
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Contract Number : HHSN261201600027C |
NCI Control Number : N43CO-2016-00027C |
PART II - CONTRACT CLAUSES
SECTION I - CONTRACT CLAUSES
ARTICLE 1.1. GENERAL CLAUSES FOR A FIXED-PRICE RESEARCH AND DEVELOPMENT SBIR PHASE I CONTRACT
This contract incorporates the following clauses by reference, with the same force and effect as if they were given in full text. Upon request, the Contracting Officer will make their full text available. Also, the full text of a clause may be accessed electronically as follows: FAR Clauses at: http://www.acauisition.gov/far/. HHSAR Clauses at: http:// www.hhs.gov/policies/hhsar/subpart352.html.
a. FEDERAL ACQUISITION REGULATION (FAR) (48 CFR CHAPTER 1) CLAUSES:
FAR CLAUSE NO. |
DATE | TITLE | ||
52.202-1 | Nov 2013 | Definitions (Over the Simplified Acquisition Threshold) | ||
52.203-12 | Oct 2010 | Limitation on Payments to Influence Certain Federal Transactions (Over $150,000) | ||
52.203-17 | Apr 2014 | Contractor Employee Whistleblower Rights and Requirements to Inform Employees of Whistleblower Rights (Over the Simplified Acquisition Threshold) | ||
52.203-99 | Feb 2015 | Prohibition on Contracting with Entities That Require Certain Internal Confidentiality Agreements (DEVIATION) | ||
52.204-10 | Oct 2015 | Reporting Executive Compensation and First-Tier Subcontract Awards ($30,000 or more) | ||
52.204-13 | Jul 2013 | System for Award Management Maintenance | ||
52.209-6 | Oct 2015 | Protecting the Government’s Interest When Subcontracting With Contractors Debarred, Suspended, or Proposed for Debarment (Over $35,000) | ||
52.215-8 | Oct 1997 | Order of Precedence - Uniform Contract Format | ||
52.219-6 | Jul 1996 | Notice of Total Small Business Set-Aside | ||
52.222-3 | Jun 2003 | Convict Labor | ||
52.222-21 | Apr 2015 | Prohibition of Segregated Facilities | ||
52.222-26 | Apr 2015 | Equal Opportunity | ||
52.222-35 | Oct 2015 | Equal Opportunity for Veterans ($150,000 or more) | ||
52.222-36 | Jul 2014 | Equal Opportunity for Workers with Disabilities | ||
52.222-37 | Feb 2016 | Employment Reports on Veterans ($150,000 or more) | ||
52.222-50 | Mar 2015 | Combating Trafficking in Persons | ||
52.222-54 | Oct 2015 | Employment Eligibility Verification (Over the Simplified Acquisition Threshold) | ||
52.223-6 | May 2001 | Drug-Free Workplace | ||
52.223-18 | Aug 2011 | Encouraging Contractor Policies to Ban Text Messaging While Driving | ||
52.225-1 | May 2014 | Buy American - Supplies | ||
52.225-13 | Jun 2008 | Restrictions on Certain Foreign Purchases | ||
52.227-1 | Dec 2007 | Authorization and Consent, Alternate 1 (Apr 1984) | ||
52.227-2 | Dec 2007 | Notice and Assistance Regarding Patent and Copyright Infringement |
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Contract Number : HHSN261201600027C |
NCI Control Number : N43CO-2016-00027C |
FAR CLAUSE NO. | DATE | TITLE | ||
52.227-11 | May 2014 | Patent Rights - Ownership by the Contractor (Note: In accordance with FAR 27.303(b)(2), paragraph (e) is modified to include the requirements in FAR 27.303(b)(2)(i) through (iv). The frequency of reporting in (i) is annual. | ||
52.227-20 | May 2014 | Rights in Data - SBIR Program | ||
52.232-9 | Apr 1984 | Limitation on Withholding of Payments | ||
52.232-23 | May 2014 | Assignment of Claims | ||
52.232-25 | Jul 2013 | Prompt Payment | ||
52.232-33 | Jul 2013 | Payment by Electronic Funds Transfer-System for Award Management | ||
52.232-39 | Jun 2013 | Unenforceability of Unauthorized Obligations | ||
52.233-1 | May 2014 | Disputes | ||
52.233-3 | Aug 1996 | Protest After Award | ||
52.233-4 | Oct 2004 | Applicable Law for Breach of Contract Claim | ||
52.243-1 | Aug 1987 | Changes - Fixed Price, Alternate V (Apr 1984) | ||
52.244-6 | Jun 2016 | Subcontracts for Commercial Items | ||
52.249-1 | Apr 1984 | Termination for the Convenience of the Government (Fixed-Price) (Short Form) | ||
52.249-9 | Apr 1984 | Default (Fixed-Price Research and Development)(Over the Simplified Acquisition Threshold) | ||
52.253-1 | Jan 1991 | Computer Generated Forms |
b. DEPARTMENT OF HEALTH AND HUMAN SERVICES ACQUISITION REGULATION (HHSAR) (48 CFR CHAPTER 3) CLAUSES:
HHSAR CLAUSE NO. | DATE | TITLE | ||
352.203-70 | Dec 2015 | Anti-Lobbying | ||
352.222-70 | Dec 2015 | Contractor Cooperation in Equal Employment Opportunity Investigations | ||
352.227-70 | Dec 2015 | Publications and Publicity | ||
352.237-75 | Dec 2015 | Key Personnel |
[End of GENERAL CLAUSES FOR A FIXED-PRICE RESEARCH AND DEVELOPMENT SBIR PHASE I CONTRACT Rev. 08/2016].
ARTICLE I.2. AUTHORIZED SUBSTITUTION OF CLAUSES
ARTICLE 1.1. of this SECTION is hereby modified as follows:
a. | Alternate IV (October 2010) of FAR Clause 52.215-21, Requirements for Certified Cost or Pricing Data and Data Other Than Certified Cost or Pricing Data—Modifications (October 2010) is added. | |
b. | The following clause(s) are added to this contract: |
● | FAR Clause 52.203-3, Gratuities (April 1984) | |
● | FAR Clause 52.203-5, Covenant Against Contingent Fees (May 2014) |
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Contract Number : HHSN261201600027C |
NCI Control Number : N43CO-2016-00027C |
● | FAR Clause 52.203-6, Restrictions on Subcontractor Sales to the Government (September 2006) | |
● | FAR Clause 52.203-7, Anti-Kickback Procedures (May 2014) | |
● | FAR Clause 52.203-8, Cancellation, Rescission, and Recovery of Funds for Illegal or Improper Activity (May 2014) | |
● | FAR Clause 52.203-10, Price or Fee Adjustment for Illegal or Improper Activity (May 2014) | |
● | FAR Clause 52.204-4, Printed or copied Double-Sided on Postconsumer Fiber Content Paper (May 2011) | |
● | FAR Clause 52.215-2, Audit and Records Negotiation (October 2010) | |
● | FAR Clause 52.215-14, Integrity of Unit Prices (October 2010) | |
● | FAR Clause 52.219-8, Utilization of Small Business Concerns (October 2014) | |
● | FAR Clause 52.219-14, Limitations on Subcontracting (December 1996) | |
● | FAR Clause 52.222-40, Notification of Employee Rights Under the National Labor Relations Act (December 2010) | |
● | FAR Clause 52.229-3, Federal, State and Local Taxes (February 2013) | |
● | FAR Clause 52.232-2, Payments under Fixed-Price Research and Development Contracts (April 1984) | |
● | FAR Clause 52.232-17, Interest (May 2014) | |
● | FAR Clause 52.242-13, Bankruptcy (July 1995) | |
● | FAR Clause 52.244-5, Competition in Subcontracting (December 2010) |
The following clause(s) is substituted as follows:
● | FAR Clause 52.249-1, Termination for the Convenience of the Government (Fixed-Price)(Short Form) (April 1984) is deleted in its entirety and FAR Clause 52.249-2, Termination for the Convenience of the Government (Fixed Price) (April 2012) is substituted therefor. |
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Contract Number : HHSN261201600027C |
NCI Control Number : N43CO-2016-00027C |
ARTICLE 1.3. Additional Contract Clauses
This contract incorporates the following clauses by reference, with the same force and effect, as if they were given in full text. Upon request, the Contracting Officer will make their full text available.
a. | FEDERAL ACQUISITION REGULATION (FAR) (48 CFR CHAPTER 1) CLAUSES |
1. | FAR Clause 52.209-10, Prohibition on Contracting With Inverted Domestic Corporations (November 2015). | |
2. | FAR Clause 52.219-28, Post-Award Small Business Program Rerepresentation (July 2013). |
b. | DEPARTMENT OF HEALTH AND HUMAN SERVICES ACQUISITION REGULATION (HHSAR) (48 CHAPTER 3) CLAUSES: |
1. | HHSAR Clause 352.208-70, Printing and Duplication (December 2015) | |
2. | HHSAR Clause 352.223-70, Safety and Health (December 2015) |
3. | HHSAR Clause 352.231-70, Salary Rate Limitation (December 2015) |
Note: The Salary Rate Limitation is at the Executive Level II Rate.
See the following website for Executive Schedule rates of pay: https://www.opm.gov/policy-data- oversight/pay-leave/salaries-wages/.
( For current year rates, click on Salaries and Wages/Executive Schedule/Rates of Pay for the Executive Schedule. For prior year rates, click on Salaries and Wages/select Another Year at the top of the page/Executive Schedule/Rates of Pay for the Executive Schedule. Rates are effective January 1 of each calendar year unless otherwise noted.)
ARTICLE I.4. ADDITIONAL FAR CONTRACT CLAUSES INCLUDED IN FULL TEXT
This contract incorporates the following clauses in full text.
a. | THERE ARE NO APPLICABLE CLAUSES IN THIS SECTION. |
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Contract Number : HHSN261201600027C |
NCI Control Number : N43CO-2016-00027C |
PART 111 - LIST OF DOCUMENTS, EXHIBITS AND OTHER ATTACHMENTS
SECTION J - LIST OF ATTACHMENTS
The following documents are attached and incorporated in this contract:
1. Statement of Work
Statement of Work, dated 09/16/2016, 3 pages.
2. Invoice Instructions for NIH Fixed-Price Contracts, NIH(RC)-2
Invoice Instructions for NIH Fixed-Price Contracts, NIH(RC)-2, (8/12), 3 pages.
https://oamp.od.nih.gov/sites/default/files/rc2_508.pdf
3. Safety and Health
Safety and Health, HHSAR Clause 352.223-70, (12/15), 2 pages.
https://oamp.od.nih.gov/sites/default/files/DGS/contracting-forms/Safety-Health-hhsar-1-06.pdf
4. Disclosure of Lobbying Activities, SF-LLL
Disclosure of Lobbying Activities, SF-LLL, dated 7/97, 2 pages.
https://www.whitehouse.gov/sites/default/files/omb/grants/sflll.pdf
5. NIH Small Business Innovation Research (SBIR) Program Funding Agreement Certification
NIH Small Business Innovative Research (SBIR) Program Funding Agreement Certification, 3 pages, located at: http://grants.nih.gov/grants/funding/sbir forms/SBIR%20Funding%20Agreement%20Certification.pdf.
6. NIH Small Business Innovation Research (SBIR) Program Life Cycle Certification
NIH Small Business Innovative Research (SBIR) Program Life Cycle Certification, 3 pages, located at: http:// grants.nih.gov/grants/funding/sbir_forms/SBIR%20Life%20Cycle%20Certification.pdf.
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Contract Number : HHSN261201600027C |
NCI Control Number : N43CO-2016-00027C |
PART IV - REPRESENTATIONS AND INSTRUCTIONS
SECTION K - REPRESENTATIONS AND CERTIFICATIONS
The following documents are incorporated by reference in this contract:
1. | FAR Clause 52.204-19 Incorporation by Reference of Representations and Certifications (December 2014). |
The Contractor’s representations and certifications, including those completed electronically via the System for Award Management (SAM), are incorporated by reference into the contract.
(End of clause)
2. | NIH Representations & Certifications, dated 08/29/2016 | |
4. | Human Subjects Assurance Identification Number FWA00022203. |
END of the SCHEDULE
(CONTRACT)
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Statement of Work (Phase I) Dated 09/16/2016) |
Contract No. HHSN26120100027C |
STATEMENT OF WORK (Phase I) | ||
TITLE: | Predictive biomarkers for prostate cancer patient sensitivity for radiation late effects | |
PRINCIPAL INVESTIGATOR(S): | Scott Grindrod, Ph.D. | |
PROJECT DURATION: | 12 months | |
COMPANY: | Shuttle Pharmaceuticals, Inc. | |
SUBCONTRACTORS: | Georgetown University |
I. | Background Information and Objectives |
A. Background Information
Patients treated for prostate cancer may experience treatment related late effects that adversely affect quality of life and may prove life-threatening. The objective of this Phase I SBIR application is to determine the technical and commercial feasibility of a biomarker panel predictive of radiation mediated late effects in patients treated for prostate cancer. The Contractor shall develop a metabolite signature of radiation responses in a cohort of patients undergoing stereotactic body radiation therapy (SBRT) for prostate cancer. Analysis of banked plasma samples shall be correlated with clinical outcomes to identify markers of urinary and gastrointestinal late effects for validation in a larger clinical population to be proposed in a subsequent Phase II application. The Phase II effort shall allow Shuttle Pharmaceuticals to advance its proposed commercialization plan and to raise capital to support validation clinical trials leading to FDA approval.
Patients treated with stereotactic body radiation therapy (SBRT) for prostate cancers on an IRB approved protocol have banked clinical specimens and detailed monitoring of quality of life parameters. Sub-sets of these patients have developed urinary incontinence (Ul), symptomatic urinary flare (USF), obstructed voiding symptoms/retention (UR) and radiation proctitis (RP). Shuttle has used high resolution mass spectrometry based metabolomics/lipidomic profiling to analyze this unique cohort of patient samples and propose here, to leverage our established analytical platform to advance product development and validation of a biomarker panel predictive of radiation toxicities. Metabolites in plasma from a cohort of 100 de-identified patients shall be analyzed to develop a kit supporting metabolomic analysis to serve as a biomarker panel predictive of patient susceptibility for radiation late effects.
B. Technical Objectives
The three technical objectives of this proposal focus on determining the feasibility for developing a metabolite panel predictive of clinical outcomes in prostate cancer patients treated with radiation therapy (SBRT). In Objective 1, the Contractor shall use technology in the Waters Center of Excellence at Georgetown University to perform metabolite analysis on de-identified, bio-banked plasma samples from 100 patients. In the first objective, untargeted metabolite profiles shall be obtained and analyzed for correlations with clinical outcomes, including cancer recurrence, urinary tract injury and rectal injury. Candidate metabolites shall be validated and a metabolite “kit” shall be designed and tested in Objective 2. Standard operating procedures (SOPs) shall be prepared and purity, stability and storage capacity shall be tested. Objective 3 is to consolidate the intellectual property (metabolite panels) within Georgetown University policies and obtain a license to develop and commercialize the biomarker panels. Submitting a final report to NIH staff documenting success in achieving the Phase I milestones shall allow preparation of a phase II application to clinically validate the biomarker panel and support commercialization efforts.
Attachment 1 |
Page 1 of 3 |
Statement of Work (Phase I) Dated 09/16/2016) |
Contract No. HHSN26120100027C |
The Contractor shall do the following:
Objective 1. Develop a metabolite biomarker panel of radiation late effects.
Task 1.1. Perform untargeted metabolomics profiling of plasma specimens using UPLC-ESI-QTOFMS. Milestone 1.1. Metabolite raw data on clinical samples from 100 patients
Task 1.2. Perform biostatistics analysis of raw data to identify candidate metabolite signatures.
Milestone 1.2. Metabolite signatures for cancer recurrence, urinary tract injury and rectal injury.
Task 1.3. Validate and evaluate biomarker performance using SID-MRM-MS. Identify candidate molecules for biomarker development.
Milestone 1.3. Panels of validated biomarkers that correlate to cancer recurrence, urinary injury and rectal injury (for kit development).
Objective 2. Design and test a metabolite “kit” suitable for GLP clinical application
Task 2.1. Define the operating range of the biomarker assay.
Milestone 2.1. Accuracy and precision of the assay is available for preparing standard operating procedures (SOPs).
Task 2.2. Determine the assay optimization and standardization.
Milestone 2.2. Purity, stability and storage capacity data for selected metabolites will be used in SOPs.
Task 2.3. Determine robustness of the assay.
Milestone 2.3. Assay repeatability available for the SOPs.
Objective 3. Review achieved milestones, evaluate commercialization potential and advance a Phase II SBIR application for clinical trial validation of the biomarker
Task 3.1. Disclose intellectual property to the GU Office of Technology Commercialization.
Milestone 3.1. Provisional patent application submission.
Task 3.2. Prepare and submit the final report of Phase I accomplishments.
Milestone 3.2. Written final report is accepted by NIH staff allowing submission of a Phase II application.
II. | Services to be Performed |
A. | General Requirements |
1. | The contractor shall independently perform all work and furnish all labor, materials, supplies, equipment, and services (except as otherwise specified in the contract). | |
2. | All work will be monitored by the Government Project Officer identified in Section G of the contract. |
Attachment 1 |
Page 2 of 3 |
Statement of Work (Phase I) Dated 09/16/2016) |
Contract No. HHSN26120100027C |
B. | Specific Requirements |
Phase I Milestones and Timeline
Months 1-3 |
Months 4-6 |
Months 7-9 |
Months 10-12 | |||||||
Objective 1 | ****** | ****** | ||||||||
GU | Milestone 1.1. Metabolite raw data on clinical samples from 100 patients | X | X | |||||||
SP/GU | Milestone 1.2. Metabolite siqnatures for cancer recurrence, urinary tract injury and rectal injury. | X | ||||||||
SP | Milestone 1.3. Panels of validated biomarkers for assay kit development. | X | X | X | ||||||
Objective 2 | ****** | ****** | ||||||||
SP | Milestone 2.1. Accuracy and precision of the assay for standard operating procedures (SOPs) | X | X | |||||||
SP | Milestone 2.2. Puritv, stability and storaae capacity data for selected metabolites for SOPs. |
X | X | |||||||
SP | Milestone 2.3. Assay repeatability for SOPs. | X | ||||||||
Objective 3 | *** | ****** | ****** | |||||||
SP/GU | Milestone 3.1. Provisional patent application submission. | X | X | X | ||||||
SP | Milestone 3.2. Written final report is accepted by NIH staff; submit a Phase II SBIR application. | X | X |
SP = Work shall be performed in Shuttle Pharmaceuticals Laboratory/ Administrative Offices
GU = Work shall be performed in Georgetown University Shared Resource Facilities
Attachment 1 |
Page 3 of 3 |
INVOICE INSTRUCTIONS FOR NIH FIXED-PRICE CONTRACTS, NIH(RC)-2
Format: Submit payment requests on Standard Form 1034, Public Voucher for Purchases and Services Other Than Personal, or the Contractor’s self-generated form provided it contains all of the information prescribed herein. DO NOT include a cover letter with the payment request.
Number of Copies: Submit payment requests in the quantity specified in the Invoice Submission Instructions in Section G of the Contract Schedule.
Frequency: Submit payment requests upon delivery and acceptance of goods or services unless otherwise authorized by the Contracting Officer.
Currency: All NIH contracts are expressed in United States dollars. When the Government pays in a currency other than United States dollars, billings shall be expressed, and payment by the Government shall be made, in that other currency at amounts coincident with actual costs incurred. Currency fluctuations may not be a basis of gain or loss to the Contractor. Notwithstanding the above, the total of all invoices paid under this contract may not exceed the United States dollars authorized.
Preparation and Itemization of the Payment Request: Prepare payment requests as follows:
Note: All information must be legible or the invoice will be considered improper and returned to the Contractor.
(a) | Designated Billing Office Name and Address: Enter the designated billing office name and address, as identified in the Invoice Submission Instructions in Section G of the Contract Schedule. | |
(b) | Contractor’s Name, Address, Point of Contact, TIN, and DUNS or DUNS+4 Number: Show the Contractor’s name and address exactly as they appear in the contract. Any invoice identified as improper will be sent to this address. Also include the name, title, phone number, and e-mail address of the Point of Contact in case of questions. If the remittance name differs from the legal business name, both names must appear on the invoice. Provide the Contractor’s Federal Taxpayer Identification Number (TIN) and Data Universal Numbering System (DUNS) or DUNS+4 number. The DUNS number must identify the Contractor’s name and address exactly as stated in the contract, and as registered in the System for Acquisition Management (SAM) database. |
When an approved assignment of claims has been executed, the Contractor shall provide the same information for the assignee as is required for the Contractor (i.e., name, address, point of contact, TIN, and DUNS number), with the remittance information clearly identified as such.
(c) | Invoice/Voucher Number: Identify each payment request by a unique invoice number, which can only be used one time regardless of the number of contracts or orders held by an organization. For example, if a contractor has already submitted invoice number 05 on one of its contracts or orders, it cannot use that same invoice number on any other contract or order. Payment requests with duplicate invoice numbers will be considered improper and returned to the contractor. |
NIH(RC)-2 | ||||
Revised 7/2013 | 1 | Attachment 2 |
The NIH does not prescribe a particular numbering format but suggests using a job or account number for each contract and order followed by a sequential invoice number (example: 8675309-05). Invoice numbers are limited to 30 characters. There are no restrictions on the use of special characters, such as colons, dashes, forward slashes, or parentheses.
If all or part of an invoice is suspended and the contractor chooses to reclaim those costs on a supplemental invoice, the contractor may use the same unique invoice number followed by an alpha character, such as “R” for revised (example: 8675309-05R).
(d) | Date Invoice/Voucher Prepared: Insert the date the payment request is prepared. | |
(e) | Contract Number and Order Number (if applicable): Insert the contract number and order number (as applicable). | |
(f) | Contract Title: Insert the contract title listed on the cover page of the contract and/or Section G of the Contract Schedule. | |
(g) | Current Contract Period of Performance: Insert the contract start date/effective date through the current completion date of the contract. | |
(h) | Total Fixed-Price of Contract/Order: Insert the total fixed-price of the contract/order. | |
(i) | Two-Way/Three-Way Match: Identify whether payment is to be made using a two-way or three-way match. To determine required payment method, refer to the Invoice Submission Instructions in Section G of the Contract Schedule. | |
(j) | Office of Acquisitions: Insert the name of the Office of Acquisitions, as identified in the Invoice Submission Instructions in Section G of the Contract Schedule. | |
(k) | Central Point of Distribution: Identify the Central Point of Distribution, as specified in the Invoice Submission Instructions in Section G of the Contract Schedule. | |
(l) | Billing Period: Insert the beginning and ending dates (month, day, and year) of the period in which costs were incurred and for which reimbursement is claimed. | |
(m) | Description of Supplies or Services: Provide a description of the supplies or services, by line item (if applicable), quantity, unit price (where appropriate), and total amount. The item description, unit of measure, and unit price must match those specified in the contract. For example, if the contract specifies 1 box of hypodermic needles (100/box) with a unit price of $50.00, then the invoice must state 1 box, hypodermic needles (100/box), $50.00, not 100 syringes at $0.50 each. Invoices that do not match the line item pricing in the contract will be considered improper and will be returned to the Contractor. | |
(n) | Amount Billed - Current Period: Insert the amount claimed for the current billing period, including any adjustments, if applicable. If the Contract Schedule contains separately priced line items, identify the contract line item(s) on the payment request. | |
(o) | Amount Billed - Cumulative: Insert the cumulative amounts claimed to date, including any adjustments as applicable. If the Contract Schedule contains separately priced line items, identify the contract line item(s) on the payment request. | |
(p) | Freight or Delivery Charges: Identify all charges for freight or express shipments, other than f.o.b. destination, as a separate line item on the invoice. (If shipped by freight or express, and charges are more than $25, attach prepaid bill.) | |
(q) | Government Property: If the contract authorizes the purchase of any item of Government Property (e.g., equipment), the invoice must list each item for which reimbursement is requested. Include reference to the following (as applicable): |
- | item number for the specific piece of equipment listed in the Property Schedule, and | |
- | Contracting Officer Authorization (COA) Number, if the equipment is not covered by the Property Schedule. |
NIH(RC)-2 | ||||
Revised 7/2013 | 2 | Attachment 2 |
Safety and Health, HHSAR 352.223-70 (January 2006)
(a) | To help ensure the protection of the life and health of all persons, and to help prevent damage to property, the Contractor shall comply with all Federal, State, and local laws and regulations applicable to the work being performed under this contract. These laws are implemented or enforced by the Environmental Protection Agency, Occupational Safety and Health Administration (OSHA) and other regulatory/enforcement agencies at the Federal, State, and local levels. |
(1) | In addition, the Contractor shall comply with the following regulations when developing and implementing health and safety operating procedures and practices for both personnel and facilities involving the use or handling of hazardous materials and the conduct of research, development, or test projects: |
(ii) | 29 CFR 1910.1030, Bloodborne pathogens; 29 CFR 1910.1450, Occupational exposure to hazardous chemicals in laboratories; and other applicable occupational health and safety standards issued by OSHA and included in 29 CFR Part 1910. These regulations are available at: http://www.osha.gov. | |
(ii) | Nuclear Regulatory Commission Standards and Regulations, pursuant to the Energy Reorganization Act of 1974 (42 U.S.C. 5801 et seq.). The Contractor may obtain copies from the U.S. Nuclear Regulatory Commission, Washington, DC 20555- 0001. |
(2) | The following Government guidelines are recommended for developing and implementing health and safety operating procedures and practices for both personnel and facilities: |
(i) | Biosafety in Microbiological and Biomedical Laboratories, CDC. This publication is available at http://www.cdc.qov/OD/ohs/biosftv/bmbl4/bmbl4toc.htm. | |
(ii) | Prudent Practices for Safety in Laboratories (1995), National Research Council, National Academy Press, 500 Fifth Street, NW., Lockbox 285, Washington, DC 20055 (ISBN 0-309-05229-7). This publication is available at http://www.nap.edu/cataloq/4911.html. |
(b) | Further, the Contractor shall take or cause to be taken additional safety measures as the Contracting Officer, in conjunction with the Contracting Officer’s Technical Representative or other appropriate officials, determines to be reasonably necessary. If compliance with these additional safety measures results in an increase or decrease in the cost or time required for performance of any part of work under this contract, the Contracting Officer will make an equitable adjustment in accordance with the applicable “Changes” clause set forth in this contract. |
(c) | The Contractor shall maintain an accurate record of, and promptly report to the Contracting Officer, all accidents or incidents resulting in the exposure of persons to toxic substances, hazardous materials or hazardous operations; the injury or death of any person; or damage to property incidental to work performed under the contract and all violations for which the Contractor has been cited by any Federal, State or local regulatory/enforcement agency. The report shall include a copy of the notice of violation and the findings of any inquiry or inspection, and an analysis addressing the impact these violations may have on the work remaining to be performed. The report shall also state the required action(s), if any, to be taken to correct any violation(s) noted by the Federal, State or local regulatory/enforcement agency and the time frame allowed by the agency to accomplish the necessary corrective action. |
Safety and Health, HHSAR 352.223-70 (January 2006)
(d) | If the Contractor fails or refuses to comply with the Federal, State or local regulatory/enforcement agency’s directive(s) regarding any violation(s) and prescribed corrective action(s), the Contracting Officer may issue an order stopping all or part of the work until satisfactory corrective action (as approved by the Federal, State or local regulatory/enforcement agencies) has been taken and documented to the Contracting Officer. No part of the time lost due to any stop work order shall be subject to a claim for extension of time or costs or damages by the Contractor. |
(e) | The Contractor shall insert the substance of this clause in each subcontract involving toxic substances, hazardous materials, or hazardous operations. The Contractor is responsible for the compliance of its subcontractors with the provisions of this clause. |
(End of clause)
Safety and Health, HHSAR 352.223-70 (January 2006) | Page 1 of 1 |
Attachment 3 |
Page 1 | Attachment 4 |
INSTRUCTIONS FOR COMPLETION OF SF-LLL, DISCLOSURE OF LOBBYING ACTIVITIES
This disclosure form shall be completed by the reporting entity, whether subawardee or prime Federal recipient, at the initiation or receipt of a covered Federal action, or a material change to a previous filing, pursuant to title 31 U.S.C. section 1352. The filing of a form is required for each payment or agreement to make payment to any lobbying entity for influencing or attempting to influence an officer or employee of any agency, a Member of Congress, an officer or employee of Congress, or an employee of a Member of Congress in connection with a covered Federal action. Use the SF-LLLA Continuation Sheet for additional information if the space on the form is inadequate. Complete all items that apply for both the initial filing and material change report. Refer to the implementing guidance published by the Office of Management and Budget for additional information.
1. | Identify the type of covered Federal action for which lobbying activity is and/or has been secured to influence the outcome of a covered Federal action. | |
2. | Identify the status of the covered Federal action. | |
3. | Identify the appropriate classification of this report. If this is a followup report caused by a material change to the information previously reported, enter the year and quarter in which the change occurred. Enter the date of the last previously submitted report by this reporting entity for this covered Federal action. | |
4. | Enter the full name, address, city. State and zip code of the reporting entity, include Congressional District, if known. Check the appropriate classification of the reporting entity that designates if it is, or expects to be, a prime or subaward recipient. Identify the tier of the subawardee,e.g., the first subawardee of the prime is the 1st tier. Subawards include but are not limited to subcontracts, subgrants and contract awards under grants. | |
5. | If the organization filing the report in item 4 checks “Subawardee,” then enter the full name, address, city, State and zip code of the prime Federal recipient. Include Congressional District, if known. | |
6. | Enter the name of the Federal agency making the award or loan commitment. Include at least one organizational level below agency name, if known. For example, Department of Transportation, United States Coast Guard. | |
7. | Enter the Federal program name or description for the covered Federal action (item 1). If known, enter the full Catalog of Federal Domestic Assistance (CFDA) number for grants, cooperative agreements, loans, and loan commitments. | |
8. | Enter the most appropriate Federal identifying number available for the Federal action identified in item 1 (e.g., Request for Proposal (RFP) number; Invitation for Bid (IFB) number; grant announcement number; the contract, grant, or loan award number; the application/proposal control number assigned by the Federal agency). Include prefixes, e.g., “RFP-DE-90-001.” | |
9. | For a covered Federal action where there has been an award or loan commitment by the Federal agency, enter the Federal amount of the award/loan commitment for the prime entity identified in item 4 or 5. |
10. | (a) | Enter the full name, address, city, State and zip code of the lobbying entity engaged by the reporting entity identified in item 4 to influence the covered Federal action. |
(b) | Enter the full names of the individual(s) performing services, and include full address if different from 10 (a). Enter Last Name, First Name, and Middle Initial (Ml). |
11. | Enter the amount of compensation paid or reasonably expected to be paid by the reporting entity (item 4) to the lobbying entity (item 10). Indicate whether the payment has been made (actual) or will be made (planned). Check all boxes that apply. If this is a material change report, enter the cumulative amount of payment made or planned to be made. | |
12. | Check the appropriate box(es). Check all boxes that apply. If payment is made through an in-kind contribution, specify the nature and value of the in-kind payment. | |
13. | Check the appropriate box(es). Check all boxes that apply. If other, specify nature. | |
14. | Provide a specific and detailed description of the services that the lobbyist has performed, or will be expected to perform, and the date(s) of any services rendered. Include all preparatory and related activity, not just time spent in actual contact with Federal officials. Identify the Federal official(s) or employee(s) contacted or the officer(s), employee(s), or Member(s) of Congress that were contacted. | |
15. | Check whether or not a SF-LLLA Continuation Sheet(s) is attached. | |
16. | The certifying official shall sign and date the form, print his/her name, title, and telephone number. |
According to the Paperwork Reduction Act, as amended, no persons are required to respond to a collection of information unless it displays a valid OMB Control Number. The valid OMB control number for this information collection is OMB No. 0348-0046. Public reporting burden for this collection of information is estimated to average 30 minutes per response, including time for reviewing instructions, searching existing data sources, gathering and maintaining the data needed, and completing and reviewing the collection of information. Send comments regarding the burden estimate or any other aspect of this collection of information, including suggestions for reducing this burden, to the Office of Management and Budget, Paperwork Reduction Project (0348-0046), Washington, DC 20503. |
Page 2 | Attachment 4 |
SBIR Funding Agreement Certification
Grant Contract Number
Program Director(s)/Principal Investigators) (PD(s)/PI(s)):
Public reporting burden for this collection of information is estimated to average 15 minutes per response, including the time for reviewing instructions, searching existing data sources, gathering and maintaining the data needed, and completing and reviewing the collection of information. An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless it displays a currently valid OMB control number. Send comments regarding this burden estimate or any other aspect of (his collection of information, including suggestions for reducing this burden, to: NIH, Project Clearance Branch, 6705 Rockledge Drive, MSC 7974, Bethesda, MD 20892-7974, ATTN: PRA (0925-0001). Do not return the completed form to this address.
All small businesses that are selected for award of an SBIR funding agreement must complete this certification at the time of award and any other time set forth in the Notice of Award or Contract Award that is prior to performance of work under this award. This includes checking all of the boxes and having an authorized officer of the awardee sign and date the certification each time it is requested.
Please read carefully the following certification statements. The Federal government relies on this information to determine whether the business is eligible for a Small Business Innovation Research (SBIR) Program award. A similar certification will be used to ensure continued compliance with specific program requirements during the life of the funding agreement. The definitions for the terms used in this certification are set forth in the Small Business Act, SBA regulations (13 C.F.R. Part 121), the SBIR Policy Directive and also any statutory and regulatory provisions references in those authorities.
If the Grants Management or Contracting Officer believes that the business may not meet certain eligibility requirements at the time of award, they are required to file a size protest with the U.S. Small Business Administration (SBA), who will determine eligibility. At that time, SBA will request further clarification and supporting documentation in order to assist in the verification of any of the information provided as part of a protest. If the Grants Management or Contracting Officer believes, after award, that the business is not meeting certain Notice of Award requirements, the agency may request further clarification and supporting documentation in order to assist in the verification of any of the information provided.
Even if correct information has been included in other materials submitted to the Federal government, any action taken with respect to this certification does not affect the Government’s right to pursue criminal, civil, or administrative remedies for incorrect or incomplete information given in the certification. Each person signing this certification may be prosecuted if they have provided false information.
The undersigned has reviewed, verified and certifies that (all boxes must be checked):
OMB No. 0925-0001 (Rev. 06/15 Approved Through 10/31/2018) | Page 3 | SBIR Founding Agreement Certification | ||
Attachment 5 |
5. | The birth certificates, naturalization papers, or passports show that any individuals it relies upon to meet the eligibility requirements are U.S. citizens or permanent resident aliens in the United States. | ||
☒ Yes ☐ No ☐ N/A Explain why N/A: | |||
6. | It h is no more than 500 employees, including the employees of its affiliates. | ||
☒ Yes ☐ No | |||
7. | SBA has not issued a size determination currently in effect finding that this business concern exceeds the 500 employee size standard. | ||
☒ Yes ☐ No | |||
8. | During the performance of the award, the principal investigator will spend more than half of his/her time as an employee of the awardee or has requested and received a written deviation from this requirement from the Grants Management or Contracting Officer. | ||
☒ Yes ☐ No Deviation approved in writing by Grants Management or Contracting Officer: % | |||
9. | All, essentially equivalent work, or a portion of the work proposed under this project (check the applicable line): | ||
☒ Has not been submitted for funding by another Federal agency | |||
☐ Has been submitted for funding by another Federal agency but has not been funded under any other Federal grant, contract, subcontract, or other transaction. | |||
☐ A portion has been funded by another grant, contract, or subcontract as described in detail in the proposal land approved in writing by the Grants Management or Contracting Officer. | |||
10. | During the performance of award, it will perform the applicable percentage of work unless a deviation from this requirement is approved in writing by the Grants Management or Contracting Officer (check the applicable line and fill in if needed): | ||
☒ SBIR Phase I: at least two-thirds (66 2/3%) of the research | |||
☒ SBIR Phase II: at least half (50%) of the research | |||
☐ Deviation approved in writing by die Grants Management or Contracting Officer: % | |||
11. | During performance of award, the research/research and development will he performed in the United States unless a deviation is approved in writing by the Grants Management or Contracting Officer. | ||
☒ Yes ☐ No | |||
12. | Durjng the performance of award, the research/research and development will be performed at my facilities with my employees, except as otherwise indicated in the SBIR application and approved in the Notice of Award or Contract Award. | ||
☒ Yes ☐ No | |||
13. | It has registered.itself on.SBA’s database as majority-ownedby venture capital operating companies, hedge funds or private equity firms. | ||
☐ Yes ☒ No ☐ N/A Explain why N/A: | |||
14. | It is a Covered Small Business Concern (a small business concern that: (a) was not majority-owned by multiple venthre capital operating companies (VCOCs), hedge funds, or private equity firms on the data on which it submitted an application in response to an SBIR solicitation; and (b) on the date of the SBIR award, which is made more than 9 months after the closing date of the solicitation, is majority-owned by multiple venture capital operating companies, hedge funds, or private equity firms). | ||
☒ Yes ☐ No |
15. | It will notify the Federal agency immediately if all or a portion of the work proposed is subsequently funded by another Federal agency. | ||
☒ Yes ☐ No |
OMB No. 0925-0001 (Rev. 06/15 Approved Through 10/31/2018) | Page 4 | SBIR Founding Agreement Certification | ||
Attachment 5 |
I understand that the information submitted may be given to Federal, State and local agencies for determining violations of law and other purposes.
I am an officer of the business concern authorized to represent it and sign this certification on its behalf. By signing this certification, I am representing on my own behalf, and on behalf of the business concern that die information provided in this certification, the application, and all other information submitted in connection with this application, is true and correct as of the date of submission. I acknowledge that any intentional or negligent misrepresentation of the information contained in this certification may result in criminal, civil or administrative sanctions, including but not limited to: (1) fines, restitution and/or imprisonment under 18 U.S.C. § 1001; (2) treble damages and civil penalties under the False Claims Act|(31 U.S.C. § 3729 et seq); (3) double damages and civil penalties under the Program Fraud Civil Remedies Act (31 U.S.C. §3801 et seq); (4) civil recovery of award funds; (5) suspension and/or debarment from all Federal procurement and nonprocurement transactions (FAR Subpart 9.4 or 2 C.F.R. part 180; and (6) other administrative penalties including termination of SBIR/STTR awards.
Date | 9/19/16 |
Signature | /s/ Peter Dale Dritschilo |
Printed Name (First, Middle, Last) | Peter Dale Dritschilo |
Title | President/CFO |
Organization Name | Shuttle Pharmaceuticals, LLC |
OMB No. 0925-0001 (Rev. 06/15 Approved Through 10/31/2018) | Page 5 | SBIR Founding Agreement Certification | ||
Attachment 5 |
HHS
Small Business Innovation Research Program
Life Cycle Certification
Public reporting burden for this collection of information is estimated to average 15 minutes per response, including the time for reviewing instructions, searching existing data sources, gathering and maintaining the data needed, and completing and reviewing the collection of information. An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless it displays a currently valid OMB control number. Send comments regarding this burden estimate or any other aspect of this collection of information, including suggestions for reducing this burden, to: NIH, Project Clearance Branch, 6705 Rockledge Drive, MSC 7974, Bethesda, MD 20892-7974, ATTN: PRA (0925-0001). Do not return the completed form to this address.
All SBIR Phase I and Phase II awardees must complete this certification at all times set forth in the funding agreement (see §8(h) of the SBIR Policy Directive). This includes checking all of the boxes and having an authorized officer of the awardee sign and date the certification each time it is required. Awardees are not required to submit this certification directly to NIH but must instead complete the certification and maintain it on file in accordance with the records and retention policy in Section 8.4.2 of the NIH Grants Policy Statement or as listed in the SBIR contract solicitation or contract award.
A certification is required at the following times:
● | For SBIR Phase I Awardees: At the time of receiving final payment or disbursement from the Payment Management System or via contract. | |
● | For SBIR Phase II Awardees: prior to receiving more than 50% of the total award amount and prior to final payment or disbursement from the Payment Management System or via contract. |
In addition, SBIR awardees indicate compliance with these certification requirements by drawing or requesting funds from the Payment Management System. If the grantee cannot complete this certification or cannot ensure compliance with the certification process, it should notify the funding agreement officer immediately. If resolution cannot be reached, the funding agreement officer will void or terminate the award, as appropriate.
Grant or Contract Number:
Program Director(s)/Principal Investigator(s) (PD(s)/PI(s)):
Please read carefully the following certification statements. The Federal government relies on the information to ensure compliance with specific program requirements during the life of the funding agreement. The definitions for the terms used in this certification are set forth in the Small Business Act, the SBIR Policy Directive, and also any statutory and regulatory provisions referenced in those authorities.
If the funding agreement officer believes that the business is not meeting certain funding agreement requirements, the agency may request further clarification and supporting documentation in order to assist in the verification of any of the information provided.
Even if correct information has been included in other materials submitted to the Federal government, any action taken with respect to this certification does not affect the Government’s right to pursue criminal, civil or administrative remedies for incorrect or incomplete information given in the certification. Each person signing this certification may be prosecuted if they have provided false information.
OMB No. 0925-0002 (Rev. 06/15 Approved Through 10/31/2018) | Page 1 | SBIR Life Cycle Certification | ||
Attachment 6 |
The undersigned has reviewed, verified and certifies that (all boxes must be checked):
☐ I will notify the Federal agency immediately if all or a portion of the work proposed is subsequently funded by another Federal agency.
☐ I understand that the information submitted may be given to Federal, State and local agencies for determining violations of law and other purposes.
☐ I am an officer of the business concern authorized to represent it and sign this certification on its behalf. By signing this certification, I am representing on my own behalf, and on behalf of the business concern that the information provided in this certification, the application, and all other information submitted in connection with the award, is true and correct as of the date of submission. I acknowledge that any intentional or negligent misrepresentation of the information contained in this certification may result in criminal, civil or administrative sanctions, including but not limited to: (1) fines, restitution and/or imprisonment under 18 U.S.C. § 1001; (2) treble damages and civil penalties under the False Claims Act (31 U.S.C. § 3729 et seq.); (3) double damages and civil penalties under the Program Fraud Civil Remedies Act (31 U.S.C. §3801 et seq.); (4) civil recovery of award funds; (5) suspension and/or debarment from all Federal procurement and nonprocurement transactions (FAR Subpart 9.4 or 2 C.F.R. part 180); and (6) other administrative penalties including termination of SBIR/STTR awards.
Date | |
Signature | |
Printed Name (First, Middle, Last) | |
Title | |
Organization Name |
OMB No. 0925-0002 (Rev. 06/15 Approved Through 10/31/2018) | Page 2 | SBIR Life Cycle Certification | ||
Attachment 6 |
Exhibit 10.8
Contract Number: HHSN261201600038C
NCI Control Number: N43CO-2016-00038
CONTRACT TABLE OF CONTENTS
PART I - THE SCHEDULE | 3 | ||
SECTION B - SUPPLIES OR SERVICES AND PRICES/COSTS | 3 | ||
ARTICLE B.1. BRIEF DESCRIPTION OF SUPPLIES OR SERVICES | 3 | ||
ARTICLE B.2. PRICES | 3 | ||
ARTICLE B.3. ADVANCE UNDERSTANDINGS | 3 | ||
SECTION C - DESCRIPTION/SPECIFICATIONS/WORK STATEMENT | 4 | ||
ARTICLE C.1. STATEMENT OF WORK | 4 | ||
ARTICLE C.2. REPORTING REQUIREMENTS | 4 | ||
ARTICLE C.3. INVENTION REPORTING REQUIREMENT | 8 | ||
SECTION D - PACKAGING, MARKING AND SHIPPING | 9 | ||
SECTION E - INSPECTION AND ACCEPTANCE | 9 | ||
SECTION F - DELIVERIES OR PERFORMANCE | 9 | ||
ARTICLE F.1. PERIOD OF PERFORMANCE | 9 | ||
ARTICLE F.2. DELIVERIES | 10 | ||
ARTICLE F.3. CLAUSES INCORPORATED BY REFERENCE, FAR 52.252-2 (FEBRUARY 1998) | 10 | ||
SECTION G - CONTRACT ADMINISTRATION DATA | 11 | ||
ARTICLE G.1. CONTRACTING OFFICER’S REPRESENTATIVE (COR) | 11 | ||
ARTICLE G.2. KEY PERSONNEL, HHSAR 352.237-75 (December 2015) | 11 | ||
ARTICLE G.3. INVOICE SUBMISSION | 11 | ||
ARTICLE G.4. PROVIDING ACCELERATED PAYMENT TO SMALL BUSINESS SUBCONTRACTORS, FAR 52.232-40 (December 2013) | 13 | ||
ARTICLE G.5. POST AWARD EVALUATION OF CONTRACTOR PERFORMANCE | 13 | ||
SECTION H - SPECIAL CONTRACT REQUIREMENTS | 13 | ||
ARTICLE H.1. HUMAN SUBJECTS | 13 | ||
ARTICLE H.2. NIH POLICY ON ENHANCING REPRODUCIBILITY THROUGH RIGOR AND TRANSPARENCY | 14 | ||
ARTICLE H.3. NIH POLICY ON ENHANCING PUBLIC ACCESS TO ARCHIVED PUBLICATIONS RESULTING FROM NIH-FUNDED RESEARCH | 14 | ||
ARTICLE H.4. ACKNOWLEDGEMENT OF FEDERAL FUNDING | 14 | ||
ARTICLE H.5. DISSEMINATION OF FALSE OR DELIBERATELY MISLEADING INFORMATION | 14 | ||
ARTICLE H.6. CARE OF LIVE VERTEBRATE ANIMALS, HHSAR 352.270-5(b) (December 2015) | 14 | ||
ARTICLE H.7. ANIMAL WELFARE | 15 | ||
ARTICLE H.8. RESTRICTION FROM USE OF LIVE VERTEBRATE ANIMALS | 15 | ||
ARTICLE H.9. RESTRICTION ON PORNOGRAPHY ON COMPUTER NETWORKS | 15 | ||
ARTICLE H.10. GUN CONTROL | 15 | ||
ARTICLE H.11. LIMITATIONS ON SUBCONTRACTING - SBIR | 16 | ||
ARTICLE H.12. ELECTRONIC AND INFORMATION TECHNOLOGY ACCESSIBILITY, HHSAR 352.239-74 (December 2015) | 16 | ||
ARTICLE H.13. PUBLICATION AND PUBLICITY | 16 | ||
ARTICLE H.14. REPORTING MATTERS INVOLVING FRAUD, WASTE AND ABUSE | 17 | ||
PART II - CONTRACT CLAUSES | 18 | ||
SECTION I - CONTRACT CLAUSES | 18 | ||
PART III - LIST OF DOCUMENTS, EXHIBITS AND OTHER ATTACHMENTS | 22 | ||
SECTION J - LIST OF ATTACHMENTS | 22 | ||
1. Statement of Work | 22 | ||
2. Invoice Instructions for NIH Fixed-Price Contracts, NIH(RC)-2 | 22 | ||
3. Safety and Health | 22 | ||
4. Disclosure of Lobbying Activities, SF-LLL | 22 | ||
5. NIH Small Business Innovation Research (SBIR) Program Funding Agreement Certification | 22 | ||
6. NIH Small Business Innovation Research (SBIR) Program Life Cycle Certification | 22 | ||
PART IV - REPRESENTATIONS AND INSTRUCTIONS | 23 | ||
SECTION K - REPRESENTATIONS AND CERTIFICATIONS | 23 | ||
1. Annual Representations and Certifications | 23 | ||
2. Animal Welfare Assurance Number | 23 |
-2- |
Contract Number: HHSN261201600038C
NCI Control Number: N43CO-2016-00038
PART I - THE SCHEDULE
SECTION B - SUPPLIES OR SERVICES AND PRICES/COSTS
ARTICLE B.1. BRIEF DESCRIPTION OF SUPPLIES OR SERVICES
In this Phase I project the objectives are to develop and annotate AA prostate epithelial cancer cell line with donor matched normal prostate epithelial cells and bio-banked reference prostate tissues. Also to support the feasibility of establishing 50 prostate cancer cell lines from AA men in a subsequent Phase II application, prepare written protocols for tissue collection, processing, establishment of conditionally reprogrammed cells and the reagents necessary for performing studies with these cells.
ARTICLE B.2. PRICES
a. | The total fixed price of this contract is $224,687. | |
b. | Upon delivery and acceptance of the item(s) and/or service(s) specified in the DELIVERY Article in SECTION F and described in SECTION C of this contract and identified in the schedule of charges below, the Government shall pay to the Contractor the unit prices set forth below: |
PAYMENT SCHEDULE
Description | Invoice # | Period Covered | Amount | |||||
PDF Kick-Off Presentation | HHSN261201600038C - 01 | Month 1 | $ | 50,000 | ||||
Quarterly Report 1 | HHSN261201600038C - 02 | Months 1-3 | $ | 50,000 | ||||
Quarterly Report 2 | HHSN261201600038C - 03 | Months 4-6 | $ | 50,000 | ||||
Draft Final Report | HHSN261201600038C - 04 | Effective date of contract through one month prior to completion date of contract | $ | 37,344 | ||||
Final Report, Contract Outcomes Report, Final Presentaton, and all other contract deliverables | HHSN261201600038C - 05 | Entire Period of Performance of contract | $ | 37,343 | ||||
TOTAL FIXED PRICE | $ | 224,687 |
ARTICLE B.3. ADVANCE UNDERSTANDINGS
Other provisions of this contract notwithstanding, approval of the following items within the limits set forth is hereby granted without further authorization from the Contracting Officer.
a. | Establishment of Indirect Cost Rate | |
Fringe Benefits costs are funded at a rate of 15% of Total Direct Labor Costs; Overhead costs are funded at a rate of 39% of Total Direct Labor and Fringe Benefits Costs; G&A is funded at a rate of 12% of Total Direct Labor and Fringe Benefits Costs; however, the Contractor shall not bill or be reimbursed for indirect costs until such time as an indirect cost proposal has been submitted to the cognizant office responsible for negotiating the indirect cost rates, unless a temporary billing rate(s) has been included herein. Unless otherwise specified below, the indirect cost rate proposal shall be submitted no later than three (3) months after the date of contract award. |
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Contract Number: HHSN261201600038C
NCI Control Number: N43CO-2016-00038
b. | Subcontract | |
To negotiate a fixed price type subcontract with Georgetown University for Cell and Animal-Based Models to Advance Health Disparity Research for an amount not to exceed $70,129 for the period 9/19/2016 through 6/18/2017. Award of the subcontract shall not proceed without the prior written consent of the Contracting Officer upon review of the supporting documentation required by FAR Clause 52.244-2, Subcontracts. After receiving written consent of the subcontract by the Contracting Officer, a copy of the signed, executed subcontract shall be provided to the Contracting Officer. | ||
c. | Contract Number Designation | |
On all correspondence submitted under this contract, the Contractor agrees to clearly identify the two contract numbers that appear on the face page of the contract as follows: |
Contract No. HHSN261201600038C.
NCI Control No. N43CO-2016-00038 .
d. | SBIR Funding Agreement Certification | |
The SBIR Funding Agreement Certification form, located in SECTION J, must be completed at the time of award prior to the performance of work under this contract, in accordance with the SBIR Policy Directive issued by SBA (October 18, 2012). | ||
For additional information, see NIH Policy Notice NOT-OD-13-116, entitled, “New Program Certifications Required for SBIR and STTR Awards,” located at: http://grants.nih.gov/qrants/guide/notice-files/NQT-OD-13-116.html. |
SECTION C - DESCRIPTION/SPECIFICATIONS/WORK STATEMENT
ARTICLE C.1. STATEMENT OF WORK
a. | Independently and not as an agent of the Government, the Contractor shall furnish all the necessary services, qualified personnel, material, equipment, and facilities, not otherwise provided by the Government as needed to perform the Statement of Work, dated September 19, 2016, set forth in SECTION J-List of Attachments, attached hereto and made a part of this contract. |
ARTICLE C.2. REPORTING REQUIREMENTS
All reports required herein shall be submitted in electronic format via e-mail, as attachments, to the following designated NCI Branch Distribution Mailbox: NCIbrancheinvoices@mail.nih.gov.
Each e-mail submission shall contain only one deliverable. If the attached file for the deliverable exceeds 50 MB, the Contractor shall divide the deliverable into files of 50 MB each. All deliverables shall be limited to five file attachments or less.
The subject line of the e-mail shall read as follows: Deliverable_Contract Number_Vendor’s Name_Deliverable Description_Due Date.
All electronic reports submitted shall be compliant with Section 508 of the Rehabilitation Act of 1973. Additional information about testing documents for Section 508 compliance, including guidance and specific checklists, by application, can be found at: http://www.hhs.gov/web/508/index.html under “Making Files Accessible.”
-4- |
Contract Number: HHSN261201600038C
NCI Control Number: N43CO-2016-00038
a. | Technical Reports | |
In addition to those reports required by the other terms of this contract, the Contractor shall prepare and submit the following reports in the manner stated below and in accordance with the DELIVERIES Article in SECTION F of this contract: | ||
[Note: The Contractor shall include, in any technical progress report submitted, the applicable PubMed Central (PMC) or NIH Manuscript Submission reference number when citing publications that arise from its NIH funded research.] |
1. | Kick-Off Presentation | |||
The Contractor shall prepare and submit a kick-off presentation. Slides shall be prepared and presentation of the slides shall occur either in-person or through webinar or teleconference. The presentation shall cover the following: | ||||
a. | Discussion of the Contractor’s organization and project status, particularly changes that occurred since the proposal submission; | |||
b. | Contractor’s recent achievements (patents, publications, sales, regulatory approvals, partnerships, awards, etc.); | |||
c. | Status of the field; | |||
d. | Status of commercial and academic competitors; | |||
e. | Where the proposed project is positioned against the state of the art; | |||
f. | Intellectual property landscape; | |||
g. | Refresher on the proposed technology/R&D; | |||
h. | Detailed plan for the first budget period of the contract; | |||
i. | Milestones (technical and commercial) to be achieved by the end of the first budget period of the contract; | |||
j. | Discussion of anticipated technical risks and alternative approaches; | |||
k. | Questions to the NCI. | |||
2. | Quarterly Reports | |||
The Contractor shall submit Quarterly Reports, which shall include: | ||||
a. | Summary of technical objectives with status of each objective clearly marked ( e.g. previously completed, completed during this reporting period, not started, etc); | |||
b. | Clear description of activities accomplished in the quarter; | |||
c. | Analysis of experimental data and presentation of selected data; | |||
d. | Comments regarding the timeliness of performance; | |||
e. | Brief explanation of objectives/activities to be pursued in the next reporting period. | |||
This report shall generally be no longer than five (5) pages, excluding tables, figures, images and graphs used to present data. |
-5- |
Contract Number: HHSN261201600038C
NCI Control Number: N43CO-2016-00038
3. | Draft Final Report |
The Contractor shall submit a Draft Final Report. The Government Contracting Officer’s Representative (COR) will review and provide comments on the Draft Final Report, which the Contractor shall incorporate into a revised Final Report (- see Reporting Requirement Item 4).
The Draft Final Report shall include the following three sections:
Section 1: Summary of Salient Results
The Summary of Salient Results shall summarize in 200 words or less the salient results achieved during performance of the contract.
Section 2: Final Technical Report
The Final Technical Report shall set forth the work performed and results obtained for the entire contract period of performance. This report shall be in sufficient detail to describe comprehensively the results achieved.
Section 3: Draft Commercialization Plan
a. | Value of the SBIR Project, Expected Outcomes, and Impact | |
Describe, in layperson’s terms, the proposed project and its key technology objectives. State the product, process, or service to be developed in Phases II and III. Clarify the need addressed, specifying weaknesses in the current approaches to meet this need. In addition, describe the commercial applications of the research and the innovation inherent in this application. Be sure to also specify the potential societal, educational, and scientific benefits of this work. Explain the non-commercial impacts to the overall significance of the project. Explain how the SBIR contract integrates with the overall business plan of the company. | ||
b. | Organization | |
Give a brief description of the Contractor’s organization, including corporate objectives, core competencies, present size (annual sales level and number and types of employees), history of previous Federal and non-Federal funding, regulatory experience and subsequent commercialization, and any current products/services that have significant sales. Include a short description of the origins of the Contractor’s organization. Indicate the Contractor’s vision for the future, how the Contractor will grow/maintain a sustainable business entity, and how the Contractor will meet critical management functions as the Contractor’s organization evolves from a small technology R&D business to a successful commercial entity. | ||
c. | Market, Customer, and Competition | |
Describe the market and/or market segments being targeted and provide a brief profile of the potential customer. Tell what significant advantages the Contractor’s innovation will bring to the market - e.g., better performance, lower cost, faster, more efficient or effective, new capability. Explain the hurdles the Contractor will have to overcome in order to gain market/customer acceptance of the Contractor’s innovation. Describe any strategic alliances, partnerships, or licensing agreements the Contractor has in place to get FDA approval (if required) and to market and sell the Contractor’s product. Briefly describe the Contractor’s marketing and sales strategy. Give an overview of the current competitive landscape and any potential competitors over the next several years. | ||
d. | Intellectual Property (IP) Protection | |
Describe how the Contractor is going to protect the IP that results from the Contractor’s innovation. Also, note other actions the Contractor may consider taking that will constitute at least a temporal barrier to others aiming to provide a solution similar to the Contractor’s. |
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Contract Number: HHSN261201600038C
NCI Control Number: N43CO-2016-00038
e. | Finance Plan | |
Describe the necessary financing the Contractor will require to commercialize the product, process, or service, and when it will be required. Describe the Contractor’s plans to raise the requisite financing to launch the Contractor’s innovation into Phase III and begin the revenue stream. Plans for this financing stage may be demonstrated in one or more of the following ways: |
● | Letter of commitment of funding. | |
● | Letter of intent or evidence of negotiations to provide funding, should the Phase II project be successful and the market need still exist. | |
● | Letter of support for the project and/or some in-kind commitment, e.g., to test or evaluate the innovation. | |
● | Specific steps the Contractor is going to take to secure Phase III funding. |
f. | Production and Marketing Plan | |
Describe how the production of the Contractor’s product/process/service will occur ( e.g., in-house manufacturing, contract manufacturing). Describe the steps the Contractor will take to market and sell the Contractor’s product/process/service. For example, explain plans for licensing, Internet sales, etc. | ||
g. | Revenue Stream | |
Explain how the Contractor plans to generate a revenue stream for the Contractor’s organization should this project be a success. Examples of revenue stream generation include, but are not limited to; manufacture and direct sales, sales through value added resellers or other distributors, joint venture, licensing, service. Describe how the Contractor’s staffing will change to meet the Contractor’s revenue expectations. |
4. | Final Report | |||
The Contractor shall submit a Final Report. This document shall incorporate revisions in response to the comments provided by the Government COR after review of the Draft Final Report (- see Reporting Requirements Item 3). | ||||
5. | Contract Outcomes Report | |||
The Contractor shall submit a Contract Outcomes Report using a fillable PDF form to be provided by the Government. The Contract Outcomes Report must be provided as a filled-in version of the PDF form provided and not as a printed or scanned copy of this document. | ||||
6. | Final Presentation | |||
The Contractor shall prepare and submit a final presentation. Slides shall be prepared and presentation of the slides shall occur either in-person or through webinar or teleconference. The presentation shall cover the following: | ||||
a. | Discussion of the Contractor’s organization and project status; | |||
b. | Contractor’s achievements during the performance period (patents, publications, sales, regulatory approvals, partnerships, awards, etc.); | |||
c. | Detailed results of the performed research and development; |
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d. | Discussion of proposed milestones and whether they were achieved during the contract performance; | ||
e. | Summary of submitted commercialization plan; | ||
f. | Discussion of the anticipated Phase II activities with emphasis on how they fit into the commercialization plan, if Contractor is interested in pursuing Phase II research; | ||
g. | Questions to the NCI. |
b. | Other Reports/Deliverables | ||
1. | Section 508 Annual Report | ||
The contractor shall submit an annual Section 508 report in accordance with the schedule set forth in the ELECTRONIC AND INFORMATION TECHNOLOGY ACCESSIBILITY Article in SECTION H of this contract. The Section 508 Report Template and Instructions for completing the report are available at: http://www.hhs.gov/web/508/contracting/technology/vendors.html under “Vendor Information and Documents.” | |||
2. | NIH Small Business Innovation Research (SBIR) Program Life Cycle Certification | ||
In accordance with the SBIR/STTR Reauthorization Act of 2011, the contractor shall complete and submit the NIH Small Business Innovation Research (SBIR) Life Cycle Certification form, located in SECTION J, of the contract to the Contracting Officer. This certification is required to ensure the contractor is meeting the program’s requirements during the life cycle of the contract. | |||
The Life Cycle Certification form shall be submitted as follows: |
● | Phase I SBIR Contractors shall submit the Certification at the time of receiving final payment or disbursement. | ||
● | Phase II SBIR Contractors shall submit the Certification prior to receiving more than 50% of the total contract amount AND prior to final payment or disbursement. |
The Contracting Officer, may, at any time after ward request further clarifications and supporting documentation in order to assist in the verification of any information provided by the contractor. | |||
For additional information, see NIH Policy Notice NOT-OD-13-116, entitled, “New Program Certifications Required for SBIR and STTR Awards,” located at: http://grants.nih.gov/grants/guide/notice-files/NOT-OD-13-116.html. |
ARTICLE C.3. INVENTION REPORTING REQUIREMENT
All reports and documentation required by FAR Clause 52.227-11, Patent Rights-Ownership by the Contractor including, but not limited to, the invention disclosure report, the confirmatory license, and the Government support certification, shall be directed to the Division of Extramural Inventions and Technology Resources (DEITR), OPERA, OER, NIH, 6705 Rockledge Drive, Suite 310, MSC 7980, Bethesda, Maryland 20892-7980 (Telephone: 301-435-1986). In addition, one copy of an annual utilization report, and a copy of the final invention statement, shall be submitted to the Contracting Officer. The final invention statement (see FAR 27.303(b)(2)(H)) shall be submitted to the Contracting Officer on or before the completion date of the contract.
If no invention is disclosed or no activity has occurred on a previously disclosed invention during the applicable reporting period, a negative report shall be submitted to the Contracting Officer via e-mail.
To assist contractors in complying with invention reporting requirements of the clause, the NIH has developed “Interagency Edison,” an electronic invention reporting system. Use of Interagency Edison is required as it streamlines the reporting process and greatly reduces paperwork. Access to the system is through a secure interactive Web site to ensure that all information submitted is protected. Interagency Edison and information relating to the capabilities of the system can be obtained from the Web (http://www.iedison.gov). or by contacting the Extramural Inventions and Technology Resources Branch, OPERA, NIH.
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SECTION D - PACKAGING, MARKING AND SHIPPING
All deliverables required under this contract shall be packaged, marked and shipped in accordance with Government specifications. At a minimum, all deliverables shall be marked with the contract number and Contractor name. The Contractor shall guarantee that all required materials shall be delivered in immediate usable and acceptable condition.
SECTION E - INSPECTION AND ACCEPTANCE
a. | The Contracting Officer or the duly authorized representative will perform inspection and acceptance of materials and services to be provided. | |
b. | For the purpose of this SECTION, the Contracting Officer’s Representative (COR) is the authorized representative of the Contracting Officer. | |
c. | Inspection and acceptance will be performed at: | |
National Cancer Institute 9609 Medical Center Drive Rockville, MD 20850 | ||
Acceptance may be presumed unless otherwise indicated in writing by the Contracting Officer or the duly authorized representative within 30 days of receipt. | ||
d. | This contract incorporates the following clause by reference, with the same force and effect as if it were given in full text. Upon request, the Contracting Officer will make its full text available. | |
FAR Clause 52.246-9, Inspection of Research and Development (Short Form) (April 1984). | ||
FAR Clause 52.246-16, Responsibility for Supplies (April 1984). |
SECTION F - DELIVERIES OR PERFORMANCE
ARTICLE F.1. PERIOD OF PERFORMANCE
The period of performance of this contract shall be from 09/19/2016 through 06/18/2017.
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ARTICLE F.2. DELIVERIES
Satisfactory performance of the final contract shall be deemed to occur upon performance of the work described in the Statement of Work Article in SECTION C of this contract and upon delivery and acceptance by the Contracting Officer, or the duly authorized representative, of the following items in accordance with the stated delivery schedule:
a. | The items specified below as described in the REPORTING REQUIREMENTS Article in SECTION C of this contract will be required to be delivered F.o.b. Destination as set forth in FAR 52.247-35, F.o.b. DESTINATION, WITHIN CONSIGNEES PREMISES (APRIL 1984), and in accordance with and by the date(s) specified below: |
Item | Description | Delivery Schedule | ||
(1) | SBIR Funding Agreement Certification | Due at time of award, prior to performance of any work under this contract. | ||
(2) | Kick-Off Presentation | Due on or before 30 calendar days following the effective date of the contract. | ||
(3) | Quarterly Report One | Due on or before 15 calendar days following completion of 3 full months of contract performance. | ||
(4) | Quarterly Report Two | Due on or before 15 calendar days following completion of 6 full months of contract performance. | ||
(5) | Draft Final Report | Due on or before 1 month prior to the contract completion date. | ||
(6) | Final Report | Due on or before the contract completion date. | ||
(7) | Contract Outcomes Report | Due on or before the contract completion date. | ||
(8) | Final Presentation | Due on or before the contract completion date. | ||
(9) | Final Invention Statement | Due on or before the contract completion date. | ||
(W) | Invention Disclosure Report | Due on or before the contract completion date. | ||
(11) | SBIR Program Life Cycle Certification | Due on or before the contract completion date. | ||
(12) | Section 508 Annual Report | Due on or before the contract completion date. |
b. | The above items shall be addressed and delivered to ncibrancheinvoices@mail.nih.gov. as well as to the following addressees: |
Addressee | Deliverables | |
Kathleen Sears Office of Acquisitions searskv@mail.nih.aov |
All deliverables, in electronic format. | |
Todd Haim NCI SBIR & STTR Programs Haimte@mail.nih.aov |
All deliverables, in electronic format. | |
OPERA, OEH, NIH 6705 Rockledge Drive Suite 310, MSC 7980 Bethesda, MD 20892-7980 |
Items 9 and 10, in hard copy. |
ARTICLE F.3. CLAUSES INCORPORATED BY REFERENCE, FAR 52.252-2 (FEBRUARY 1998)
This contract incorporates the following clause(s) by reference, with the same force and effect as if it were given in full text. Upon request, the Contracting Officer will make its full text available. Also, the full text of a clause may be accessed electronically at this address: http://www.acquisition.gov/far.
FEDERAL ACQUISITION REGULATION (48 CFR CHAPTER 1) CLAUSE:
52.242-15, Stop Work Order (August 1989)
Alternate I (April 1984) is not applicable to this contract.
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SECTION G - CONTRACT ADMINISTRATION DATA
ARTICLE G.1. CONTRACTING OFFICER’S REPRESENTATIVE (COR)
The following Contracting Officer’s Representative (COR) will represent the Government for the purpose of this contract:
Todd Haim
The COR is responsible for: (1) monitoring the Contractor’s technical progress, including the surveillance and assessment of performance and recommending to the Contracting Officer changes in requirements; (2) interpreting the statement of work and any other technical performance requirements; (3) performing technical evaluation as required; (4) performing technical inspections and acceptances required by this contract; and (5) assisting in the resolution of technical problems encountered during performance.
The Contracting Officer is the only person with authority to act as agent of the Government under this contract. Only the Contracting Officer has authority to: (1) direct or negotiate any changes in the statement of work; (2) modify or extend the period of performance; (3) change the delivery schedule; (4) authorize reimbursement to the Contractor for any costs incurred during the performance of this contract; (5) otherwise change any terms and conditions of this contract; or (6) sign written licensing agreements. Any signed agreement shall be incorporated by reference in Section K of the contract
The Government may unilaterally change its COR designation.
ARTICLE G.2. KEY PERSONNEL, HHSAR 352.237-75 (December 2015)
The key personnel specified in this contract are considered to be essential to work performance. At least 30 days prior to the contractor voluntarily diverting any of the specified individuals to other programs or contracts the Contractor shall notify the Contracting Officer and shall submit a justification for the diversion or replacement and a request to replace the individual. The request must identify the proposed replacement and provide an explanation of how the replacement’s skills, experience, and credentials meet or exceed the requirements of the contract (including, when applicable, Human Subjects Testing requirements). If the employee of the contractor is terminated for cause or separates from the contractor voluntarily with less than thirty days notice, the Contractor shall provide the maximum notice practicable under the circumstances. The Contractor shall not divert, replace, or announce any such change to key personnel without the written consent of the Contracting Officer. The contract will be modified to add or delete key personnel as necessary to reflect the agreement of the parties.
(End of Clause)
The following individual(s) is/are considered to be essential to the work being performed hereunder:
Name | Title | |
Dr. Johng Rhim | Principal Investigator |
ARTICLE G.3. INVOICE SUBMISSION
a. | Invoice Instructions for NIH Fixed-Price Type Contracts, NIH(RC)-2, are attached and made part of this contract. The Contractor shall follow the attached instructions and submission procedures specified below to meet the requirements of a “proper invoice” pursuant to FAR Subpart 32.9, Prompt Payment. |
1. | Payment requests shall be submitted to the offices identified below. Do not submit supporting documentation (e.g., receipts, time sheets, vendor invoices, etc.) with your payment request unless specified elsewhere in the contract or requested by the Contracting Officer. |
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a. | The original invoice shall be submitted to the following designated billing office: | ||
National Institutes of Health | |||
Office of Financial Management | |||
Commercial Accounts | |||
2115 East Jefferson Street, Room 4B-432, MSC 8500 | |||
Bethesda, MD 20892-8500 |
b. | One courtesy copy of the original invoice shall be submitted electronically as follows: | ||
1. | The Contractor shall scan the original payment request (invoice) in Adobe Portable Document Format (PDF) along with the necessary supporting documentation as one single attachment. | ||
2. | Save the single attachment (scanned invoice along with any supporting documentation) in the following format: YourVendorNameJnvoice number (e.g., if you are submitting Invoice 123456, save the single attachment as “Ash Stevensjnvoice 123456”) [Note: Please do not use special characters such as (#, $, %,*, &, I) when saving your attachment. Only the underscore symbol (_) is permitted.] | ||
3. | Transmit the saved single attachment via e-mail to the appropriate branch’s Central Point of Distribution. For the purpose of this contract, the Central Point of Distribution is NCI OA Branch E - ncibrancheinvoices@mail.nih.gov. Only one payment request shall be submitted per e-mail and the subject line of the e-mail shall include the Contract Number_ Contract Title_ Contractor’s Name_ unique Invoice number | ||
(e.g, HHSN2612XXXXXC_Clinical Genetics SupportAsh Stevens J nvoice 12345) [Note: The original payment request must still be submitted in hard copy and mailed to the designated billing office listed in subparagraph a, above, to meet the requirements of a “proper invoice.” Also, The Contractor must certify on the payment request that the electronic courtesy copy is a duplicate of the original invoice mailed to NIH’s Office of Financial Management.] |
2. | In addition to the requirements specified in FAR 32.905 for a proper invoice, the Contractor shall include the following information on the face page of all payment requests: | ||
a. | Name of the Office of Acquisitions. The Office of Acquisitions for this contract is National Cancer Institute . | ||
b. | Federal Taxpayer Identification Number (TIN). If the Contractor does not have a valid TIN, it shall identify the Vendor Identification Number (VIN) on the payment request. The VIN is the number that appears after the Contractor’s name on the face page of the contract. If the Contractor has neither a TIN, DUNS, or VIN, contact the Contracting Officer. | ||
c. | DUNS or DUNS+4 Number. The DUNS number must identify the Contractor’s name and address exactly as stated in the contract and as registered in the Central Contractor Registration (CCR) database. If the Contractor does not have a valid DUNS number, it shall identify the Vendor Identification Number (VIN) on the payment request. The VIN is the number that appears after the Contractor’s name on the face page of the contract. If the Contractor has neither a TIN, DUNS, or VIN, contact the Contracting Officer. | ||
d. | Invoice Matching Option. This contract requires a two-way match. |
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e. | Unique Invoice Number. Each payment request must be identified by a unique invoice number, which can only be used one time regardless of the number of contracts or orders held by an organization. | ||
f. | The contract period of performance. | ||
g. | The contract title. |
b. Inquiries regarding payment of invoices shall be directed to the designated billing office, (301) 496-6452. |
ARTICLE G.4. PROVIDING ACCELERATED PAYMENT TO SMALL BUSINESS SUBCONTRACTORS, FAR 52.232-40 (December 2013)
a. | Upon receipt of accelerated payments from the Government, the Contractor shall make accelerated payments to its small business subcontractors under this contract, to the maximum extent practicable and prior to when such payment is otherwise required under the applicable contract or subcontract, after receipt of a proper invoice and all other required documentation from the small business subcontractor. | |
b. | The acceleration of payments under this clause does not provide any new rights under the prompt Payment Act. | |
c. | Include the substance of this clause, include this paragraph c, in all subcontracts with small business concerns, including subcontracts with small business concerns for the acquisition of commercial items. |
(End of Clause)
ARTICLE G.5. POST AWARD EVALUATION OF CONTRACTOR PERFORMANCE
a. | Contractor Performance Evaluations | |
A Final evaluation of Contractor performance will be prepared on this contract in accordance with FAR Subpart 42.15. The Final performance evaluation will be prepared at the time of completion of work. | ||
The Final evaluation will be provided to the Contractor as soon as practicable after completion of the evaluation. The Contractor will be permitted thirty days to review the document and to submit additional information or a rebutting statement. If agreement cannot be reached between the parties, the matter will be referred to an individual one level above the Contracting Officer, whose decision will be final. | ||
Copies of the evaluation, Contractor responses, and review comments, if any, will be retained as part of the contract file, and may be used to support future award decisions. | ||
b. | Electronic Access to Contractor Performance Evaluations | |
Contractors may access evaluations through a secure Web site for review and comment at the following address: | ||
http://www.cpars.gov |
SECTION H - SPECIAL CONTRACT REQUIREMENTS
ARTICLE H.1. HUMAN SUBJECTS
It is hereby understood and agreed that research involving human subjects shall not be conducted under this contract, and that no material developed, modified, or delivered by or to the Government under this contract, or any subsequent modification of such material, will be used by the Contractor or made available by the Contractor for use by anyone other than the Government, for experimental or therapeutic use involving humans without the prior written approval of the Contracting Officer.
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ARTICLE H.2. NIH POLICY ON ENHANCING REPRODUCIBILITY THROUGH RIGOR AND TRANSPARENCY
Contractors shall adhere to the NIH policy of enhancing reproducibility through rigor and transparency by addressing each of the four areas of the policy in performance of the Statement of Work and in publications, as applicable: 1) Scientific Premise; 2) Scientific Rigor; 3) Consideration of Relevant Biological Variables, including Sex; and 4) Authentication of Key Biological and/or Chemical Resources. This policy applies to all NIH funded research and development, from basic through advanced clinical studies. See NIH Guide Notice, NOT-OD-15-1Q3, “Enhancing Reproducibility through Rigor and Transparency” and NOT-OD-15-102. “Consideration of Sex as a Biological Variable in NIH-funded Research” for more information. In addition, publications are expected to follow the guidance at http://www.nih.gov/research-training/rigor-reproducibility/principles-guidelines-reporting-preclinical-research. whether preclinical or otherwise, as appropriate. More information is available at http://grants.nih.gov/reproducibility/index.htm. including FAQs and a General Policy Overview.
ARTICLE H.3. NIH POLICY ON ENHANCING PUBLIC ACCESS TO ARCHIVED PUBLICATIONS RESULTING FROM NIH-FUNDED RESEARCH
NIH-funded investigators shall submit to the NIH National Library of Medicine’s (NLM) PubMed Central (PMC) an electronic version of the author’s final manuscript, upon acceptance for publication, resulting from research supported in whole or in part with direct costs from NIH. NIH defines the author’s final manuscript as the final version accepted for journal publication, and includes all modifications from the publishing peer review process. The PMC archive will preserve permanently these manuscripts for use by the public, health care providers, educators, scientists, and NIH. The Policy directs electronic submissions to the NIH/NLM/PMC: http://www.pubmedcentral.nih.gov.
Additional information is available at http://grants.nih.qov/grants/guide/notice-files/NOT-QD-09-Q71.html and http:// publicaccess.nih.gov.
ARTICLE H.4. ACKNOWLEDGEMENT OF FEDERAL FUNDING
The Contractor shall clearly state, when issuing statements, press releases, requests for proposals, bid solicitations and other documents describing projects or programs funded in whole or in part with Federal money: (1) the percentage of the total costs of the program or project which will be financed with Federal money; (2) the dollar amount of Federal funds for the project or program; and (3) the percentage and dollar amount of the total costs of the project or program that will be financed by nongovernmental sources.
ARTICLE H.5. DISSEMINATION OF FALSE OR DELIBERATELY MISLEADING INFORMATION
The Contractor shall not use contract funds to disseminate information that is deliberately false or misleading.
ARTICLE H.6. CARE OF LIVE VERTEBRATE ANIMALS, HHSAR 352.270-5(b) (December 2015)
a. | Before undertaking performance of any contract involving animal-related activities where the species is regulated by the United Sates Department of Agriculture (USDA), the Contractor shall register with the Secretary of Agriculture of the United States in accordance with 7 U.S.C. 2136 and 9 CFR 2.25 through 2.28. The Contractor shall furnish evidence of the registration to the Contracting Officer. | |
b. | The Contractor shall acquire vertebrate animals used in research from a dealer licensed by the Secretary of Agriculture under 7 U.S.C. 2133 and 9 CFR 2.1 2.11, or from a source that is exempt from licensing under those sections. | |
c. | The Contractor agrees that the care, use, and intended use of any live vertebrate animals in the performance of this contract shall conform with the Public Health Service (PHS) Policy on Humane Care and Use of Laboratory Animals (PHS Policy), the current Animal Welfare Assurance (Assurance), the Guide for the Care and Use of Laboratory Animals (National Academy Press, Washington, DC) and the pertinent laws and regulations of the United States Department of Agriculture (see 7 U.S.C. 2131 et seq. and 9 CFR subchapter A, Parts 1-4). In case of conflict between standards, the more stringent standard shall govern. |
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d. | If at any time during performance of this contract, the Contracting Officer determines, in consultation with the Office of Laboratory Animal Welfare (OLAW), National Institutes of Health (NIH), that the Contractor is not in compliance with any of the requirements and standards stated in paragraphs (a) through (c)above, the Contracting Officer may immediately suspend, in whole or in part, work and further payments under this contract until the Contractor corrects the noncompliance. Notice of the suspension may be communicated by telephone and confirmed in writing. If the Contractor fails to complete corrective action within the period of time designated in the Contracting Officer’s written notice of suspension, the Contracting Officer may, in consultation with OLAW, NIH, terminate this contract in whole or in part, and the Contractor’s name may be removed from the list of those contractors with Animal Welfare Assurances. |
Note: The Contractor may request registration of its facility and a current listing of licensed dealers from the Regional Office of the Animal and Plant Health Inspection Service (APHIS), USDA, for the region in which its research facility is located. The location of the appropriate APHIS Regional Office, as well as information concerning this program may be obtained by contacting the Animal Care Staff, USDA/APHIS, 4700 River Road, Riverdale, Maryland 20737 (Email: ace@aphis.usda.gov: Web site: (http://www.aphis.usda.gov/wps/portal/aphis/ourfocus/animalwelfare).
(End of clause)
ARTICLE H.7. ANIMAL WELFARE
All research involving live, vertebrate animals shall be conducted in accordance with the Public Health Service Policy on Humane Care and Use of Laboratory Animals (PHS Policy). The PHS Policy can be accessed at: http://grants1.nih.gov/grants/olaw/references/phspol.htm
In addition, the research involving live vertebrate animals shall be conducted in accordance with the description set forth in the Vertebrate Animal Section (VAS) of the contractor’s technical proposal, as modified in the Final Proposal Revision (FPR), dated 9/19/2016, which is incorporated by reference.
ARTICLE H.8. RESTRICTION FROM USE OF LIVE VERTEBRATE ANIMALS
UNDER GOVERNING POLICY, FEDERAL FUNDS ADMINISTERED BY THE PUBLIC HEALTH SERVICE (PHS) SHALL NOT BE EXPENDED FOR RESEARCH INVOLVING LIVE VERTEBRATE ANIMALS WITHOUT PRIOR APPROVAL BY THE OFFICE OF LABORATORY ANIMAL WELFARE (OLAW), OF [AN ANIMAL WELFARE ASSURANCE THAT COMPLIES WITH THE PHS POLICY ON HUMANE CARE AND USE OF LABORATORY ANIMALS AND/OR A VALID INSTITUTIONAL ANIMAL CARE AND USE COMMITTEE (IACUC) APPROVAL], THIS RESTRICTION APPLIES TO ALL PERFORMANCE SITES (e.g. COLLABORATING INSTITUTIONS, SUBCONTRACTORS, SUBGRANTEES) WITHOUT OLAW-APPROVED ASSURANCES, WHETHER DOMESTIC OR FOREIGN.
ARTICLE H.9. RESTRICTION ON PORNOGRAPHY ON COMPUTER NETWORKS
The Contractor shall not use contract funds to maintain or establish a computer network unless such network blocks the viewing, downloading, and exchanging of pornography.
ARTICLE H.10. GUN CONTROL
The Contractor shall not use contract funds in whole or in part, to advocate or promote gun control.
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ARTICLE H.11. LIMITATIONS ON SUBCONTRACTING - SBIR
The Contractor shall perform a minimum of two-thirds of the research and/or analytical effort conducted under this contract, as measured by total contract dollars. Any deviation from this requirement must be approved in writing by the Contracting Officer.
ARTICLE H.12. ELECTRONIC AND INFORMATION TECHNOLOGY ACCESSIBILITY, HHSAR 352.239-74 (December 2015)
a. | Pursuant to Section 508 of the Rehabilitation Act of 1973(29 U.S.C. 794d), as amended by the Workforce Investment Act of 1998, all electronic and information technology (EIT) supplies and services developed, acquired, or maintained under this contract or order must comply with the “Architectural and Transportation Barriers Compliance Board Electronic and Information Technology (EIT) Accessibility Standards” set forth by the Architectural and Transportation Barriers Compliance Board (also referred to as the “Access Board”) in 36 CFR part 1194. Information about Section 508 is available at http://www.hhs.gov/web/508. The complete text of Section 508 Final Provisions can be accessed at http://www.access-board.gov/guidelines-and-standards/communications-and-it/about-the-section-508-standards. | |
b. | The Section 508 accessibility standards applicable to this contract or order are identified in the Statement of Work or Specification or Performance Work Statement. The contractor must provide any necessary updates to the submitted HHS Product Assessment Template(s) at the end of each contract or order exceeding the simplified acquisition threshold (see FAR 2.101) when the contract or order duration is one year or less. If it is determined by the Government that EIT supplies and services provided by the Contractor do not conform to the described accessibility standards in the contract, remediation of the supplies or services to the level of conformance specified in the contract will be the responsibility of the Contractor at its own expense. | |
c. | The Section 508 accessibility standards applicable to this contract are: None. | |
d. | In the event of a modification(s) to this contract or order,which adds new EIT supplies or services or revises the type of, or specifications for, supplies or services, the Contracting Officer may require that the contractor submit a completed HHS Section 508 Product Assessment Template and any other additional information necessary to assist the Government in determining that the EIT supplies or services conform to Section 508 accessibility standards. Instructions for documenting accessibility via the HHS Section 508 Product Assessment Template may be found under Section 508 policy on the HHS Web site: (http://www.hhs.gov/web/508). If it is determined by the Government that EIT supplies and services provided by the Contractor do not conform to the described accessibility standards in the contract, remediation of the supplies or services to the level of conformance specified in the contract will be the responsibility of the Contractor at its own expense. | |
e. | If this is an Indefinite Delivery contract, a Blanket Purchase Agreement or a Basic Ordering Agreement, the task/delivery order requests that include EIT supplies or services will define the specifications and accessibility standards for the order. In those cases, the Contractor may be required to provide a completed HHS Section 508 Product Assessment Template and any other additional information necessary to assist the Government in determining that the EIT supplies or services conform to Section 508 accessibility standards. Instructions for documenting accessibility via the HHS Section 508 Product Assessment Template may be found at http://www.hhs.gov/web/508. If it is determined by the Government that EIT supplies and services provided by the Contractor do not conform to the described accessibility standards in the provided documentation, remediation of the supplies or services to the level of conformance specified in the contract will be the responsibility of the Contractor at its own expense. |
(End of clause)
ARTICLE H.13. PUBLICATION AND PUBLICITY
In addition to the requirements set forth in HHSAR Clause 352.227-70, Publications and Publicity incorporated by reference in SECTION I of this contract, the Contractor shall acknowledge the support of the National Institutes of Health whenever publicizing the work under this contract in any media by including an acknowledgment substantially as follows:
“This project has been funded in whole or in part with Federal funds from the National Cancer Institute, National Institutes of Health, Department of Health and Human Services, under Contract No. HHSN261201600038C.”
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ARTICLE H.14. REPORTING MATTERS INVOLVING FRAUD, WASTE AND ABUSE
Anyone who becomes aware of the existence or apparent existence of fraud, waste and abuse in NIH funded programs is encouraged to report such matters to the HHS Inspector General’s Office in writing or on the Inspector General’s Hotline. The toll free number is 1-800-HHS-TIPS (1-800-447-8477). All telephone calls will be handled confidentially. The website to file a complaint on-line is: http://oig.hhs.gov/fraud/hotline/ and the mailing address is:
US Department of Health and Human Services | |
Office of Inspector General | |
ATTN: OIG HOTLINE OPERATIONS | |
P.O. Box 23489 | |
Washington, D.C. 20026 |
ARTICLE H.15. ADVANCED COPIES OF PRESS RELEASES
Press releases shall be considered to include the public release of information to any medium, excluding peer- reviewed scientific publications. The Contractor shall not publish a press release related to this contract without receiving prior concurrence from the Contracting Officer (CO). The Contractor shall submit an advance copy of the press release to the Contracting Officer and Contracting Officer’s Representative (COR). Upon acknowledgement of receipt, the Contracting Officer will have five (5) working days to respond with concurrence or comments. In the event that the Contracting Officer does not communicate concurrence or comments to the Contractor within five (5) working days following acknowledgement of receipt of the press release advance copy, concurrence may be presumed.
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Contract Number: HHSN261201600038C
NCI Control Number: N43CO-2016-00038
PART II - CONTRACT CLAUSES
SECTION I - CONTRACT CLAUSES
ARTICLE 1.1. GENERAL CLAUSES FOR A FIXED-PRICE RESEARCH AND DEVELOPMENT SBIR PHASE I CONTRACT
This contract incorporates the following clauses by reference, with the same force and effect as if they were given in full text. Upon request, the Contracting Officer will make their full text available. Also, the full text o f a clause may be accessed electronically as follows: FAR Clauses at: http://www.acquisition.gov/far/. HHSAR Clauses at: http://www.hhs.gov/Dolicies/hhsar/subDart352.html.
a. FEDERAL ACQUISITION REGULATION (FAR) (48 CFR CHAPTER 1) CLAUSES:
FAR
CLAUSE NO. |
DATE | TITLE | ||
52.202-1 | Nov 2013 | Definitions (Over the Simplified Acquisition Threshold) | ||
52.203-12 | Oct 2010 | Limitation on Payments to Influence Certain Federal Transactions (Over $150,000) | ||
52.203-17 | Apr 2014 | Contractor Employee Whistleblower Rights and Requirements to Inform Employees of Whistleblower Rights (Over the Simplified Acquisition Threshold) | ||
52.203-99 | Feb 2015 | Prohibition on Contracting with Entities That Require Certain Internal Confidentiality Agreements (DEVIATION) | ||
52.204-10 | Oct 2015 | Reporting Executive Compensation and First-Tier Subcontract Awards ($30,000 or more) | ||
52.204-13 | Jul 2013 | System for Award Management Maintenance | ||
52.209-6 | Oct 2015 | Protecting the Government’s Interest When Subcontracting With Contractors Debarred, Suspended, or Proposed for Debarment (Over $35,000) | ||
52.215-8 | Oct 1997 | Order of Precedence - Uniform Contract Format | ||
52.219-6 | Jul 1996 | Notice of Total Small Business Set-Aside | ||
52.222-3 | Jun 2003 | Convict Labor | ||
52.222-21 | Apr 2015 | Prohibition of Segregated Facilities | ||
52.222-26 | Apr 2015 | Equal Opportunity | ||
52.222-35 | Oct 2015 | Equal Opportunity for Veterans ($150,000 or more) | ||
52.222-36 | Jul 2014 | Equal Opportunity for Workers with Disabilities | ||
52.222-37 | Feb 2016 | Employment Reports on Veterans ($150,000 or more) | ||
52.222-50 | Mar 2015 | Combating Trafficking in Persons | ||
52.222-54 | Oct 2015 | Employment Eligibility Verification (Over the Simplified Acquisition Threshold) | ||
52.223-6 | May 2001 | Drug-Free Workplace | ||
52.223-18 | Aug 2011 | Encouraging Contractor Policies to Ban Text Messaging While Driving | ||
52.225-1 | May 2014 | Buy American - Supplies | ||
52.225-13 | Jun 2008 | Restrictions on Certain Foreign Purchases | ||
52.227-1 | Dec 2007 | Authorization and Consent, Alternate 1 (Apr 1984) | ||
52.227-2 | Dec 2007 | Notice and Assistance Regarding Patent and Copyright Infringement |
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Contract Number: HHSN261201600038C
NCI Control Number: N43CO-2016-00038
FAR CLAUSE NO. |
DATE | TITLE | ||
52.227-11 | May 2014 | Patent Rights - Ownership by the Contractor (Note: In accordance with FAR 27.303(b)(2), paragraph (e) is modified to include the requirements in FAR 27.303(b)(2)(i) through (iv). The frequency of reporting in (i) is annual. | ||
52.227-20 | May 2014 | Rights in Data - SBIR Program | ||
52.232-9 | Apr 1984 | Limitation on Withholding of Payments | ||
52.232-23 | May 2014 | Assignment of Claims | ||
52.232-25 | Jul 2013 | Prompt Payment | ||
52.232-33 | Jul 2013 | Payment by Electronic Funds Transfer-System for Award Management | ||
52.232-39 | Jun 2013 | Unenforceability of Unauthorized Obligations | ||
52.233-1 | May 2014 | Disputes | ||
52.233-3 | Aug 1996 | Protest After Award | ||
52.233-4 | Oct 2004 | Applicable Law for Breach of Contract Claim | ||
52.243-1 | Aug 1987 | Changes - Fixed Price, Alternate V (Apr 1984) | ||
52.244-6 | Jun 2016 | Subcontracts for Commercial Items | ||
52.249-1 | Apr 1984 | Termination for the Convenience of the Government (Fixed-Price) (Short Form) | ||
52.249-9 | Apr 1984 | Default (Fixed-Price Research and Development)(Over the Simplified Acquisition Threshold) | ||
52.253-1 | Jan 1991 | Computer Generated Forms |
b. DEPARTMENT OF HEALTH AND HUMAN SERVICES ACQUISITION REGULATION (HHSAR) (48 CFR CHAPTER 3) CLAUSES:
HHSAR
CLAUSE NO. |
DATE | TITLE | ||
352.203-70 | Dec 2015 | Anti-Lobbying | ||
352.222-70 | Dec 2015 | Contractor Cooperation in Equal Employment Opportunity Investigations | ||
352.227-70 | Dec 2015 | Publications and Publicity | ||
352.237-75 | Dec 2015 | Key Personnel |
[End of GENERAL CLAUSES FOR A FIXED-PRICE RESEARCH AND DEVELOPMENT SBIR PHASE I CONTRACT- Rev. 08/2016],
ARTICLE I.2. AUTHORIZED SUBSTITUTION OF CLAUSES
ARTICLE 1.1. of this SECTION is hereby modified as follows:
a. | Alternate IV (October 2010) of FAR Clause 52.215-21, Requirements for Certified Cost or Pricing Data and Data Other Than Certified Cost or Pricing Data-Modifications (October 2010) is added. | ||
b. | The following clause(s) are added to this contract: | ||
● | FAR Clause 52.203-3, Gratuities (April 1984) | ||
● | FAR Clause 52.203-5, Covenant Against Contingent Fees (May 2014) |
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● | FAR Clause 52.203-6, Restrictions on Subcontractor Sales to the Government (September 2006) | ||
● | FAR Clause 52.203-7, Anti-Kickback Procedures (May 2014) | ||
● | FAR Clause 52.203-8, Cancellation, Rescission, and Recovery of Funds for Illegal or Improper Activity (May 2014) | ||
● | FAR Clause 52.203-10, Price or Fee Adjustment for Illegal or Improper Activity (May 2014) | ||
● | FAR Clause 52.204-4, Printed or copied Double-Sided on Postconsumer Fiber Content Paper (May 2011) | ||
● | FAR Clause 52.215-2, Audit and Records Negotiation (October 2010) | ||
● | FAR Clause 52.215-14, Integrity of Unit Prices (October 2010) | ||
● | FAR Clause 52.219-8, Utilization of Small Business Concerns (October 2014) | ||
● | FAR Clause 52.219-14, Limitations on Subcontracting (December 1996) | ||
● | FAR Clause 52.222-40, Notification of Employee Rights Under the National Labor Relations Act (December 2010) | ||
● | FAR Clause 52.229-3, Federal, State and Local Taxes (February 2013) | ||
● | FAR Clause 52.232-2, Payments under Fixed-Price Research and Development Contracts (April 1984) | ||
● | FAR Clause 52.232-17, Interest (May 2014) | ||
● | FAR Clause 52.242-13, Bankruptcy (July 1995) | ||
● | FAR Clause 52.244-5, Competition in Subcontracting (December 2010) |
The following clause(s) is substituted as follows: | |||
● | FAR Clause 52.249-1, Termination for the Convenience of the Government (Fixed-Price)(Short Form) (April 1984) is deleted in its entirety and FAR Clause 52.249-2, Termination for the Convenience of the Government (Fixed Price) (April 2012) is substituted therefor. |
ARTICLE 1.3. Additional Contract Clauses
This contract incorporates the following clauses by reference, with the same force and effect, as if they were given in full text. Upon request, the Contracting Officer will make their full text available.
a. | FEDERAL ACQUISITION REGULATION (FAR) (48 CFR CHAPTER 1) CLAUSES | ||
1. | FAR Clause 52.204-18 Commercial and Government Entity Code Maintenance (July 2016) | ||
2. | FAR Clause 52.209-10, Prohibition on Contracting With Inverted Domestic Corporations (November 2015). | ||
3. | FAR Clause 52.219-28, Post-Award Small Business Program Rerepresentation (July 2013). | ||
b. | DEPARTMENT OF HEALTH AND HUMAN SERVICES ACQUISITION REGULATION (HHSAR) (48 CHAPTER 3) CLAUSES: | ||
1. | HHSAR Clause 352.208-70, Printing and Duplication (December 2015) |
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Contract Number: HHSN261201600038C
NCI Control Number: N43CO-2016-00038
2. | HHSAR Clause 352.223-70, Safety and Health (December 2015) | ||
3. | HHSAR Clause 352.231-70, Salary Rate Limitation (December 2015) |
Note: The Salary Rate Limitation is at the Executive Level II Rate. | |
See the following website for Executive Schedule rates of pay: https://www.opm.gov/policy-data-oversight/pav-leave/salaries-wages/. | |
(For current year rates, click on Salaries and Wages/Executive Schedule/Rates of Pay for the Executive Schedule. For prior year rates, click on Salaries and Wages/select Another Year at the top of the page/Executive Schedule/Rates of Pay for the Executive Schedule. Rates are effective January 1 of each calendar year unless otherwise noted.) |
ARTICLE 1.4. ADDITIONAL FAR CONTRACT CLAUSES INCLUDED IN FULL TEXT
This contract incorporates the following clauses in full text.
a. | THERE ARE NO APPLICABLE CLAUSES IN THIS SECTION. |
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Contract Number: HHSN261201600038C
NCI Control Number: N43CO-2016-00038
PART III - LIST OF DOCUMENTS, EXHIBITS AND OTHER ATTACHMENTS
SECTION J - LIST OF ATTACHMENTS
The following documents are attached and incorporated in this contract:
1. Statement of Work
Statement of Work, dated September 19, 2016, 2 pages.
2. Invoice Instructions for NIH Fixed-Price Contracts, NIH(RC)-2
Invoice Instructions for NIH Fixed-Price Contracts, NIH(RC)-2, (8/12), 3 pages.
3. Safety and Health
Safety and Health, HHSAR Clause 352.223-70, (12/15), 2 pages.
4. Disclosure of Lobbying Activities, SF-LLL
Disclosure of Lobbying Activities, SF-LLL, dated 7/97, 2 pages.
5. NIH Small Business Innovation Research (SBIR) Program Funding Agreement Certification
NIH Small Business Innovative Research (SBIR) Program Funding Agreement Certification, 3 pages, located at: http://grants.nih.gov/grants/funding/sbir_forms/SBIR%20Fundina%20Agreement%20Certification.pdf.
6. NIH Small Business Innovation Research (SBIR) Program Life Cycle Certification
NIH Small Business Innovative Research (SBIR) Program Life Cycle Certification, 3 pages, located at: http://grants.nih.gov/grants/funding/sbir_forms/SBIR%20Life%20Cycle%20Certification.pdf.
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Contract Number: HHSN261201600038C
NCI Control Number: N43CO-2016-00038
PART IV - REPRESENTATIONS AND INSTRUCTIONS
SECTION K - REPRESENTATIONS AND CERTIFICATIONS
The following documents are incorporated by reference in this contract:
1. | FAR Clause 52.204-19 Incorporation by Reference of Representations and Certifications (December 2014) |
The Contractor’s representations and certifications, including those completed electronically via the System for Award Management (SAM), are incorporated by reference into the contract. | ||
(End of clause) |
2. | Animal Welfare Assurance Number A3282-1. |
END of the SCHEDULE
(CONTRACT)
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Statement of Work (Phase I) Dated 09/19/2016
Contract No. HHSN261201600038C
STATEMENT OF WORK (Phase I)
TITLE: | Cell-Based Models for Prostate Cancer Health Disparity Research |
PRINCIPAL INVESTIGATOR: | Dr. Johng Rhim |
PROJECT DURATION: | 9 months |
COMPANY: | Shuttle Pharmaceuticals, LLC |
SUBCONTRACTORS: | Georgetown University |
I. Background Information and Objectives
A. Background Information
Prostate cancer health disparities studies have shown that African-American (AA) men are at higher risk for developing prostate cancer, as well as at higher risk of cancer specific death rates, as compared to Caucasian American (CA) men. The causes of disparities have been attributed to socioeconomic differences, environmental exposures and biological factors. Most disparities studies have been population based, in part, due to the lack of relevant in vitro and in vivo models to support biological studies. In this Phase I proposal, we will develop an annotated AA prostate epithelial cancer cell line with donor matched normal prostate epithelial cells and bio-banked reference prostate tissues. To support the feasibility of establishing 50 prostate cancer cell lines from AA men in a subsequent Phase II application, we will prepare written protocols for tissue collection, processing, establishment of conditionally reprogrammed cells and the reagents necessary for performing studies with these cells. We will determine commercial feasibility for cell distribution and reagent marketing through a private-public partnership.
B. Technical Objectives
The three technical objectives of this proposal focus on determining the feasibility for establishing paired cancer and normal epithelial cell lines from African-American patients presenting with prostate cancers. In the first objective, three previously harvested, de-identified and bio-banked prostate cells from AA patients will be grown and characterized to develop standard operating protocols and optimal media conditions. The second objective will be to optimize growth medium for use with AA cell lines. The third objective is to negotiate intellectual property (license) through Georgetown University to support commercialization of AA cell lines.
Objective 1. Grow paired cancer and normal epithelial cells from AA prostate tumors and normal biopsy specimens bio-banked on IRB protocol # 2012-163.
Task 1.1. Establish malignant and non-malignant cell lines from AA prostatectomy specimens.
Milestone 1.1. Expand and freeze 20 vials for each AA cell line to perform characterizations.
Task 1,2. Characterize and annotate AA cells.
Milestone 1.2, Full characterization of AA cell lines, including: cell origin, cell growth > 30 passages, capacity to form xenograft tumors, karyotypes, expression of prostate tissue and tumor specific markers, STR authentication and Mycoplasma testing
Task 1,3. Expand early passages of CRCs for freezing and banking in the CRC bio-repository.
Milestone 1.3. 50 vials of 1-2x10A6 cells/vial are banked for each normal/tumor AA cell pair.
Task 1,4. Prepare written protocols and standard operating procedures (SOPs) for establishing AA cell lines.
Milestone 1.4, SOPs for establishing AA cell lines and SOPs for cell growth and annotation.
Objective 2. Determine the optimal growth medium and conditions for growing prostate CRCs with and without irradiated feeder cells.
Task 2.1. Collect and concentrate the conditioned medium from J2-irradiated fibroblasts in sufficient quantity to support AA cell growth in 50 flasks. Test effects of graded concentrations of conditioned medium on AA cells using telomerase and cell growth assays.
Milestone 2.1,1. Documentation of effects of conditioned medium on AA cell growth.
Milestone 2.1.2. Optimal formulation of conditioned medium supplement for AA prostate cell growth.
Task 2.2. Optimize the panel of supplementary growth factors for AA prostate CRC cell growth.
Milestone 2.2. Proprietary formula of growth factors needed to promote AA CRC culture growth.
Page 1 | ATTACHMENT 1 |
Statement of Work (Phase I) Dated 09/19/2016
Contract No. HHSN261201600038C
Task 2.3. Compare cell characteristics under different media and growth conditions.
Milestone 2.3. Determine cell growth over at least 30 passages, capacity to form xenograft tumors, karyotype at early and late passages and expression of prostate specific markers.
Objective 3. Negotiate a licensing agreement for commercialization of AA derived cells, submit a Phase I final report to SBIR administration and prepare a Phase II SBIR application.
Task 3.1. Through the GU Office of Technology Commercialization, negotiate to obtain a licensing agreement to support commercialization of established AA cells.
Milestone 3.1. Executed licensing agreement.
Task 3.2. Submit a written final Phase I report to SBIR administration.
Milestone 3.2. Phase I milestones have been reached and SBIR administration is informed of the technical and commercial feasibility of establishing 50 model AA cell lines supporting a Phase II application in response to an appropriate NIH/SBIR RFA.
II. Services to be Performed
A. General Requirements
1. | The contractor shall independently perform all work and furnish all labor, materials, supplies, equipment, and services (except as otherwise specified in the contract). | |
2. | All work will be monitored by the Government Project Officer identified in Section G of the contract. |
B. Specific Requirements
Phase I Milestones and Timeline
Objectives | Milestone | Months 1-3 |
Months 4-6 |
Months 7-9 | ||||
Objective 1 | *** | *** | *** | |||||
Milestone 1.1.Repository of 20 frozen vials of each initial model AA cell line. | X | |||||||
Milestone 1.2. Annotation data completed for initial AA cell lines | X | |||||||
Milestone 1.3. Repository of 50 frozen vials of each AA cell line. | X | |||||||
Milestone 1.4. Written protocols, annotation reports and SOP’s. | X | X | ||||||
Objective 2 | *** | *** | ||||||
Milestone 2.1. Optimal media formula for growing AA prostate cells. | X | |||||||
Milestone 2.2. Growth media supplements for AA prostate cells. | X | |||||||
Milestone 2.3. Annotation of cell growth, xenograft tumor formation, genetic analysis, marker expression, and cell of origin | X | |||||||
Objective 3 | *** | |||||||
Milestone 3.1. Executed licensing agreement. | X | |||||||
Milestone 3.2. Written final report of achieved Phase 1 milestones and application for Phase II SBIR funding |
X |
Page 2 | ATTACHMENT 1 |
INVOICE INSTRUCTIONS FOR NIH FIXED-PRICE CONTRACTS, NIH(RC)-2
Format: Submit payment requests on Standard Form 1034, Public Voucher for Purchases and Services Other Than Personal, or the Contractor’s self-generated form provided it contains all of the information prescribed herein. DO NOT include a cover letter with the payment request.
Number of Copies: Submit payment requests in the quantity specified in the Invoice Submission Instructions in Section G of the Contract Schedule.
Frequency: Submit payment requests upon delivery and acceptance of goods or services unless otherwise authorized by the Contracting Officer.
Currency: All NIH contracts are expressed in United States dollars. When the Government pays in a currency other than United States dollars, billings shall be expressed, and payment by the Government shall be made, in that other currency at amounts coincident with actual costs incurred. Currency fluctuations may not be a basis of gain or loss to the Contractor. Notwithstanding the above, the total of all invoices paid under this contract may not exceed the United States dollars authorized.
Preparation and Itemization of the Payment Request: Prepare payment requests as follows:
Note: All information must be legible or the invoice will be considered improper and returned to the Contractor.
(a) | Designated Billing Office Name and Address: Enter the designated billing office name and address, as identified in the Invoice Submission Instructions in Section G of the Contract Schedule. |
(b) | Contractor’s Name, Address, Point of Contact, TIN, and DUNS or DUNS+4 Number: Show the Contractor’s name and address exactly as they appear in the contract. Any invoice identified as improper will be sent to this address. Also include the name, title, phone number, and e-mail address of the Point of Contact in case of questions. If the remittance name differs from the legal business name, both names must appear on the invoice. Provide the Contractor’s Federal Taxpayer Identification Number (TIN) and Data Universal Numbering System (DUNS) or DUNS+4 number. The DUNS number must identify the Contractor’s name and address exactly as stated in the contract, and as registered in the System for Acquisition Management (SAM) database. |
When an approved assignment of claims has been executed, the Contractor shall provide the same information for the assignee as is required for the Contractor (i.e., name, address, point of contact, TIN, and DUNS number), with the remittance information clearly identified as such. | |
(c) | Invoice/Voucher Number: Identify each payment request by a unique invoice number, which can only be used one time regardless of the number of contracts or orders held by an organization. For example, if a contractor has already submitted invoice number 05 on one of its contracts or orders, it cannot use that same invoice number on any other contract or order. Payment requests with duplicate invoice numbers will be considered improper and returned to the contractor. |
The NIH does not prescribe a particular numbering format but suggests using a job or account number for each contract and order followed by a sequential invoice number (example: 8675309-05). Invoice numbers are limited to 30 characters. There are no restrictions on the use of special characters, such as colons, dashes, forward slashes, or parentheses. |
NIH(RC)-2 Revised 7/2013 | 1 | ATTACHMENT 2 |
If all or part of an invoice is suspended and the contractor chooses to reclaim those costs on a supplemental invoice, the contractor may use the same unique invoice number followed by an alpha character, such as “R” for revised (example: 8675309-05R). | |
(d) | Date Invoice/Voucher Prepared: Insert the date the payment request is prepared. |
(e) | Contract Number and Order Number (if applicable): Insert the contract number and order number (as applicable). |
(f) | Contract Title: Insert the contract title listed on the cover page of the contract and/or Section G of the Contract Schedule. |
(g) | Current Contract Period of Performance: Insert the contract start date/effective date through the current completion date of the contract. |
(h) | Total Fixed-Price of Contract/Order: Insert the total fixed-price of the contract/order. |
(i) | Two-Way/Three-Way Match: Identify whether payment is to be made using a two-way or three-way match. To determine required payment method, refer to the Invoice Submission Instructions in Section G of the Contract Schedule. |
(j) | Office of Acquisitions: Insert the name of the Office of Acquisitions, as identified in the Invoice Submission Instructions in Section G of the Contract Schedule. |
(k) | Central Point of Distribution: Identify the Central Point of Distribution, as specified in the Invoice Submission Instructions in Section G of the Contract Schedule. |
(l) | Billing Period: Insert the beginning and ending dates (month, day, and year) of the period in which costs were incurred and for which reimbursement is claimed. |
(m) | Description of Supplies or Services: Provide a description of the supplies or services, by line item (if applicable), quantity, unit price (where appropriate), and total amount. The item description, unit of measure, and unit price must match those specified in the contract. For example, if the contract specifies 1 box of hypodermic needles (100/box) with a unit price of $50.00, then the invoice must state 1 box, hypodermic needles (100/box), $50.00, not 100 syringes at $0.50 each. Invoices that do not match the line item pricing in the contract will be considered improper and will be returned to the Contractor. |
(n) | Amount Billed - Current Period: Insert the amount claimed for the current billing period, including any adjustments, if applicable. If the Contract Schedule contains separately priced line items, identify the contract line item(s) on the payment request. |
(o) | Amount Billed - Cumulative: Insert the cumulative amounts claimed to date, including any adjustments as applicable. If the Contract Schedule contains separately priced line items, identify the contract line item(s) on the payment request. |
(p) | Freight or Delivery Charges: Identify all charges for freight or express shipments, other than f.o.b. destination, as a separate line item on the invoice. (If shipped by freight or express, and charges are more than $25, attach prepaid bill.) | |
(q) | Government Property: If the contract authorizes the purchase of any item of Government Property (e.g., equipment), the invoice must list each item for which reimbursement is requested. Include reference to the following (as applicable): | |
- | item number for the specific piece of equipment listed in the Property Schedule, and | |
- | Contracting Officer Authorization (COA) Number, if the equipment is not covered by the Property Schedule. |
NIH(RC)-2 Revised 7/2013 | 2 | ATTACHMENT 2 |
Safety and Health, HHSAR 352.223-70 (DEC 2015)
a. | To help ensure the protection of the life and health of all persons, and to help prevent damage to property, the Contractor shall comply with all Federal, State, and local laws and regulations applicable to the work being performed under this contract. These laws are implemented or enforced by the Environmental Protection Agency, Occupational Safety and Health Administration (OSHA) and other regulatory/enforcement agencies at the Federal, State, and local levels. |
1. | In addition, the Contractor shall comply with the following regulations when developing and implementing health and safety operating procedures and practices for both personnel and facilities involving the use or handling of hazardous materials and the conduct of research, development, or test projects: |
I. | 29 CFR 1910.1030, Bloodborne pathogens; 29 CFR 1910.1450, Occupational exposure to hazardous chemicals in laboratories; and other applicable occupational health and safety standards issued by OSHA and included in 29 CFR part 1910. These regulations are available at https://www.osha.gov/. | ||
II. | Nuclear Regulatory Commission Standards and Regulations, pursuant to the Energy Reorganization Act of 1974 (42 U.S.C. 5801 et seq.). The Contractor may obtain copies from the U.S. Nuclear Regulatory Commission, Washington, DC 20555-0001. |
2. | The following Government guidelines are recommended for developing and implementing health and safety operating procedures and practices for both personnel and facilities: |
I. | Biosafety in Microbiological and Biomedical Laboratories, CDC. This publication is available at http://www.cdc.gov/biosafety/publications/index.htm. | ||
II. | Prudent Practices for Safety in Laboratories (1995), National Research Council, National Academy Press, 500 Fifth Street NW., Lockbox 285, Washington, DC 20055 (ISBN 0-309-05229-7). This publication is available at | ||
http://www.nap.edu/catalog/4911/prudent-practices-in-the-laboratory-handling-and-disposal-of-chemicals. |
b. | Further, the Contractor shall take or cause to be taken additional safety measures as the Contracting Officer, in conjunction with the Contracting Officer’s Representative or other appropriate officials, determines to be reasonably necessary. If compliance with these additional safety measures results in an increase or decrease in the cost or time required for performance of any part of work under this contract, the Contracting Officer will make an equitable adjustment in accordance with the applicable “Changes” clause set forth in this contract. |
ATTACHMENT 3 |
c. | The Contractor shall maintain an accurate record of, and promptly report to the Contracting Officer, all accidents or incidents resulting in the exposure of persons to toxic substances, hazardous materials or hazardous operations; the injury or death of any person; or damage to property incidental to work performed under the contract resulting from toxic or hazardous materials and resulting in any or all violations for which the Contractor has been cited by any Federal, State or local regulatory/enforcement agency. The report citing all accidents or incidents resulting in the exposure of persons to toxic substances, hazardous materials or hazardous operations; the injury or death of any person; or damage to property incidental to work performed under the contract resulting from toxic or hazardous materials and resulting in any or all violations for which the Contractor has been cited shall include a copy of the notice of violation and the findings of any inquiry or inspection, and an analysis addressing the impact these violations may have on the work remaining to be performed. The report shall also state the required action(s), if any, to be taken to correct any violation(s) noted by the Federal, State, or local regulatory/enforcement agency and the time frame allowed by the agency to accomplish the necessary corrective action. |
d. | If the Contractor fails or refuses to comply with the Federal, State or local regulatory/enforcement agency’s directive(s) regarding any violation(s) and prescribed corrective action(s), the Contracting Officer may issue an order stopping all or part of the work until satisfactory corrective action (as approved by the Federal, State, or local regulatory/enforcement agencies) has been taken and documented to the Contracting Officer. No part of the time lost due to any such stop work order shall form the basis for a request for extension or costs or damages by the Contractor. |
e. | The Contractor shall insert the substance of this clause in each subcontract involving toxic substances, hazardous materials, or hazardous operations. The Contractor is responsible for the compliance of its subcontractors with the provisions of this clause. |
(End of clause)
ATTACHMENT 3 |
INSTRUCTIONS FOR COMPLETION OF SF-LLL, DISCLOSURE OF LOBBYING ACTIVITIES
This disclosure form shall be completed by the reporting entity, whether subawardee or prime Federal recipient, at the initiation or receipt of a covered Federal action, or a material change to a previous filing, pursuant to title 31 U.S.C. section 1352. The filing of a form is required for each payment or agreementto make paymentto any lobbying entity for influencing or attempting to influence an officer or employeeof any agency, a Member of Congress, an officer or employeeof Congress, or an employeeof a Member of Congress in connection with a covered Federal action. Complete all itemsthatapplyfor both the initial filing and material change report. Refer to the implementing guidance published by the Office of Management and Budget for additional information.
1. | Identify the type of covered Federal action for which lobbying activity is and/or has been secured to influence the outcome of a covered Federal action. | |
2. | Identify the status of the covered Federal action. | |
3. | Identify the appropriate classification of this report. If this is a followup report caused by a material change to the information previously reported, enter the year and quarter in which the change occurred. Enter the date of the last previously submitted report by this reporting entity for this covered Federal action. | |
4. | Enter the full name, address, city, State and zip code of the reporting entity. Include Congressional District, if known. Check the appropriateclassification of the reporting entity that designates if it is, or expects to be, a prime or subaward recipient. Identify the tier of the subawardee, e.g., the first subawardee of the prime is the 1st tier. Subawards include but are not limited to subcontracts, subgrants and contract awards under grants. | |
5. | If the organization filing the report in item 4 checks “Subawardee,” then enter the full name, address, city, State and zip code of the prime Federal recipient. Include Congressional District, if known. | |
6. | Enter the name of the Federal agency making the award or loan commitment. Include at least one organizationallevel below agency name, if known. For example, Department of Transportation, United States Coast Guard. | |
7. | Enter the Federal program name or description for the covered Federal action (item 1). If known, enter the full Catalog of Federal Domestic Assistance (CFDA) number for grants, cooperative agreements, loans, and loan commitments. | |
8. | Enter the most appropriate Federal identifying number availablefor the Federal action identified in item 1 (e.g., Request for Proposal (RFP) number; Invitation for Bid (IFB) number; grant announcement number; the contract, grant, or loan award number; the application/proposal control number assigned by the Federal agency). Include prefixes, e.g., “RFP-DE-90-001.” | |
9. | For a covered Federal action where there has been an award or loan commitment by the Federal agency, enter the Federal amount of the award/loan commitment for the prime entity identified in item 4 or 5. | |
10. | (a) Enter the full name, address, city, State and zip code of the lobbying registrant under the Lobbying Disclosure Act of 1995 engaged by the reporting entity identified in item 4 to influence the covered Federal action. | |
(b) Enter the full names of the individual(s) performing services, and include full address if different from 10 (a). Enter Last Name, First Name, and Middle Initial (Ml). | ||
11. | The certifying official shall sign and date the form, print his/her name, title, and telephone number. |
According to the Paperwork Reduction Act, as amended, no persons are required to respond to a collection of information unless it displays a valid OMB Control Number. The valid OMB control number for this information collection is OMB No. 0348-0046. Public reporting burden for this collection of information is estimated to average 10 minutes per response, including time for reviewing instructions, searching existing data sources, gathering and maintaining the data needed, and completing and reviewing the collection of information. Send comments regarding the burden estimate or any other aspect of this collection of information, including suggestions for reducing this burden, to the Office of Managementand Budget, Paperwork Reduction Project (0348-0046), Washington, DC 20503.
2 | Attachment 4 |
SBIR Funding Agreement Certification
Grant Contract Number:
Program Directors)/Principal Investigator(s) (PD(s)/PI(s)):
Public reporting burden for this collection of information is estimated to average 15 minutes per response, including the time for reviewing instructions, searching existing data sources, gathering and maintaining the data needed, and completing and reviewing the collection of information. An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless it displays a currently valid OMB control number. Send comments regarding this burden estimate or any other aspect of this collection of information, including suggestions for reducing this burden, to: NIH, Project Clearance Branch, 6705 Rockledge Drive, MSC 7974, Bethesda, MD 20892-7974, ATTN: PRA (0925-0001). Do not return the completed form to this address.
All small businesses that are selected for award of an SBIR funding agreement must complete this certification at the time of award and any other time set forth in the Notice of Award or Contract Award that is prior to performance of work under this award. This includes checking all of the boxes and having an authorized officer of the awardee sign and date the certification each time it is requested.
Please read carefully the following certification statements. The Federal government relies on this information to determine whether the business is eligible for a Small Business Innovation Research (SBIR) Program award. A similar certification will be used to ensure continued compliance with specific program requirements during the life of the funding agreement. The definitions for the terms used in this certification are set forth in the Small Business Act, SBA regulations (13 C.F.R. Part 121), the SBIR Policy Directive and also any statutory and regulatory provisions references in those authorities.
If the Grants Management or Contracting Officer believes that the business may not meet certain eligibility requirements at the time of award, they are required to file a size protest with the U.S. Small Business Administration (SBA), who will determine eligibility. At that time, SBA will request further clarification and supporting documentation in order to assist in the verification of any of the information provided as part of a protest. If the Grants Management or Contracting Officer believes, after award, that the business is not meeting certain Notice of Award requirements, the agency may request further clarification and supporting documentation in order to assist in the verification of any of the information provided.
Even if correct information has been included in other materials submitted to the Federal government, any action taken with respect to this certification does not affect the Government’s right to pursue criminal, civil, or administrative remedies for incorrect or incomplete information given in the certification. Each person signing this certification may be prosecuted if they have provided false information.
The undersigned has reviewed, verified and certifies that (all boxes must be checked):
1. | The business concern meets the ownership and control requirements set forth in 13 C.F.R. § 121.702. | ||
☐ Yes ☐ No | |||
2. | If a corporation, all corporate documents (articles of incorporation and any amendments, articles of conversion, by-laws and amendments, shareholder meeting minutes showing director elections, shareholder meeting minutes showing officer elections, organizational meeting minutes, all issued stock certificates, stock ledger, buy-sell agreements, stock transfer agreements, voting agreements, and documents relating to stock options, including the right to convert non-voting stock or debentures into voting stock) evidence that it meets the ownership and control requirements set forth in 13 C.F.R. § 121.702. | ||
☐ Yes ☐ No ☐ N/A Explain why N/A: | |||
3. | If a partnership, the partnership agreement evidences that it meets the ownership and control requirements set forth in 13 C.F.R. § 121.702. | ||
☐ Yes ☐ No ☐ N/A Explain why N/A: | |||
4. | If a limited liability company, the articles of organization and any amendments, and operating agreements and amendments, evidence that it meets the ownership and control requirements set forth in 13 C.F.R. § 121.702. | ||
☐ Yes ☐ No ☐ N/A Explain why N/A: |
1 | Attachment 5 |
5. | The birth certificates, naturalization papers, or passports show that any individuals it relies upon to meet the eligibility requirements are U.S. citizens or permanent resident aliens in the United States. | |||
☐ Yes ☐ No ☐ N/A Explain why N/A: | ||||
6. | It has no more than 500 employees, including the employees of its affiliates. | |||
☐ Yes ☐ No | ||||
7. | SBA has not issued a size determination currently in effect finding that this business concern exceeds the 500 employee size standard. | |||
☐ Yes ☐ No | ||||
8. | During the performance of the award, the principal investigator will spend more than half of his/her time as an employee of the awardee or has requested and received a written deviation from this requirement from the Grants Management or Contracting Officer. | |||
☐ Yes ☐ No Deviation approved in writing by Grants Management or Contracting Officer: | % | |||
9. | All, essentially equivalent work, or a portion of the work proposed under this project (check the applicable line): | |||
☐ Has not been submitted for funding by another Federal agency | ||||
☐ Has been submitted for funding by another Federal agency but has not been funded under any other Federal grant, contract, subcontract, or other transaction. | ||||
☐ A portion has been funded by another grant, contract, or subcontract as described in detail in the proposal and approved in writing by the Grants Management or Contracting Officer. | ||||
10. | During the performance of award, it will perform the applicable percentage of work unless a deviation from this requirement is approved in writing by the Grants Management or Contracting Officer (check the applicable line and fill in if needed): | |||
☐ SBIR Phase I: at least two-thirds (66 2/3%) of the research |
||||
☐ SBIR Phase II: at least half (50%) of the research | ||||
☐ Deviation approved in writing by the Grants Management or Contracting Officer: | % | |||
11. | During performance of award, the research/research and development will be performed in the United States unless a deviation is approved in writing by the Grants Management or Contracting Officer. | |||
☐ Yes ☐ No | ||||
12. | During the performance of award, the research/research and development will be performed at my facilities with my employees, except as otherwise indicated in the SBIR application and approved in the Notice of Award or Contract Award. | |||
☐ Yes ☐ No | ||||
13. | It has registered itself on SBA’s database as majority-owned by venture capital operating companies, hedge funds or private equity firms. | |||
☐ Yes ☐ No ☐ N/A Explain why N/A: |
2 | SBIR Funding Agreement Attachment 5 Certification |
14. | It is a Covered Small Business Concern (a small business concern that: (a) was not majority-owned by multiple venture capital operating companies (VCOCs), hedge funds, or private equity firms on the data on which it submitted an application in response to an SBIR solicitation; and (b) on the date of the SBIR award, which is made more than 9 months after the closing date of the solicitation, is majority-owned by multiple venture capital operating companies, hedge funds, or private equity firms). | |||
☐ Yes ☐ No | ||||
15. | It will notify the Federal agency immediately if all or a portion of the work proposed is subsequently funded by another Federal agency. | |||
☐ Yes ☐ No |
I understand that the information submitted may be given to Federal, State and local agencies for determining violations of law and other purposes.
I am an officer of the business concern authorized to represent it and sign this certification on its behalf. By signing this certification, I am representing on my own behalf, and on behalf of the business concern that the information provided in this certification, the application, and all other information submitted in connection with this application, is true and correct as of the date of submission. I acknowledge that any intentional or negligent misrepresentation of the information contained in this certification may result in criminal, civil or administrative sanctions, including but not limited to: (1) fines, restitution and/or imprisonment under 18 U.S.C. § 1001; (2) treble damages and civil penalties under the False Claims Act (31 U.S.C. § 3729 et seq); (3) double damages and civil penalties under the Program Fraud Civil Remedies Act (31 U.S.C. §3801 et seq); (4) civil recovery of award funds; (5) suspension and/or debarment from all Federal procurement and nonprocurement transactions (FAR Subpart 9.4 or 2 C.F.R. part 180; and (6) other administrative penalties including termination of SBIR/STTR awards.
Date |
Signature |
Printed Name (First, Middle, Last) |
Title |
Organization Name |
3 | SBIR Funding Agreement Attachment 5 Certification |
HHS Small Business Innovation Research Program
Life Cycle Certification
Public reporting burden for this collection of information is estimated to average 15 minutes per response, including the time for reviewing instructions, searching existing data sources, gathering and maintaining the data needed, and completing and reviewing the collection of information. An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless it displays a currently valid OMB control number. Send comments regarding this burden estimate or any other aspect of this collection of information, including suggestions for reducing this burden, to: NIH, Project Clearance Branch, 6705 Rockledge Drive, MSC 7974, Bethesda, MD 20892-7974, ATTN: PRA (0925-0001). Do not return the completed form to this address.
All SBIR Phase I and Phase II awardees must complete this certification at all times set forth in the funding agreement (see §8(h) of the SBIR Policy Directive). This includes checking all of the boxes and having an authorized officer of the awardee sign and date the certification each time it is required. Awardees are not required to submit this certification directly to NIH but must instead complete the certification and maintain it on file in accordance with the records and retention policy in Section 8.4.2 of the NIH Grants Policy Statement or as listed in the SBIR contract solicitation or contract award.
A certification is required at the following times:
● | For SBIR Phase I Awardees: At the time of receiving final payment or disbursement from the Payment Management System or via contract. | |
● | For SBIR Phase II Awardees: prior to receiving more than 50% of the total award amount and prior to final payment or disbursement from the Payment Management System or via contract. |
In addition, SBIR awardees indicate compliance with these certification requirements by drawing or requesting funds from the Payment Management System. If the grantee cannot complete this certification or cannot ensure compliance with the certification process, it should notify the funding agreement officer immediately. If resolution cannot be reached, the funding agreement officer will void or terminate the award, as appropriate.
Grant or Contract Number:
Program Director(s)/Principal Investigator(s) (PD(s)/PI(s)):
Please read carefully the following certification statements. The Federal government relies on the information to ensure compliance with specific program requirements during the life of the funding agreement. The definitions for the terms used in this certification are set forth in the Small Business Act, the SBIR Policy Directive, and also any statutory and regulatory provisions referenced in those authorities.
If the funding agreement officer believes that the business is not meeting certain funding agreement requirements, the agency may request further clarification and supporting documentation in order to assist in the verification of any of the information provided.
Even if correct information has been included in other materials submitted to the Federal government, any action taken with respect to this certification does not affect the Government’s right to pursue criminal, civil or administrative remedies for incorrect or incomplete information given in the certification. Each person signing this certification may be prosecuted if they have provided false information.
1 | SBIR Life Cycle Certification Attachment 6 |
The undersigned has reviewed, verified and certifies that (all boxes must be checked):
1. | The principal investigator spent more than one half of his/her time as an employee of the awardee or has requested and received a written deviation from this requirement from the funding agreement officer. |
☐ Yes ☐ No Deviation approved in writing by funding agreement officer: | % |
2. | All, essentially equivalent work, or a portion of the work performed under this project (check the applicable line): |
☐ Has not been submitted for funding by another Federal agency. | |
☐ Has been submitted for funding by another Federal agency but has not been funded under any other Federal grant, contract, subcontract, or other transaction. | |
☐ A portion has been funded by another grant, contract, or subcontract as described in detail in the proposal and approved in writing by the funding agreement officer. |
3. | Upon completion of the award it will have performed the applicable percentage of work, unless a deviation from this requirement is approved in writing by the funding agreement officer (check the applicable line and fill in if needed): |
☐ SBIR Phase I: at least two-thirds (66 2/3%) of the research | ||
☐ SBIR Phase II: at least half (50%) of the research | ||
☐ Deviation approved in writing by the funding agreement officer: | % |
4. | The work is completed and it has performed the applicable percentage of work, unless a deviation from this requirement is approved in writing by the funding agreement officer (check the applicable line and fill in if needed). |
☐ SBIR Phase I: at least two-thirds (66 2/3%) of the research | ||
☐ SBIR Phase II: at least half (50%) of the research | ||
☐ Deviation approved in writing by the funding agreement officer: | % | |
☐ N/A because work is not completed |
5. | The research/research and development is performed in the United States unless a deviation is approved in writing by the funding agreement officer. |
☐ Yes ☐ No ☐ Waiver has been granted |
6. | The research/research and development is performed at my facilities with my employees, except as otherwise indicated in the SBIR application and approved in the Notice of Award or Contract Award. |
☐ Yes ☐ No |
☐ I will notify the Federal agency immediately if all or a portion of the work proposed is subsequently funded by another Federal agency.
☐ I understand that the information submitted may be given to Federal, State and local agencies for
determining violations of law and other purposes.
☐ I am an officer of the business concern authorized to represent it and sign this certification on its behalf. By signing this certification, I am representing on my own behalf, and on behalf of the business concern that the information provided in this certification, the application, and all other information submitted in connection with the award, is true and correct as of the date of submission. I acknowledge that any intentional or negligent misrepresentation of the information contained in this certification may result in criminal, civil or administrative sanctions, including but not limited to: (1) fines, restitution and/or imprisonment under 18 U.S.C. § 1001; (2) treble damages and civil penalties under the False Claims Act (31 U.S.C. § 3729 et seq.); (3) double damages and civil penalties under the Program Fraud Civil Remedies Act (31 U.S.C. §3801 et seq.); (4) civil recovery of award funds; (5) suspension and/or debarment from all Federal procurement and nonprocurement transactions (FAR Subpart 9.4 or 2 C.F.R. part 180); and (6) other administrative penalties including termination of SBIR/STTR awards.
Date |
Signature |
Printed Name (First, Middle, Last) |
Title |
Business Name |
2 | SBIR Life Cycle Certification Attachment 6 |
Exhibit 10.9
Shuttle Pharmaceuticals, Inc.
1 Research Ct. Suite 450 ● Rockville, MD 20850 ● TEL (240) 403-4212 ● FAX (301) 519-8001
MATERIALS TRANSFER AGREEMENT
This Material Transfer Agreement (“Agreement”) is hereby made by and between the GeorgeWashington University (hereinafter “Recipient”) and Shuttle Pharmaceuticals, Inc, Rockville, MD (hereinafter “Provider”) upon request from Recipient for the following material (hereinafter “Material”) more particularly described below:
[DESCRIPTION OF MATERIAL]
Recipient and Provider hereby agree to conform to the following terms related to transfer of Material: Small molecule ATM activator/HDAC inhibitor and selective HDAC inhibitor
1. The above-described Material is the property of the Provider and is made available as a service to the research community.
2. The Material is not intended for and will not be used in human subjects.
3. The Material will be used for teaching or not-for-profit research purposes only.
4. The Material will not be distributed further to others without the Provider’s prior express written consent. The Recipient shall refer any third-party request for the Material to the Provider.
5. The Recipient agrees to acknowledge the source of the Material in any publication reporting its use.
6. Any Material delivered pursuant to this Agreement is understood to be experimental in nature and may contain hazardous properties. The Provider makes no representations and extends no warranties of any kind, either express or implied. Unless prohibited by law, Recipient assumes all liability for claims of damages against Recipient by third-parties which may arise from the use, storage, or disposal of the Material except that, to the extent permitted by law, the Provider shall be liable to the Recipient when the damage is caused by the gross negligence or willful misconduct of the Provider.
7. The Recipient agrees to use the Material in compliance with all applicable state and federal statutes and regulations.
8. The Material is provided at no cost or with an optional transmittal fee solely to reimburse the Provider for its preparation and distribution costs. If a fee is requested, the amount is indicated here: $ waived .
Shuttle Pharmaceuticals, LLC ● 1 Research Court, Suite 450 ● Rockville, MD 20850
PROVIDER INFORMATION AND AUTHORIZED SIGNATURE:
Date: | |||
Anatoly Dritschilo, MD CEO Shuttle Pharmaceuticals, Inc One Research Court, Suite 450 240-403-4212 anatoly.dritschilo@shuttlepharma.org | |||
Provider |
RECIPIENT INFORMATION AND AUTHORIZED SIGNATURE:
Date: | 4-24-2017 | ![]() | |
Charles T. Maples Sr. Contracting Officer, Sponsored Projects Office of the Vice President for Research George Washington University 2121 Eye Street, NW, Suite 601 Washington, DC 20052 USA
Recipient |
READ AND ACKNOWLEDGED
4/24/2017 |
![]() | |
Alejandro Villagra, PhD Assistant Professor Cancer Biology Program, GW Cancer Center
Department of Biochemistry and Molecular Medicine School of Medicine and Health Sciences The George Washington University 800 22nd St NW, Suite 8880 | Washington, DC 20052 (202) 994 9547 | avillagra@gwu.edu
Recipient |
2 |
EXHIBIT A – Research Plan
Dr. Villagra will write in vitro assays related to the Materials. No in vivo studies are contemplated in this MTA.
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Exhibit 10.12
EMPLOYMENT AGREEMENT
This Employment Agreement (the “Agreement”) is entered into as of the 28th day of June, 2019, by and between Shuttle Pharmaceuticals Holdings, Inc., a Delaware corporation (the “Company”), and Anatoly Dritschilo, M.D., an individual residing at the address set forth on Schedule A hereto (the “Executive”).
INTRODUCTION
WHEREAS, the Company is in the business of the development and commercialization of specialty pharmaceuticals (the “Business”);
WHEREAS, the Company wishes to employ the Executive under the title and capacity set forth on Schedule A hereto;
WHEREAS, the Executive desires to be employed by the Company in such capacity, subject to the terms of this Agreement; and
WHEREAS, the Executive acknowledges that he will not be entitled to compensation under this Agreement until such time as the Company either completes an initial public offering or otherwise becomes a publicly reporting company.
AGREEMENT
NOW, THEREFORE, in consideration of the premises and mutual promises herein below set forth, the parties hereby agree as follows:
1. Employment Period. The initial term of the Executive’s employment by the Company (directly or through its wholly-owned subsidiary Shuttle Pharmaceuticals, Inc.) pursuant to this Agreement shall commence upon the date hereof (the “Effective Date”) and shall continue for three (3) years from the Effective Date (the “Employment Period”). Thereafter, the Employment Period shall automatically renew for successive periods of three (3) years each, unless either party shall have given to the other at least thirty (30) days’ prior written notice of their intention not to renew the Executive’s employment prior to the end of the Employment Period or the then applicable renewal term, as the case may be. In any event, the Employment Period may be terminated as provided herein.
2. Employment; Duties.
(a) Subject to the terms and conditions set forth herein, the Company hereby employs the Executive to act for the Company during the Employment Period in the capacity set forth on Schedule A hereto, and the Executive hereby accepts such employment. The duties and responsibilities of the Executive shall include such duties and responsibilities appropriate to such office and as are normally associated with and appropriate for such position and as the Company’s board of directors (the “Board”) may from time to time reasonably assign to the Executive.
(b) Executive recognizes that during the period of Executive’s employment hereunder, Executive owes an undivided duty of loyalty to the Company, and Executive will use Executive’s good faith efforts to promote and develop the business of the Company and its subsidiaries (the Company’s subsidiaries from time to time, together with any other affiliates of the Company, the “Affiliates”). Executive shall devote all of Executive’s business time, attention and skills to the performance of Executive’s services as an executive of the Company [except as set forth in Schedule A]. Recognizing and acknowledging that it is essential for the protection and enhancement of the brand name, reputation and business of the Company and the goodwill pertaining thereto, Executive shall perform the Executive’s duties under this Agreement professionally, in accordance with the applicable laws, rules and regulations and such standards, policies and procedures established by the Company and the industry from time to time.
(c) However, the parties agree that: (i) Executive may devote a reasonable amount of his time to civic, community, or charitable activities and may serve as a director of other corporations (provided that any such other corporation is not a competitor of the Company, as determined by the Board) and to other types of business or public activities not expressly mentioned in this paragraph and (ii) Executive may participate as a non-employee director and/or investor in other companies and projects as disclosed by Executive to, and approved by, the Board, so long as Executive’s responsibilities with respect thereto do not conflict or interfere with the faithful performance of his duties to the Company.
3. Place of Employment The Executive’s services shall be performed at the Company’s offices located at One Research Court, Suite 450, Rockville, MD 20850, at any other location at which the Company now or hereafter has a business facility, or at any other location where Executive’s presence is necessary to perform his duties. The parties acknowledge that the Executive may be required to travel in connection with the performance of his duties hereunder.
4. Base Salary. The Executive shall be entitled to receive a salary from the Company during the Employment Period at a rate per year indicated on Schedule A hereto (the “Base Salary”), which Base Salary shall commence upon the Company’s completion of an initial public offering (“IPO”) or upon the Company becoming a publicly reporting company under the Securities Exchange Act of 1934, as amended, whichever comes first. Once the Board has established the Base Salary, such Base Salary shall be payable in monthly installments in accordance with the Company’s customary payroll practices. The Executive’s Base Salary may be increased on each anniversary of the Effective Date, at the Board’s sole discretion.
5. Bonus.
(a) The Executive shall be eligible to receive an annual cash bonus (the “Annual Bonus”), which shall be earned by the Executive based upon the level of achievement of specific operational, financial or other milestones by the Company established by the Board in consultation with the Executive (the “Milestones”) indicated on the attached Schedule B, and based upon the Executive’s performance of the Executive Duties set forth on Schedule A. The amount of the Annual Bonus, if any, and the method of payment of all or any portion of any Annual Bonus (which may be paid in cash, securities or other property) shall be determined by the Board in its sole discretion. If the Board determines that any portion of the Annual Bonus is to be paid in cash, such amount shall be payable in U.S. dollars within ten (10) days of the filing with the Securities and Exchange Commission of the Company’s annual report on Form 10-K.
(b) The Executive shall be eligible to participate in any other bonus or incentive program established by the Company for executives of the Company.
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6. Other Benefits
(a) Grant of Restricted Stock Units. The Executive shall be entitled to receive a number of restricted stock units (“Restricted Stock Units”) as set forth on Schedule A hereto, issuable under the Company’s 2018 Equity Incentive Plan, which will vest annually in one-third increments commencing on the first anniversary date of the grant of Restricted Stock Units, in accordance with the terms of a separate Restricted Stock Unit Award Agreement, a form of which is attached hereto as Exhibit A. Any additional equity awards to the Executive shall be at the option of the Board.
(b) Restrictions. Any and all shares of stock, options, restricted stock units and other equity awards granted to or owned by the Executive will be subject to the share ownership guidelines and insider trading and blackout policies adopted from time to time by the Board of Directors for senior executives of the Company and will also be subject to applicable holding periods and transaction reporting requirements under applicable securities laws.
(c) Insurance and Other Benefits. During the Employment Period, the Executive and the Executive’s dependents shall be entitled to participate in any Company insurance programs and any applicable benefit plans, as the same may be adopted and/or amended from time to time (the “Benefits”). The Executive shall be bound by all of the policies and procedures relating to Benefits established by the Company from time to time.
(d) Vacation; Personal Days. During the Employment Period, the Executive shall be entitled to an annual vacation of such duration consistent with the Company’s policies from time to time, as determined by the Board. The Executive shall be entitled to paid personal days on a basis consistent with the Company’s other senior executives, as determined by the Board.
(e) Expense Reimbursement. The Company shall reimburse the Executive for all reasonable business, promotional, travel and entertainment expenses (“Reimbursable Expenses”) incurred or paid by the Executive during the Employment Period in the performance of Executive’s services under this Agreement on a basis consistent with the Company’s other senior executives, as determined by the Board, provided that the Executive furnishes to the Company appropriate documentation required by the Internal Revenue Code and/or other taxing authorities in a timely fashion in connection with such expenses and shall furnish such other documentation and accounting as the Company may from time to time reasonably request.
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7. Termination; Compensation Due Upon Termination of Employment. The Executive’s employment with the Company shall be entirely “at-will,” meaning that either the Executive or the Company may terminate such employment relationship by terminating this Agreement in writing delivered to the other party at any time for any reason or for no reason at all, subject, however, to the terms of this Section 7. The Executive’s right to compensation for periods after the date his employment with the Company terminates shall be determined in accordance with the provisions of paragraphs (a) through (e) below.
(a) Voluntary Resignation; Termination without Cause.
(i) Voluntary Resignation. The Executive may terminate his employment at any time upon thirty (30) days prior written notice to the Company. In the event of the Executive’s voluntary termination of employment other than for Good Reason (as defined below), the Company shall have no obligation to make payments to the Executive in accordance with the provisions of Sections 4 or 5, except as otherwise required by this Agreement or by applicable law, to provide the benefits described in Section 6 for periods after the date on which the Executive’s employment with the Company terminates due to the Executive’s voluntary resignation, except for the payment of the Executive’s Base Salary accrued through the date of such resignation.
(ii) Termination without Cause.
(A) If the Executive’s employment is terminated by the Company without Cause (as defined below): (1) the Company shall (x) continue to pay the Executive the Base Salary (at the rate in effect on the date the Executive’s employment is terminated) until the end of the Severance Period (as defined below), (y) with respect to the Annual Bonus, to the extent the Milestones are achieved or, in the absence of Milestones, the Board has, in its sole discretion, otherwise determined an amount for the Executive’s bonus for the current Employment Period, pay the Executive a pro rata portion of the Annual Bonus for the year of the Employment Period on the date such Annual Bonus would have been payable to the Executive had the Executive remained employed by the Company, and (z) pay any other accrued compensation and Benefits; and (2) any of the Executive’s unvested stock options as set forth on Schedule A attached hereto shall automatically vest upon the Executive’s termination without Cause. The Executive shall have no further rights under this Agreement or otherwise to receive any other compensation or benefits after such termination of employment.
(B) If, following a termination of employment without Cause, the Executive breaches the provisions of Sections 8, 9 or 10 hereof, the Executive shall not be eligible, as of the date of such breach, for the payments and benefits described in Section 7(a)(ii)(A) above, and any and all obligations and agreements of the Company with respect to such payments shall thereupon cease.
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(b) Discharge for Cause. Upon written notice to the Executive, the Company may terminate the Executive’s employment for “Cause” if any of the following events shall occur:
(i) any act or omission that constitutes a material breach by the Executive of any of his obligations under this Agreement;
(ii) the willful and continued failure or refusal of the Executive to satisfactorily perform the duties reasonably required of him as an employee of the Company;
(iii) the Executive’s conviction of, or plea of nolo contendere to, (i) any felony or (ii) a crime involving dishonesty or moral turpitude or which could reflect negatively upon the Company or otherwise impair or impede its operations;
(iv) the Executive’s engaging in any misconduct, negligence, act of dishonesty (including, without limitation, theft or embezzlement), violence, threat of violence or any activity that could result in any violation of federal securities laws, in each case, that is injurious to the Company or any of its Affiliates;
(v) the Executive’s material breach of a written policy of the Company or the rules of any governmental or regulatory body applicable to the Company;
(vi) the Executive’s refusal to follow the directions of the Board, unless such directions are, in the written opinion of legal counsel, illegal or in violation of applicable regulations;
(vii) any other willful misconduct by the Executive which is materially injurious to the financial condition or business reputation of the Company or any of its Affiliates, or
(viii) the Executive’s breach of his obligations under Section 8, 9 or 10 hereof.
In the event Executive is terminated for Cause, the Company shall have no obligation to make payments to Executive in accordance with the provisions of Sections 4 or 5, or, except as otherwise required by law, to provide the benefits described in Section 6, for periods after the Executive’s employment with the Company is terminated on account of the Executive’s discharge for Cause except for the Executive’s then applicable Base Salary accrued through the date of such termination.
(c) Disability. The Company shall have the right, but shall not be obligated to, terminate the Executive’s employment hereunder in the event the Executive becomes disabled such that he is unable to discharge his duties to the Company for a period of ninety (90) consecutive days or one hundred twenty (120) days in any one hundred eighty (180) consecutive day period (unless longer periods are not required under applicable local labor regulations) (a “Permanent Disability”). In the event of a termination of employment due to a Permanent Disability, the Company shall be obligated to continue to make payments to the Executive in an amount equal to the then applicable Base Salary for the Severance Period (as defined below), payable in the form of salary continuation for the applicable Severance Period after the Executive’s employment with the Company is terminated due to a Permanent Disability. A determination of a Permanent Disability shall be made by a physician satisfactory to both the Executive and the Company; provided, however, that if the Executive and the Company do not agree on a physician, the Executive and the Company shall each select a physician and those two physicians together shall select a third physician, whose determination as to a Permanent Disability shall be binding on all parties.
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(d) Death. The Executive’s employment hereunder shall terminate upon the death of the Executive. The Company shall have no obligation to make payments to the Executive in accordance with the provisions of Sections 4 or 5, or, except as otherwise required by law or the terms of any applicable benefit plan, to provide the benefits described in Section 6 for periods after the date of the Executive’s death except for then applicable Base Salary earned and accrued through the date of death, payable to the Executive’s beneficiary, as the Executive shall have indicated in writing to the Company (or if no such beneficiary has been designated, to Executive’s estate).
(e) Termination for Good Reason. The Executive may terminate this Agreement at any time for Good Reason. In the event of termination under this paragraph (e), the Company shall pay to the Executive severance in an amount equal to the Executive’s then applicable Base Salary for a period equal to the number of months set forth on Schedule A hereto (the “Severance Period”), subject to the Executive’s continued compliance with Sections 8, 9 and 10 of this Agreement, payable in the form of salary continuation for the applicable Severance Period following the Executive’s termination, and subject to the Company’s regular payroll practices and required withholdings. Such severance shall be reduced by any cash remuneration paid to the Executive because of the Executive’s employment or self-employment during the Severance Period. The Executive shall continue to receive all Benefits (either through the Company or an Affiliate) during the Severance Period. The Executive shall have no further rights under this Agreement or otherwise to receive any other compensation or benefits after such resignation. For the purposes of this Agreement, “Good Reason” shall mean any of the following (without Executive’s express written consent):
(i) the assignment to the Executive of duties that are significantly different from, and that result in a substantial diminution of, the duties that he assumed on the Effective Date;
(ii) removal of the Executive from his position as indicated on Schedule A hereto, or the assignment to the Executive of duties that are significantly different from, and that result in a substantial diminution of, the duties that he assumed under this Agreement, within twelve (12) months after a Change of Control (as defined below);
(iii) a reduction by the Company in the Executive’s then applicable Base Salary or other compensation, unless said reduction is pari passu with other senior executives of the Company;
(iv) the taking of any action by the Company that would, directly or indirectly, materially reduce the Executive’s benefits, unless said reductions are pari passu with other senior executives of the Company; or
(v) a breach by the Company of any material term of this Agreement that is not cured by the Company within thirty (30) days following receipt by the Company of written notice thereof.
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For purposes of this Agreement, “Change of Control” shall mean the occurrence of any one or more of the following: (i) the accumulation, whether directly, indirectly, beneficially or of record, by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) of 50% or more of the shares of the outstanding equity securities of the Company, (ii) a merger or consolidation of the Company in which the Company does not survive as an independent company or upon the consummation of which the holders of the Company’s outstanding equity securities prior to such merger or consolidation own less than 50% of the outstanding equity securities of the Company after such merger or consolidation, or (iii) a sale of all or substantially all of the assets of the Company; provided, however, that the following acquisitions shall not constitute a Change of Control for the purposes of this Agreement: (A) any acquisitions of common stock or securities convertible into common stock directly from the Company, or (B) any acquisition of common stock or securities convertible into common stock by any employee benefit plan (or related trust) sponsored by or maintained by the Company.
(f) Notice of Termination. Any termination of employment by the Company or the Executive shall be communicated by a written “Notice of Termination” to the other party hereto given in accordance with Section 16 of this Agreement. In the event of a termination by the Company for Cause, the Notice of Termination shall (i) indicate the specific termination provision in this Agreement relied upon, (ii) set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Executive’s employment under the provision so indicated and (iii) specify the date of termination, which date shall be the date of such notice. The failure by the Executive or the Company to set forth in the Notice of Termination any fact or circumstance which contributes to a showing of Cause shall not waive any right of the Executive or the Company, respectively, hereunder or preclude the Executive or the Company, respectively, from asserting such fact or circumstance in enforcing the Executive’s or the Company’s rights hereunder.
(g) Resignation of Executive Officer. The termination of the Executive’s employment for any reason will constitute the Executive’s resignation from (i) any director, officer or employee position the Executive has with the Company or any of its Affiliates, and (ii) all fiduciary positions (including as a trustee) the Executive holds with respect to any employee benefit plans or trusts established by the Company. The Executive agrees that this Agreement shall serve as written notice of resignation in this circumstance, unless otherwise required by any plan or applicable law.
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8. Non-Competition; Non-Solicitation.
(a) For the duration of the Employment Period and, unless the Company terminates the Executive’s employment without Cause, during the Severance Period (the “Non-compete Period”), the Executive shall not, directly or indirectly, except as specifically provided in the last sentence of Section 2(c) hereof, engage or invest in, own, manage, operate, finance, control or participate in the ownership, management, operation, financing, or control of, be employed by, associated with, or in any manner connected with, lend any credit to, or render services or advice to, any business, firm, corporation, partnership, association, joint venture or other entity that engages or conducts any business the same as or substantially similar to the Business or any other business engaged in or proposed to be engaged in or conducted by the Company; however, that the Executive may own less than 5% in the aggregate of the outstanding shares of any class of securities of any enterprise (but without otherwise participating in the activities of such enterprise), other than any such enterprise with which the Company competes or is currently engaged in a joint venture, if such securities are of a class listed on any national or regional securities exchange or have been registered under Section 12(b) or (g) of the Exchange Act.
(b) During the Employment Period and for a period of twelve (12) months following termination of the Executive’s employment with the Company, the Executive shall not:
(i) solicit or hire, or attempt to recruit, persuade, solicit or hire, any employee, or independent contractor of, or consultant to, the Company, or its Affiliates, to leave the employment (or independent contractor relationship) thereof, whether or not any such employee or independent contractor is party to an employment agreement; or
(ii) attempt in any manner to solicit or accept from any customer or client of the Company or any of its Affiliates, with whom the Company or any of its Affiliates had significant contact during the term of this Agreement, business of the kind or competitive with the business done by the Company or any of its Affiliates with such customer or to persuade or attempt to persuade any such customer to cease to do business or to reduce the amount of business which such customer has customarily done or is reasonably expected to do with the Company or any of its Affiliates or if any such customer elects to move its business to a person other than the Company or any of its Affiliates, provide any services (of the kind or competitive with the Business of the Company or any of its Affiliates) for such customer, or have any discussions regarding any such service with such customer, on behalf of such other person.
(c) The Executive recognizes and agrees that because a violation by the Executive of his obligations under this Section will cause irreparable harm to the Company that would be difficult to quantify and for which money damages would be inadequate, the Company shall have the right to injunctive relief to prevent or restrain any such violation, without the necessity of posting a bond. The Non-compete Period will be extended by the duration of any violation by the Executive of any of his obligations under this Section.
(d) The Executive expressly agrees that the character, duration and scope of the covenant not to compete are reasonable in light of the circumstances as they exist at the date upon which this Agreement has been executed. However, should a determination nonetheless be made by a court of competent jurisdiction at a later date that the character, duration or geographical scope of the covenant not to compete is unreasonable in light of the circumstances as they then exist, then it is the intention of the Executive, on the one hand, and the Company, on the other, that the covenant not to compete shall be construed by the court in such a manner as to impose only those restrictions on the conduct of the Executive which are reasonable in light of the circumstances as they then exist and necessary to assure the Company of the intended benefit of the covenant not to compete.
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9. Inventions and Patents. The Executive acknowledges that all inventions, innovations, improvements, know-how, plans, development, methods, designs, analyses, specifications, software, drawings, reports and all similar or related information (whether or not patentable or reduced to practice) which related to any of the Company’s actual or proposed business activities and which are created, designed or conceived, developed or made by the Executive during the Executive’s past or future employment by the Company or any Affiliates, or any predecessor thereof (“Work Product”), belong to the Company, or its Affiliates, as applicable. Any copyrightable work falling within the definition of Work Product shall be deemed a “work made for hire” and ownership of all right title and interest shall rest in the Company. The Executive hereby irrevocably assigns, transfers and conveys, to the full extent permitted by law, all right, title and interest in the Work Product, on a worldwide basis, to the Company to the extent ownership of any such rights does not automatically vest in the Company under applicable law. The Executive will promptly disclose any such Work Product to the Company and perform all actions requested by the Company (whether during or after employment) to establish and confirm ownership of such Work Product by the Company (including, without limitation, assignments, consents, powers of attorney and other instruments).
10. Confidentiality.
(a) The Executive understands that the Company and/or its Affiliates, from time to time, may impart to the Executive confidential information, whether such information is written, oral, electronic or graphic.
(b) For purposes of this Agreement, “Confidential Information” means information, which is used in the business of the Company or its Affiliates and (i) is proprietary to, about or created by the Company or its Affiliates, (ii) gives the Company or its Affiliates some competitive business advantage or the opportunity of obtaining such advantage or the disclosure of which could be detrimental to the interests of the Company or its Affiliates, (iii) is designated as Confidential Information by the Company or its Affiliates, is known by the Executive to be considered confidential by the Company or its Affiliates, or from all the relevant circumstances should reasonably be assumed by the Executive to be confidential and proprietary to the Company or its Affiliates, or (iv) is not generally known by non-Company personnel. Such Confidential Information includes, without limitation, the following types of information and other information of a similar nature (whether or not reduced to writing or designated as confidential):
(i) internal personnel and financial information of the Company or its Affiliates, vendor information (including vendor characteristics, services, prices, lists and agreements), purchasing and internal cost information, internal service and operational manuals, and the manner and methods of conducting the business of the Company or its Affiliates;
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(ii) marketing and development plans, price and cost data, price and fee amounts, pricing and billing policies, bidding, quoting procedures, marketing techniques, forecasts and forecast assumptions and volumes, and future plans and potential strategies (including, without limitation, all information relating to any oil and gas prospect and the identity of any key contact within the organization of any acquisition prospect) of the Company or its Affiliates which have been or are being discussed;
(iii) names of customers and their representatives, contracts (including their contents and parties), customer services, and the type, quantity, specifications and content of products and services purchased, leased, licensed or received by customers of the Company or its Affiliates; and
(iv) confidential and proprietary information provided to the Company or its Affiliates by any actual or potential customer, government agency or other third party (including businesses, consultants and other entities and individuals).
The Executive hereby acknowledges the Company’s exclusive ownership of such Confidential Information.
(c) The Executive agrees as follows: (1) only to use the Confidential Information to provide services to the Company and its Affiliates; (2) only to communicate the Confidential Information to fellow employees, agents and representatives on a need-to-know basis; and (3) not to otherwise disclose or use any Confidential Information, except as may be required by law or otherwise authorized by the Board. Upon demand by the Company or upon termination of the Executive’s employment, the Executive will deliver to the Company all manuals, photographs, recordings and any other instrument or device by which, through which or on which Confidential Information has been recorded and/or preserved, which are in the Executive’s possession, custody or control.
11. Executive’s Representation. The Executive hereby represents that the Executive’s entry into this Agreement and performance of the services hereunder will not violate the terms or conditions of any other agreement to which the Executive is a party.
12. Arbitration. In the event of any breach arising from the performance of this Agreement, either party may request arbitration. In such event, the parties will submit to arbitration by a qualified arbitrator with the definition and laws of the State of Maryland. Such arbitration shall be final and binding on both parties.
13. Governing Law/Jurisdiction. This Agreement and any disputes or controversies arising hereunder shall be construed and enforced in accordance with and governed by the internal laws of the State of Maryland without regard to the conflicts of laws principles thereof.
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14. Public Company Obligations; Indemnification.
(a) Executive acknowledges that the Company intends to become a publicly reporting company whose shares of common stock will be registered under the U.S. Securities Act of 1933, as amended (the “Securities Act”), and whose common stock will be registered under the Exchange Act, and that, after the Company becomes a publicly reporting company, this Agreement will be subject to the public filing requirements of the Exchange Act. In addition, both parties acknowledge that the Executive’s compensation and perquisites (each as determined by the rules of the US Securities and Exchange Commission (the “SEC”) or any other regulatory body or exchange having jurisdiction) (which may include benefits or regular or occasional aid/assistance, such as recreation, club memberships, meals, education for his family, vehicle, lodging or clothing, occasional bonuses or anything else he receives, during the Employment Period and any renewals thereof, in cash or in kind) paid or payable or received or receivable under this Agreement or otherwise, and his transactions and other dealings with the Company, may be required to be publicly disclosed.
(b) Executive acknowledges and agrees that the applicable insider trading rules, transaction reporting rules, limitations on disclosure of non-public information and other requirements set forth in the Securities Act, the Exchange Act and rules and regulations promulgated by the SEC may apply to this Agreement and Executive’s employment with the Company.
(c) Executive (on behalf of himself, as well as the Executive’s executors, heirs, administrators and assigns) absolutely and unconditionally agrees to indemnify and hold harmless the Company and all of its past, present and future affiliates, executors, heirs, administrators, shareholders, employees, officers, directors, attorneys, accountants, agents, representatives, predecessors, successors and assigns from any and all claims, debts, demands, accounts, judgments, causes of action, equitable relief, damages, costs, charges, complaints, obligations, controversies, actions, suits, proceedings, expenses, responsibilities and liabilities of every kind and character whatsoever (including, but not limited to, reasonable attorneys’ fees and costs) in the event of Executive’s breach of any obligation of Executive under the Securities Act, the Exchange Act, any rules promulgated by the SEC and any other applicable federal, state or foreign laws, rules, regulations or orders.
15. Entire Agreement. This Agreement constitutes the entire agreement between the parties hereto with respect to the subject matter hereof and thereof and supersedes and cancels any and all previous agreements, both written and oral, regarding the subject matter hereof between the parties hereto. This Agreement shall not be changed, altered, modified or amended, except by a written agreement signed by both parties hereto.
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16. Notices. All notices, requests, demands and other communications called for or contemplated hereunder shall be in writing and shall be deemed to have been given when delivered to the party to whom addressed or when sent by telecopy (if promptly confirmed by registered or certified mail, return receipt requested, prepaid and addressed) to the parties, their successors in interest, or their assignees at the following addresses, or at such other addresses as the parties may designate by written notice in the manner aforesaid:
(a) | to the Company at: | |
Shuttle Pharmaceuticals Holdings, Inc. | ||
One Research Court, Suite 450 | ||
Rockville, MD 20850 | ||
Attn: Chief Executive Officer | ||
Email: anatoly.dritschilo@shuttlepharma.org | ||
with a copy to: | ||
CKR Law LLP | ||
1330 Avenue of the Americas, 14th Floor | ||
New York, NY 10019 | ||
Attn: Megan J. Penick, Esq. | ||
Email: mpenick@ckrlaw.com | ||
(b) | to the Executive as set forth on Schedule A hereto. |
All such notices, requests and other communications will (i) if delivered personally to the address as provided in this Section, be deemed given upon delivery, (ii) if delivered by facsimile transmission to the facsimile number as provided for in this Section, be deemed given upon facsimile confirmation, (iii) if delivered by mail in the manner described above to the address as provided for in this Section, be deemed given on the earlier of the third business day following mailing or upon receipt and (iv) if delivered by overnight courier to the address as provided in this Section, be deemed given on the earlier of the first business day following the date sent by such overnight courier or upon receipt (in each case regardless of whether such notice, request or other communication is received by any other person to whom a copy of such notice is to be delivered pursuant to this Section). Either party may, by notice given to the other party in accordance with this Section, designate another address or person for receipt of notices hereunder.
17. Severability. If any term or provision of this Agreement, or the application thereof to any person or under any circumstance, shall to any extent be invalid or unenforceable, the remainder of this Agreement, or the application of such terms to the persons or under circumstances other than those as to which it is invalid or unenforceable, shall be considered severable and shall not be affected thereby, and each term of this Agreement shall be valid and enforceable to the fullest extent permitted by law. The invalid or unenforceable provisions shall, to the extent permitted by law, be deemed amended and given such interpretation as to achieve the economic intent of this Agreement.
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18. Waiver. The failure of any party to insist in any one instance or more upon strict performance of any of the terms and conditions hereof, or to exercise any right or privilege herein conferred, shall not be construed as a waiver of such terms, conditions, rights or privileges, but same shall continue to remain in full force and effect. Any waiver by any party of any violation of, breach of or default under any provision of this Agreement by the other party shall not be construed as, or constitute, a continuing waiver of such provision, or waiver of any other violation of, breach of or default under any other provision of this Agreement.
19. Successors and Assigns. This Agreement shall be binding upon the Company and any successors and assigns of the Company. Neither this Agreement nor any right or obligation hereunder may be assigned by the Executive. The Company may assign this Agreement and its right and obligations hereunder, in whole or in part.
20. Counterparts. This Agreement may be executed in multiple counterparts, each of which shall be deemed an original, and all of which together shall constitute one and the same instrument. Additionally, a facsimile counterpart of this Agreement shall have the same effect as an originally executed counterpart.
21. Headings. Headings in this Agreement are for reference purposes only and shall not be deemed to have any substantive effect.
22. Opportunity to Seek Advice. The Executive acknowledges and confirms that he has had the opportunity to seek such legal, financial and other advice and representation as he has deemed appropriate in connection with this Agreement, that the Executive is fully aware of its legal effect, and that Executive has entered into it freely based on the Executive’s judgment and not on any representations or promises other than those contained in this Agreement.
23. Withholding and Payroll Practices. All salary, severance payments, bonuses or benefits payments made by the Company under this Agreement shall be net of any tax or other amounts required to be withheld by the Company under applicable law and shall be paid in the ordinary course pursuant to the Company’s then existing payroll practices.
[The next page is the signature page.]
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above.
SHUTTLE PHARMACEUTICALS HOLDINGS, INC. | ||
By: | /s/ Peter Dritschilo | |
Name: | Peter Dritschilo | |
Title: | President and Chief Operating Officer | |
EXECUTIVE: | ||
Anatoly Dritschilo | ||
Anatoly Dritschilo, M.D. |
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Schedule A
1. | Employment Period: 36 months |
2. | Employment |
a. | Title: Chief Executive Officer and Chairman of the Board |
b. | Executive Duties: |
In his capacity as Chairman of the Board and Chief Executive Officer, the Executive shall perform such services, consistent with his office, as from time to time shall be assigned to him by the Board of Directors of the Company, devoting such time and effort to manage, operate and direct the activities of the Company and perform all of the functions of the offices held by him, as directed by the Board of Directors from time-to-time.
3. | Base Salary: $274,000 per year. |
5(a). | Initial Restricted Stock Unit Grant: $515,000 worth of Restricted Stock Units issuable under the Company’s 2018 Equity Incentive Plan, vesting annually in one-third increments commencing on the first anniversary date of the grant of Restricted Stock Units, in accordance with the terms of the Restricted Stock Unit Award Agreement. |
6(e). | Severance Period: [twelve] months |
15(b). | Executive Contact Information: |
Anatoly Dritschilo, MD
8101 Fenway Road
Behtesda, MD
Cell Phone: 310-675-3041
Schedule B
Milestones
Key Performance Indicators | Level to be Achieved by the Company | Year |
General and Administrative:
#1 Complete the filing of the Registration Statement on form S-1 resulting in its effectiveness and Raising Capital
(a) Raise Bridge Capital (b) Perform and Complete Road Show (c) Bring accounting functions in-house (c) Manage HR& general business operations
|
50% |
2020 |
Regulatory: #2 Complete regulatory applications |
25% | 2020 |
#3 Prepare Clinical Trials w/ CRO | 25% | 2020 |
Exhibit A
Form of Restricted Stock Award Agreement
Exhibit 10.15
Non-Federal
Sponsor National Cancer Institute |
| |
Subaward Period of Performance Phase 110/27/14 - 6/18/15 Phase II 6/19/15- 6/18/17 |
Amount Funded this Action $65,549 |
Est. Total (if incrementally funded) $688,818 |
Project Title Development of Radiation Modulators for Use DurinQ Radiotherapy |
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Reporting Requirements [Check here if applicable: 181 See Attachment 4] |
Terms and Conditions
1) Prime Recipient hereby awards a cost reimbursable subaward, as described above, to Subrecipient. The statement of work and budget for this subaward are (check one): _____ as specified in Subrecipient’s proposal dated _______________; or _X_ as shown in Attachments 3 & 4. In its performance of subaward work, Subrecipient shall be an independent entity and not an employee or agent of Prime Recipient.
2) Prime Recipient shall reimburse Subrecipient not more often than monthly for allowable costs. All invoices shall be submitted using Subrecipient’s standard invoice, but at a minimum shall include current and cumulative costs (including cost sharing), subaward number, and certification as to truth and accuracy of invoice. Invoices that do not reference Prime Recipient’s subaward number shall be returned to Subrecipient. Invoices and questions concerning invoice receipt or payments should be directed to the appropriate party’s Financial Contact, as shown in Attachment 2.
3) A final statement of cumulative costs incurred, including cost sharing, marked “FINAL,” must be submitted to Prime Recipient’s Administrative Contact NOT LATER THAN sixty (60) days after subaward end date. The final statement of costs shall constitute Subrecipient’s final financial report.
4) All payments shall be considered provisional and subject to adjustment within the total estimated cost in the event such adjustment is necessary as a result of an adverse audit finding against the Subrecipient.
5) Matters concerning the technical performance of this subaward should be directed to the appropriate party’s Project Director, as shown in Attachment 2. Technical reports are required as shown above, “Reporting Requirements.”
6) Matters concerning the request or negotiation of any changes in the terms, conditions, or amounts cited in this subaward agreement should be directed to the appropriate party’s Administrative Contact, as shown in Attachment 2. Any such changes made to this subaward agreement require the written approval of each party’s Authorized Official, as shown in Attachment 2.
7) Each party shall be responsible for its negligent acts or omissions and the negligent acts or omissions of its employees, officers or directors, to the extent allowed by law.
8) Either party may terminate this agreement with thirty days written notice to the appropriate party’s Administrative Contact, as shown in Attachment 2. Prime Recipient shall pay Subrecipient for all allowable, noncancellable obligations in the event of termination.
9) No-cost extensions require the approval of the Prime Recipient. Any requests for a no-cost extension should be addressed to and received by the Administrative Contact, as shown in Attachment 2, not less than thirty days prior to the desired effective date of the requested change.
10) The Subaward is subject to the terms and conditions of the Prime Award and other special terms and conditions, as identified in Attachment 1.
By an Authorized Official of PRIME RECIPIENT: | By an Authorized Official of SUBRECIPIENT: |
Anatoly Dritschilo, MD - CEO Date |
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Non-Federal
Attachment 2 Subaward Ar._ reement | |||
Prime Recipient Contacts | Subrecipient Contacts | ||
Administrative Contact | Administrative Contact | ||
Name: | Peter D. Dritschilo President & CFO |
Name: | Kim-Marie Lawrence |
Address: | Shuttle Pharmaceuticals, LLC One Research Court, Suite 450 Rockville, MD 20850-6252 |
Address: | Office of Research Administration 1 Hoppin Street, Suite 1.300 Providence, RI 02903-4141 |
Telephone: | 240-271-0642 | Telephone: | 401.444.8554 |
Fax: | 301-519-8081 | Fax: | 401.444.4061 |
Email: | hoya92@aol.com | Email: | klawrence@Iifespan.org |
Principal Investigator | Project Director | ||
Name: | Theodore Phillips, MD | Name: | Timothy Kinsella, MD |
Address: | Shuttle Pharmaceuticals, LLC One Research Court, Suite 450 Rockville, MD 20850-6252 |
Address: | Rhode Island Hospital 593 Eddy Street, APC 1 Providence, RI 02903 |
Telephone: | 240-403-4212 | Telephone: | 401.444.6203 |
Fax: | 301-519-8081 | Fax: | 401.444.5335 |
Email: | farfa12@aol.com | Email: | tkinsella@lifespan.org |
Financial Contact | Financial Contact | ||
Name: | Peter D. Dritschilo President & CFO President & CFO |
Name: | Donald Hook Manager, Research Finance |
Address: | Shuttle Pharmaceuticals, LLC One Research Court, Suite 450 Rockville, MD 20850-6252 |
Address: | Rhode Island Hospital 1 Hoppin Street, Suite 1.300 Providence, RI 02903-4141 |
Telephone: | 240-271-0642 | Telephone: | 401-444-5112 |
Fax: | 301-519-8081 | Fax: | 401-444-4061 |
Email: | hoya92@aol.com | Email: | dhook@lifespan.org |
Authorized Official | Authorized Official | ||
Name: | Anatoly Dritschilo, MD CEO |
Name: | Joan M. Silva Administrative Manager |
Address: | Shuttle Pharmaceuticals, LLC One Research Court, Suite 450 Rockville, MD 20850-6252 |
Address: | Rhode Island Hospital Office of Research Administration 1 Hoppin Street, Suite 1.300 Providence, RI 02903-4141 |
Telephone: | 202-444-4068 | Telephone: | 401.444.4006 |
Fax: | 301-519-8081 | Fax: | 401.444.4061 |
Email: | dritscha@georgetown.edu | Email: | jsilva@lifespan.org |
Exhibit 10.16
SUBLICENSE AGREEMENT
This SUBLICENSE AGREEMENT (the “Agreement”), effective as of the last date of signature below (the “Effective Date”), is entered into by and between PROPAGENIX Inc., a Delaware corporation having a main office at 9605 Medical Center Drive, Suite 325, Rockville, MD, 20850, United States (“PROPAGENIX”) and Shuttle Pharmaceuticals, Inc. (“SHUTTLE”), a pharmaceutical corporation having its offices at One Research Court, Suite 450, Rockville, MD 20850. PROPAGENIX and SHUTTLE may be referred to herein individually as a “Party” and collectively as the “Parties.”
RECITALS
WHEREAS, Georgetown University (“Georgetown”) owns or controls rights to certain patents and other intellectual property relating to the ex vivo culture of epithelial cells, specifically employing Conditional Reprogramming (“CR”) technology.
WHEREAS, Georgetown has granted exclusive rights to these patents to PROPAGENIX, and under the license agreement (the “GU License”), Propagenix is obligated to ensure that any sublicenses it grants are in compliance with the terms of its license with Georgetown.
WHEREAS, SHUTTLE is engaged in the business of discovering and developing novel therapeutics for oncology.
WHEREAS, PROPAGENIX is willing to grant to SHUTTLE limited rights to its Licensed Patents for SHUTTLE to make Commercialized Products for Research Use directly related to its program entitled “Cell-Based Models for Prostate Cancer Health Disparity Research”, supported by the Phase 2 Small Business Innovation Research (SBIR) grant HHSN261201800016C (the “Cell-Based Models for Prostate Cancer Health Disparity Research Grant”), under the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the above premises and the mutual covenants contained herein, the Parties agree as follows.
1. | DEFINITIONS |
The terms in this Agreement with initial letters capitalized, whether used in the singular or the plural, shall have the meaning set forth below or, if not listed below, the meaning designated in places throughout this Agreement.
1.1 | “Affiliate” of a Party means any other party which (directly or indirectly) is controlled by, controls or is under common control with such Party. For the purposes of this definition, the term “control” (including, with correlative meanings, the terms “controlled by” and “under common control with”) as used with respect to a Party, shall mean the possession, directly or indirectly, of the power to direct, or cause the direction of, the management or policies of such Party, whether through the ownership of voting securities, by contract or otherwise. “Controlling” means possessing, directly or indirectly, the power to direct or cause the direction of the management and affairs of a party, whether through ownership of voting shares, contract or otherwise, and “controlled” and “control” have a corresponding meaning. |
1.2 | “Cell-Based Models for Prostate Cancer” means cell cultures and their derivatives that were prepared from primary normal prostate tissues and prostate tumor tissues expanded in vitro using CR Technology, and that was supported by the SBIR grant entitled “Cell-Based Models for Prostate Cancer Health Disparity Research”, grant number HHSN261201800016C. | |
1.3 | “Commercial Use” means (a) any activity undertaken for financial consideration (unless done as part of a Preferred Subcontractor relationship with a Propagenix Sublicensee), such as use for manufacturing, or resale of Commercialized Products or any materials made using Commercialized Products; or (b) the use of Commercialized Products or any materials made using them to provide services or quality control testing of other products for commercial sale). | |
1.4 | “Commercialized Products” means Cell-Based Models for Prostate Cancer including cells and derivative products (e.g., DNA, RNA, cell lysate, exosomes or tumor microarrays). | |
1.5 | “Confidential Information” means all information disclosed by either Party hereunder, whether in writing, orally, electronically, visually or in any other form, including but not limited to know-how, formulas, processes, product ideas, inventions (whether patentable or not), improvements, copyrightable or patentable materials, trade secrets, schematics, and other technical, business, financial, and product development plans, forecasts, strategies, and information, that a Party discloses to the other Party. | |
1.6 | “Cover”, “Covered”, “Covering” means, with respect to a claim within the Licensed Patents, that the claim would be, directly or indirectly, infringed should a party practice the invention defined by the claim without a license to do so (or in the case of a patent application, would infringe a claim in such patent application if it were to issue as a patent). | |
1.7 | “CR Technology” means any method, process or technology, the practice of which is covered by any Valid Claims of the Licensed Patents, and associated know-how, and any improvements thereto owned or controlled by PROPAGENIX as of the Effective Date. | |
1.8 | “CR Reagents” means reagents supplied by Propagenix to SHUTTLE or Third Parties to practice the CR Technology. CR reagents include (but are not limited to) cell culture media (CRM), irradiated 3T3-J2 cells, irradiated 3T3-J2 cell conditioned media, and any cell culture expanded using CR Technology. | |
1.9 | “Effective Date” means the last date of signature to this Agreement. |
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1.10 | “Field” means use of CR Technology by SHUTTLE to supply Commercialized Products for Research Use. | |
1.11 | “Industry Sponsored Academic Research” means research sponsored by a for-profit organization carried out at an academic institution by the academic institution’s personnel. | |
1.12 | “Licensed Patents” means: (i) the patents and patent applications listed in Exhibit A attached hereto, as may be amended from time to time; (ii) all patents and patent applications related to the patents and patent applications listed in Schedule A, whether filed before or after the Effective Date, which claim priority under 35 U.S.C. 7119 or the benefit of the filing date under 35 USC Section 120 or Section 371 provided the claims of the related patent applications Cover subject matter that was disclosed in a patent or patent application from which priority or benefit is claimed; (iii) any patent or patent application that constitutes a substitution, divisional, continuation, or continuation-in-part of a patent application described in (i) or (ii), with the proviso that the rights extend only to claims in a continuation-in-part application that are directed to subject matter that was disclosed in a patent or patent application described in (i) or (ii); (iv) any patent issuing from any patent application described in (i), (ii), or (iii), as such application may be amended from time to time; (v) any patent or patent application described in (i), (ii), (iii), or (iv) that has been submitted to a proceeding for reissue, renewal, reexamination (including certificates of invention), revalidation, a supplementary protection certificate, and the like, or whose term has been adjusted or whose exclusionary patent or marketing rights have been extended including, but not limited to, the grant of any exclusionary period for pediatric use; and (v) any non-US counterpoint or equivalent of any patent or patent application described in (i), (ii), (iii), (iv), or (v). | |
1.12 | “Permitted Subcontractors” means (i) Georgetown University, and (ii) additional Third Party subcontractors hired by SHUTTLE to perform work related to the Cell-Based Models for Prostate Cancer. All Permitted Subcontractors other than Georgetown University will require a sublicense from PROPAGENIX, with terms to be negotiated in good faith between the Parties. | |
1.13 | “Research Use” means academic research, drug discovery research and preclinical research only, and does not include the right to sell, use, or otherwise engage in Commercial Use or in support of clinical trial activities. | |
1.14 | “Territory” means any jurisdiction in which there is an issued Licensed Patent (as of the Effective Date, this includes the United States of America and Japan) for the practice of CR Technology. | |
1.15 | “Third Party” means a party that is not SHUTTLE or PROPAGENIX or their respective Affiliates. Third Party includes Permitted Subcontractors and Third Party Distributors. |
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1.15 | “Third Party Distributor” means any Third Party that enters into an agreement with SHUTTLE or Georgetown University to commercialize any cell-based or derivative product for resale, which was created or manufactured using the CR Technology and made as part of the Cell-Based Models for Prostate Cancer Health Disparity Research Program Grant. | |
1.16 | “Valid Claim” means a claim of (a) an issued and unexpired patent, which claim has not been held invalid or unenforceable by a court or other government agency of competent jurisdiction, or (b) a pending patent application. |
2. | GRANT |
2.1 | Rights Conveyed. PROPAGENIX hereby grants to SHUTTLE a non-exclusive, non-sublicensable sublicense, under the Licensed Patents in the Territory to make, have made, use, have used, sell and have sold, Commercialized Products for Research Use. | |
2.2 | Included Rights. The foregoing grant includes the rights to SHUTTLE to convey cell cultures and derivative products generated as part of the Cell-Based Models for Prostate Cancer Health Disparity Research Grant to Third Party Distributors that have been granted a sublicense by PROPAGENIX. | |
2.3 | Retained Rights. PROPAGENIX retains the sole right to grant licenses for uses within and outside the Field, as well as the right to practice CR Technology for any purpose. This grant to SHUTTLE is limited in scope as to SHUTTLE’s rights to practice CR Technology only as defined in Sections 2.1 and 2.2. | |
2.4 | Limited Use Label License. All Commercialized Products shall be accompanied by a Limited Use Label License in the same form as provided under Appendix C (“LULL”). | |
2.5 | Improvements. Ownership of improvements made to any invention claimed in the CR Technology (“Improvements”) shall be determined by inventorship per US Patent Law. For improvements owned by SHUTTLE, SHUTTLE shall grant to PROPAGENIX a paid-up, royalty-free, non-exclusive, non-sublicensable worldwide license to practice Improvements that are non-severable from the Licensed Patents, solely for PROPAGENIX’s internal research use. For clarity, all severable Improvements created by Shuttle shall belong to Shuttle. | |
2.6 | Improvements owned by SHUTTLE’s Permitted Subcontractors may be licensed to PROPAGENIX through an agreement negotiated in good faith between the Parties. Improvements shall be communicated to PROPAGENIX within thirty (30) days of disclosure to SHUTTLE. |
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3. | SUBLICENSING |
3.1 | PROPAGENIX shall grant a non-exclusive, royalty-free sublicense on pre-determined financial terms as outlined in Appendix D, to approved Third-Party Distributors to market and sell Commercialized Products for Research Use by end-user customers. PROPAGENIX retains the right to approve each Third Party Distributor sublicensee proposed by SHUTTLE, with approval not to be unreasonably withheld. |
4. | PAYMENTS AND CONSIDERATION |
4.1 | Upfront Fee. In consideration of the license grant, SHUTTLE shall pay to PROPAGENIX a one-time non-refundable fee of twenty-five thousand ($25,000) US dollars (USD) within forty-five (45) days after the Effective Date of the Agreement. | |
4.2 | Manner of Payment. All payments to be made to PROPAGENIX under this Agreement shall be payable in US dollars and shall be paid by bank wire transfer to such bank account as designated in writing by PROPAGENIX within forty-five (45) days. | |
4.3 | Technology Transfer Support. Upon request, PROPAGENIX will provide SHUTTLE without charge up to four (4) hours of consultation to facilitate technology transfer if requested by SHUTTLE during the first six (6) months following the Effective Date. Should PROPAGENIX provide to SHUTTLE additional technology transfer support, it shall be charged at a rate of two hundred dollars per hour ($200/hour). Such consultation will be provided by telephone at such times during normal business hours as may be reasonably requested by SHUTTLE or by such other means and at such other times as the Parties may mutually agree. |
5. | REAGENT SUPPLY |
5.1 | SHUTTLE and its Affiliates, any Permitted Subcontractors (but excluding Georgetown, and any Third Party Distributors shall be required to use CR Reagents which have been purchased directly from PROPAGENIX and only from PROPAGENIX (or its designated supplier) in order to practice the licensed CR Technology. The terms on the sale of CR Reagents are provided under Appendix B. The pricing in Appendix B will be reviewed no more than once per year and may be revised if the list price of said reagents is modified by Propagenix. Price increases will be limited to equaling the annual rate of inflation as reflected by the US Consumer Price Index. For clarity, the foregoing grant to SHUTTLE to practice CR Technology is contingent on SHUTTLE’s, SHUTTLE’s Permitted Subcontractor’s, and SHUTTLE’s Third Party Distributors purchase of CR Reagents directly from PROPAGENIX or its designated supplier. |
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6. | REPRESENTATIONS AND WARRANTIES |
6.1 | PROPAGENIX represents and warrants to SHUTTLE as of the Effective Date that: |
a) | It owns or controls the exclusive right to the Licensed Patents and it has all requisite power and authority to enter into this Agreement and to grant the rights granted by it hereunder, | |
b) | Execution of this Agreement has been duly authorized, | |
c) | This Agreement is fully binding and enforceable in accordance with its terms, | |
d) | PROPAGENIX will not, during the term of this Agreement, enter into any agreements, contracts or other arrangements that would be inconsistent with its obligations under this Agreement, | |
e) | There are no legal proceedings (including interference or opposition proceedings) or threatened legal proceedings against PROPAGENIX in relation to the Licensed Patents or the CR Technology as of the Effective Date of this Agreement, | |
f) | To the best of PROPAGENIX’s knowledge, the CR Technology does not infringe any Third Party’s rights, and it has received no notice of any claim from any Third Party making any adverse claim involving the Licensed Patents or CR Technology, or involving any products or services that may use or practice any Valid Claims of the Licensed Patents, and | |
g) | (i) The GU License is in full force and effect; (ii) PROPAGENIX has not received any notice from Georgetown regarding any breach or threatened breach of the GU License, (iii) PROPAGENIX is in compliance with the GU License; and (iv) PROPAGENIX has disclosed to SHUTTLE prior to the Effective Date all materials terms of the GU License applicable to SHUTTLE. |
6.2 | SHUTTLE represents and warrants to PROPAGENIX as of the Effective Date that: |
a) | It has all requisite power and authority to enter into this Agreement and to perform its obligations under this Agreement, | |
b) | Execution of this Agreement has been duly authorized, | |
c) | This Agreement is fully binding and enforceable in accordance with its terms, | |
d) | SHUTTLE will not, during the term of this Agreement, enter into any agreements, contracts or other arrangements that would be inconsistent with its obligations under this Agreement. |
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7. | TERM AND TERMINATION |
7.1 | Term. This Agreement is effective as of the Effective Date and shall expire on the expiration of the last to expire of the Valid Claims of Licensed Patents (the “Term”), unless earlier terminated in accordance with Section 7.2. Upon expiration of the last to expire of the Valid Claims of Licensed Patents, the licenses granted by PROPAGENIX to SHUTTLE hereunder shall be fully paid up and perpetual, and SHUTTLE shall not be required to pay any further fees to PROPAGENIX. |
7.2 | Termination. |
a) | SHUTTLE may terminate this Agreement at any time upon sixty (60) days’ written notice to PROPAGENIX, subject to the payment of any consideration due on or prior to the date of termination. | |
b) | This Agreement may be terminated by written notice to the other Party, with effect immediately, if |
(i) either the other Party becomes insolvent under local law, makes a general assignment for the benefit of creditors, is adjudicated as bankrupt or insolvent, files a voluntary petition in bankruptcy or for a reorganization or to effect a plan or other arrangement with its creditors, is the subject of a creditor’s petition or other petition against it for an adjudication in bankruptcy or that is not stayed or dismissed within one hundred twenty (120) days, or applies for or permits the appointment of a receiver, trustee, or custodian for any substantial portion of its properties or assets; or
(ii) if an order is entered by any court approving an involuntary petition seeking reorganization of the other Party, or appointing a receiver, trustee or custodian for any substantial portion of its assets or business.
(iii) Georgetown terminates the license agreement with PROPAGENIX pursuant to the terms of Georgetown’s license agreement with PROPAGENIX.
c) | Subject to Section 12.3, PROPAGENIX shall have the right to terminate this Agreement in the event that any material provision or stipulation of this Agreement has been breached by SHUTTLE and in the event that SHUTTLE has failed to remedy such breach within sixty (60) days of receiving written notice thereof from PROPAGENIX; provided, that if the breach is not reasonably capable of cure within sixty (60) days, this Agreement will not be terminated so long as SHUTTLE takes reasonable steps to cure within the initial sixty (60) day notice period, and thereafter makes diligent efforts to cure the breach during the subsequent sixty (60) day period. Any such termination shall become effective at the end of such subsequent sixty (60) day period unless SHUTTLE has cured such breach. |
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d) | PROPAGENIX shall also have the right to terminate this Agreement immediately upon written notice to SHUTTLE, if SHUTTLE or any of its Affiliates, Permitted Subcontractors, or Third Party Distributors,, either individually or in association with any other person or entity, commences any legal action challenging the validity of the Licensed Patents. |
7.3 | Effect of Termination. The termination of this Agreement shall not affect any rights or obligations of either Party that have accrued or matured prior to termination and which are intended by the Parties to survive termination. All terms and provisions of this Agreement that should by their nature survive the termination or expiration of this Agreement shall so survive, including without limitation, Sections [7.3, 9, 10, 11 and 12]. |
8. | DISPUTE RESOLUTION |
8.1 | The Parties agree that it is in their best interest to resolve disputes between them in an orderly fashion and in a consistent manner. Therefore, the Parties agree that the method described in this Section 8 shall be the sole and exclusive method for settling any dispute, claim, demand, controversy or cause of action of every kind and nature whatsoever, vested or contingent, arising out of or relating to this Agreement (a “Dispute”). | |
8.2 | Negotiation. In the event of a Dispute, a Party shall first give written notice of the Dispute (the “Notice of Dispute”) to the other Party. The Notice of Dispute shall provide reasonable details of the Dispute, include a request for a meeting with the other Party, and designate a senior executive with authority to reach a resolution of the Dispute on behalf of such Party. The Party receiving the Notice of Dispute shall also designate a representative of similar authority for the purpose of discussing the specific matter in dispute. At least one meeting of the designated representatives shall be held in an effort to resolve the Dispute. The first meeting of the designated representatives will be held within thirty (30) days after the Notice of Dispute, on a date and at a locale (including by teleconference), as mutually agreed upon by the designated representatives. | |
8.3 | Arbitration. In the event that the Parties are unable to informally resolve the Dispute through negotiation under Section 8.2 within sixty (60) days of the Notice of Dispute, or such longer period as mutually agreed to by the Parties, the dispute shall be resolved by binding arbitration before a panel of three arbitrators (one arbitrator chosen by each of the parties and the third arbitrator chosen by the first two, unless the parties agree otherwise), at least one of whom shall have a minimum of five (5) years of experience in the field of biotechnology or pharmaceutical product or patent licensing, and shall be under the jurisdiction of, administered by and in accordance with the rules of the American Arbitration Association. The venue for the arbitration shall be in a location in Maryland mutually agreed by the Parties. In no event shall punitive or exemplary damages be awardable. The arbitrators shall have the authority to allocate between the parties the costs of arbitration, including but not limited to reasonable attorneys’ fees, in such equitable manner as they determine. The parties irrevocably agree that a final judgment in any arbitration proceeding relating to this Agreement shall be conclusive and shall be enforceable in any court having jurisdiction thereof. |
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9. | CONFIDENTIALITY |
9.1 | Non-disclosure. Each Party that is the recipient (the “Recipient”) of Confidential Information disclosed to it by the disclosing Party (the “Discloser”), must |
a) | Hold the Confidential Information of the Discloser in confidence and in trust for the Discloser, | |
b) | Not, without the prior written consent of the Discloser, disclose, publish, use, reproduce, deal with, or otherwise exploit the Confidential Information of the Discloser or permit the same to be disclosed, published, used, reproduced, dealt with, or otherwise exploited, except to the extent permitted under this Agreement, | |
c) | Only disclose the Confidential Information of the Discloser to Recipient’s employees and agents (and Permitted Subcontractors in the case of SHUTTLE as the Recipient of PROPAGENIX’s Confidential Information), |
(i) | With a definable need to know such information in connection with their work under this Agreement, and | |
(ii) | Who are informed of the confidential nature of such information, |
d) | Ensure that Recipient’s employees and agents that are exposed to the Confidential Information of the Discloser maintain the confidentiality of such information, and | |
e) | Protect the Confidential Information of the Discloser against wrongful disclosure, misuse, espionage and theft. |
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9.2 | Exceptions. Section 9.1 imposes no obligation on the Recipient with respect to the Confidential Information of the Discloser |
a) | Which is or becomes public knowledge through no fault of the Recipient, | |
b) | Which was legitimately possessed by the Recipient before its disclosure to the Recipient by the Discloser as evidenced by the Recipient’s prior written records, | |
c) | Which is independently obtained by the Recipient from a source which was not, at the relevant time, prohibited from disclosing such Confidential Information to the Recipient under any legal, contractual or fiduciary obligation, | |
d) | Which is the same as information that is developed by the Recipient independently without reference to the Confidential Information of the Discloser as evidenced by the Recipient’s prior written records, | |
e) | Which, subject to Section 9.3, is required to be disclosed by applicable law, regulation or legal process, or | |
f) | To the extent and in the manner approved by the Discloser in writing. |
9.3 | Legal Requirements to Disclose. If the Recipient is required by applicable law, regulation or legal process to disclose any of the Confidential Information of the Discloser, the Recipient will notify the Discloser promptly so that the Discloser may seek a protective order or other appropriate remedy or waive compliance with the terms of this Agreement. If no such protective order or other remedy is obtained or the Discloser does not waive compliance with the terms of this Agreement, the Recipient |
a) | Will furnish only that portion of the Confidential Information of the Discloser which the Recipient is advised by counsel is legally required to be disclosed, and | |
b) | Will exercise all reasonable efforts to obtain reliable assurances that confidential treatment will be accorded such Confidential Information. |
9.4 | Equitable relief. Each Party acknowledges the competitive and technical value and the sensitive and confidential nature of the Confidential Information of the other Party and agrees that monetary damages alone may be inadequate to protect such other Party’s interests against any actual or threatened breach of this Agreement. Accordingly, each Party agrees that the other Party is entitled to seek specific performance and injunctive or other equitable relief in respect of any actual or threatened breach of this Agreement, without proof of actual damages. | |
9.5 | Survival of Confidential Obligations. The provisions of Section 9 will survive the expiry or earlier termination (for whatever reason) of this Agreement for a period of ten (10) years. |
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10. | INDEMNIFICATION; LIMITATION OF LIABILITY |
10.1 | SHUTTLE Indemnification. SHUTTLE agrees to indemnify, defend and hold PROPAGENIX and Georgetown, and their directors, officers, employees, representatives, agents, successors and assigns (“PROPAGENIX Indemnitees”), harmless from any and all expenses, costs of defense (including without limitation reasonable lawyer’s fees), damages, and any amounts PROPAGENIX Indemnitees become legally obligated to pay (“Losses”) as a result of any Third Party claim or claims against them to the extent that such claim or claims are due to: (i) the gross negligence or willful misconduct of SHUTTLE Indemnitees; or (ii) any breach by SHUTTLE of any of its obligations, representations and warranties hereunder; provided that PROPAGENIX provides SHUTTLE with prompt written notice of any such claim and gives SHUTTLE sole control over defense and settlement of such claim and further provided that SHUTTLE shall not enter into any settlement, compromise or judgment of such claim that imposes any financial obligation, liability, or admission of liability on PROPAGENIX (except with PROPAGENIX’s and PROPAGENIX’s indemnities prior written consent). The rights and obligations of this section shall survive termination or expiration of this Agreement. |
Notwithstanding the foregoing, SHUTTLE shall have no obligation to indemnify, defend, and/or hold harmless PROPAGENIX Indemnitees for any Losses to the extent such Losses arise from or are in connection with (i) PROPAGENIX’s negligence or wilful misconduct; or (ii) breach by PROPAGENIX of any of its obligations, representations or warranties hereunder.
10.2 | PROPAGENIX Indemnification. PROPAGENIX hereby agrees to indemnify, hold harmless and defend SHUTTLE, and its Affiliates and each of their respective agents, representatives, distributors, directors, officers, employees, successors and assigns (“SHUTTLE Indemnitees”) against any and all Losses as a result of any Third Party claim or claims against them to the extent that such claim or claims are due to (i) the gross negligence or willful misconduct of PROPAGENIX Indemnitees; (ii) breach by PROPAGENIX of any of its obligations, representations or warranties hereunder; or (iii) SHUTTLE’s use of the CR Technology in its research except to the extent arising from claims for which SHUTTLE is obligated to indemnify PROPAGENIX under Section 10.1 of this Agreement; provided that SHUTTLE provides PROPAGENIX with prompt notice of any such claim and the exclusive ability to defend (with the reasonable cooperation of SHUTTLE) or settle any such claim and further provided that PROPAGENIX shall not enter into any settlement, compromise or judgment of such claim that imposes financial obligation, liability or admission of liability on SHUTTLE (except with SHUTTLE’s prior written consent). |
Notwithstanding the foregoing, PROPAGENIX shall have no obligation to indemnify, defend, and/or hold harmless SHUTTLE Indemnitees for any Losses to the extent such Losses arise from or are in connection with (i) SHUTTLE’s negligence or wilful misconduct; or (ii) breach by SHUTTLE of any of its obligations, representations or warranties hereunder.
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10.3 | EXCEPT FOR BREACH OF THE CONFIDENTIALITY OBLIGATIONS UNDER SECTION 9, OR A PARTY’S INDEMNIFICATION OLBIGATIONS UNDER SECTION 10, IN NO EVENT SHALL EITHER PARTY BE LIABLE TO THE OTHER PARTY FOR SPECIAL, INCIDENTAL, INDIRECT, PUNITIVE OR CONSEQUENTIAL DAMAGES, INCLUDING LOST PROFITS, LOST REVENUES, DAMAGE TO REPUTATION OR GOODWILL, FAILURE TO REALIZE EXPECTED SAVINGS, TREBLE DAMAGES OR OTHER SUCH COMMERCIAL OR ECONOMIC LOSSES OF ANY KIND OR FOR COSTS OF PROCURING SUBSTITUTE PRODUCTS, WHETHER THE CLAIM IS BASED UPON CONTRACT, WARRANTY, TORT, NEGLIGENCE, PRODUCT LIABILITY, OR STRICT LIABILITY THEORIES OR OTHERWISE. |
11. | USE OF NAMES. |
11.1 | Use of Names. Neither Party shall use the name of the other Party or its employees in any publicity, news release, or other public announcement or comment without the prior consent of an authorized representative of the other Party, except as provided in this Agreement or as required by law; provided, however, that SHUTTLE may make factual statements in any publicity, news release, or other public announcement regarding the existence of this Agreement, PROPAGENIX as licensor hereunder, and use of the CR Technology by SHUTTLE. Georgetown name as the owner of the Licensed Patents must not be used without Georgetown’s approval. | |
11.2 | Press Release. Upon mutual agreement of the Parties, a press release announcing the licensing agreement will be crafted jointly and released within one hundred eighty (180) days after the Effective Date. Neither Party will otherwise make any public statements regarding the terms of this Agreement without prior written consent of the other Party. | |
11.3 | Trademarks. Neither Party shall use the trademarks of the other Party without prior written consent of an authorized representative of the other Party, except as provided in this Agreement. |
12. | OTHER PROVISIONS. |
12.1 | Headings. Headings and captions of the Sections hereof are for convenience only and are not to be used in the interpretation of this Agreement. | |
12.2 | Assignment. This Agreement may not be assigned or otherwise transferred by either Party without the prior written consent of the other Party; provided, that either Party may assign this Agreement without such consent to an Affiliate or to a successor in interest that acquires all or substantially all of the business, stock or assets of the assigning Party to which this Agreement relates, whether by merger, acquisition, sale of stock, sale of assets or otherwise. Further provided that the assigning Party shall notify the other Party within a reasonable amount of time after the assignment has occurred. |
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Notwithstanding the foregoing, PROPAGENIX or its Affiliates may assign this Agreement-without the prior written consent of SHUTTLE in the event of a merger with a Third Party, in the event of an acquisition of the capital stock of PROPAGENIX instituting at least 51% of the capital stock which constitutes voting control of PROPAGENIX by a Third Party, or in connection with the sale of all or substantially all of PROPAGENIX’s assets, provided such Third Party in each incident 1) has the financial ability to acquire or partner with PROPAGENIX; 2) assumes all obligations owed to SHUTTLE in this Agreement; 3) agrees to comply in all respects with the terms, conditions, and provisions of this Agreement.
12.3 | Force Majeure. Neither Party shall be held liable or responsible to the other Party nor be deemed to have defaulted under or breached this Agreement for failure or delay in fulfilling or performing any term of this Agreement when such failure or delay is caused by or results from causes beyond the reasonable control of the affected Party (hereinafter, a “Force Majeure” event), including but not limited to (i) any law, regulation, order, rule, direction, priority, seizure, allocation, requisition, or any other official action by any department, bureau, board, administration, or other instrumentality or agency of any government or political subdivision thereof having jurisdiction over such Party; or (ii) fire, floods, earthquake, embargoes, war, acts of war (whether war be declared or not), insurrections, acts of terrorism, riots, civil commotions, strikes, lockouts or other labor disturbances, unavailability of raw materials, acts of God or acts, omissions or delays in acting by any governmental authority or the other Party. Upon the occurrence of any Force Majeure event, the affected Party shall give written notice of such event to the other Party, and in the event of (ii) above shall use reasonable efforts to overcome such Force Majeure event. | |
12.4 | Governing Law. The Parties acknowledge and agree that this Agreement will be governed and construed in accordance of the laws of Maryland, USA. | |
12.5 | Notices. Any notice or other communication pursuant to this Agreement shall be sufficiently made or given on the date of mailing if sent to such Party by certified first class mail, postage prepaid, or by next day express delivery service, addressed to it at its address below (or such address as it shall designate by written notice given to the other Party). |
If to PROPAGENIX:
PROPAGENIX Inc.
9605 Medical Center Drive, Suite 325
Rockville, MD 20850
Attn: CEO
If to SHUTTLE:
Shuttle Pharmaceuticals
One Research Court, Suite 450
Rockville, MD, 20850
Attn: CEO
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12.6 | Waivers and Modifications. The failure of any Party to insist on the performance of any obligation hereunder shall not be deemed to be a waiver of such obligation. Waiver of any breach of any provision hereof shall not be deemed to be a waiver of any other breach of such provision or any other provision. No waiver, modification, release or amendment of any obligation under or provision of this Agreement shall be valid or effective unless in writing and signed by both Parties hereto. | |
12.7 | Relationship of the Parties. It is expressly agreed that the relationship between the Parties shall not constitute a partnership, joint venture or agency. Neither Party shall have the authority to make any statements, representations or commitments of any kind, or to take any action, which shall be binding on the other, without the prior consent of the other Party to do so. | |
12.8 | Counterparts. This Agreement may be executed in counterparts with the same effect as if both Parties had signed the same document. All such counterparts shall be deemed an original, shall be construed together and shall constitute one and the same instrument. | |
12.9 | Severability. In performing this Agreement, the Parties shall comply with all applicable laws. Wherever there is any conflict between any provision of this Agreement and any applicable law, the applicable law shall prevail, but in such event the affected provision of this Agreement shall be limited or eliminated only to the extent necessary, and the remainder of this Agreement shall remain in full force and effect. In the event the terms of this Agreement are materially altered as a result of the foregoing, the Parties shall renegotiate in good faith the terms of this Agreement to resolve any inequities. Notwithstanding the foregoing, the Parties agree not to submit to any court of competent jurisdiction or tribunal the issue of whether Section 10.3 is illegal, void or unenforceable, the intent of the Parties being that all issues in any dispute, including the issue of arbitrability, be decided by the arbitrator in accordance with Section 8.3. | |
12.10 | Entire Agreement. This Agreement, including the exhibits hereto, constitutes the entire agreement between the Parties with respect to the subject matter hereof, and supersedes any and all oral and/or written communications or understandings relating to the subject matter hereof. | |
12.11 | This Agreement shall be signed in two (2) counterparts each of which shall be deemed to be an original, and both of which taken together shall constitute one and the same instrument. The Parties may sign and deliver this Agreement by electronic mail in portable document format (PDF) form, and a reproduction of this Agreement made by PDF will have the same effect as a signed and delivered original version. |
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the Parties have caused their duly authorized representatives to execute this Agreement as of the Effective Date.
SHUTTLE PHARMACEUTICALS, Inc. |
PROPAGENIX Inc. | |||
By: | ![]() |
By: | ![]() | |
Name: | Anatoly Dritschilo, MD | Name: | Brian A. Pollok, Ph.D | |
Title: | CEO | Title: | President and CEO | |
Date: | Date: | 15 February 2019 |
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Appendix A
Licensed Patents
Patent/Patent
Application Title |
Country of Filing | Application
No. or Issued Patent No. |
Application
Filing Date / Issue Date | |||
Licensed CR Patents (from Georgetown University) | ||||||
Immortalizing Epithelial Cells and Methods of Use | Provisional (US) | 61/413,291
|
November 12, 2010 | |||
“ | Provisional (US) | 61/474,901 | April 13, 2011 | |||
“ | PCT Application | PCT/US11/060378 | November 11, 2011 | |||
“ | United States | 9,279,106 (issued) | March 8, 2016 | |||
“ | Japan | 6,076,258 (issued) | January 20, 2017 | |||
“ | United States | 9,657,272 (issued) | May 23, 2017 | |||
United States | 9,951,315 (issued) | April 24, 2018 | ||||
“ | EPO | 11839723.1 | November 11, 2011 | |||
“ | Canada | 2,817,712 | November 11, 2011 | |||
“ | United States | 10,041,048 (issued) | August 7, 2018 | |||
“ | United States | 15/040,783 (continuation) | February 10, 2016 |
Appendix B
Pricing on CR Reagents
Item | Pricing | |||
Irradiated 3T3-J2 cells; one cryovial of 3x106 cells (sufficient for one T-75 flask) | $ | 150 | ||
CR media (CRM); 250 ml bottle | $ | 300 | ||
Irradiated 3T3-J2 cell conditioned media; 100 ml bottle | $ | 350 |
Appendix C
Limited Use Label License for Use of Conditional Reprogramming (“CR”) Technology Covered Under US Patent Nos. 9,279,106, 9,657,272, 9,951,315, and 10,041,048 and Japanese Patent No. 6,076,258 and Subsequent Patent Applications Pending in the US and Other Jurisdictions (collectively, “Patents”).
Notice to Purchaser:
This product was developed under license to intellectual property owned or controlled by Georgetown University and exclusively licensed to Propagenix Inc. This product is sold for Research Use only. Purchase of this product does not include the right to sell, use or otherwise transfer this product for:
(i) Commercial Use (i.e., (a) any activity undertaken for financial consideration; or (b) the use of this product or any materials made using this product to provide services or quality control testing of other products for commercial sale); or
(ii) Clinical Use (i.e., (a) the administration of this product or any material made using this product to humans; or (b) the use of this product and or any material made using this product to manufacture and/or commercialize diagnostic or therapeutic products or services).
Purchasers wishing to use the product for purposes other than Research Use should contact Propagenix Inc. at 240-713-3300 or support@propagenix.com.
Appendix D
Propagenix agrees to grant three-year, term-limited sublicenses to approved Third Party Distributors chosen by SHUTTLE for a one-time, non-refundable upfront fee of $5,000 USD. These sublicenses shall be renewable upon mutual agreement for additional three-year terms. Any renewal sublicenses will include commercialization milestone payments not to exceed 3% of each successive $100,000 in net sales reached.
Exhibit 10.17
CONTRACT TABLE OF CONTENTS
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PART I-THE SCHEDULE
SECTION B - SUPPLIES OR SERVICES AND PRICES/COSTS
ARTICLE B.1. BRIEF DESCRIPTION OF SUPPLIES OR SERVICES
Topic 352 - Cell-Based Models for Prostate Cancer Health Disparity Research:
This Phase II SBIR effort will complete tasks to meet four objectives to establish 50 prostate cancer cell lines for commercialization for health disparities research. Objective 1 is to establish 25 prostate paired epithelial cancer and normal cell lines from AA prostate surgical specimens and 25 prostate epithelial cancer cell lines from targeted needle biopsies (product#1). In objective 2, paired tumor/normal micro-arrays will be designed and manufactured (product#2). In objective 3, proprietary, supplemented conditioned medium will be manufactured for growing AA prostate cancer cells (product #3). In objective 4, a plan will be advanced to commercialize and market the AA derived prostate cancer cells and related products for health disparities research.
ARTICLE B.2. PRICES
a. | The total fixed price of this contract is $1,484,350. | |
b. | Upon delivery and acceptance of the services described in SECTION C of this contract and identified in the schedule of charges below, the Government shall pay to the Contractor the unit price(s) set forth below: |
PAYMENT SCHEDULE
Description | Amount ($) | |||
Kick-Off Presentation | $ | 164,927 | ||
Quarterly Report 1 | $ | 164,927 | ||
Quarterly Report 2 | $ | 164,927 | ||
Quarterly Report 3 | $ | 164,927 | ||
Quarterly Report 4, SBIR Program Life Cycle
Certification, Annual Updated Commercialization Plan | $ | 164,927 | ||
Quarterly Report 5 | $ | 164,927 | ||
Quarterly Report 6 | $ | 164,927 | ||
Quarterly Report 7 | $ | 164,927 | ||
Final Report, Contract Outcomes Report, Final presentation, and all other contract deliverables | $ | 164,934 | ||
TOTAL FIXED PRICE | $ | 1,484,350 |
ARTICLE B.3. ADVANCE UNDERSTANDINGS
a. | Contract Number Designation |
On all correspondence submitted under this contract, the Contractor agrees to clearly identify the two contract numbers that appear on the face page of the contract as follows:
HHS Contract Number: HHSN261201800016C
UPIID: 75N91018C00016
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b. | SBIR Funding Agreement Certification |
The SBIR Funding Agreement Certification form, located in SECTION J, must be completed at the time of award prior to the performance of work under this contract, in accordance with the SBIR Policy Directive issued by SBA (October 18, 2012).
For additional information, see NIH Policy Notice NOT-OD-13-116, entitled, “New Program Certifications Required for SBIR and STTR Awards,” located at: http://grants.nih.gov/grants/guide/notice-files/NOT- OD-13-116.html.
SECTION C - DESCRIPTIONZSPECIFICATIONSZWORK STATEMENT
ARTICLE C.1. STATEMENT OF WORK
a. | Independently and not as an agent of the Government, the Contractor shall furnish all the necessary services, qualified personnel, material, equipment, and facilities, not otherwise provided by the Government as needed to perform the Statement of Work, dated September 17, 2018, set forth in SECTION J-List of Attachments, attached hereto and made a part of this contract. |
ARTICLE C.2. REPORTING REQUIREMENTS
All reports required herein shall be submitted in electronic format via e-mail, as attachments, to the following designated NCI Branch Distribution Mailbox: NCIbrancheinvoices@mail.nih.gov.
Each e-mail submission shall contain only one deliverable. If the attached file for the deliverable exceeds 50 MB, the Contractor shall divide the deliverable into files of 50 MB each. All deliverables shall be limited to five file attachments or less.
The subject line of the e-mail shall read as follows: Deliverable- Contract Number_ Vendor’s Name_ Deliverable Description- Due Date.
All electronic reports submitted shall be compliant with Section 508 of the Rehabilitation Act of 1973. Additional information about testing documents for Section 508 compliance, including guidance and specific checklists, by application, can be found at: http://www.hhs.gov/web/508/index.html under “Making Files Accessible.”
a. | Technical Reports |
In addition to those reports required by the other terms of this contract, the Contractor shall prepare and submit the following reports in the manner stated below and in accordance with the DELIVERIES Article in SECTION F of this contract:
Note: The Contractor shall include, in any technical progress report submitted, the applicable PubMed Central (PMC) or NIH Manuscript Submission reference number when citing publications that arise from its NIH funded research.
1. Kick-Off Presentation
The Contractor shall prepare and submit a kick-off presentation. Slides shall be prepared and presentation of the slides shall occur either in-person or through webinar or teleconference. The presentation shall cover the following:
a. | Discussion of the Contractor’s organization and project status, particularly changes that occurred since the proposal submission; |
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b. | Contractor’s recent achievements (patents, publications, sales, regulatory approvals, partnerships, awards, etc.); | |
c. | Status of the field; | |
d. | Status of commercial and academic competitors; | |
e. | Where the proposed project is positioned against the state of the art; | |
f. | Intellectual property landscape; | |
g. | Refresher on the proposed technology/R&D; | |
h. | Detailed plan for the first budget period of the contract; | |
i. | Milestones (technical and commercial) to be achieved by the end of the first budget period of the contract; | |
j. | Discussion of anticipated technical risks and alternative approaches; | |
k. | Questions to the NCI. |
2. Quarterly Reports
The Contractor shall submit Quarterly Reports, which shall include:
a. | Summary of technical objectives with status of each objective clearly marked ( e.g. previously completed, completed during this reporting period, not started, etc); | |
b. | Clear description of activities accomplished in the quarter; | |
c. | Analysis of experimental data and presentation of selected data; | |
d. | Comments regarding the timeliness of performance; | |
e. | Brief explanation of objectives/activities to be pursued in the next reporting period. |
This report shall generally be no longer than five (5) pages, excluding tables, figures, images and graphs used to present data.
3. Annual Updated Commercialization Plan
The Contractor shall submit an updated commercialization plan which shall include.
a. | Value of the SBIR Project. Expected Outcomes, and Impact |
Describe, in layperson’s terms, the proposed project and its key technology objectives. State the product, process, or service to be developed in Phases II and III. Clarify the need addressed, specifying weaknesses in the current approaches to meet this need. In addition, describe the commercial applications of the research and the innovation inherent in this application. Be sure to also specify the potential societal, educational, and scientific benefits of this work. Explain the non-commercial impacts to the overall significance of the project. Explain how the SBIR contract integrates with the overall business plan of the company.
b. | Organization |
Give a brief description of the Contractor’s organization, including corporate objectives, core competencies, present size (annual sales level and number and types of employees), history of previous Federal and non-Federal funding, regulatory experience and subsequent commercialization, and any current products/services that have significant sales. Include a short description of the origins of the Contractor’s organization. Indicate the Contractor’s vision for the future, how the Contractor will grow/maintain a sustainable business entity, and how the Contractor will meet critical management functions as the Contractor’s organization evolves from a small technology R&D business to a successful commercial entity.
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c. | Market. Customer, and Competition |
Describe the market and/or market segments being targeted and provide a brief profile of the potential customer. Tell what significant advantages the Contractor’s innovation will bring to the market - e.g., better performance, lower cost, faster, more efficient or effective, new capability. Explain the hurdles the Contractor will have to overcome in order to gain market/customer acceptance of the Contractor’s innovation. Describe any strategic alliances, partnerships, or licensing agreements the Contractor has in place to get FDA approval (if required) and to market and sell the Contractor’s product. Briefly describe the Contractor’s marketing and sales strategy. Give an overview of the current competitive landscape and any potential competitors over the next several years.
d. | Intellectual Property (IP) Protection |
Describe how the Contractor is going to protect the IP that results from the Contractor’s innovation. Also, note other actions the Contractor may consider taking that will constitute at least a temporal barrier to others aiming to provide a solution similar to the Contractor’s.
e. | Finance Plan |
Describe the necessary financing the Contractor will require to commercialize the innovation and when it will be required. Describe the Contractor’s plans to raise the requisite financing to launch the Contractor’s innovation into Phase III and begin the revenue stream. Plans for this financing stage may be demonstrated in one or more of the following ways:
● | Letter of commitment of funding. | |
● | Letter of intent or evidence of negotiations to provide funding, should the Phase II project be successful and the market need still exist. | |
● | Letter of support for the project and/or some in-kind commitment, e.g., to test or evaluate the innovation. | |
● | Specific steps the Contractor is going to take to secure Phase III funding. |
f. | Production and Marketing Plan |
Describe how the production of the Contractor’s product/process/service will occur ( e.g., in house manufacturing, contract manufacturing). Describe the steps the Contractor will take to market and sell the Contractor’s product/process/service. For example, explain plans for licensing, Internet sales, etc.
g. | Revenue Stream |
Explain how the Contractor plans to generate a revenue stream for the Contractor’s organization should this project be a success. Examples of revenue stream generation include, but are not limited to; manufacture and direct sales, sales through value added resellers or other distributors, joint venture, licensing, service. Describe how the Contractor’s staffing will change to meet the Contractor’s revenue expectations.
4. Draft Final Report
The Contractor shall submit a Draft Final Report. The Government Contracting Officer’s Representative (COR) will review and provide comments on the Draft Final Report, which the Contractor shall incorporate into a revised Final Report (- see Reporting Requirement Item 5).
The Draft Final Report shall include the following three sections:
Section 1: Summary of Salient Results
The Summary of Salient Results shall summarize in 200 words or less the salient results achieved during performance of the contract.
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Section 2: Final Technical Report
The Final Technical Report shall set forth the work performed and results obtained for the entire contract period of performance. This report shall be in sufficient detail to describe comprehensively the results achieved.
Section 3: Commercialization Plan
The Commercialization Plan shall be in the same format as described above for the Annual Updated Commercialization Plan (- see Reporting Requirement Item 3).
5. Final Report
The Contractor shall submit a Final Report. This document shall incorporate revisions in response to the comments provided by the Government COR after review of the Draft Final Report (- see Reporting Requirements Item 4).
6. Contract Outcomes Report
The Contractor shall submit a Contract Outcomes Report using a fillable PDF form to be provided by the Government. The Contract Outcomes Report must be provided as a filled-in version of the PDF form provided and not as a printed or scanned copy of this document.
7. Final Presentation
The Contractor shall prepare and submit a final presentation. Slides shall be prepared and presentation of the slides shall occur either in-person or through webinar or teleconference. The presentation shall cover the following:
a. | Discussion of the Contractor’s organization and project status; | |
b. | Contractor’s achievements during the performance period (patents, publications, sales, regulatory approvals, partnerships, awards, etc.); | |
c. | Detailed results of the performed research and development; | |
d. | Discussion of proposed milestones and whether they were achieved during the contract performance; | |
e. | Summary of progress towards commercialization; | |
f. | Questions to the NCI. |
b. | Other Reports/Deliverables |
1. Reporting of Financial Conflict of Interest (FCOI)
All reports and documentation required by 45 CFR Part 94, Responsible Prospective Contractors including, but not limited to, the New FCOI Report, Annual FCOI Report, Revised FCOI Report, and the Mitigation Report, shall be submitted to the Contracting Officer in Electronic format. Thereafter, reports shall be due in accordance with the regulatory compliance requirements in 45 CFR Part 94.
45 CFR Part 94 is available at: http://www.ecfr.gov/cgi-bin/text-idx? c=ecfr&SID=0af84ca649a74846f102aaf664da1623&rqn=div5&view=text&node=45:1.0.1.1.51 &idno=45.
See Part 94.5, Management and reporting of financial conflicts of interest for complete information on reporting requirements.
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(Reference subparagraph g. of the INSTITUTIONAL RESPONSIBILITY REGARDING INVESTIGATOR FINANCIAL CONFLICTS OF INTEREST Article in SECTION H of this contract.)
2. NIH Small Business Innovation Research (SBIR) Program Life Cycle Certification
In accordance with the SBIR/STTR Reauthorization Act of 2011, the contractor shall complete and submit the NIH Small Business Innovation Research (SBIR) Life Cycle Certification form, located in SECTION J, of the contract to the Contracting Officer. This certification is required to ensure the contractor is meeting the program’s requirements during the life cycle of the contract.
The Life Cycle Certification form shall be submitted as follows:
● | Phase I SBIR Contractors shall submit the Certification at the time of receiving final payment or disbursement. | |
● | Phase II SBIR Contractors shall submit the Certification prior to receiving more than 50% of the total contract amount AND prior to final payment or disbursement. |
The Contracting Officer, may, at any time after ward request further clarifications and supporting documentation in order to assist in the verification of any information provided by the contractor.
For additional information, see NIH Policy Notice NOT-OD-13-116, entitled, “New Program Certifications Required for SBIR and STTR Awards,” located at: http://qrants.nih.gov/grants/guide/ notice-files/NOT-OD-13-116.html.
ARTICLE C.3. INVENTION REPORTING REQUIREMENT
A ‘subject invention’ is defined as “any invention of the contractor made in the performance of work under a Government contract.” See FAR 27.301.
All reports and documentation required for subject inventions by FAR Clause 52.227-11, Patent Rights-Ownership by the Contractor including, but not limited to, the invention disclosure report, the confirmatory license, and the Government support certification, shall be directed to the Division of Extramural Inventions and Technology Resources (DEITR), OPERA, OER, NIH, 6705 Rockledge Drive, Suite 310, MSC 7980, Bethesda, Maryland 20892-7980 (Telephone: 301-435-1986).
To assist contractors in complying with invention reporting requirements of the clause, the NIH has developed “Interagency Edison,” an electronic invention reporting system. Use of Interagency Edison is required as it streamlines the reporting process and greatly reduces paperwork. Access to the system is through a secure interactive Web site to ensure that all information submitted is protected. Interagency Edison and information relating to the capabilities of the system can be obtained from the Web ( http://www.iedison.gov). or by contacting the Extramural Inventions and Technology Resources Branch, OPERA, NIH.
In addition, a final invention statement, listing all subject inventions or stating that there were none, shall be submitted to the Contracting Officer and the Contracting Officer’s Representative (COR) on or before the completion date of the contract.
SECTION D - PACKAGING, MARKING AND SHIPPING
All deliverables required under this contract shall be packaged, marked and shipped in accordance with Government specifications. At a minimum, all deliverables shall be marked with the contract number and Contractor name. The Contractor shall guarantee that all required materials shall be delivered in immediate usable and acceptable condition.
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SECTION E - INSPECTION AND ACCEPTANCE
a. | The Contracting Officer or the duly authorized representative will perform inspection and acceptance of materials and services to be provided. | |
b. | For the purpose of this SECTION, the Contracting Officer’s Representative (COR) designated in SECTION G is the authorized representative of the Contracting Officer. | |
c. | Inspection and acceptance will be performed at: |
National Cancer Institute
9609 Medical Center Drive
Rockville, MD 20850
Acceptance may be presumed unless otherwise indicated in writing by the Contracting Officer or the duly authorized representative within 30 days of receipt.
d. | This contract incorporates the following clauses by reference, with the same force and effect as if given in full text. Upon request, the Contracting Officer will make its full text available. |
FAR Clause 52.246-9, Inspection of Research and Development (Short Form) (April 1984).
FAR Clause 52.246-16, Responsibility for Supplies (April 1984).
SECTION F - DELIVERIES OR PERFORMANCE
ARTICLE F.1. Estimated Completion Date
The estimated completion date of this contract is September 16, 2020.
ARTICLE F.2. DELIVERIES
Satisfactory performance of the final contract shall be deemed to occur upon performance of the work described in the Statement of Work Article in SECTION C of this contract and upon delivery and acceptance by the Contracting Officer, or the duly authorized representative, of the following items in accordance with the stated delivery schedule:
a. | The items specified below as described in the REPORTING REQUIREMENTS Article in SECTION C of this contract will be required to be delivered F.o.b. Destination as set forth in FAR 52.247-35, F.o.b. DESTINATION, WITHIN CONSIGNEES PREMISES (APRIL 1984), and in accordance with and by the date(s) specified below: |
Item | Description | Delivery Schedule | ||
(1) | SBIR Funding Agreement Certification | Due at time of award, prior to performance of any work under this contract. | ||
(2) | Kick-off Presentation | Due on or before 30 calendar days following the effective date of this contract. | ||
(3) | Quarterly Reports | Due on or before 15 calendar days following completion of each reporting period. A Quarterly Report shall not be due when the Final Report is due. | ||
(4) | SBIR Program Life Cycle Certification 1 | Due upon submission of invoice requesting at least 50% of the total fixed price. |
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Item | Description | Delivery Schedule | ||
(5) | Annual Updated Commercialization Plan | Due on or before 1 year after the effective date of this contract. | ||
(6) | Draft Final Report | Due on or before 1 month prior to the completion date of the contract. | ||
(7) | Final Report | Due on or before the completion date of the contract. | ||
(8) | Contract Outcomes Report | Due on or before the completion date of the contract. | ||
(9) | Final Presentation | Due on or before the completion date of the contract. | ||
(W) | SBIR Program Life Cycle Certification 2 | Due on or before the completion date of the contract. | ||
(11) | Final Invention Statement | Due on or before the completion date of the contract. | ||
(12) | Financial Conflict of Interest Reports | In accordance with 45 CFR Part 94. | ||
(13) | Invention Disclosure Report & Annual Invention Utilization Reports |
In accordance with FAR Clause 52.227-11, Patent Rights-Ownership by the Contractor, for any subject invention(s). |
b. The above items shall be addressed and delivered to:
Addressee | Deliverables | |
NCI Contracting Officer ncibrancheinvoices@mail.nih.gov | Items 1-12, in electronic format | |
OPERA, OEH, NIH 6705 Rockledge Drive, Suite 310, MSC 7980 Bethesda, MD 20892-7980 |
Item 13. via http://www.iedison.qov |
ARTICLE F.3. CLAUSES INCORPORATED BY REFERENCE, FAR 52.252-2 (FEBRUARY 1998)
This contract incorporates the following clause(s) by reference, with the same force and effect as if it were given in full text. Upon request, the Contracting Officer will make its full text available. Also, the full text of a clause may be accessed electronically at this address: https://www.acquisition.qov/?q=browsefar.
FEDERAL ACQUISITION REGULATION (48 CFR CHAPTER 1) CLAUSE: 52.242-15, Stop Work Order (August 1989).
SECTION G - CONTRACT ADMINISTRATION DATA
ARTICLE G.1. CONTRACTING OFFICER’S REPRESENTATIVE (COR)
The following Contracting Officer’s Representative (COR) will represent the Government for the purpose of this contract:
Dr. Xiang-Jian Lou
The COR is responsible for: (1) monitoring the Contractor’s technical progress, including the surveillance and assessment of performance and recommending to the Contracting Officer changes in requirements; (2) interpreting the statement of work and any other technical performance requirements; (3) performing technical evaluation as required; (4) performing technical inspections and acceptances required by this contract; and (5) assisting in the resolution of technical problems encountered during performance.
The Contracting Officer is the only person with authority to act as agent of the Government under this contract. Only the Contracting Officer has authority to: (1) direct or negotiate any changes in the statement of work; (2) modify or extend the period of performance; (3) change the delivery schedule; (4) authorize reimbursement to the Contractor for any costs incurred during the performance of this contract; (5) otherwise change any terms and conditions of this contract; or (6) sign written licensing agreements. Any signed agreement shall be incorporated by reference in Section K of the contract
The Government may unilaterally change its COR designation.
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ARTICLE G.2. KEY PERSONNEL, HHSAR 352.237-75 (December 2015)
The key personnel specified in this contract are considered to be essential to work performance. At least 30 days prior to the contractor voluntarily diverting any of the specified individuals to other programs or contracts the Contractor shall notify the Contracting Officer and shall submit a justification for the diversion or replacement and a request to replace the individual. The request must identify the proposed replacement and provide an explanation of how the replacement’s skills, experience, and credentials meet or exceed the requirements of the contract (including, when applicable, Human Subjects Testing requirements). If the employee of the contractor is terminated for cause or separates from the contractor voluntarily with less than thirty days notice, the Contractor shall provide the maximum notice practicable under the circumstances. The Contractor shall not divert, replace, or announce any such change to key personnel without the written consent of the Contracting Officer. The contract will be modified to add or delete key personnel as necessary to reflect the agreement of the parties.
(End of Clause)
The following individual(s) is/are considered to be essential to the work being performed hereunder:
Name | Title | |
Scott Grindrod, PhD | Principal Investigator |
ARTICLE G.3. INVOICE SUBMISSION
a. | Invoice Instructions for NIH Fixed-Price Type Contracts, NIH(RC)-2, are attached and made part of this contract. The Contractor shall follow the attached instructions and submission procedures specified below to meet the requirements of a “proper invoice” pursuant to FAR Subpart 32.9, Prompt Payment. |
1. | Payment requests shall be submitted to the offices identified below. Do not submit supporting documentation (e.g., receipts, time sheets, vendor invoices, etc.) with your payment request unless specified elsewhere in the contract or requested by the Contracting Officer. |
a. The original invoice shall be submitted to the following designated billing office:
National Institutes of Health
Office of Financial Management
Commercial Accounts
2115 East Jefferson Street, Room 4B-432, MSC 8500
Bethesda, MD 20892-8500
b. One courtesy copy of the original invoice shall be submitted electronically as follows:
1. | The Contractor shall scan the original payment request (invoice) in Adobe Portable Document Format (PDF) along with the necessary supporting documentation as one single attachment. | |
2. | Save the single attachment (scanned invoice along with any supporting documentation) in the following format: YourVendorName_lnvoice number (e.g., if you are submitting Invoice 123456, save the single attachment as “Contractor Namejnvoice 123456”). | |
[Note: Please do not use special characters (such as #, $, %, *, &, I) when saving your attachment. Only the underscore symbol (_) is permitted.] |
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3. | Transmit the saved single attachment via e-mail to the appropriate branch’s Central Point of Distribution. For the purpose of this contract, the Central Point of Distribution is NCI OA Branch E - ncibrancheinvoices@mail.nih.gov. Only one payment request shall be submitted per e-mail and the subject line of the e-mail shall include the Contract Number_Contract Title_Contractor’s Name_unique Invoice number. | |
Note: The original payment request must still be submitted in hard copy and mailed to the designated billing office listed in subparagraph a., above, to meet the requirements of a “proper invoice.” Also, the Contractor must certify on the payment request that the electronic courtesy copy is a duplicate of the original invoice mailed to NIH’s Office of Financial Management. |
2. | In addition to the requirements specified in FAR 32.905 for a proper invoice, the Contractor shall include the following information on the face page of all payment requests: |
a. | Name of the Office of Acquisitions: The National Cancer Institute. | |
b. | Federal Taxpayer Identification Number (TIN). If the Contractor does not have a valid TIN, it shall identify the Vendor Identification Number (VIN) on the payment request. The VIN is the number that appears after the Contractor’s name on the face page of the contract. If the Contractor has neither a TIN, DUNS, or VIN, contact the Contracting Officer. | |
c. | DUNS or DUNS+4 Number. The DUNS number must identify the Contractor’s name and address exactly as stated in the contract and as registered in the System for Award Management (SAM) database. If the Contractor does not have a valid DUNS number, it shall identify the Vendor Identification Number (VIN) on the payment request. The VIN is the number that appears after the Contractor’s name on the face page of the contract. If the Contractor has neither a TIN, DUNS, or VIN, contact the Contracting Officer. | |
d. | Invoice Matching Option. This contract requires a two-way match. | |
e. | Unique Invoice Number. Each payment request must be identified by a unique invoice number, which can only be used one time regardless of the number of contracts or orders held by an organization. | |
f. | The contract period of performance. | |
g. | The contract number designations identified in Article B and the contract title. |
b. | Inquiries regarding payment of invoices shall be directed to the designated billing office, (301) 496-6452. |
ARTICLE G.4. PROVIDING ACCELERATED PAYMENT TO SMALL BUSINESS
SUBCONTRACTORS, FAR 52.232-40 (December 2013)
a. | Upon receipt of accelerated payments from the Government, the Contractor shall make accelerated payments to its small business subcontractors under this contract, to the maximum extent practicable and prior to when such payment is otherwise required under the applicable contract or subcontract, after receipt of a proper invoice and all other required documentation from the small business subcontractor. |
b. | The acceleration of payments under this clause does not provide any new rights under the prompt Payment Act. |
c. | Include the substance of this clause, include this paragraph c, in all subcontracts with small business concerns, including subcontracts with small business concerns for the acquisition of commercial items. |
(End of Clause)
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ARTICLE G.5. POST AWARD EVALUATION OF CONTRACTOR PERFORMANCE
a. | Contractor Performance Evaluations |
Interim and Final evaluations of Contractor performance will be prepared on this contract in accordance with FAR Subpart 42.15. The Final performance evaluation will be prepared at the time of completion of work. In addition to the Final evaluation, Interim evaluation(s) will be prepared Annually, on or around the anniversary of the effective date of the contract.
Interim and Final evaluations will be provided to the Contractor as soon as practicable after completion of the evaluation. The Contractor will be permitted sixty days to review the document and to submit additional information or a rebutting statement. If agreement cannot be reached between the parties, the matter will be referred to an individual one level above the Contracting Officer, whose decision will be final.
Copies of the evaluations, Contractor responses, and review comments, if any, will be retained as part of the contract file, and may be used to support future award decisions.
b. | Electronic Access to Contractor Performance Evaluations |
Contractors may access evaluations through a secure Web site for review and comment at the following address: http://www.cpars.gov.
SECTION H - SPECIAL CONTRACT REQUIREMENTS
ARTICLE H.1. HUMAN SUBJECTS
It is hereby understood and agreed that research involving human subjects shall not be conducted under this contract, and that no material developed, modified, or delivered by or to the Government under this contract, or any subsequent modification of such material, will be used by the Contractor or made available by the Contractor for use by anyone other than the Government, for experimental or therapeutic use involving humans without the prior written approval of the Contracting Officer.
ARTICLE H.2. HUMAN MATERIALS
The acquisition and supply of all human specimen material (including fetal material) used under this contract shall be obtained by the Contractor in full compliance with applicable State and Local laws and the provisions of the Uniform Anatomical Gift Act in the United States, and no undue inducements, monetary or otherwise, will be offered to any person to influence their donation of human material.
ARTICLE H.3. NIH POLICY ON ENHANCING REPRODUCIBILITY THROUGH RIGOR AND TRANSPARENCY
Contractors shall adhere to the NIH policy of enhancing reproducibility through rigor and transparency by addressing each of the four areas of the policy in performance of the Statement of Work and in publications, as applicable:
1) Scientific Premise; 2) Scientific Rigor; 3) Consideration of Relevant Biological Variables, including Sex; and 4) Authentication of Key Biological and/or Chemical Resources. This policy applies to all NIH funded research and development, from basic through advanced clinical studies. See NIH Guide Notice, NQT-QD-15-103. “Enhancing Reproducibility through Rigor and Transparency” and NOT-OD-15-1Q2, “Consideration of Sex as a Biological Variable in NIH-funded Research” for more information. In addition, publications are expected to follow the guidance at http:// www.nih.gov/research-traininq/riqor-reproducibility/principles-guidelines-reporting-preclinical-research. whether preclinical or otherwise, as appropriate. More information is available at http://grants.nih.gov/reproducibility/index.htm. including FAQs and a General Policy Overview.
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ARTICLE H.4. NIH POLICY ON ENHANCING PUBLIC ACCESS TO ARCHIVED PUBLICATIONS RESULTING FROM NIH-FUNDED RESEARCH
NIH-funded investigators shall submit to the NIH National Library of Medicine’s (NLM) PubMed Central (PMC) an electronic version of the author’s final manuscript, upon acceptance for publication, resulting from research supported in whole or in part with direct costs from NIH. NIH defines the author’s final manuscript as the final version accepted for journal publication, and includes all modifications from the publishing peer review process. The PMC archive will preserve permanently these manuscripts for use by the public, health care providers, educators, scientists, and NIH. The Policy directs electronic submissions to the NIH/NLM/PMC: http://www.pubmedcentral.nih.gov.
Additional information is available at http://grants.nih.qov/grants/quide/notice-files/NOT-OD-09-Q71.html and http:// publicaccess.nih.gov.
ARTICLE H.5. ACKNOWLEDGEMENT OF FEDERAL FUNDING
The Contractor shall clearly state, when issuing statements, press releases, requests for proposals, bid solicitations and other documents describing projects or programs funded in whole or in part with Federal money: (1) the percentage of the total costs of the program or project which will be financed with Federal money; (2) the dollar amount of Federal funds for the project or program; and (3) the percentage and dollar amount of the total costs of the project or program that will be financed by nongovernmental sources.
ARTICLE H.6. CARE OF LIVE VERTEBRATE ANIMALS, HHSAR 352.270-5(b) (December 2015)
a. | Before undertaking performance of any contract involving animal-related activities where the species is regulated by the United Sates Department of Agriculture (USDA), the Contractor shall register with the Secretary of Agriculture of the United States in accordance with 7 U.S.C. 2136 and 9 CFR 2.25 through 2.28. The Contractor shall furnish evidence of the registration to the Contracting Officer. |
b. | The Contractor shall acquire vertebrate animals used in research from a dealer licensed by the Secretary of Agriculture under 7 U.S.C. 2133 and 9 CFR 2.1 2.11, or from a source that is exempt from licensing under those sections. |
c. | The Contractor agrees that the care, use, and intended use of any live vertebrate animals in the performance of this contract shall conform with the Public Health Service (PHS) Policy on Humane Care and Use of Laboratory Animals (PHS Policy), the current Animal Welfare Assurance (Assurance), the Guide for the Care and Use of Laboratory Animals (National Academy Press, Washington, DC) and the pertinent laws and regulations of the United States Department of Agriculture (see 7 U.S.C. 2131 et seq. and 9 CFR subchapter A, Parts 1-4). In case of conflict between standards, the more stringent standard shall govern. |
d. | If at any time during performance of this contract, the Contracting Officer determines, in consultation with the Office of Laboratory Animal Welfare (OLAW), National Institutes of Health (NIH), that the Contractor is not in compliance with any of the requirements and standards stated in paragraphs (a) through (c)above, the Contracting Officer may immediately suspend, in whole or in part, work and further payments under this contract until the Contractor corrects the noncompliance. Notice of the suspension may be communicated by telephone and confirmed in writing. If the Contractor fails to complete corrective action within the period of time designated in the Contracting Officer’s written notice of suspension, the Contracting Officer may, in consultation with OLAW, NIH, terminate this contract in whole or in part, and the Contractor’s name may be removed from the list of those contractors with Animal Welfare Assurances. |
Note: The Contractor may request registration of its facility and a current listing of licensed dealers from the Regional Office of the Animal and Plant Health Inspection Service (APHIS), USDA, for the region in which its research facility is located. The location of the appropriate APHIS Regional Office, as well as information concerning this program may be obtained by contacting the Animal Care Staff, USDA/APHIS, 4700 River Road, Riverdale, Maryland 20737 (Email: ace@aphis.usda.qov; Web site: ( http://www.aphis.usda.gov/wps/portal/aphis/ourfocus/animalwelfare).
(End of clause)
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ARTICLE H.7. ANIMAL WELFARE
All research involving live, vertebrate animals shall be conducted in accordance with the Public Health Service Policy on Humane Care and Use of Laboratory Animals (PHS Policy). The PHS Policy can be accessed at: http:// qrants1.nih.gov/qrants/olaw/references/phspol.htm
In addition, the research involving live vertebrate animals shall be conducted in accordance with the description set forth in the Vertebrate Animal Section (VAS) of the contractor’s technical proposal, as modified in the Final Proposal Revision (FPR), dated July 31,2018, which is incorporated by reference.
ARTICLE H.8. RESTRICTION ON PORNOGRAPHY ON COMPUTER NETWORKS
The Contractor shall not use contract funds to maintain or establish a computer network unless such network blocks the viewing, downloading, and exchanging of pornography.
ARTICLE H.9. GUN CONTROL
The Contractor shall not use contract funds in whole or in part, to advocate or promote gun control.
ARTICLE H.10. LIMITATIONS ON SUBCONTRACTING - SBIR
The Contractor shall perform a minimum of one-half of the research and/or analytical effort conducted under this contract, as measured by total contract dollars. Any deviation from this requirement must be approved in writing by the Contracting Officer.
ARTICLE H.11. INSTITUTIONAL RESPONSIBILITY REGARDING INVESTIGATOR FINANCIAL CONFLICTS OF INTEREST
The Institution (includes any contractor, public or private, excluding a Federal agency) shall comply with the requirements of 45 CFR Part 94, Responsible Prospective Contractors, which promotes objectivity in research by establishing standards to ensure that Investigators (defined as the project director or principal Investigator and any other person, regardless of title or position, who is responsible for the design, conduct, or reporting of research funded under NIH contracts, or proposed for such funding, which may include, for example, collaborators or consultants) will not be biased by any Investigator financial conflicts of interest. 45 CFR Part 94 is available at the following Web site:: http://www.ecfr.gov/cgi-bin/text-idx? c=ecfr&SID=0af84ca649a74846f102aaf664da1623&rgn=div5&view=text&node=45:1.0.1.1.51&idno=45 As required by 45 CFR Part 94, the Institution shall, at a minimum:
a. | Maintain an up-to-date, written, enforceable policy on financial conflicts of interest that complies with 45 CFR Part 94, inform each Investigator of the policy, the Investigator’s reporting responsibilities regarding disclosure of significant financial interests, and the applicable regulation, and make such policy available via a publicly accessible Web site, or if none currently exist, available to any requestor within five business days of a request. A significant financial interest means a financial interest consisting of one or more of the following interests of the Investigator (and those of the Investigator’s spouse and dependent children) that reasonably appears to be related to the Investigator’s institutional responsibilities: |
1. | With regard to any publicly traded entity, a significant financial interest exists if the value of any remuneration received from the entity in the twelve months preceding the disclosure and the value of any equity interest in the entity as of the date of disclosure, when aggregated, exceeds $5,000. Included are payments and equity interests; |
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2. | With regard to any non-publicly traded entity, a significant financial interest exists if the value of any remuneration received from the entity in the twelve months preceding the disclosure, when aggregated, exceeds $5,000, or when the Investigator (or the Investigator’s spouse or dependent children) holds any equity interest; or | |
3. | Intellectual property rights and interests, upon receipt of income related to such rights and interest. |
Significant financial interests do not include the following: |
1. | Income from seminars, lectures, or teaching, and service on advisory or review panels for government agencies, Institutions of higher education, academic teaching hospitals, medical centers, or research institutes with an Institution of higher learning; and | |
2. | Income from investment vehicles, such as mutual funds and retirement accounts, as long as the Investigator does not directly control the investment decisions made in these vehicles. |
b. | Require each Investigator to complete training regarding the Institution’s financial conflicts of interest policy prior to engaging in research related to any NIH-funded contract and at least every four years. The Institution must take reasonable steps [see Part 94.4(c)] to ensure that investigators working as collaborators, consultants or subcontractors comply with the regulations. | |
c. | Designate an official(s) to solicit and review disclosures of significant financial interests from each Investigator who is planning to participate in, or is participating in, the NIH-funded research. | |
d. | Require that each Investigator who is planning to participate in the NIH-funded research disclose to the Institution’s designated official(s) the Investigator’s significant financial interest (and those of the Investigator’s spouse and dependent children) no later than the date of submission of the Institution’s proposal for NIH- funded research. Require that each Investigator who is participating in the NIH-funded research to submit an updated disclosure of significant financial interests at least annually, in accordance with the specific time period prescribed by the Institution during the period of the award as well as within thirty days of discovering or acquiring a new significant financial interest. | |
e. | Provide guidelines consistent with the regulations for the designated official(s) to determine whether an Investigator’s significant financial interest is related to NIH-funded research and, if so related, whether the significant financial interest is a financial conflict of interest. An Investigator’s significant financial interest is related to NIH-funded research when the Institution, thorough its designated official(s), reasonably determines that the significant financial interest: Could be affected by the NIH-funded research; or is in an entity whose financial interest could be affected by the research. A financial conflict of interest exists when the Institution, through its designated official(s), reasonably determines that the significant financial interest could directly and significantly affect the design, conduct, or reporting of the NIH-funded research. | |
f. | Take such actions as necessary to manage financial conflicts of interest, including any financial conflicts of a subcontractor Investigator. Management of an identified financial conflict of interest requires development and implementation of a management plan and, if necessary, a retrospective review and mitigation report pursuant to Part 94.5(a). | |
g. | Provide initial and ongoing FCOI reports to the Contracting Officer pursuant to Part 94.5(b). | |
h. | Maintain records relating to all Investigator disclosures of financial interests and the Institution’s review of, and response to, such disclosures, and all actions under the Institution’s policy or retrospective review, if applicable, for at least 3 years from the date of final payment or, where applicable, for the other time periods specified in 48 CFR Part 4, subpart 4.7, Contract Records Retention. |
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i. | Establish adequate enforcement mechanisms and provide for employee sanctions or other administrative actions to ensure Investigator compliance as appropriate. | |
j. | Complete the certification in Section K - Representations, Certifications, and Other Statements of Offerors titled “Certification of Institutional Policy on Financial Conflicts of Interest”. |
If the failure of an Institution to comply with an Institution’s financial conflicts of interest policy or a financial conflict of interest management plan appears to have biased the design, conduct, or reporting of the NIH-funded research, the Institution must promptly notify the Contracting Officer of the corrective action taken or to be taken. The Contracting Officer will consider the situation and, as necessary, take appropriate action or refer the matter to the Institution for further action, which may include directions to the Institution on how to maintain appropriate objectivity in the NIH- funded research project.
The Contracting Officer and/or HHS may inquire at any time before, during, or after award into any Investigator disclosure of financial interests, and the Institution’s review of, and response to, such disclosure, regardless of whether the disclosure resulted in the Institution’s determination of a financial conflict of interests.. The Contracting Officer may require submission of the records or review them on site. On the basis of this review of records or other information that may be available, the Contracting Officer may decide that a particular financial conflict of interest will bias the objectivity of the NIH-funded research to such an extent that further corrective action is needed or that the Institution has not managed the financial conflict of interest in accordance with Part 94.6(b). The issuance of a Stop Work Order by the Contracting Officer may be necessary until the matter is resolved.
If the Contracting Officer determines that NIH-funded clinical research, whose purpose is to evaluate the safety or effectiveness of a drug, medical device, or treatment, has been designed, conducted, or reported by an Investigator with a financial conflict of interest that was not managed or reported by the Institution, the Institution shall require the Investigator involved to disclose the financial conflict of interest in each public presentation of the results of the research and to request an addendum to previously published presentations.
ARTICLE H.12. PUBLICATION AND PUBLICITY
In addition to the requirements set forth in HHSAR Clause 352.227-70, Publications and Publicity incorporated by reference in SECTION I of this contract, the Contractor shall acknowledge the support of the National Institutes of Health whenever publicizing the work under this contract in any media by including an acknowledgment substantially as follows:
“This project has been funded in whole or in part with Federal funds from the National Cancer Institute, National Institutes of Health, Department of Health and Human Services, under Contract No. HHSN261201800016C”
a. | Advanced Copies of Press Releases |
Press releases shall be considered to include the public release of information to any medium, excluding peer- reviewed scientific publications. The Contractor shall not publish a press release related to this contract without receiving prior concurrence from the Contracting Officer. The Contractor shall submit an advance copy of the press release to the Contracting Officer and Contracting Officer’s Representative (COR). Upon acknowledgment of receipt, the Contracting Officer will have five (5) working days to respond with concurrence or comments. In the event that the Contracting Officer does not communicate concurrence or comments to the Contractor within five (5) working days following acknowledgement of receipt of the press release advance copy, concurrence may be presumed.
ARTICLE H.13. REPORTING MATTERS INVOLVING FRAUD, WASTE AND ABUSE
Anyone who becomes aware of the existence or apparent existence of fraud, waste and abuse in NIH funded programs is encouraged to report such matters to the HHS Inspector General’s Office in writing or on the Inspector
General’s Hotline. The toll free number is 1-800-HHS-TIPS (1-800-447-8477). All telephone calls will be handled confidentially. The website to file a complaint on-line is: http://oiq.hhs.gov/fraud/hotline/ and the mailing address is:
US Department of Health and Human Services
Office of Inspector General
ATTN: OIG HOTLINE OPERATIONS
P.O. Box 23489
Washington, D.C. 20026
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ARTICLE H.14. SHARING RESEARCH DATA
The Contractor agrees to adhere to the data sharing plan submitted with its final proposal revision and shall request prior approval of the Contracting Officer for any changes in its plan.
The NIH endorses the sharing of final research data to serve health. This contract is expected to generate research data that must be shared with the public and other researchers. NIH’s data sharing policy may be found at the following Web site: http://qrants.nih.gov/grants/quide/notice-files/NOT-OD-03-Q32.html.
NIH recognizes that data sharing may be complicated or limited, in some cases, by institutional policies, local IRB rules, as well as local, state and Federal laws and regulations, including the Privacy Rule (see HHS-published documentation on the Privacy Rule at http://www.hhs.gov/ocr/). The rights and privacy of people who participate in NIH-funded research must be protected at all times; thus, data intended for broader use should be free of identifiers that would permit linkages to individual research participants and variables that could lead to deductive disclosure of the identity of individual subjects.
PART II - CONTRACT CLAUSES
SECTION I - CONTRACT CLAUSES
ARTICLE 1.1. GENERAL CLAUSES FOR A FIXED-PRICE RESEARCH AND DEVELOPMENT SBIR PHASE II CONTRACT
This contract incorporates the following clauses by reference, with the same force and effect as if they were given in full text. Upon request, the Contracting Officer will make their full text available. Also, the full text of a clause may be accessed electronically as follows: FAR Clauses at: htto://www, acquisition, oov/far/. HHSAR Clauses at: http:// www. hhs. gov/policies/hhsar/suboart352. html.
a. FEDERAL ACQUISITION REGULATION (FAR) (48 CFR CHAPTER 1) CLAUSES:
FAR CLAUSE NO. | DATE | TITLE | ||
52.202-1 | Nov 2013 | Definitions (Over the Simplified Acquisition Threshold) | ||
52.203-3 | Apr 1984 | Gratuities (Over the Simplified Acquisition Threshold) | ||
52.203-5 | May 2014 | Covenant Against Contingent Fees (Over the Simplified Acquisition Threshold) | ||
52.203-6 | Sep 2006 | Restrictions on Subcontractor Sales to the Government (Over the Simplified Acquisition Threshold) | ||
52.203-7 | May 2014 | Anti-Kickback Procedures (Over the Simplified Acquisition Threshold) | ||
52.203-8 | May 2014 | Cancellation, Rescission, and Recovery of Funds for Illegal or Improper Activity (Over the Simplified Acquisition Threshold) | ||
52.203-10 | May 2014 | Price or Fee Adjustment for Illegal or Improper Activity (Over the Simplified Acquisition Threshold) |
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FAR CLAUSE NO. |
DATE | TITLE | ||
52.203-12 | Oct 2010 | Limitation on Payments to Influence Certain Federal Transactions (Over $150,000) | ||
52.203-17 | Apr 2014 | Contractor Employee Whistleblower Rights and Requirements to Inform Employees of Whistleblower Rights (Over the Simplified Acquisition Threshold) | ||
52.203-99 | Feb 2015 | Prohibition on Contracting with Entities That Require Certain Internal Confidentiality Agreements (DEVIATION) | ||
52.204-4 | May 2011 | Printed or Copied Double-Sided on Postconsumer Fiber Content PaperfOver the Simplified Acquisition Threshold) | ||
52.204-10 | Oct 2016 | Reporting Executive Compensation and First-Tier Subcontract Awards ($30,000 or more) | ||
52.204-13 | Oct 2016 | System for Award Management Maintenance | ||
52.209-6 | Oct 2015 | Protecting the Government’s Interest When Subcontracting With Contractors Debarred, Suspended, or Proposed for Debarment (Over $35,000) | ||
52.215-2 | Oct 2010 | Audit and Records - Negotiation [Note: Applies to ALL contracts funded in whole or in part with Recovery Act funds, regardless of dollar value, AND contracts over the Simplified Acquisition Threshold funded exclusively with non-Recovery Act funds.] | ||
52.215-8 | Oct 1997 | Order of Precedence - Uniform Contract Format | ||
52.215-10 | Aug 2011 | Price Reduction for Defective Certified Cost or Pricing Data (Over $750,000) | ||
52.215-12 | Oct 2010 | Subcontractor Cost or Pricing Data (Over $750,000) | ||
52.215-14 | Oct 2010 | Integrity of Unit Prices (Over the Simplified Acquisition Threshold) | ||
52.215-15 | Oct 2010 | Pension Adjustments and Asset Reversions (Over $750,000) | ||
52.215-18 | Jul 2005 | Reversion or Adjustment of Plans for Post-Retirement Benefits (PRB) other than Pensions | ||
52.215-19 | Oct 1997 | Notification of Ownership Changes | ||
52.215-21 | Oct 2010 | Requirements for Certified Cost or Pricing Data and Data Other Than Certified Cost or Pricing Data - Modifications | ||
52.219-6 | Nov 2011 | Notice of Total Small Business Set-Aside | ||
52.219-8 | Nov 2016 | Utilization of Small Business Concerns (Over the Simplified Acquisition Threshold) | ||
52.219-14 | Jan 2017 | Limitations on Subcontracting | ||
52.222-3 | Jun 2003 | Convict Labor | ||
52.222-21 | Apr 2015 | Prohibition of Segregated Facilities | ||
52.222-26 | Sep 2016 | Equal Opportunity | ||
52.222-35 | Oct 2015 | Equal Opportunity for Veterans ($150,000 or more) | ||
52.222-36 | Jul 2014 | Equal Opportunity for Workers with Disabilities | ||
52.222-37 | Feb 2016 | Employment Reports on Veterans ($150,000 or more) | ||
52.222-40 | Dec 2010 | Notification of Employee Rights Under the National Labor Relations Act (Over the Simplified Acquisition Threshold) | ||
52.222-50 | Mar 2015 | Combating Trafficking in Persons | ||
52.222-54 | Oct 2015 | Employment Eligibility Verification (Over the Simplified Acquisition Threshold) |
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FAR CLAUSE NO. | DATE | TITLE | ||
52.223-6 | May 2001 | Drug-Free Workplace | ||
52.223-18 | Aug 2011 | Encouraging Contractor Policies to Ban Text Messaging While Driving | ||
52.225-1 | May 2014 | Buy American - Supplies | ||
52.225-13 | Jun 2008 | Restrictions on Certain Foreign Purchases | ||
52.227-1 | Dec 2007 | Authorization and Consent, Alternate 1 (Apr 1984) | ||
52.227-2 | Dec 2007 | Notice and Assistance Regarding Patent and Copyright Infringement | ||
52.227-11 | May 2014 | Patent Rights - Ownership by the Contractor (Note: In accordance with FAR 27.303(b)(2), paragraph (e) is modified to include the requirements in FAR 27.303(b)(2)(i) through (iv). The frequency of reporting in (i) is annual. | ||
52.227-20 | May 2014 | Rights in Data - SBIR Program | ||
52.229-3 | Feb 2013 | Federal, State and Local Taxes (Over the Simplified Acquisition Threshold) | ||
52.232-2 | Apr 1984 | Payments under Fixed-Price Research and Development Contracts | ||
52.232-9 | Apr 1984 | Limitation on Withholding of Payments | ||
52.232-17 | May 2014 | Interest (Over the Simplified Acquisition Threshold) | ||
52.232-23 | May 2014 | Assignment of Claims | ||
52.232-25 | Jan 2017 | Prompt Payment | ||
52.232-33 | Jul 2013 | Payment by Electronic Funds Transfer-System for Award Management | ||
52.232-39 | Jun 2013 | Unenforceability of Unauthorized Obligations | ||
52.233-1 | May 2014 | Disputes | ||
52.233-3 | Aug 1996 | Protest After A ward | ||
52.233-4 | Oct 2004 | Applicable Law for Breach of Contract Claim | ||
52.242-13 | Jul 1995 | Bankruptcy (Over the Simplified Acquisition Threshold) | ||
52.243-1 | Aug 1987 | Changes - Fixed Price, Alternate V (Apr 1984) | ||
52.244-5 | Dec 1996 | Competition in Subcontracting (Over the Simplified Acquisition Threshold) | ||
52.244-6 | Nov 2017 | Subcontracts for Commercial Items | ||
52.246-25 | Feb 1997 | Limitation of Liability - Services (Over the Simplified Acquisition Threshold) | ||
52.249-2 | Apr 2012 | Termination for the Convenience of the Government (Fixed-Price) | ||
52.249-9 | Apr 1984 | Default (Fixed-Price Research and Development)(Over the Simplified Acquisition Threshold) | ||
52.253-1 | Jan 1991 | Computer Generated Forms |
b. DEPARTMENT OF HEALTH AND HUMAN SERVICES ACQUISITION REGULATION (HHSAR) (48 CFR CHAPTER 3) CLAUSES:
HHSAR CLAUSE NO. |
DATE | TITLE | ||
352.203-70 | Dec 2015 | Anti-Lobbying | ||
352.222-70 | Dec 2015 | Contractor Cooperation in Equal Employment Opportunity Investigations | ||
352.227-70 | Dec 2015 | Publications and Publicity | ||
352.237-75 | Dec 2015 | Key Personnel |
[End of GENERAL CLAUSES FOR A FIXED-PRICE RESEARCH AND DEVELOPMENT SBIR PHASE II CONTRACT- Rev. 11/2017].
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ARTICLE 1.2. AUTHORIZED SUBSTITUTION OF CLAUSES
ARTICLE 1.1. of this SECTION is hereby modified as follows:
a. | THERE ARE NO APPLICABLE CLAUSES IN THIS SECTION. |
ARTICLE 1.3. Additional Contract Clauses
This contract incorporates the following clauses by reference, with the same force and effect, as if they were given in full text. Upon request, the Contracting Officer will make their full text available.
a. | FEDERAL ACQUISITION REGULATION (FAR) (48 CFR CHAPTER 1) CLAUSES |
1. | FAR Clause 52.204-18 Commercial and Government Entity Code Maintenance (July 2016) | |
2. | FAR Clause 52.209-10, Prohibition on Contracting With Inverted Domestic Corporations (November 2015). | |
3. | FAR Clause 52.219-28, Post-Award Small Business Program Rerepresentation (July 2013). |
b. | DEPARTMENT OF HEALTH AND HUMAN SERVICES ACQUISITION REGULATION (HHSAR) (48 CHAPTER 3) CLAUSES: |
1. | HHSAR Clause 352.208-70, Printing and Duplication (December 2015) | |
2. | HHSAR Clause 352.223-70, Safety and Health (December 2015) |
PART III - LIST OF DOCUMENTS, EXHIBITS AND OTHER ATTACHMENTS
SECTION J - LIST OF ATTACHMENTS
The following documents are attached and incorporated in this contract:
1. Statement of Work
Statement of Work, dated September 17, 2018, 4 pages.
2. Invoice Instructions for NIH Fixed-Price Contracts, NIH(RC)-2
Invoice Instructions for NIH Fixed-Price Contracts, NIH(RC)-2, (8/12), 3 pages.
3. Safety and Health
Safety and Health, HHSAR Clause 352.223-70, (12/15), 2 pages.
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4. Disclosure of Lobbying Activities, SF-LLL
Disclosure of Lobbying Activities, SF-LLL, dated 7/97, 2 pages.
5. NIH Small Business Innovation Research (SBIR) Program Funding Agreement Certification
NIH Small Business Innovative Research (SBIR) Program Funding Agreement Certification, 3 pages, located at: http://grants.nih.qov/grants/funding/sbir_forms/SBlR%20Fundinq%20Agreement%20Certification.pdf.
6. NIH Small Business Innovation Research (SBIR) Program Life Cycle Certification
NIH Small Business Innovative Research (SBIR) Program Life Cycle Certification, 3 pages, located at: http:// grants.nih.gov/grants/funding/sbir_forms/SBIR%20Life%20Cycle%20Certification.pdf.
PART IV - REPRESENTATIONS AND INSTRUCTIONS
SECTION K - REPRESENTATIONS AND CERTIFICATIONS
The following documents are incorporated by reference in this contract:
1. | FAR Clause 52.204-19 Incorporation by Reference of Representations and Certifications (December 2014) |
The Contractor’s representations and certifications, including those completed electronically via the System for Award Management (SAM), are incorporated by reference into the contract.
(End of clause)
2. | NIH Representations & Certifications, dated January, 2017 | |
3. | Animal Welfare Assurance Number A8433-02. |
END of the SCHEDULE
(CONTRACT)
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STATEMENT OF WORK (Phase II Topic 352)
TITLE: Cell-Based Models for Prostate Cancer Health Disparity Research
Background Information
I. | Prostate cancer health disparities studies have shown that African-American (AA) men are at higher risk for developing prostate cancer, as well as at higher risk of cancer specific death rates, as compared to Caucasian American (CA) men. Causes of disparities have been attributed to socioeconomic differences, environmental exposures and biological factors; however, the lack of relevant in vitro and in vivo models has limited biological and mechanistic studies. In the Phase I SBIR contract effort, we completed feasibility studies of establishing annotated, same donor cancer and normal prostate epithelial cell lines from an AA patient. We developed standard operating procedures and reagents for establishing cancer and normal prostate epithelial cell lines using “conditional reprogramming cell (CRC)” technology. In this Phase II SBIR contract application, we propose to establish prostate epithelial cancer cell lines from 50 AA patients to serve as the product for commercialization for use in health disparities research. Furthermore, a niche marketing assessment and negotiations with Propagenix, Inc. to license the CRC intellectual property supports the development of a commercialization plan for AA cell distribution and reagent marketing. |
II. | Scope |
Prostate cancer and normal epithelial cell lines will be established from 50 African- American patients presenting with prostate cancer for use in health disparities research.
III. | Objectives |
This Phase II SBIR effort will complete tasks to meet four objectives to establish 50 prostate cancer cell lines for commercialization for health disparities research. Objective 1 is to establish 25 prostate paired epithelial cancer and normal cell lines from AA prostate surgical specimens and 25 prostate epithelial cancer cell lines from targeted needle biopsies (product#1). In objective 2, paired tumor/normal micro-arrays will be designed and manufactured (product#2). In objective 3, proprietary, supplemented conditioned medium will be manufactured for growing AA prostate cancer cells (product #3). In objective 4, a plan will be advanced to commercialize and market the AA derived prostate cancer cells and related products for health disparities research.
IV. | Services to be Performed. |
“The contractor shall independently perform all work and furnish all labor, materials, supplies, equipment, and services (except as otherwise specified in the contract) to perform the following services:”
A. | Specific Requirements. |
Objective 1. Obtain tissues to establish prostate epithelial tumor and normal cell cultures from 50 African-American patients (product #1).
Rationale, Overview and Methodologies: We have demonstrated that biopsies from prostatectomy specimens may be sampled in regions with normal appearance as well as regions deemed abnormal by an experienced pathologist. We have expanded the epithelial cells using CRC technology. In this first objective, biopsy samples from 25 African -American patients
will be grown to establish paired normal and tumor derived cells. Furthermore, patients undergoing prostatectomy are generally low to intermediate risk, yielding tumors from cancers with predominantly Gleason’s grades 6 and 7. Patients presenting with high risk cancers with higher Gleason’s grades (8-10) and PSA values exceeding 20 ng/dl are frequently biopsied and offered hormonal and/or radiation therapy options. The CRC technology is capable of establishing cell growth from needle biopsies with as few as 5,000 cells. We propose to apply targeted biopsy technology to establish cell lines from these higher-grade, more aggressive tumors, or from metastatic lesions in soft tissues to expand the range of tumor aggressiveness of AA-derived prostate cancers. Matched normal cells may not be available in some cases.
Attachment 1: Statement of Work | Page 1 of 4 |
Dated: September 17, 2018 | |
HHSN261201800016C |
Task 1.1. Acquire tissues from 25 radical prostatectomy specimens from AA patients and grow cells under CRC conditions.
Milestone 1.1. 25 tumor and normal prostate epithelial cell cultures from prostatectomy specimens from AA patients.
Task 1.2. Acquire tissues from 25 AA patient undergoing targeted needle biopsies.
Milestone 1.2. 25 tumor and normal prostate epithelial cell cultures from prostate needle biopsy specimens from AA patients.
Task 1.3. Perform characterization and annotation studies, including clinical annotation, cell growth > 30 passages, capacity to form xenograft tumors, karyotype at early and late passages, microarray analysis for differential gene expression in cells in 2D and 3D cultures, expression of prostate tissue and tumor specific markers, STR analysis, and mycoplasma testing.
Milestone 1.3. Clinical and biological annotations of AA cells are available.
Task 1.4. Establish and expand (up to 30 passages) paired tumor/normal stock cell cultures derived from AA patients with prostate cancers.
Milestone 1.4. 50 annotated cell cultures from AA patients (product #1).
Task 1.5. Perform Q/A testing for immortalization of cells during extended growth by growing cells in medium, without the use of irradiated feeder layer cells, and growing cells in an immune deficient animal to form tumors.
Milestone 1.5. Established cultures will be annotate for immortal or tumorigenic cell growth.
Objective 2. Design and manufacture paired tumor/normal micro-arrays (product #2).
Rationale, Overview and Methodologies: The focus on personalized medicine in cancer treatment has been to discover and apply predictive biomarkers in directing targeted therapy. The use of tissue micro-arrays (TMAs) offers a screen for understanding the relevant molecular pathways. The use of cells for drug candidate screening offers an efficient and cost effective assay to discover new therapeutics. Here we propose to manufacture TMAs from our annotated prostate epithelial cell culture.
Task 2.1. Based on prostate epithelial cell annotation data, design tissue microarrays (TMAs) for AA cells based on groupings of cells by site of derivation (normal vs tumor), annotation parameters of Gleason’s grades, tumor growth in animals, early passage vs late and selected tumor specific markers.
Milestone 2.1. At least three categories for grouping cells are identified for TMA manufacture in sets of 12 tumor cell lines and associated normal.
Task 2.2. Manufacture TMAs from AA cells.
Milestone 2.2. Stock of representative TMAs for each of the selected categories of AA cells (product #2).
Attachment 1: Statement of Work | Page 2 of 4 |
Dated: September 17, 2018 | |
HHSN261201800016C |
Objective 3. Manufacture proprietary, supplemented conditioned medium for growing AA prostate cancer cells (product #3).
Rationale, Overview and Methodologies. The use of the CRC technology requires technical experience, manpower, access to an irradiator and has a learning curve for staff for optimal implementation. Through our previous efforts to optimize the media for use with prostate epithelial cells, we observed that conditioned medium with supplements permitted expansion of 5,000 prostate epithelial cells to > 1,000,000. Since establishing the full scale CRC technology includes potential barriers for some investigators, here we propose to provide reagents for use for more focused experiments with proprietary medium for selected AA prostate cell lines.
Task 3.1. Manufacture conditioned medium formulated to support AA prostate cell growth.
Milestone 3.1. Stock of 100 ml vials of proprietary conditioned medium for AA cells (product #3).
Task 3.2. Test AA prostate cell growth in proprietary conditioned medium and select best growing cells for marketing in combination with the proprietary conditioned medium.
Milestone 3.2. Stock of AA cells capable of growth in proprietary conditioned medium.
Objective 4. Advance the business development and commercialization plan for company sustainability and AA cell distribution and sales.
Rationale, Overview and Methodologies.
Task 4.1. Complete licensing agreement with Propagenix for CRC technology to establish and commercialize AA cells for research use.
Milestone 4.1. Executed license agreement for the IP to support AA cell line commercialization.
Task 4.2. Negotiate distribution agreement with Indivumed to market and distribute Shuttle products.
Milestone 4.2. Executed distribution agreement for AA cell lines and ancillary products.
Task 4.3. Prepare the business plan and marketing materials for AA cell commercialization and distribution for use in a capital raise, (engage consultant Glenn Peters - see letter of support)
Milestone 4.3. Commercialization and marketing plan for AA prostate cancer cells is available for implementation.
Past Experience with similar studies: We have previously published on biological differences in the expression of genes affecting tumor aggressiveness and metastases in cell lines established from AA as compared to CA patients (3). Our collaboration with Drs. Schlegel and Liu resulted in a highly cited publication in American Journal of Pathology
Attachment 1: Statement of Work | Page 3 of 4 |
Dated: September 17, 2018 | |
HHSN261201800016C |
Chart 1: Gantt chart of project time line and work distribution between GU and SP.
Phase II Milestones and Timeline
Months 1-6 |
Months 6-12 |
Months 12-18 |
Months 18-24 | |||||||
Objective 1 | ****** | ****** | ****** | |||||||
GU/SP | Milestone 1.1. 25 tumor and normal prostate epithelial cell cultures from prostatectomy specimens from AA patients. |
X | X | X | X | |||||
GU/SP | Milestone 1.2. 25 tumor and normal prostate epithelial cell cultures from prostate needle biopsy specimens from AA patients. |
X | X | X | X | |||||
SP | Milestone 1.3. Clinical and bioloaical annotations of AA cells are available, including differential gene expression by microarray analysis of 2D and 3D cultures. | X | X | X | X | |||||
SP | Milestone 1.4. 50 annotated cell cultures from AA patients (product #1). | X | X | X | ||||||
Objective 2 | ****** | ****** | ****** | ****** | ||||||
SP/GU | Milestone 2.1. At least three cateaories for grouping cells are identified for TMA manufacture in sets of 12 tumor cell lines and associated normal. | X | X | |||||||
SP/GU | Milestone 2.2. Stock of reoresentative TMAs for each of the selected categories of AA cells (product #2). | X | X | |||||||
Objective 3 | ****** | ****** | ||||||||
SP | Milestone 3.1. Stock of 100 ml vials of proprietary conditioned medium for AA cells. | X | X | X | X | |||||
SP | Milestone 3.2. Stock of AA cells capable of qrowth in proprietary conditioned medium. | X | X | X | ||||||
Objective 4 | ||||||||||
SP | Milestone 4.1. Executed license agreement for the IP to support AA cell line commercialization. |
X | ||||||||
SP | Milestone 4.2. Executed distribution agreement for AA cell lines and ancillary products. | X | X | |||||||
SP | Milestone 4.3. Commercialization and marketing plan for AA prostate cancer cells is available for implementation. | X | X | X |
SP = Work will be performed in Shuttle Pharmaceuticals laboratory/offices
GU = Work will be performed in Georgetown University Shared Resource facilities
Attachment 1: Statement of Work | Page 4 of 4 |
Dated: September 17, 2018 | |
HHSN261201800016C |
INVOICE INSTRUCTIONS FOR NIH FIXED-PRICE CONTRACTS. NIH(RC)-2
Format: Submit payment requests on Standard Form 1034, Public Voucher for Purchases and Services Other Than Personal, or the Contractor’s self-generated form provided it contains all of the information prescribed herein. DO NOT include a cover letter with the payment request.
Number of Copies: Submit payment requests in the quantity specified in the Invoice Submission Instructions in Section G of the Contract Schedule.
Frequency: Submit payment requests upon delivery and acceptance of goods or services unless otherwise authorized by the Contracting Officer.
Currency: All NIH contracts are expressed in United States dollars. When the Government pays in a currency other than United States dollars, billings shall be expressed, and payment by the Government shall be made, in that other currency at amounts coincident with actual costs incurred. Currency fluctuations may not be a basis of gain or loss to the Contractor. Notwithstanding the above, the total of all invoices paid under this contract may not exceed the United States dollars authorized.
Preparation and Itemization of the Payment Request: Prepare payment requests as follows:
Note: | All Information must be legible or the invoice will be considered improper and returned to the Contractor. |
(a) | Designated Billing Office Name and Address: Enter the designated billing office name and address, as identified in the Invoice Submission Instructions in Section G of the Contract Schedule. |
(b) | Contractor’s Name, Address, Point of Contact, TIN, and DUNS or DUNS+4 Number: Show the Contractor’s name and address exactly as they appear in the contract. Any invoice identified as improper will be sent to this address. Also include the name, title, phone number, and e-mail address of the Point of Contact in case of questions. If the remittance name differs from the legal business name, both names must appear on the invoice. Provide the Contractor’s Federal Taxpayer Identification Number (TIN) and Data Universal Numbering System (DUNS) or DUNS+4 number. The DUNS number must identify the Contractor’s name and address exactly as stated in the contract, and as registered in the System for Acquisition Management (SAM) database. |
When an approved assignment of claims has been executed, the Contractor shall provide the same information for the assignee as is required for the Contractor (i.e., name, address, point of contact, TIN, and DUNS number), with the remittance information clearly identified as such.
(c) | Invoice/Voucher Number: Identify each payment request by a unique invoice number, which can only be used one time regardless of the number of contracts or orders held by an organization. For example, if a contractor has already submitted invoice number 05 on one of its contracts or orders, it cannot use that same invoice number on any other contract or order. Payment requests with duplicate invoice numbers will be considered improper and returned to the contractor. |
The NIH does not prescribe a particular numbering format but suggests using a job or account number for each contract and order followed by a sequential invoice number (example: 8675309-05). Invoice numbers are limited to 30 characters. There are no restrictions on the use of special characters, such as colons, dashes, forward slashes, or parentheses.
If all or part of an invoice is suspended and the contractor chooses to reclaim those costs on a supplemental invoice, the contractor may use the same unique invoice number followed by an alpha character, such as “R” for revised (example: 8675309-05R).
(d) | Date Invoice/Voucher Prepared: Insert the date the payment request is prepared. |
(e) | Contract Number and Order Number (if applicable): Insert the contract number and order number (as applicable). |
(f) | Contract Title: Insert the contract title listed on the cover page of the contract and/or Section 6 of the Contract Schedule. |
(g) | Current Contract Period of Performance: Insert the contract start date/effective date through the current completion date of the contract. |
(h) | Total Fixed-Price of Contract/Order: Insert the total fixed-price of the contract/order. |
(i) | Two-Way/Three-Way Match: Identify whether payment is to be made using a two-way or three-way match. To determine required payment method, refer to the Invoice Submission Instructions in Section G of the Contract Schedule. |
(j) | Office of Acquisitions: Insert the name of the Office of Acquisitions, as identified in the Invoice Submission Instructions in Section G of the Contract Schedule. |
(k) | Central Point of Distribution: Identify the Central Point of Distribution, as specified in the Invoice Submission Instructions in Section G of the Contract Schedule. |
(l) | Billing Period: Insert the beginning and ending dates (month, day, and year) of the period in which costs were incurred and for which reimbursement is claimed. |
(m) | Description of Supplies or Services: Provide a description of the supplies or services, by line item (if applicable), quantity, unit price (where appropriate), and total amount. The item description, unit of measure, and unit price must match those specified in the contract. For example, if the contract specifies 1 box of hypodermic needles (100/box) with a unit price of $50.00, then the invoice must state 1 box, hypodermic needles (100/box), $50.00, not 100 syringes at $0.50 each. Invoices that do not match the line item pricing in the contract will be considered improper and will be returned to the Contractor. |
(n) | Amount Billed - Current Period: Insert the amount claimed for the current billing period, including any adjustments, if applicable. If the Contract Schedule contains separately priced line items, identify the contract line item(s) on the payment request. |
(o) | Amount Billed - Cumulative: Insert the cumulative amounts claimed to date, including any adjustments as applicable. If the Contract Schedule contains separately priced line items, identify the contract line item(s) on the payment request. |
(p) | Freight or Delivery Charges: Identify all charges for freight or express shipments, other than f.o.b. destination, as a separate line item on the invoice. (If shipped by freight or express, and charges are more than $25, attach prepaid bill.) |
(q) | Government Property: If the contract authorizes the purchase of any item of Government Property (e.g., equipment), the invoice must list each item for which reimbursement is requested. Include reference to the following (as applicable): |
- item number for the specific piece of equipment listed in the Property Schedule, and
- Contracting Officer Authorization (COA) Number, if the equipment is not covered by the Property Schedule.
Safety and Health, HHSAR 352.223-70 (DEC 2015)
a. | To help ensure the protection of the life and health of all persons, and to help prevent damage to property, the Contractor shall comply with all Federal, State, and local laws and regulations applicable to the work being performed under this contract. These laws are implemented or enforced by the Environmental Protection Agency, Occupational Safety and Health Administration (OSHA) and other regulatory/enforcement agencies at the Federal, State, and local levels. |
1. | In addition, the Contractor shall comply with the following regulations when developing and implementing health and safety operating procedures and practices for both personnel and facilities involving the use or handling of hazardous materials and the conduct of research, development, or test projects: |
I. | 29 CFR 1910.1030, Bloodborne pathogens; 29 CFR 1910.1450, Occupational exposure to hazardous chemicals in laboratories; and other applicable occupational health and safety standards issued by OSHA and included in 29 CFR part 1910. These regulations are available at https://www.osha.gov/. | |
II. | Nuclear Regulatory Commission Standards and Regulations, pursuant to the Energy Reorganization Act of 1974 (42 U.S.C. 5801 et seq.). The Contractor may obtain copies from the U.S. Nuclear Regulatory Commission, Washington, DC 20555-0001. |
2. | The following Government guidelines are recommended for developing and implementing health and safety operating procedures and practices for both personnel and facilities: |
I. | Biosafety in Microbiological and Biomedical Laboratories, CDC. This publication is available at http://www.cdc.gov/biosafetv/publications/index.htm. | |
II. | Prudent Practices for Safety in Laboratories (1995), National Research Council, National Academy Press, 500 Fifth Street NW., Lockbox 285, Washington, DC 20055 (ISBN 0-309-05229-7). This publication is available at http://www.nap.edu/catalog/4911/prudent-practices-in-the- laboratory-handling-and-disposal-of-chemicals. |
b. | Further, the Contractor shall take or cause to be taken additional safety measures as the Contracting Officer, in conjunction with the Contracting Officer’s Representative or other appropriate officials, determines to be reasonably necessary. If compliance with these additional safety measures results in an increase or decrease in the cost or time required for performance of any part of work under this contract, the Contracting Officer will make an equitable adjustment in accordance with the applicable “Changes” clause set forth in this contract. |
1 |
c. | The Contractor shall maintain an accurate record of, and promptly report to the Contracting Officer, all accidents or incidents resulting in the exposure of persons to toxic substances, hazardous materials or hazardous operations; the injury or death of any person; or damage to property incidental to work performed under the contract resulting from toxic or hazardous materials and resulting in any or all violations for which the Contractor has been cited by any Federal, State or local regulatory/enforcement agency. The report citing all accidents or incidents resulting in the exposure of persons to toxic substances, hazardous materials or hazardous operations; the injury or death of any person; or damage to property incidental to work performed under the contract resulting from toxic or hazardous materials and resulting in any or all violations for which the Contractor has been cited shall include a copy of the notice of violation and the findings of any inquiry or inspection, and an analysis addressing the impact these violations may have on the work remaining to be performed. The report shall also state the required action(s), if any, to be taken to correct any violation(s) noted by the Federal, State, or local regulatory/enforcement agency and the time frame allowed by the agency to accomplish the necessary corrective action. |
d. | If the Contractor fails or refuses to comply with the Federal, State or local regulatory/enforcement agency’s directive(s) regarding any violation(s) and prescribed corrective action(s), the Contracting Officer may issue an order stopping all or part of the work until satisfactory corrective action (as approved by the Federal, State, or local regulatory/enforcement agencies) has been taken and documented to the Contracting Officer. No part of the time lost due to any such stop work order shall form the basis for a request for extension or costs or damages by the Contractor. |
e. | The Contractor shall insert the substance of this clause in each subcontract involving toxic substances, hazardous materials, or hazardous operations. The Contractor is responsible for the compliance of its subcontractors with the provisions of this clause. |
(End of clause)
2 |
SBIR Funding Agreement Certification
Grant Contract Number: BAAN44CO89001 - 49
Program Director(s)/Principal Investigator(s) (PD(s)/PI(s)): Scott Grindrod, PhD
Public reporting burden for this collection of information is estimated to average 15 minutes per response, including the time for reviewing instructions, searching existing data sources, gathering and maintaining the data needed, and completing and reviewing the collection of information. An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless it displays a currently valid OMB control number. Send comments regarding this burden estimate or any other aspect of this collection of information, including suggestions for reducing this burden, to: NIH, Project Clearance Branch, 6705 Rockledge Drive, MSC 7974, Bethesda, MD 20892-7974, ATTN: PRA (0925-0001). Do not return the completed form to this address.
All small businesses that are selected for award of an SBIR funding agreement must complete this certification at the time of award and any other time set forth in the Notice of Award or Contract Award that is prior to performance of work under this award. This includes checking all of the boxes and having an authorized officer of the awardee sign and date the certification each time it is requested.
Please read carefully the following certification statements. The Federal government relies on this information to determine whether the business is eligible for a Small Business Innovation Research (SBIR) Program award. A similar certification will be used to ensure continued compliance with specific program requirements during the life of the funding agreement. The definitions for the terms used in this certification are set forth in the Small Business Act, SBA regulations (13 C.F.R. Part 121), the SBIR Policy Directive and also any statutory and regulatory provisions references in those authorities.
If the Grants Management or Contracting Officer believes that the business may not meet certain eligibility requirements at the time of award, they are required to file a size protest with the U.S. Small Business Administration (SBA), who will determine eligibility. At that time, SBA will request further clarification and supporting documentation in order to assist in the verification of any of the information provided as part of a protest. If the Grants Management or Contracting Officer believes, after award, that the business is not meeting certain Notice of Award requirements, the agency may request further clarification and supporting documentation in order to assist in the verification of any of the information provided.
Even if correct information has been included in other materials submitted to the Federal government, any action taken with respect to this certification does not affect the Government’s right to pursue criminal, civil, or administrative remedies for incorrect or incomplete information given in the certification. Each person signing this certification may be prosecuted if they have provided false information.
The undersigned has reviewed, verified and certifies that (all boxes must be checked):
1. | The business concern meets the ownership and control requirements set forth in 13 C.F.R. § 121.702. |
☒ Yes ☐ No
2. | If a corporation, all corporate documents (articles of incorporation and any amendments, articles of conversion, by-laws and amendments, shareholder meeting minutes showing director elections, shareholder meeting minutes showing officer elections, organizational meeting minutes, all issued stock certificates, stock ledger, buy-sell agreements, stock transfer agreements, voting agreements, and documents relating to stock options, including the right to convert non-voting stock or debentures into voting stock) evidence that it meets the ownership and control requirements set forth in 13 C.F.R. § 121.702. |
☒ Yes ☐ No ☐ N/A | Explain why N/A: |
3. | If a partnership, the partnership agreement evidences that it meets the ownership and control requirements set forth in 13 C.F.R. § 121.702. |
☐ Yes ☐ No ☐ N/A | Explain why N/A: |
4. | If a limited liability company, the articles of organization and any amendments, and operating agreements and amendments, evidence that it meets the ownership and control requirements set forth in 13 C.F.R. § 121.702. |
☐ Yes ☐ No ☐ N/A | Explain why N/A: |
OMB No. 0925-0001 (Rev. 06/15Approved Through 03/31/2020) | Page 1 | SBIR Funding AgfHment Certification |
5. | The birth certificates, naturalization papers, or passports show that any individuals it relies upon to meet the eligibility requirements are U.S. citizens or permanent resident aliens in the United States. |
☒ Yes ☐ No ☐ N/A | Explain why N/A: |
6. | It has no more than 500 employees, including the employees of its affiliates. |
☒ Yes ☐ No
7. | SBA has not issued a size determination currently in effect finding that this business concern exceeds the 500 employee size standard. |
☒ Yes ☐ No
8. | During the performance of the award, the principal investigator will spend more than half of his/her time as an employee of the awardee or has requested and received a written deviation from this requirement from the Grants Management or Contracting Officer. |
☒ Yes ☐ No Deviation approved in writing by Grants Management or Contracting Officer: %
9. | All, essentially equivalent work, or a portion of the work proposed under this project (check the applicable line): |
☒ Has not been submitted for funding by another Federal agency
☐ Has been submitted for funding by another Federal agency but has not been funded under any other Federal grant, contract, subcontract, or other transaction.
☐ A portion has been funded by another grant, contract, or subcontract as described in detail in the proposal and approved in writing by the Grants Management or Contracting Officer.
10. | During the performance of award, it will perform the applicable percentage of work unless a deviation from this requirement is approved in writing by the Grants Management or Contracting Officer (check the applicable line and fill in if needed): |
☐ SBIR Phase I: at least two-thirds (66 2/3%) of the research
☒ SBIR Phase II: at least half (50%) of the research
☐ Deviation approved in writing by the Grants Management or Contracting Officer: %
11. | During performance of award, the research/research and development will be performed in the United States unless a deviation is approved in writing by the Grants Management or Contracting Officer. |
☒ Yes ☐ No
12. | During the performance of award, the research/research and development will be performed at my facilities with my employees, except as otherwise indicated in the SBIR application and approved in the Notice of Award or Contract Award. |
☒ Yes ☐ No
13. | It has registered itself on SBA’s database as majority-owned by venture capital operating companies, hedge funds or private equity firms. |
☐ Yes ☒ No ☐ N/A | Explain why N/A: |
14. | It is a Covered Small Business Concern (a small business concern that: (a) was not majority-owned by multiple venture capital operating companies (VCOCs), hedge funds, or private equity firms on the data on which it submitted an application in response to an SBIR solicitation; and (b) on the date of the SBIR award, which is made more than 9 months after the closing date of the solicitation, is majority-owned by multiple venture capital operating companies, hedge funds, or private equity firms). |
☒ Yes ☐ No
OMB No. 0925-0001 (Rev. 06/15Approved Through 03/31/2020) | Page 2 | SBIR Funding AgfHment Certification |
15. | It will notify the Federal agency immediately if all or a portion of the work proposed is subsequently funded by another Federal agency. |
☒ Yes ☐ No
I understand that the information submitted may be given to Federal, State and local agencies for determining violations of law and other purposes.
I am an officer of the business concern authorized to represent it and sign this certification on its behalf. By signing this certification, I am representing on my own behalf, and on behalf of the business concern that the information provided in this certification, the application, and all other information submitted in connection with this application, is true and correct as of the date of submission. I acknowledge that any intentional or negligent misrepresentation of the information contained in this certification may result in criminal, civil or administrative sanctions, including but not limited to: (1) fines, restitution and/or imprisonment under 18 U.S.C. § 1001; (2) treble damages and civil penalties under the False Claims Act (31 U.S.C. § 3729 et seq); (3) double damages and civil penalties under the Program Fraud Civil Remedies Act (31 U.S.C. §3801 et seq); (4) civil recovery of award funds; (5) suspension and/or debarment from all Federal procurement and nonprocurement transactions (FAR Subpart 9.4 or 2 C.F.R. part 180; and (6) other administrative penalties including termination of SBIR/STTR awards.
Date 9/12/2018 | ||
Signature | ![]() | |
Printed Name (First, Middle, Last) Anatoly Dristchilo | ||
Title CEO | ||
Organization Name Shuttle Pharmaceuticals, Inc |
OMB No. 0925-0001 (Rev. 06/15Approved Through 03/31/2020) | Page 3 | SBIR Funding AgfHment Certification |
HHS Small Business Innovation Research Program
Life Cycle Certification
Public reporting burden for this collection of information is estimated to average 15 minutes per response, including the time for reviewing instructions, searching existing data sources, gathering and maintaining the data needed, and completing and reviewing the collection of information. An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless it displays a currently valid OMB control number. Send comments regarding this burden estimate or any other aspect of this collection of information, including suggestions for reducing this burden, to: NIH, Project Clearance Branch, 6705 Rockledge Drive, MSC 7974, Bethesda, MD 20892-7974, ATTN: PRA (0925-0001). Do not return the completed form to this address.
All SBIR Phase I and Phase II awardees must complete this certification at all times set forth in the funding agreement (see §8(h) of the SBIR Policy Directive). This includes checking all of the boxes and having an authorized officer of the awardee sign and date the certification each time it is required. Awardees are not required to submit this certification directly to NIH but must instead complete the certification and maintain it on file in accordance with the records and retention policy in Section 8.4.2 of the NIH Grants Policy Statement or as listed in the SBIR contract solicitation or contract award.
A certification is required at the following times:
● | For SBIR Phase I Awardees : At the time of receiving final payment or disbursement from the Payment Management System or via contract. | |
● | For SBIR Phase II Awardees: prior to receiving more than 50% of the total award amount and prior to final payment or disbursement from the Payment Management System or via contract. |
In addition, SBIR awardees indicate compliance with these certification requirements by drawing or requesting funds from the Payment Management System. If the grantee cannot complete this certification or cannot ensure compliance with the certification process, it should notify the funding agreement officer immediately. If resolution cannot be reached, the funding agreement officer will void or terminate the award, as appropriate.
Grant or Contract Number:
Program Director(s)/Principal Investigator(s) (PD(s)/PI(s)):
Please read carefully the following certification statements. The Federal government relies on the information to ensure compliance with specific program requirements during the life of the funding agreement. The definitions for the terms used in this certification are set forth in the Small Business Act, the SBIR Policy Directive, and also any statutory and regulatory provisions referenced in those authorities.
If the funding agreement officer believes that the business is not meeting certain funding agreement requirements, the agency may request further clarification and supporting documentation in order to assist in the verification of any of the information provided.
Even if correct information has been included in other materials submitted to the Federal government, any action taken with respect to this certification does not affect the Government’s right to pursue criminal, civil or administrative remedies for incorrect or incomplete information given in the certification. Each person signing this certification may be prosecuted if they have provided false information.
The undersigned has reviewed, verified and certifies that (all boxes must be checked):
OMB No. 0925-0002 (Rev. 06/15 Approved Through 03/31/2020) | Page 1 | SBIR Life Cycle Certification |
1. | The principal investigator spent more than one half of his/her time as an employee of the awardee or has requested and received a written deviation from this requirement from the funding agreement officer. |
☐ Yes ☐ No Deviation approved in writing by funding agreement officer: %
2. | All, essentially equivalent work, or a portion of the work performed under this project (check the applicable line): |
☐ Has not been submitted for funding by another Federal agency.
☐ Has been submitted for funding by another Federal agency but has not been funded under any other Federal grant, contract, subcontract, or other transaction.
☐ A portion has been funded by another grant, contract, or subcontract as described in detail in the proposal and approved in writing by the funding agreement officer.
3. | Upon completion of the award it will have performed the applicable percentage of work, unless a deviation from this requirement is approved in writing by the funding agreement officer (check the applicable line and fill in if needed): |
☐ SBIR Phase I: at least two-thirds (66 2/3%) of the research
☐ SBIR Phase II: at least half (50%) of the research
☐ Deviation approved in writing by the funding agreement officer: %
4. | The work is completed and it has performed the applicable percentage of work, unless a deviation from this requirement is approved in writing by the funding agreement officer (check the applicable line and fill in if needed). |
☐ SBIR Phase I: at least two-thirds (66 2/3%) of the research
☐ SBIR Phase II: at least half (50%) of the research
☐ Deviation approved in writing by the funding agreement officer: %
☐ N/A because work is not completed
5. | The research/research and development is performed in the United States unless a deviation is approved in writing by the funding agreement officer. |
☐ Yes ☐ No ☐ Waiver has been granted
6. | The research/research and development is performed at my facilities with my employees, except as otherwise indicated in the SBIR application and approved in the Notice of Award or Contract Award. |
☐ Yes ☐ No
☐ 1 will notify the Federal agency immediately if all or a portion of the work proposed is subsequently funded by another Federal agency.
☐ 1 understand that the information submitted may be given to Federal, State and local agencies for determining violations of law and other purposes.
☐ I am an officer of the business concern authorized to represent it and sign this certification on its behalf. By signing this certification, I am representing on my own behalf, and on behalf of the business concern that the information provided in this certification, the application, and all other information submitted in connection with the award, is true and correct as of the date of submission. I acknowledge that any intentional or negligent misrepresentation of the information contained in this certification may result in criminal, civil or administrative sanctions, including but not limited to: (1) fines, restitution and/or imprisonment under 18 U.S.C. § 1001; (2) treble damages and civil penalties under the False Claims Act (31 U.S.C. § 3729 et seq.); (3) double damages and civil penalties under the Program Fraud Civil Remedies Act (31 U.S.C. §3801 et seq.); (4) civil recovery of award funds; (5) suspension and/or debarment from all Federal procurement and nonprocurement transactions (FAR Subpart 9.4 or 2 C.F.R. part 180); and (6) other administrative penalties including termination of SBIR/STTR awards.
Date | |
Signature | |
Printed Name (First, Middle, Last) | |
Title | |
Business Name |
OMB No. 0925-0002 (Rev. 06/15 Approved Through 03/31/2020) | Page 2 | SBIR Life Cycle Certification |
Exhibit 23.1
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors of
Shuttle Pharmaceuticals Holdings, Inc. Limited
We consent to the inclusion in the Amendment No. 1 to the Form S-1 Registration Statement of Shuttle Pharmaceuticals Holdings, Inc. (File No. 333-265429) of our report dated June 3, 2022 (except for the effects on the financial statements of the restatement described in Note 9, as to which the date is June 23, 2022), relating to our audit of the balance sheets as of December 31, 2021 and 2020, and statements of operations, stockholders’ equity and cash flows for the years ended December 31, 2021 and 2020.
We also consent to the reference to us under the caption “Experts” in the Registration Statement.
/s/ BF Borgers CPA PC
Certified Public Accountants
Lakewood, Colorado
June 3, 2022, except for the effects on the financial statements of the restatement described in Note 9, as to which the date is June 23, 2022