0001603454
false
0001603454
2021-04-08
2021-04-08
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
April 8, 2021
Celcuity
Inc.
(Exact name of Registrant as Specified in its Charter)
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Delaware
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001-38207
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82-2863566
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(State or Other Jurisdiction
of Incorporation)
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(Commission
File Number)
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(IRS Employer
Identification No.)
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16305 36th
Avenue North; Suite
100
Minneapolis,
Minnesota
55446
(Address of Principal Executive Offices and Zip Code)
(763)
392-0767
(Registrant’s telephone number, including area
code)
Not Applicable
(Former Name or Former Address, if Changed Since Last
Report)
Check
the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant
under any of the following provisions:
☐
Written communications pursuant to
Rule 425 under the Securities Act (17 CFR
230.425)
☐
Soliciting material pursuant to Rule
14a-12 under the Exchange Act (17 CFR
240.14a-12)
☐
Pre-commencement communications
pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
☐
Pre-commencement communications
pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
Securities
registered pursuant to Section 12(b) of the Act:
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Title
of each class
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Trading
Symbol(s)
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Name of
each exchange on which registered
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Common Stock, $0.001 par value per
share
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CELC
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The
Nasdaq
Stock Market LLC
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Indicate
by check mark whether the registrant is an emerging growth company
as defined in Rule 405 of the Securities Act of 1933 (§
230.405 of this chapter) or Rule 12b-2 of the Securities Exchange
Act of 1934 (§ 240.12b-2 of this chapter).
Emerging
growth company ☒
If an
emerging growth company, indicate by check mark if the registrant
has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided
pursuant to Section 13(a) of the Exchange Act. ☒
Item
1.01
Entry
into a Material Definitive Agreement.
License Agreement
On April 8, 2021, Celcuity Inc. (the “Company”)
entered into a license agreement (the “License
Agreement”) with Pfizer,
Inc. (“Pfizer”),
pursuant to which the Company acquired exclusive (including as to
Pfizer) worldwide sublicensable rights to research, develop,
manufacture, and commercialize gedatolisib, a potent,
well-tolerated, reversible dual inhibitor that targets PI3K and
mTOR, for the treatment, diagnosis and prevention of all diseases.
Pursuant to the License Agreement, the Company is obligated to use
commercially reasonable efforts to develop and seek regulatory
approval for at least one product in the United States and if
regulatory approval is obtained, to commercialize such product in
the United States and at least one international major
market.
The Company paid Pfizer a $5.0 million upfront fee upon execution
of the License Agreement and, pursuant to an Equity Grant
Agreement, issued to Pfizer $5.0 million of shares of the
Company’s common stock. The number of shares to be issued
will be calculated by dividing $5.0 million by the closing price of
a share of the Company’s common stock on the Nasdaq Capital
Market on the effective date of the License Agreement. The Company
is also required to make milestone payments to Pfizer upon
achievement of certain development and commercial milestone events,
up to an aggregate of $330.0 million. Additionally, the Company
will pay Pfizer tiered royalties on sales of gedatolisib at
percentages ranging from the low to mid-teens, which may be subject
to deductions for expiration of valid claims, amounts due under
third-party licenses and generic competition. Unless earlier
terminated, the License Agreement will expire upon the expiration
of all royalty obligations. The royalty period will expire on a
country-by-country basis upon the later of (a) 12 years following
the date of first commercial sale of such product in such country,
(b) the expiration of all regulatory or data exclusivity in such
country for such product or (c) the date upon which the
manufacture, use, sale, offer for sale or importation of such
product in such country would no longer infringe, but for the
license granted in the License Agreement, a valid claim of a
licensed patent right.
The Company has the right to terminate the License Agreement for
convenience upon 90 days’ prior written notice. Pfizer may
not terminate the agreement for convenience. Either the Company or
Pfizer may terminate the License Agreement if the other party is in
material breach and such breach is not cured within the specified
cure period. In addition, either the Company or Pfizer may
terminate the License Agreement in the event of specified
insolvency events involving the other party.
The descriptions of the License Agreement and the Equity Grant
Agreement contained herein do not purport to be complete and are
qualified in their entirety by reference to the complete text of
the License Agreement, which will be filed as an exhibit to the
Company’s Quarterly Report on Form 10-Q for the quarter
ending June 30, 2021 and the Equity Grant Agreement, which is filed
as Exhibit 4.1 attached hereto.
Loan and Security Agreement
Also, on April 8, 2021, the Company entered into a loan and
security agreement (the “Loan Agreement”) with
Innovatus Life Sciences Lending Fund I, LP, a Delaware limited
partnership (“Innovatus”), as collateral agent and the
Lenders listed on Schedule 1.1 thereto, pursuant to which
Innovatus, as a Lender, has agreed to make certain term loans to
the Company in the aggregate principal amount of up to $25.0
million (the “Term Loans”).
Funding of the first $15.0 million tranche occured on April 8,
2021. The Company will be eligible to draw on a second tranche of
$5.0 million upon achievement of certain milestones, including
meeting the primary end points of either the FACT-1 or FACT-2
clinical trials and receipt of unrestricted net cash proceeds of at
least $50.0 million from the issuance and sale of the
Company’s equity securities. The Company will be eligible to
draw on a third tranche of $5.0 million upon the achievement of
certain additional milestones, including commencement of certain
Phase 3 clinical trials and the receipt of unrestricted net cash
proceeds of at least $75.0 million from the issuance and sale of
the Company’s equity securities.
Innovatus has the right, at its election, after June 1, 2021 and
until the third anniversary of the Loan Agreement, to convert up to
20% of the outstanding principal amount of all Terms Loans made
under the Loan Agreement into shares of the Company’s common
stock at a price per share equal to the volume weighted average
closing price of the Company’s stock for the 5-trading day
period ending on the last trading day immediately preceding the
execution of the Loan Agreement (the “Conversion
Right”)
The Company is entitled to make interest-only payments for
thirty-six months, or up to forty-eight months if certain
conditions are met. The Term Loans will mature on the fifth
anniversary of the initial funding date and will bear interest at a
rate equal to sum of (a) the greater of (i) Prime Rate (as defined
in the Loan Agreement) or (ii) 3.25%, plus (b) 5.70%.
The Loan Agreement is secured by all assets of the Company.
Proceeds will be used for working capital purposes and to fund the
Company’s general business requirements. The Loan Agreement
contains customary representations and warranties and covenants,
subject to customary carve outs, and includes financial covenants
related to liquidity and trailing twelve months
revenue.
In connection with each funding of the Term Loans, the Company is
required to issue to Innovatus a warrant (the
“Warrants”) to purchase a number of shares of the
Company’s common stock equal to 2.5% of the principal amount
of the relevant Term Loan funded divided by the exercise price,
which will be based on the lower of (i) the volume weighted average
closing price of the Company’s stock for the 5-trading day
period ending on the last trading day immediately preceding the
execution of the Loan Agreement or (ii) the closing price on the
last trading day immediately preceding the execution of the Loan
Agreement. For the second and third tranches only the exercise
price will be based on the lower of (i) the exercise price for the
first tranche or (ii) the volume weighted average closing price of
the Company’s stock for the 5-trading day period ending on
the last trading day immediately preceding the relevant Term Loan
funding. The Warrants may be exercised on a cashless basis and are
exercisable through the 10th
anniversary of the applicable funding
date. The number of shares of common stock for which each Warrant
is exercisable and the associated exercise price are subject to
certain proportional adjustments as set forth in such
Warrant.
The descriptions of the Loan Agreement and the Warrants contained
herein do not purport to be complete and are qualified in their
entirety by reference to the complete text of the Loan Agreement,
which will be filed as an exhibit to the Company’s Quarterly
Report on Form 10-Q for the quarter ending June 30, 2021 and the
form of Warrant filed as Exhibit 4.2 attached hereto.
Item 2.03
Creation of a Direct Financial Obligation or an Obligation under an
Off-Balance Sheet Arrangement of a Registrant.
The
information set forth under Loan and Security
Agreement in Item 1.01 above is
incorporated herein by reference.
Item 3.02
Unregistered Sales of Equity Securities.
The information set forth under Item 1.01 above regarding the
issuance of equity to Pfizer under the License Agreement, the
Conversion Right, and the Warrants is incorporated herein by
reference. The issuance of shares of the Company’s common
stock pursuant to the License Agreement, the Conversion Right, and
the Warrants will be made in reliance on the exemption from
registration contained in Section 4(a)(2) of the Securities Act of
1933, as amended, and Rule 506 of Regulation D
thereunder.
Item 5.02
Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of
Certain Officers.
In connection with the execution of the license agreement, each of
Brian Sullivan, our President and Chief Executive Officer, Lance
Laing, our Chief Science Officer, and Vicky Hahne, our Chief
Financial Officer, earned a milestone bonus under the
Company’s milestone-based incentive pay program, payable in
the form of stock options. These bonuses were consistent with the
previously disclosed executive bonus program, except for Ms.
Hahne’s bonus. She received a one-time increase to the stock
option that would otherwise be issued from a fair market value of
$51,000 to a fair market value of $71,000.
On April 8, 2021, the Company issued a press release announcing the
License Agreement and a press release announcing certain business
updates, including the Loan Agreement. These press releases are
attached as Exhibit 99.1 and Exhibit 99.2, respectively, hereto and
are incorporated herein by reference.
To reflect the addition of the License Agreement to the
Company’s business, the Company is providing supplements to
its Business Description and Risk Factors as presented in the
Annual Report on Form 10-K for the year ended December 31, 2020.
The supplemental business description is attached hereto as Exhibit
99.3 and the supplemental risk factors are attached hereto as
Exhibit 99.4, each of which is incorporated herein by
reference.
Item
9.01
Financial
Statements and Exhibits.
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Equity
Grant Agreement, dated April 8, 2021 between the Company and
Pfizer, Inc.
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Form of
Warrant
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Press
Release dated April 8, 2021 regarding
the License Agreement.
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Press
Release dated April 8, 2021 certain business updates, including the
Loan Agreement.
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Supplemental
Business Description.
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Supplemental
Risk Factors.
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SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
Date:
April 8, 2021
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CELCUITY INC.
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By:
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/s/
Brian F. Sullivan
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Brian
F. Sullivan
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Chief
Executive Officer
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EQUITY GRANT AGREEMENT
This
Equity Grant Agreement (this “Agreement”) is made
effective as of the 7 day of April, 2021 (the “Effective Date”), by and
between Celcuity Inc., a Delaware corporation (the
“Company”), and Pfizer
Inc., a Delaware corporation (the “Investor”).
WHEREAS, the
Company and the Investor are entering into a License Agreement
dated the Effective Date (the “License Agreement”) under
which the Company is licensing certain technology from the
Investor;
WHEREAS, the
Company and the Investor are executing and delivering this
Agreement in reliance upon the exemption from
securities registration afforded by Section 4(a)(2) of the
Securities Act of 1933, as amended (the “Securities Act”), and
Rule 506 of Regulation D as promulgated by the United States
Securities and Exchange Commission (the “Commission”) under the
Securities Act; and
WHEREAS, the
License Agreement provides that, among other things, the Company
will issue to the Investor shares of common stock, par value $0.001
per share (the “Common Stock”), of the
Company upon the terms and conditions stated in this
Agreement.
NOW,
THEREFORE, in consideration of the mutual covenants set forth
herein, and for other good and valuable consideration, the receipt
and sufficiency of which is acknowledged, and intending to be
legally bound hereby, the parties hereto agree as
follows:
1. Issuance of
Shares.
1.1. Shares;Number
of Shares. In consideration of the licenses and rights
granted to the Company under the License Agreement, and subject to
the terms and conditions of this Agreement and in reliance on the
representations and warranties of the Investor set forth herein,
the Company hereby agrees to issue to the Investor, and the
Investor hereby agrees to acquire from the Company, such number of
shares of the Company’s Common Stock (the “Shares”) equivalent in
monetary value on an aggregate basis to five million U.S. dollars
($5,000,000.00), where the number of shares of Company’s
Common Stock issued to Investor shall be calculated by dividing
five million U.S. dollars ($5,000,000.00) by the closing price of a
share of the Company’s Common Stock on the NASDAQ Capital
Market on the Effective Date, rounded to the nearest whole
share.
1.2. Closing;
Delivery of Shares. The issuance of the Shares shall take
place on the Effective Date, remotely via the exchange of documents
and signatures, or at such other time, date and place as the
Company and the Investor mutually agree upon in writing (which time
and place are designated as the “Closing”). On or before
the Closing, the Company will cause the transfer agent for the
Common Stock (the “Transfer Agent”) to issue
the Shares to the Investor and to hold the Shares in book-entry
form for the account of the Investor. The book entry for the Shares
will be subject to a stop transfer order reflecting such the
transfer restrictions referred to in Sections 4.5 and 4.6 of this Agreement. At the
Closing, the Company will deliver to Investor a copy of
Company’s irrevocable instructions to its Transfer Agent for
the Common Stock instructing such Transfer Agent to register the
issuance of the Shares to the Investor via book-entry.
2. Conditions to
Closing.
2.1. Conditions
to the Investor’s Obligations. The obligation of the
Investor to acquire the Shares at the Closing is subject to the
fulfillment to the reasonable satisfaction of the Investor on or
prior to the Closing of each of the following conditions, any of
which may be waived by the Investor:
(a) Each of the
representations and warranties of the Company contained in
Section 3 shall be true and correct in
all material respects or, if subject to materiality or Material
Adverse Effect (as defined in Section 3.1), shall be true and correct
in all respects, at and as of the Closing (except for such
representations and warranties that are made as of a specific date,
which shall be true and correct in all material respects or, if
subject to materiality or Material Adverse Effect, shall be true
and correct in all respects as of such date), as though such
representation or warranty were made as of such date.
(b) The Company shall
have performed in all material respects all obligations and
covenants herein or in the License Agreement required to be
performed by it on or prior to the Closing.
(c) The Company shall
have delivered or caused to be delivered an irrevocable instruction
letter to the Company’s Transfer Agent instructing the
Transfer Agent to issue the Shares to the Investor in book-entry
form for the account of the Investor.
(d) No judgment, writ,
order, injunction, award or decree of or by any court, or judge,
justice or magistrate, including any bankruptcy court or judge, or
any order of or by any governmental authority, shall have been
issued, and no action or proceeding shall have been instituted by
any governmental authority, enjoining or preventing the
consummation of the transactions contemplated hereby or in the
License Agreement.
(e) No stop order or
suspension of trading shall have been imposed by the Commission or
any other governmental or regulatory body with respect to public
trading in the Common Stock.
(f) Since the Effective
Date, there shall not have occurred any Material Adverse Effect,
and no event shall have occurred or circumstance shall exist that,
in combination with any other events or circumstances, could
reasonably be expected to have or result in a Material Adverse
Effect.
2.2. Conditions
to the Company’s Obligations. The Company’s
obligation to issue the Shares at the Closing is subject to the
fulfillment to the reasonable satisfaction of the Company on or
prior to the Closing of each of the following conditions, any of
which may be waived by the Company:
(a) Each of the
representations and warranties of the Investor contained in
Section 4 shall be true and correct in
all material respects at and as of the Closing, as though such
representation or warranty were made as of such date.
(b) The License
Agreement shall not have been terminated.
(c) No judgment, writ,
order, injunction, award or decree of or by any court, or judge,
justice or magistrate, including any bankruptcy court or judge, or
any order of or by any governmental authority, shall have been
issued, and no action or proceeding shall have been instituted by
any governmental authority, enjoining or preventing the
consummation of the transactions contemplated hereby or in the
License Agreement.
(d) No stop order or
suspension of trading shall have been imposed by the Commission or
any other governmental or regulatory body with respect to public
trading in the Common Stock.
3. Representations and Warranties of the
Company. The Company hereby represents and warrants to the
Investor that:
3.1. Organization, Good Standing and
Qualification. The Company is a corporation duly organized,
validly existing and in good standing under the laws of the State
of Delaware and has all requisite corporate power and authority to
carry on its business as presently conducted or proposed to be
conducted and to own or lease the properties and assets it now owns
or holds under lease. The Company and its Subsidiaries are duly
qualified to transact business and is in good standing in each
jurisdiction in which the failure so to qualify would, individually
or in the aggregate, have a material adverse effect upon the
general affairs, business, management, properties, operations,
condition (financial or otherwise) or results of operations of the
Company or any of its Subsidiaries, taken as a whole
(“Material Adverse
Effect”). The Company has disclosed all of its
subsidiaries required to be disclosed in an exhibit to its
applicable SEC Reports (the “Subsidiaries”). The
Company owns, directly or indirectly, all of the capital stock or
other equity interests of each Subsidiary free and clear of any
liens, and all of the issued and outstanding shares of capital
stock of each Subsidiary are validly issued and are fully paid and,
if applicable in the relevant jurisdiction, non-assessable, and
free of preemptive and similar rights to subscribe for or purchase
securities.
3.2. Capitalization;Valid
Issuance of Shares. The authorized capital of the Company,
as of the last business day immediately prior to the Effective
Date, consists of: (i) 25,000,000 shares of Common Stock, of
which (x) 12,287,896 shares were issued and outstanding,
(y) 1,285,582 shares were reserved for future issuance
pursuant to the Company’s stock-based compensation plans,
including 854,622 shares issuable upon the exercise of stock
options outstanding as of such date, and (z) 352,400 shares
issuable were upon the exercise of stock warrants outstanding as of
such date, and (ii) 2,500,000 shares of preferred stock, par
value $0.001 per share, none of which were issued and outstanding
as of such date. The capital stock of the Company, including the
Common Stock and the Shares to be issued pursuant to this
Agreement, conforms to the description thereof in the SEC Reports.
All of the issued and outstanding shares of capital stock of the
Company are duly authorized and validly issued, fully paid and
nonassessable, have been issued in compliance with all federal and
state securities laws, were not issued in violation of or subject
to any preemptive rights or other rights to subscribe for or
purchase securities that have not been waived in writing, and the
holders thereof are not subject to personal liability by reason of
being such holders. The Shares to be issued hereunder by the
Company have been duly authorized and, when issued and delivered in
accordance with the terms of this Agreement, will have been validly
issued and will be fully paid and nonassessable, will not be
subject to preemptive rights or other similar rights of
stockholders of the Company, and will be free and clear of all lien
(except for restrictions on transfer imposed by applicable
securities Laws or contained herein) and the holder thereof will
not be subject to personal liability by reason of being such
holder.
3.3. Authorization;
No Conflicts; Authority. This Agreement has been duly
authorized, executed and delivered by the Company, and constitutes
a valid, legal and binding obligation of the Company, enforceable
in accordance with its terms, except as such enforceability may be
limited by bankruptcy, insolvency, reorganization or similar laws
affecting the rights of creditors generally and subject to general
principles of equity. The execution, delivery and performance of
this Agreement and the consummation of the transactions herein
contemplated will not (a) conflict with or result in a breach or
violation of any of the terms or provisions of, or constitute a
default under, or result in the creation or imposition of any lien,
charge or encumbrance upon any property or assets of the Company
pursuant to any indenture, mortgage, deed of trust, loan agreement
or other material agreement or instrument to which the Company is a
party or by which the Company is bound or to which any of the
property or assets of the Company is subject, (b) result in any
violation of the provisions of the Company’s charter or
bylaws or (c) result in the violation of any law or statute or any
judgment, order, rule, regulation or decree of any court or
arbitrator or federal, state, local or foreign governmental agency
or regulatory authority having jurisdiction over the Company or any
of its properties or assets (each, a “Governmental Authority”),
except in the case of clauses (a) and (c) above as would not result
in a Material Adverse Effect. No consent, approval, authorization
or order of, or registration or filing with any Governmental
Authority is required for the execution, delivery and performance
of this Agreement or for the consummation of the transactions
contemplated hereby, including the issuance of the Shares by the
Company, except such as may be required under the Securities Act,
the Nasdaq Stock Market Rules or state securities or blue sky laws;
and the Company has full power and authority to enter into this
Agreement and to consummate the transactions contemplated hereby,
including the authorization and issuance of the Shares as
contemplated by this Agreement.
3.4. Exchange
Listing and Exchange Act Registration. The Common Stock is
registered pursuant to Section 12(b) of the Securities Exchange Act
of 1934, as amended (“Exchange Act”) and is
included for listing on the Nasdaq Capital Market and the Company
has not taken any action designed to, or likely to have the effect
of, terminating the registration of the Common Stock under the
Exchange Act or delisting the Common Stock from the Nasdaq Capital
Market, and the Company has not received any notification that the
Commission or the Nasdaq Capital Market is contemplating
terminating such registration or listing. The Company agrees to
notify Investor promptly upon the Company becoming an
“ineligible issuer.” The Company has complied in all
material respects with the applicable requirements of the Nasdaq
Capital Market for maintenance of inclusion of the Common Stock
thereon. No person or entity has any right to cause the Company to
effect the registration under the Securities Act of any securities
of the Company or any Subsidiary.
3.5. SEC
Reports. The Company has timely filed with the Commission
all of the reports and other documents required to be filed by it
under the Exchange Act and the Securities Act and any required
amendments to any of the foregoing (the “SEC Reports”). The SEC
Reports, when they were filed with the Commission, did not contain
an untrue statement of a material fact or omit to state a material
fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading. None of
the Company’s Subsidiaries is subject to the periodic
reporting requirements of the Exchange Act. As of the date hereof,
there are no outstanding or unresolved comments in comment letters
from the Commission staff with respect to any of the SEC Reports
and the Company has not been notified in writing that any of the
SEC Reports is the subject of ongoing Commission review or
outstanding investigation.
3.6. Financial
Statements. As of its respective date, the financial
statements, together with the related notes and schedules, of the
Company included in the SEC Reports complied as to form in all
material respects with all applicable accounting requirements and
the published rules and regulations of the Commission and all other
applicable rules and regulations with respect thereto. Such
financial statements, together with the related notes and
schedules, have been prepared in accordance with generally accepted
accounting principles in the United States (“GAAP”) applied on a
consistent basis during the periods involved (except (i) as may be
otherwise indicated in such financial statements or the notes
thereto or (ii) in the case of unaudited interim statements, to the
extent they may not include footnotes or may be condensed or
summary statements), and fairly present in all material respects
the financial condition of the Company and its consolidated
subsidiaries as of the dates thereof and the results of operations
and cash flows for the periods then ended (subject, in the case of
unaudited statements, to normal year-end audit adjustments). Except
(i) as set forth in the SEC Reports or (ii) for liabilities
incurred in the ordinary course of business subsequent to the date
of the most recent balance sheet contained in the SEC Reports, the
Company has no liabilities, whether absolute or accrued, contingent
or otherwise, required by GAAP to be set forth on a consolidated
balance sheet of the Company or in the notes thereto.
3.7. Certain
Registration Matters. Assuming the accuracy of the
Investor’s representations and warranties set forth in
Section 4, no registration under the
Securities Act is required for the offer and issuance of the
Securities by the Company to the Investor under this Agreement and
the License Agreement.
3.8. Private
Placement. Subject to the accuracy of the representations
made by Investor in Section 4, the offer and issuance of the Shares
to Investor as contemplated hereby is exempt from the registration
requirements of the Securities Act, and will have been registered
or qualified (or are exempt from registration and qualification)
under the registration, permit or qualification requirements of all
applicable state securities Laws. Except as otherwise disclosed by
Company to Investor in writing, Company has not engaged any
brokers, finders or agents, nor incurred, nor will incur, directly
or indirectly, any liability for brokerage or finder’s fees
or agents’ commissions or any similar charges in connection
with this Agreement and the transactions contemplated
hereby.
3.9. Litigation.
Other than as set forth in the SEC Reports filed prior to the
Effective Date, there is no action, suit, prosecution,
investigation, litigation, arbitration, hearing, order, claim,
complaint or other proceeding (“Action”) pending (of
which the Company has received notice or otherwise has knowledge)
or, to the Company’s knowledge, threatened, against the
Company, any of its Subsidiaries or any of their respective
properties or which the Company or any of its Subsidiaries intends
to initiate, except where such Action would not (a) adversely
affect or challenge the legality, validity or enforceability of
this Agreement or the issuance of the Shares or (ii) reasonably be
expected to have a Material Adverse Effect on the
Company.
3.10. Permits;
Compliance with Laws. The Company has all franchises,
permits, licenses and other rights and privileges
(“Permits”) necessary to
permit it to own its properties and to conduct its business as
presently conducted and is in compliance thereunder, except where
the failure to be in compliance would not reasonably be expected to
have a Material Adverse Effect on the Company. The Company is and
has been in compliance with all laws, statutes, rules, regulations,
orders, judgments, injunctions and ordinances of any Governmental
Authority (“Laws”) applicable to its
business, properties and assets, and to the products and services
sold by it, except where the failure to be in compliance has not
had and would not reasonably be expected to have a Material Adverse
Effect on the Company. The Company has made all material filings
and obtained all such material approvals as may be required by the
United States Food and Drug Administration (the “FDA”) or any committee
thereof or from any other U.S. or drug or medical device regulatory
agency, or health care facility Institutional Review Board
(collectively, the “Regulatory Agencies”) to
conduct the clinical trials and manufacturing activities related to
such clinical trials currently being conducted by the Company, and
the Company has operated and currently is in compliance in all
material respects with all applicable rules, regulations and
policies of the Regulatory Agencies, except where the failure to
make such filings, obtain such approval or comply with such rules,
regulations and policies could not reasonably be expected to have a
Material Adverse Effect on the Company. The Company has not
received any written notification of any pending or threatened
Action from any Governmental Authority, including any Regulatory
Agency, that could reasonably be expected to have a Material
Adverse Effect on the Company.
3.11. Absence
of Certain Changes. Since the date of the latest audited
financial statements included within the SEC Reports, (a) the
Company and each of its Subsidiaries has conducted its business
operations in the ordinary course of business consistent with past
practice, (b) there has not occurred any event, change,
development, circumstance or condition that, individually or in the
aggregate, has had or would reasonably be expected to have a
Material Adverse Effect on the Company, (c) the Company has not (i)
declared or paid any dividends, or authorized or made any
distribution upon or with respect to any class or series of its
capital stock, or (ii) sold, exchanged or otherwise disposed of any
of its material assets or rights, and (d) the Company has not
admitted in writing its inability to pay its debts generally as
they become due, filed or consented to the filing against it of a
petition in bankruptcy or a petition to take advantage of any
insolvency act, made an assignment for the benefit of creditors,
consented to the appointment of a receiver for itself or for the
whole or any substantial part of its property, or had a petition in
bankruptcy filed against it, been adjudicated bankrupt or filed a
petition or answer seeking reorganization or arrangement under the
federal bankruptcy laws or any other laws of the United States or
any other jurisdiction.
3.12. Anti-Corruption
and Anti-Bribery Laws. Neither the Company and its
Subsidiaries, nor, to the Company’s knowledge, any of their
respective directors, officer, agents, employees or other
authorized persons acting on behalf of the Company or its
Subsidiaries is aware of or has taken any action, directly or
indirectly, that could result in a violation or a sanction for
violation by such persons of the Foreign Corrupt Practices Act of
1977 or the U.K. Bribery Act 2010, each as may be amended, or
similar law of any other relevant jurisdiction, or the rules or
regulations thereunder; and the Company has instituted and
maintains policies and procedures to ensure compliance
therewith.
3.13. Economic
Sanctions. Neither the Company and its Subsidiaries, nor, to
Company’s knowledge, any of their respective directors,
officers, agents, employees or other authorized person acting on
behalf of the Company: (a) is, or is controlled or 50% or more
owned in the aggregate by or is acting on behalf of, one or more
individuals or entities that are currently the subject of any
sanctions administered or enforced by the United States
(collectively, “Sanctions” and such
persons, “Sanctioned
Persons” and each such person, a “Sanctioned Person”) or
(b) has, within the last five (5) years, done the Company’s
business in a country or territory that was, or whose government
was, at such time the subject of Sanctions that broadly prohibit
dealings with that country or territory. Within the past five (5)
years, to the knowledge of the Company, it has neither been the
subject of any governmental investigation or inquiry regarding
compliance with Sanctions nor has it been assessed any fine or
penalty in regard to compliance with Sanctions.
3.14. Money
Laundering. The operations of the Company and its
Subsidiaries are and have been conducted at all times in compliance
with applicable financial record-keeping and reporting requirements
of the Currency and Foreign Transactions Reporting Act of 1970, as
amended, applicable money laundering statutes and applicable rules
and regulations thereunder (collectively, the “Money Laundering Laws”),
and no Action by or before any court or governmental agency,
authority or body or any arbitrator involving the Company or any
Subsidiary with respect to the Money Laundering Laws is pending or,
to the knowledge of the Company or any Subsidiary,
threatened.
3.15. Accountants.
The Company’s registered public accounting firm is Boulay
PLLP. To the Company’s knowledge, Boulay PLLP are independent
public accountants with respect to the Company within the meaning
of the Securities Act and Exchange Act and the applicable published
rules and regulations thereunder.
3.16. Incorporation
of Other Representations and Warranties. The representations
and warranties of the Company contained in the License Agreement
are incorporated herein by reference and made a part of this
Agreement as if fully set forth herein.
4. Representations and Warranties of the
Investor. The Investor hereby represents and warrants to the
Company that:
4.1. Authorization.
This Agreement has been duly authorized, executed and delivered by
the Company, and constitutes a valid, legal and binding obligation
of the Company, enforceable in accordance with its terms, except as
such enforceability may be limited by bankruptcy, insolvency,
reorganization or similar laws affecting the rights of creditors
generally and subject to general principles of equity.
4.2. Purchase
Entirely for Own Account. The Investor is acquiring the
Shares for investment for the Investor’s own account, not as
a nominee or agent, and not with a view to the resale or
distribution of any part thereof, and the Investor has no present
intention of selling, granting any participation in, or otherwise
distributing the same. The Investor does not presently have any
contract, undertaking, agreement or arrangement with any person to
sell, transfer or grant participations to such person or to any
third person, with respect to any of the Shares.
4.3. Disclosure
of Information. The Investor has had an opportunity to
discuss the Company’s business, management, financial affairs
and the terms and conditions of the offering of the Shares with the
Company’s management and has had an opportunity to review the
Company’s facilities.The foregoing, however, does not limit
or modify the representations and warranties of the Company in
Section 3 of this Agreement or the
right of the Investor to rely thereon.
4.4. Accredited
Investor. The Investor is an accredited investor as defined
in Rule 501(a) of Regulation D promulgated under the Securities
Act.
4.5. Restricted Securities. The
Investor understands that the Shares have not been, and will not
be, registered under the Securities Act, by reason of a specific
exemption from the registration provisions of the Securities Act
which depends upon, among other things, the bona fide nature of the
investment intent and the accuracy of the Investor’s
representations as expressed herein. The Investor understands that
the Shares are “restricted securities”
under applicable U.S. federal and state securities laws and that,
pursuant to these laws, the Investor must hold the Shares indefinitely unless they
are registered under the Securities Act and qualified by state
authorities, or an exemption from such registration and
qualification requirements is available. The Investor acknowledges
that the Company has no obligation to register or qualify the
Shares for resale. The Investor further acknowledges that if an
exemption from registration or qualification is available, it may
be conditioned on various requirements including, but not limited
to, the time and manner of sale, the holding period for the Shares,
and on requirements relating to the Company which are outside of
the Investor’s control, and which the Company is under no
obligation and may not be able to satisfy.
4.6. Legends. The Investor
understands that the Shares may bear one or all of the following
legends:
(a) “THE SHARES
REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AND HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A
VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF.
NO SUCH TRANSFER MAY BE EFFECTED WITHOUT AN EFFECTIVE REGISTRATION
STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL IN A FORM
SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED
UNDER THE SECURITIES ACT OF 1933.”
(b) Any legend required
by the securities laws of any state to the extent such laws are
applicable to the Shares represented by the certificate,
instrument, or book entry so legended.
5. Resale of Shares.
5.1. Reports
Under Exchange Act. With a view to making available to the
Investor the benefits of Rule 144 promulgated by the Commission
pursuant to the Securities Act, as such Rule may be amended from
time to time (“Rule
144”), and any other rule or regulation of the
Commission that may at any time permit the Investor to sell
securities of the Company to the public without registration, the
Company shall:
(a) make and keep
available adequate current public information, as such term is
understood and defined in Rule 144, at all times after the
Effective Date;
(b) use commercially
reasonable efforts to file with the Commission in a timely manner
all reports and other documents required of the Company under the
Securities Act and the Exchange Act; and
(c) furnish to the
Investor, so long as the Investor owns any Shares, upon request (i)
to the extent accurate, a written statement by the Company that it
has complied with the reporting requirements of Rule 144, the
Securities Act, and the Exchange Act; (ii) a copy of the most
recent annual or quarterly report of the Company and such other
reports and documents filed by the Company with the Commission; and
(iii) such other information as may be reasonably requested in
availing the Investor of any rule or regulation of the Commission
that permits the selling of any such securities without
registration.
5.2. Removal
of Legends. In connection with any sale or disposition of
the Shares by Investor pursuant to Rule 144 or pursuant to any
other exemption under the Securities Act such that the purchaser
acquires freely tradable shares and upon compliance by Investor
with the requirements of this Agreement, the Company shall cause
the Transfer Agent to issue replacement certificates representing
the Shares sold or disposed of without restrictive legends or
record the Shares sold or disposed of in book-entry form without
such restrictions. Upon the Shares becoming freely tradable by
Investor as a non-affiliate pursuant to Rule 144, the Company shall
deliver to the Transfer Agent irrevocable instructions to remove
restrictive legends or stop-transfer orders with respect to the
Shares.
6. Miscellaneous.
6.1. Entire
Agreement; Amendments; Waivers. This Agreement, together
with the License Agreement, constitutes the entire agreement
between the parties hereto pertaining to the subject matter hereof,
and any and all other prior or contemporaneous written or oral
agreements relating to the subject matter hereof existing between
the parties hereto are expressly canceled. This Agreement may not
be amended, modified or waived except by an instrument in writing
signed by each of the parties hereto.
6.2. Successors
and Assigns. Neither this Agreement nor any of the rights or
obligations hereunder may be assigned by either party without the
prior written consent of the non-assigning party;provided, however, that
Investor may assign this Agreement without the Company’s
consent to an affiliate of the Investor. The terms and conditions
of this Agreement shall inure to the benefit of and be binding upon
the respective successors and assigns of the parties hereto.
Nothing in this Agreement, express or implied, is intended to
confer upon any party other than the parties hereto or their
respective successors and assigns any rights, remedies,
obligations, or liabilities under or by reason of this Agreement,
except as expressly provided in this Agreement.
6.3. Further
Assurances; Survival. The parties shall execute and deliver
all such further instruments and documents and take all such other
actions as may reasonably be required to carry out the transactions
contemplated hereby and to evidence the fulfillment of the
agreements herein contained. The provisions of this Agreement will
survive termination.
6.4. Notices.
Except as otherwise provided herein, all communications hereunder
shall be in writing and, if to the Investor, shall be mailed via
overnight delivery service or hand delivered to Pfizer Inc., 235
East 42nd Street, New York, NY 10017, Attention: Senior Vice
President, Worldwide Business Development (with a copy to Pfizer
Inc., 235 East 42nd Street, New York, NY 10017, Attention: Andrew
J. Muratore);if to the Company, shall be mailed via overnight
delivery service or hand delivered to Celcuity Inc., 16305 36th
Avenue North, Suite 100, Minneapolis, MN 55446, Attention: Brian F.
Sullivan, with a copy (which shall not constitute notice) to
Fredrikson & Byron, P.A., 200 South Sixth Street, Suite 4000,
Minneapolis, MN 55402, Attention: Eric O. Madson;or in each case to
such other address as the person to be notified may have requested
in writing. Any party to this Agreement may change such address for
notices by sending to the parties to this Agreement written notice
of a new address for such purpose.
6.5. Governing
Law. All questions concerning the construction, validity,
enforcement and interpretation of this Agreement shall be governed
by and construed and enforced in accordance with the internal laws
of the State of Delaware, without regard to the principles of
conflicts of law thereof.
6.6. Titles
and Subtitles. The titles and subtitles used in this
Agreement are used for convenience only and are not to be
considered in construing or interpreting this
Agreement.
6.7. Counterparts.
This Agreement may be executed and delivered by facsimile, by
electronic mail attaching a portable document file (.pdf) or any
electronic signature complying with the U.S. federal ESIGN Act of
2000 (e.g., www.docusign.com). This
Agreement may be executed in one or more counterparts and, if
executed in more than one counterpart, the executed counterparts
shall each be deemed to be an original and all such counterparts
shall together constitute one and the same instrument.
6.8. Severability.
If any provision of this Agreement should be held invalid, illegal
or unenforceable in any jurisdiction, the parties will negotiate in
good faith a valid, legal and enforceable substitute provision that
most nearly reflects the original intent of the parties and all
other provisions hereof will remain in full force and effect in
such jurisdiction and will be liberally construed in order to carry
out the intentions of the parties hereto as nearly as may be
possible. Such invalidity, illegality or unenforceability will not
affect the validity, legality or enforceability of such provision
in any other jurisdiction.
6.9. No
Strict Construction. The language used in this Agreement is
deemed to be the language chosen by the parties to express their
mutual intent, and no rules of strict construction will be applied
against a party.
6.10. Expenses.
The Company and Investor are each liable for, and will pay, their
own expenses incurred in connection with the negotiation,
preparation, execution and delivery of this Agreement, including,
without limitation, attorneys’ and consultants’ fees
and expenses. The Company shall pay any and all transfer, stamp,
issuance and similar taxes, costs and expenses (including, without
limitation, fees and expenses of the transfer agent) that may be
payable with respect to the delivery of the Shares to
Investor.
[Signature page follows]
IN
WITNESS WHEREOF, the parties have executed this Equity Grant
Agreement as of the Effective Date.
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THE
COMPANY:
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CELCUITY
INC.
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By:
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/s/ Brian F.
Sullivan
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Name:
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Brian F.
Sullivan
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Title:
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Chief Executive
Officer
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INVESTOR:
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PFIZER
INC.
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By:
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/s/ Jeff
Settleman
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Name:
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Jeff
Settleman
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Title:
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Senior Vice
President & Chief Scientific Officr, Pfizer Oncology
R&d
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THIS WARRANT AND THE SHARES ISSUABLE HEREUNDER HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
“ACT”), OR THE SECURITIES LAWS OF ANY STATE AND,
EXCEPT AS SET FORTH IN SECTIONS 5.3 AND 5.4 BELOW, MAY NOT BE
OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED (I) UNLESS AND
UNTIL REGISTERED UNDER SAID ACT AND LAWS OR (II) WITHOUT AN OPINION
OF COUNSEL, IN FORM AND SUBSTANCE REASONABLY SATISFACTORY TO THE
COMPANY, THAT SUCH OFFER, SALE, PLEDGE OR OTHER TRANSFER IS EXEMPT
FROM SUCH REGISTRATION.
WARRANT TO PURCHASE
STOCK1
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Company
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CELCUITY, INC.
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Number of Shares
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26,042
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Type/Series of Stock
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Common Stock, par value $0.01 per share of the Company
(“Common
Stock”)
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Warrant Price
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$14.40 per share2
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Issue Date
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April 8, 2021
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Expiration Date
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April 8, 2031 (See also
Section 5.1(b))
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Credit Facility
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This Warrant to Purchase Stock (“Warrant”) is issued in
connection with that certain Loan and Security Agreement, dated
April 8, 2021, among Innovatus Life Sciences Lending Fund I, LP, as
Lender and Collateral Agent, the Lenders from time to time party
thereto, and the Company (as modified, amended and/or restated from
time to time, the “Loan
Agreement”).
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THIS WARRANT CERTIFIES THAT, for good and valuable
consideration, INNOVATUS LIFE SCIENCES LENDING FUND I, LP
(“Innovatus”), a Delaware limited partnership with an
office located at 777 Third Avenue, 25th Floor, New York, NY 10017
(together with any successor or permitted assignee or transferee of
this Warrant or of any shares issued upon exercise hereof,
“Holder”)
is entitled to purchase the number of fully paid and non-assessable
shares (the “Shares”)
of the above-stated Type/Series of Stock (the
“Class”)
of the above-named company (the “Company”)
at the above-stated Warrant Price, all as set forth above and as
adjusted pursuant to Section 2 of this Warrant, subject to the
provisions and upon the terms and conditions set forth in this
Warrant.
______________
1 The Company
acknowledges and agrees that this Warrant is issued in connection
with the Term A Loan under, and as defined in, the Loan Agreement,
and that, in the event the Company draws the Term B Loan and/or the
Term C Loan, each as defined therein, the Company shall issue
the Holder additional Warrants to purchase shares of the
Company’s Common Stock, equal to 2.5% of the funded amount of
such Term B and Term C Loans, at the price per share described
above, subject to any adjustments to the shares and/or price, on
substantially the terms and conditions set forth in this
Warrant.
SECTION
1. EXERCISE.
1.1. Method
of Exercise. Holder may at any time and from time to time
after June 1, 2021 exercise this Warrant, in whole or in part, by
delivering to the Company the original of this Warrant together
with a duly executed Notice of Exercise in substantially the form
attached hereto as Appendix 1 and, unless Holder is exercising this
Warrant pursuant to a cashless exercise set forth in Section 1.2, a
check, wire transfer of same-day funds (to an account designated by
the Company), or other form of payment acceptable to the Company
for the aggregate Warrant Price for the Shares being purchased;
provided that if an Acquisition occurs the Holder may exercise this
Warrant according to the terms hereof at any time.
1.2. Cashless
Exercise. On any exercise of this Warrant, in lieu of
payment of the aggregate Warrant Price in the manner as specified
in Section 1.1 above, but otherwise in accordance with the
requirements of Section 1.1, Holder may elect to receive Shares
equal to the value of this Warrant, or portion hereof as to which
this Warrant is being exercised. Thereupon, the Company shall issue
to the Holder such number of fully paid and non-assessable Shares
as are computed using the following formula:
X =
Y(A-B)/A
where:
X =
the
number of Shares to be issued to the Holder;
Y =
the
number of Shares with respect to which this Warrant is being
exercised (inclusive of the Shares surrendered to the Company in
payment of the aggregate Warrant Price);
A =
the
Fair Market Value (as determined pursuant to Section 1.3 below) of
one Share; and
1.3. Fair
Market Value. If the Common Stock is then traded or quoted
on a nationally recognized securities exchange, inter-dealer
quotation system or over-the-counter market (a “Trading Market”), the
fair market value of a Share shall be the closing price of a share
of Common Stock reported for the Business Day immediately before
the date on which Holder delivers this Warrant together with its
Notice of Exercise to the Company. If the Common Stock is not
traded in a Trading Market, the Board of Directors of the Company
shall determine the fair market value of a Share in its reasonable
good faith judgment.
1.4. Delivery
of Certificate and New Warrant. Promptly after Holder
exercises this Warrant in the manner set forth in Section 1.1 or
1.2 above, the Company shall deliver to Holder a certificate (via
an electronic shares program, if applicable) representing the
Shares issued to Holder upon such exercise and, if this Warrant has
not been fully exercised and has not expired, a new warrant of like
tenor representing the Shares not so acquired.
1.5. Replacement
of Warrant. On receipt of evidence reasonably satisfactory
to the Company of the loss, theft, destruction or mutilation of
this Warrant and, in the case of loss, theft or destruction, on
delivery of an indemnity agreement reasonably satisfactory in form,
substance and amount to the Company or, in the case of mutilation,
on surrender of this Warrant to the Company for cancellation, the
Company shall, within a reasonable time, execute and deliver to
Holder, in lieu of this Warrant, a new warrant of like tenor and
amount.
1.6. Treatment
of Warrant Upon Acquisition of Company.
(a) Acquisition. For the purpose of
this Warrant, “Acquisition” means any
transaction or series of related transactions involving: (i) the
sale, lease, exclusive license or other disposition of all or
substantially all of the assets of the Company; (ii) any merger or
consolidation of the Company into or with another person or entity
(other than a merger or consolidation effected exclusively to
change the Company’s domicile), or any other corporate
reorganization, in which the stockholders of the Company in their
capacity as such immediately prior to such merger, consolidation or
reorganization, own less than a majority of the Company’s (or
the surviving or successor entity’s) outstanding voting power
immediately after such merger, consolidation or reorganization; or
(iii) any sale or other transfer by the stockholders of the Company
of shares representing a majority of the Company’s then-total
outstanding combined voting power.
(b) Treatment of Warrant at
Acquisition. In the event of an Acquisition in which the
consideration to be received by the Company’s stockholders
consists solely of cash, solely of Marketable Securities or a
combination of cash and Marketable Securities (a
“Cash/Public
Acquisition”), either (i) Holder shall exercise this
Warrant pursuant to Section 1.1 and/or 1.2 and such exercise will
be deemed effective immediately prior to and contingent upon the
consummation of such Acquisition or (ii) if Holder elects not to
exercise the Warrant, this Warrant will expire immediately prior to
the consummation of such Acquisition. For the avoidance of doubt,
“Acquisition” shall
exclude any sale and issuance by the Company of shares of its
capital stock, or securities or instruments exercisable for or
convertible into or otherwise representing the right to acquire
shares of capital stock, to one or more investors in a transaction
or series of related transactions the primary purpose of which is a
bona fide equity financing of the Company.
(c) The Company shall
provide Holder with written notice of its request relating to the
Cash/Public Acquisition (together with such reasonable information
as Holder may reasonably require regarding the treatment of this
Warrant in connection with such contemplated Cash/Public
Acquisition giving rise to such notice), which is to be delivered
to Holder not less than seven (7) Business Days prior to the
closing of the proposed Cash/Public Acquisition. Notwithstanding
the foregoing, if, immediately prior to the Cash/Public
Acquisition, the fair market value of one Share (or other security
issuable upon the exercise hereof) as determined in accordance with
Section 1.3 above would be greater than the Warrant Price in effect
on such date, then this Warrant shallautomatically be deemed on and
as of such date to be exercised pursuant to Section 1.2 above as to
all Shares (or such other securities) for which it shall not
previously have been exercised, and the Company shall promptly
notify the Holder of the number of Shares (or such other
securities) issued upon such exercise to the Holder.
(d) Upon the closing of
any Acquisition other than a Cash/Public Acquisition defined above,
the acquiring, surviving or successor entity shall assume the
obligations of this Warrant, and this Warrant shall thereafter be
exercisable for the same securities and/or other property as would
have been paid for the Shares issuable upon exercise of the
unexercised portion of this Warrant as if such Shares were
outstanding on and as of the closing of such Acquisition, subject
to further adjustment from time to time in accordance with the
provisions of this Warrant.
(e) As used in this
Warrant, “Marketable
Securities” means securities meeting all of the
following requirements: (i) the issuer thereof is then subject to
the reporting requirements of Section 13 or Section 15(d) of the
Securities Exchange Act of 1934, as amended (the
“Exchange
Act”), and is then current in its filing of all
required reports and other information under the Act and the
Exchange Act; (ii) the class and series of shares or other security
of the issuer that would be received by Holder in connection with
the Acquisition were Holder to exercise this Warrant on or prior to
the closing thereof is then traded in Trading Market; and (iii)
Holder would be able to publicly re-sell, within six (6) months
following the closing of such Acquisition, all of the
issuer’s shares and/or other securities that would be
received by Holder in such Acquisition were Holder to exercise this
Warrant in full on or prior to the closing of such
Acquisition.
SECTION
2. ADJUSTMENTS TO THE SHARES AND WARRANT
PRICE.
2.1. Stock
Dividends, Splits, Etc. If the Company declares or pays a
dividend or distribution on the outstanding shares of the Class
payable in common stock or other securities or property (other than
cash), then upon exercise of this Warrant, for each Share acquired,
Holder shall receive, without additional cost to Holder, the total
number and kind of securities and property which Holder would have
received had Holder owned the Shares of record as of the date the
dividend or distribution occurred. If the Company subdivides the
outstanding shares of the Class by reclassification or otherwise
into a greater number of shares, the number of Shares purchasable
hereunder shall be proportionately increased and the Warrant Price
shall be proportionately decreased. If the outstanding shares of
the Class are combined or consolidated, by reclassification or
otherwise, into a lesser number of shares, the Warrant Price shall
be proportionately increased and the number of Shares shall be
proportionately decreased.
2.2. Reclassification,
Exchange, Combinations or Substitution. Upon any event
whereby all of the outstanding shares of the Class are
reclassified, exchanged, combined, substituted, or replaced for,
into, with or by Company securities of a different class and/or
series, then from and after the consummation of such event, this
Warrant will be exercisable for the number, class and series of
Company securities that Holder would have received had the Shares
been outstanding on and as of the consummation of such event, and
subject to further adjustment thereafter from time to time in
accordance with the provisions of this Warrant. The provisions of
this Section 2.2 shall similarly apply to successive
reclassifications, exchanges, combinations substitutions,
replacements or other similar events.
2.3. Intentionally
Omitted.
2.4. Intentionally
Omitted.
2.5. No
Fractional Share. No fractional Share shall be issuable upon
exercise of this Warrant and the number of Shares to be issued
shall be rounded down to the nearest whole Share. If a fractional
Share interest arises upon any exercise of the Warrant, the Company
shall eliminate such fractional Share interest by paying Holder in
cash the amount computed by multiplying the fractional interest by
(a) the fair market value (as determined in accordance with Section
1.3 above) of a full Share, less (b) the then-effective Warrant
Price.
2.6. Notice/Certificate
as to Adjustments. Upon each adjustment of the Warrant
Price, Class and/or number of Shares, the Company, at the
Company’s expense, shall notify Holder in writing within a
reasonable time setting forth the adjustments to the Warrant Price,
Class and/or number of Shares and facts upon which such adjustment
is based. The Company shall, upon written request from Holder,
furnish Holder with a certificate of its Chief Financial Officer,
including computations of such adjustment and the Warrant Price,
Class and number of Shares in effect upon the date of such
adjustment.
SECTION
3. REPRESENTATIONS AND COVENANTS OF THE
COMPANY.
3.1. Representations
and Warranties. The Company represents and warrants to, and
agrees with, the Holder as follows:
(a) The initial Warrant
Price referenced on the first page of this Warrant is not greater
than the price per share at which shares of the Class were last
sold and issued prior to the Issue Date hereof in an arms-length
transaction in which at least $500,000 of such shares were
sold.
(b) All Shares which
may be issued upon the exercise of this Warrant, and all
securities, if any, issuable upon conversion of the Shares, shall,
upon issuance, be duly authorized, validly issued, fully paid and
non-assessable, and free of any liens and encumbrances except for
restrictions on transfer provided for herein or under applicable
federal and state securities laws. The Company covenants that it
shall at all times cause to be reserved and kept available out of
its authorized and unissued capital stock such number of shares of
the Class as will be sufficient to permit the exercise in full of
this Warrant.
3.2. Notice
of Certain Events. If the Company proposes at any time
to:
(a) declare any
dividend or distribution upon the outstanding shares of the Class,
whether in cash, property, stock, or other securities and whether
or not a regular cash dividend;
(b) offer for
subscription or sale pro rata to the holders of the outstanding
shares of the Class any additional shares of any class or series of
the Company’s stock (other than pursuant to contractual
pre-emptive rights);
(c) effect any
reclassification, exchange, combination, substitution,
reorganization or recapitalization of the outstanding shares of the
Class;or
(d) effect an
Acquisition or to liquidate, dissolve or wind up;
then, in connection with each such event, the Company shall give
Holder:
(1)
at least seven (7) Business Days prior written notice of the date
on which a record will be taken for such dividend, distribution, or
subscription rights (and specifying the date on which the holders
of outstanding shares of the Class will be entitled thereto) or for
determining rights to vote, if any, in respect of the matters
referred to in (a) and (b) above;and
(2)
in the case of the matters referred to in (c) and (d) above at
least seven (7) Business Days prior written notice of the date when
the same will take place (and specifying the date on which the
holders of outstanding shares of the Class will be entitled to
exchange their shares for the securities or other property
deliverable upon the occurrence of such event).
Reference is made to Section 1.6(c) whereby this Warrant will be
deemed to be exercised pursuant to Section 1.2 hereof if the
Company does not give written notice to Holder of a Cash/Public
Acquisition as required by the terms hereof. Company will also
provide information requested by Holder that is reasonably
necessary to enable Holder to comply with Holder’s accounting
or reporting requirements.
SECTION
4. REPRESENTATIONS,
WARRANTIES OF THE HOLDER.
The
Holder represents and warrants to the Company as
follows:
4.1. Purchase
for Own Account. This Warrant and the securities to be
acquired upon exercise of this Warrant by Holder are being acquired
for investment for Holder’s account, not as a nominee or
agent, and not with a view to the public resale or distribution
within the meaning of the Act. Holder also represents that it has
not been formed for the specific purpose of acquiring this Warrant
or the Shares.
4.2. Disclosure
of Information. Holder is aware of the Company’s
business affairs and financial condition and has received or has
had full access to all the information it considers necessary or
appropriate to make an informed investment decision with respect to
the acquisition of this Warrant and its underlying securities.
Holder further has had an opportunity to ask questions and receive
answers from the Company regarding the terms and conditions of the
offering of this Warrant and its underlying securities and to
obtain additional information (to the extent the Company possessed
such information or could acquire it without unreasonable effort or
expense) necessary to verify any information furnished to Holder or
to which Holder has access.
4.3. Investment
Experience. Holder understands that the purchase of this
Warrant and its underlying securities involves substantial risk.
Holder has experience as an investor in securities of companies in
the development stage and acknowledges that Holder can bear the
economic risk of such Holder’s investment in this Warrant and
its underlying securities and has such knowledge and experience in
financial or business matters that Holder is capable of evaluating
the merits and risks of its investment in this Warrant and its
underlying securities and/or has a preexisting personal or business
relationship with the Company and certain of its officers,
directors or controlling persons of a nature and duration that
enables Holder to be aware of the character, business acumen and
financial circumstances of such persons.
4.4. Accredited
Investor Status. Holder is an “accredited
investor” within the meaning of Regulation D promulgated
under the Act.
4.5. The
Act. Holder understands that this Warrant and the Shares
issuable upon exercise hereof have not been registered under the
Act in reliance upon a specific exemption therefrom, which
exemption depends upon, among other things, the bona fide nature of
the Holder’s investment intent as expressed herein. Holder
understands that this Warrant and the Shares issued upon any
exercise hereof must be held indefinitely unless subsequently
registered under the Act and qualified under applicable state
securities laws, or unless exemption from such registration and
qualification are otherwise available. Holder is aware of the
provisions of Rule 144 promulgated under the Act.
4.6. No
Voting Rights. Holder, as a Holder of this Warrant, will not
have any voting rights until the exercise of this
Warrant.
SECTION
5. MISCELLANEOUS.
5.1. Term
and Automatic Conversion Upon Expiration.
(a) Term. Subject to the provisions
of Section 1.6 above, this Warrant is exercisable in whole or in
part at any time and from time to time on or before 6:00 P.M.,
Eastern time, on the Expiration Date and shall be void
thereafter.
(b) Automatic
Cashless Exercise upon Expiration. In the event that, upon
the Expiration Date, the fair market value of one Share (or other
security issuable upon the exercise hereof) as determined in
accordance with Section 1.3 above is greater than the Warrant Price
in effect on such date, then this Warrant shall automatically be
deemed on and as of such date to be exercised pursuant to Section
1.2 above as to all Shares (or such other securities) for which it
shall not previously have been exercised, and the Company shall,
within a reasonable time, deliver a certificate (via an electronic
shares program, if applicable) representing the Shares (or such
other securities) issued upon such exercise to Holder.
5.2. Legends.
The Shares (and the securities issuable, directly or indirectly,
upon conversion of the Shares, if any) shall be imprinted with a
legend in substantially the following form:
THE
SHARES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR THE SECURITIES
LAWS OF ANY STATE AND, EXCEPT AS SET FORTH IN THAT CERTAIN WARRANT
TO PURCHASE STOCK ISSUED BY THE ISSUER TO INNOVATUS LIFE SCIENCES
LENDING FUND I, LP DATED APRIL 8, 2021, MAY NOT BE OFFERED, SOLD,
PLEDGED OR OTHERWISE TRANSFERRED (I) UNLESS AND UNTIL REGISTERED
UNDER SAID ACT AND LAWS OR (II) WITHOUT AN OPINION OF COUNSEL, IN
FORM AND SUBSTANCE REASONABLY SATISFACTORY TO THE ISSUER, THAT SUCH
OFFER, SALE, PLEDGE OR OTHER TRANSFER IS EXEMPT FROM SUCH
REGISTRATION.
5.3. Compliance
with Securities Laws on Transfer. This Warrant and the
Shares issuable upon exercise of this Warrant (and the securities
issuable, directly or indirectly, upon conversion of the Shares, if
any) may not be transferred or assigned in whole or in part except
in compliance with applicable federal and state securities laws by
the transferor and the transferee (including, without limitation,
the delivery of investment representation letters and legal
opinions reasonably satisfactory to the Company, as reasonably
requested by the Company). The Company shall not require Holder to
provide an opinion of counsel if the transfer is to an affiliate of
Holder. Additionally, the Company shall also not require an opinion
of counsel if there is no material question as to the availability
of Rule 144 promulgated under the Act.
5.4. Transfer
Procedure. Subject to the provisions of Section 5.3 and upon
providing the Company with written notice, Holder may transfer all
or part of this Warrant or the Shares issuable upon exercise of
this Warrant (or the securities issuable directly or indirectly,
upon conversion of the Shares, if any) to any transferee,
provided,
however, in
connection with any such transfer, Holder will give the Company
notice of the portion of the Warrant being transferred with the
name, address and taxpayer identification number of the transferee
and Holder will surrender this Warrant to the Company for
reissuance to the transferee(s) (and Holder if applicable); and
provided
further, that any
subsequent transferee shall agree in writing with the Company to be
bound by all of the terms and conditions of this
Warrant.
5.5. Notices.
All notices and other communications hereunder from the Company to
the Holder, or vice versa, shall be deemed delivered and effective
(i) when given personally, (ii) on the third (3rd) Business Day after
being mailed by first-class registered or certified mail, postage
prepaid, (iii) upon actual receipt if given by facsimile or
electronic mail and such receipt is confirmed in writing by the
recipient, or (iv) on the first Business Day following delivery to
a reliable overnight courier service, courier fee prepaid, in any
case at such address as may have been furnished to the Company or
Holder, as the case may be, in writing by the Company or such
Holder from time to time in accordance with the provisions of this
Section 5.5. All notices to Holder shall be addressed as follows
until the Company receives notice of a change of address in
connection with a transfer or otherwise:
|
INNOVATUS LIFE SCIENCES LENDING FUND I, LP
|
|
777 Third Avenue, 25th Floor
|
|
New York, NY 10017
|
|
Attention:
Claes Ekstrom
|
|
Email:
cekstrom@innovatuscp.com
|
Notice
to the Company shall be addressed as follows until Holder receives
notice of a change in address:
|
CELCUITY, INC.
|
|
16305 – 36th Avenue North
|
|
Suite 100
|
|
Minneapolis, MN 55446
|
|
Attn: Chief Financial Officer
Facsimile No.:________________
|
|
Email: vhahne@celcuity.com
|
|
|
|
With a copy (which shall not constitute notice) to:
|
|
Fredrikson
& Byron, P.A.200 South Sixth Street, Suite 4000
Minneapolis,
MN 55402
Attn:
Brad WallaceFax: (612) 492-7077
Email:
bwallace@fredlaw.com
|
|
|
5.6. Waiver.
This Warrant and any term hereof may be changed, waived, discharged
or terminated (either generally or in a particular instance and
either retroactively or prospectively) only by an instrument in
writing signed by the party against which enforcement of such
change, waiver, discharge or termination is sought.
5.7. Attorneys’
Fees. In the event of any dispute between the parties
concerning the terms and provisions of this Warrant, the party
prevailing in such dispute shall be entitled to collect from the
other party all costs incurred in such dispute, including
reasonable attorneys’ fees.
5.8. Counterparts;
Facsimile/Electronic Signatures. This Warrant may be
executed in counterparts, all of which together shall constitute
one and the same agreement. Any signature page delivered
electronically or by facsimile shall be binding to the same extent
as an original signature page with regards to any agreement subject
to the terms hereof or any amendment thereto.
5.9. Governing
Law. This Warrant shall be governed by and construed in
accordance with the laws of the State of New York, without giving
effect to its principles regarding conflicts of law.
5.10. Headings.
The headings in this Warrant are for purposes of reference only and
shall not limit or otherwise affect the meaning of any provision of
this Warrant.
5.11. Business
Days. “Business Day” is any day
that is not a Saturday, Sunday or a day on which banks in New York,
New York are closed.
[Signature page follows]
IN
WITNESS WHEREOF, the parties have caused this Warrant to Purchase
Stock to be executed by their duly authorized representatives
effective as of the Issue Date written above.
|
“COMPANY”
CELCUITY, INC.
By: /s/ Brian F.
Sullivan
Name: Brian F. Sullivan
(Print)
Title: Chairman and Chief Executive Officer
|
|
“HOLDER”
INNOVATUS LIFE SCIENCES LENDING FUND I, LP
By: /s/ Andrew
Hobson
Name: Andrew Hobson
(Print)
Title: Authorized Signatory
|
|
APPENDIX 1
NOTICE OF EXERCISE
1. The
undersigned Holder hereby exercises its right purchase ___________
shares of the Common Stock of CELCUITY, INC. (the
“Company”)
in accordance with the attached Warrant To Purchase Stock, and
tenders payment of the aggregate Warrant Price for such shares as
follows:
|
[ ]
|
check in the amount of $________ payable to order of the Company
enclosed herewith
|
|
[ ]
|
Wire transfer of immediately available funds to the Company’s
account
|
|
[ ]
|
Cashless Exercise pursuant to Section 1.2 of the
Warrant
|
|
[ ]
|
Other [Describe]
__________________________________________
|
2. Please
issue a certificate or certificates representing the Shares in the
name specified below:
|
___________________________________________
|
|
Holder’s Name
|
|
___________________________________________
|
|
___________________________________________
|
|
(Address)
|
3. By
its execution below and for the benefit of the Company, Holder
hereby restates each of the representations and warranties in
Section 4 of the Warrant to Purchase Stock as of the date
hereof.
|
HOLDER:
|
|
_________________________
|
|
By:_________________________
|
|
Name:________________________
|
|
Title:_________________________
|
|
Date: _________________________
|
Celcuity Announces Worldwide Licensing Agreement with Pfizer to
Develop and Commercialize Gedatolisib, a First-in-Class PI3K/mTOR
Inhibitor for Breast Cancer
-Preliminary
data from 103 patients in the expansion portion of a Phase 1b
clinical trial demonstrated the drug was well tolerated and
anti-tumor activity was noted
-
Unique opportunity to leverage our CELsignia platform to advance
development
of a
first-in-class targeted therapy
-
Management to host conference call/webcast today, April 8, 2021, at
5:00 p.m. ET
MINNEAPOLIS
- April 8, 2021 - Celcuity
Inc. (Nasdaq:CELC), a clinical-stage
biotechnology company pursuing an integrated companion diagnostic
and therapeutic strategy for treating patients with cancer, today
announced it has entered into a global licensing agreement with
Pfizer Inc. (NYSE:PFE) granting Celcuity exclusive rights to
Pfizer’s gedatolisib, a Phase 1b pan-PI3K/mTOR inhibitor.
Gedatolisib is in clinical development for the treatment of
patients with ER+/HER2-negative advanced or metastatic breast
cancer.
Under
the terms of the licensing agreement, Pfizer provided Celcuity with
a world-wide license to develop and commercialize gedatolisib.
Celcuity paid an upfront license fee of $5 million of cash and $5
million of Celcuity’s common stock as upfront payment. Pfizer
is eligible to receive up to $330 million of development and
sales-based milestone payments and tiered royalties on potential
sales.
Additional financial terms of the agreement were not
disclosed.
“We
are excited about the opportunity to utilize our CELsignia platform
to support the development of a potential first-in-class targeted
therapy like gedatolisib,” said Brian Sullivan, CEO and
co-founder of Celcuity. “In light of the important role the
PI3K/mTOR pathway plays in driving tumor growth when patients
become resistant to endocrine therapies, we believe gedatolisib is
a highly promising drug candidate to improve outcomes for patients
with breast cancer. Supporting development of a potential
first-in-class therapy for breast cancer, such as gedatolisib, with
our CELsignia platform is a natural extension of our strategy to
develop CELsignia CDx for other breast cancer therapies. We believe
developing targeted therapies that benefit from the CELsignia
platform while also offering companion diagnostics that enable new
drug indications, creates a synergistic advantage for each
program.”
Approximately
70%-80% of breast cancers in the United States express the estrogen
receptor and are thus likely dependent on estrogen signaling to
promote tumor growth. Patients with estrogen receptor-positive
(ER+)/HER2- metastatic tumors typically receive endocrine
therapies, such as tamoxifen, letrozole, or fulvestrant. Most women
with ER+/HER2- metastatic breast cancer ultimately develop
resistance to these endocrine therapies. One new strategy to treat
metastatic ER+/HER2- breast cancer involves blocking pathways
enabling partial and complete endocrine resistance by combining
gedatolisib and a cyclin-dependent kinases 4 and 6 (CDK 4/6)
inhibitor with existing endocrine therapy.
To
evaluate the efficacy and safety of this new treatment strategy,
gedatolisib is currently being evaluated in combination with
palbociclib, an oral CDK 4/6 inhibitor, and either letrozole or
fulvestrant in the expansion portion of a Phase 1b clinical trial
in patients with ER+/HER2-negative advanced or metastatic breast
cancer. A total of 103 patients were enrolled in one of four
different arms according to their prior treatment history for
metastatic breast cancer. A preliminary analysis of the objective
response rates as of a January 11, 2021 data cut-off demonstrated
that gedatolisib combined with palbociclib and an endocrine therapy
achieved superior objective response rates relative to historical
control data. Gedatolisib was also generally well tolerated, with
the majority of treatment related adverse events (TRAE) being Grade
1 or 2. The most common Grade 3 or 4 TRAE’s were neutrophil
count decrease and stomatitis.
Added
Art DeCillis, M.D., Celcuity’s Chief Medical Officer,
“In light of the data reported as of the January 11, 2021
data cut-off, we intend to initiate, subject to feedback from the
FDA, a Phase 2/3 clinical trial evaluating gedatolisib in
combination with palbociclib and an endocrine therapy in patients
with ER+/HER2- advanced or metastatic breast cancer in the first
half of 2022.”
Webcast Presentation and Conference Call Information
The
Celcuity management team will host a webcast/conference call today,
April 8, 2021, at 5:00 p.m. ET to discuss the gedatolisib license
agreement. To participate in the call, dial 1-877-407-8035. A
live webcast presentation can also be accessed using this weblink
at: https://www.webcaster4.com/Webcast/Page/2678/40570
or via Celcuity’s website at https://celcuity.com/home/investors/events-webcasts/.
A replay of the webcast will be available on the Celcuity website
for a limited time following the event.
About Celcuity
Celcuity
is a clinical-stage biotechnology company seeking to extend the
lives of cancer patients by pursuing an integrated companion
diagnostic and therapeutic strategy. Our CELsignia companion
diagnostic platform is uniquely able to analyze live patient tumor
cells to identify new groups of cancer patients likely to benefit
from targeted therapies. This enables a CELsignia CDx to support
advancement of new indications for already approved targeted
therapies. Our therapeutic efforts are focused on in-licensing and
developing molecularly targeted therapies that address the same
cancer driver our companion diagnostics can identify. By pursuing
an integrated companion diagnostic and therapeutic strategy, we
believe we are uniquely positioned to achieve our goal of helping
cancer patients receive the therapeutic best suited to treat their
cancer driver. Celcuity is headquartered in Minneapolis. Further
information about Celcuity can be found at www.celcuity.com.
Forward-Looking Statements
This
press release contains statements that constitute "forward-looking
statements." In some cases, you can identify forward-looking
statements by terminology such as "may," "should," "expects,"
"plans," "anticipates," "believes," "estimates," "predicts,"
"potential," "intends" or "continue," and other similar expressions
that are predictions of or indicate future events and future
trends, or the negative of these terms or other comparable
terminology. Forward looking statements in this press release
include, without limitation, expectations with respect to the
results from the B2151009 Phase 1b clinical trial, the timing of
launching a Phase 2/3 clinical trial, the future payments that may
be owed to Pfizer under the license agreement, the expected
benefits of gedatolisib, and other statements regarding the future
of Celcuity’s business and results of operations. .
Forward-looking statements are subject to numerous conditions, many
of which are beyond the control of Celcuity, which include, but are
not limited to, the unknown impact of the COVID-19 pandemic on
Celcuity's business and those other risks set forth in the Risk
Factors section in Celcuity's Annual Report on Form 10-K for the
year ended December 31, 2020 filed with the Securities and Exchange
Commission on February 16, 2021. Readers are cautioned not to place
undue reliance on these forward-looking statements, which speak
only as of the date hereof. Celcuity undertakes no obligation to
update these statements for revisions or changes after the date of
this press release, except as required by law.
Contacts:
Celcuity
Inc.
Brian Sullivan, bsullivan@celcuity.com
Vicky Hahne, vhahne@celcuity.com
763-392-0123
Westwicke
ICR
Robert Uhl, robert.uhl@westwicke.com
(619)
228-5886
Celcuity Reports Preliminary Data from Phase 1b Trial of
Gedatolisib plus Ibrance® and Endocrine Therapy for Patients
with ER+/HER2- Metastatic Breast Cancer and Provides Corporate
Update
Preliminary Phase 1b Data
- 53
of the 88 evaluable patients (60%) had an objective response
-
- Gedatolisib
showed a potentially differentiated safety and tolerability profile
-
Corporate Update
-
Entered $25 million debt financing agreement with Innovatus Capital
Partners -
-
Proceeds from first $15 million tranche increase cash-on-hand to
$44 million -
- Drug
development capabilities and team broadened and expanded
-
- Conference
call and webcast scheduled for today, April 8 at 5 p.m. Eastern
Time -
MINNEAPOLIS, April 8, 2021 - Celcuity Inc. (Nasdaq:CELC), a clinical-stage
biotechnology company pursuing an integrated companion diagnostic
and therapeutic strategy for treating patients with cancer, today
reported preliminary data for the 103 patients enrolled in the
expansion portion of an ongoing Phase 1b clinical trial evaluating
gedatolisib, a first-in-class PI3K/mTOR inhibitor, plus Ibrance and
endocrine therapy, in ER+/HER2- advanced or metastatic breast
cancer patients. As of the January 11, 2021 data cut-off date,
53 of the 88 evaluable patients (60%) had an objective response.
Gedatolisib was also generally well tolerated, with the majority of
treatment-related adverse events (TRAE) being Grade 1 or 2. The
most common Grade 3 or 4 TRAEs related to gedatolisib were
stomatitis and rash.
“We
are very encouraged by this preliminary data for gedatolisib from
our ongoing Phase 1b trial in patients with breast cancer,”
said Brian Sullivan, CEO and Co-Founder of Celcuity. “The
robust response rate and the observed tolerability profile are
particularly compelling given the need for a therapeutic regimen
that can address endocrine therapy resistance. We look forward to
sharing additional data from the study at a future medical
conference in 2021. Developing a therapeutic such as gedatolisib
allows us to more fully leverage our CELsignia cellular analysis
platform.“
Preliminary Phase 1b Data for Gedatolisib:
The
preliminary Phase 1b data set for the 103 patients enrolled
utilized a January 11, 2021 data cut-off. Patients were enrolled in
one of four expansion arms (A, B, C, D), according to their prior
treatment history for metastatic breast cancer. All patients
received gedatolisib in combination with standard doses of
palbociclib and endocrine therapy (either letrozole or
fulvestrant). In Arms A, B, and C, patients received an intravenous
dose of 180 mg of gedatolisib once weekly. In Arm D, patients
received an intravenous dose of 180 mg gedatolisib on a four-week
cycle of three weeks-on, one week-off. The primary endpoint was
objective response as determined using Response Evaluation Criteria
in Solid Tumors v1.0, or RECIST v1.0.
The
preliminary efficacy and safety analysis showed:
●
53 of the 88
evaluable patients (60%) had an objective response.
●
66 of the 88
evaluable patients (75%) had a clinical benefit, defined as either
a confirmed objective response or stable disease for at least 24
weeks.
●
Gedatolisib was
also generally well tolerated, with the majority of treatment
related adverse events (TRAE) being Grade 1 or 2. The most common
Grade 3 or 4 TRAEs associated with gedatolisib were stomatitis and
rash. Gedatolisib was discontinued in 10% of patients.
●
22 patients were
continuing to receive gedatolisib in combination with the other
study drugs, 17 of whom have been on study treatment for more than
two years.
In
light of these encouraging results, Celcuity is planning to
initiate, subject to feedback from the FDA, a Phase 2/3 clinical
trial evaluating gedatolisib in combination with palbociclib and an
endocrine therapy in patients with ER+/HER2- advanced or metastatic
breast cancer in the first half of 2022.
Corporate Update
Management team expanded in key areas
With
the in-licensing of gedatolisib, Celcuity has broadened and
deepened its management team with experienced pharmaceutical
development and regulatory affairs experts.
Arthur DeCillis, M.D., Chief Medical Officer
Dr.
DeCillis was the Chief Medical Officer for Eleven Biotherapeutics
(now known as Sesen Bio Inc.) and VP Clinical Research for
Exelixis. Prior to that, he served in senior drug development roles
at Novartis and Bristol-Myers Squibb. Arthur has been involved in
the development of several commercialized oncology drugs, including
SPRYCEL® (dasatinib), AFINITOR® (everolimus),
FARYDAK® (panobinostat), and CABOMETYX®
(cabozantinib).
John R. MacDonald, Ph.D., DABT, Senior Vice President of
R&D
Dr.
MacDonald led the preclinical and clinical R&D efforts at MGI
Pharma, an oncology-focused pharmaceutical company until its sales
to Eisai Co. He has over 30 years of experience in all aspects of
pharmaceutical drug development and licensing. Prior to MGI, he
worked for Warner-Lambert (now Pfizer).
Sheri Smith, Head of Clinical Operations (Acting)
Ms.
Smith was the former Senior Director of Clinical Operations at MGI
Pharma, where she was responsible for all clinical operations. For
the past 17 years, she has served as President of Courante
Oncology, a specialty clinical research services company serving
pharmaceutical and medical device companies.
Bernhard Lampert, Ph.D., Head of CMC
Dr.
Lampert has extensive drug development experience in the
pharmaceutical and biotech industries, including ten years in
large, fully integrated pharmaceutical companies, including Gilead
and GSK. He received his Ph.D. in Medicinal Chemistry from the
University of Georgia in 1989.
Marie DeGayner Kuker, Head of Regulatory
Ms.
Kuker has more than 35 years of experience in the pharmaceutical
industry, most recently as head of global regulatory affairs for 3M
Pharmaceuticals and Drug Delivery Systems before founding her
consultancy in 2007. Marie is an appointed Fellow of the Regulatory
Affairs Professionals Society.
Celcuity announces $25 million debt financing agreement with
Innovatus Capital Partners, LLC
Celcuity
has entered into a debt financing agreement with Innovatus Capital
Partners, LLC (Innovatus) to provide Celcuity with up to $25
million in term loans with the first $15 million tranche funded at
closing. Celcuity will be able to draw on two additional tranches
of $5 million each upon the achievement of certain clinical trial
and financing milestones. Celcuity is entitled to make interest
only payments for 36 months or up to 48 months if certain
conditions are met. The loans will mature on the fifth anniversary
of the initial funding date. Innovatus has the right to convert up
to 20% of the outstanding principal amount into shares of Celcuity
common stock until the third anniversary of the loan agreement. The
loan agreement includes customary warrant coverage and is secured
by all of Celcuity’s assets. Armentum Partners LLC acted as
sole advisor to Celcuity on this transaction.
Webcast Presentation and Conference Call Information
The Celcuity management team will host a webcast/conference call
today, April 8, 2021, at 5:00 p.m. ET to discuss the gedatolisib
license agreement and provide a corporate update. To participate in
the call, dial 1-877-407-8035. A live webcast presentation can be accessed using this
weblink: https://www.webcaster4.com/Webcast/Page/2678/40570
or via Celcuity’s website
at https://celcuity.com/home/investors/events-webcasts/.
A replay of the
webcast will be available on the Celcuity website for a limited
time following the event.
About the Phase 1b Gedatolisib Clinical Trial
The B2151009 trial is a multicenter, open-label, on-going Phase 1b
study in patients with ER+/HER2- metastatic breast cancer. Four
dose expansion arms enrolled 103 patients to determine if the
triplet combination of gedatolisib plus palbociclib and letrozole
or gedatolisib plus palbociclib and fulvestrant produced a superior
objective response (OR), compared to historical control data of the
doublet combination (palbociclib plus endocrine therapy). More
information about the trial is available at NCT02684032.
About Gedatolisib
Gedatolisib
is a potent, reversible dual inhibitor that selectively targets
PI3K and mTOR. Gedatolisib was originally developed by Wyeth and
clinical development was continued by Pfizer after it acquired
Wyeth. Celcuity licensed exclusive global rights to gedatolisib
from Pfizer in April 2021. An on-going Phase 1b trial evaluating
patients with ER+/HER2- metastatic breast cancer was initiated in
2016 and subsequently enrolled 138 patients. Patient enrollment for
the four expansion arms of the trial is complete. Based on the
favorable preliminary results reported to date from the Phase 1b
trial, we intend to initiate, subject to feedback from the FDA, a
Phase 2/3 clinical trial evaluating gedatolisib in combination with
palbociclib and an endocrine therapy in patients with ER+/HER2-
advanced or metastatic breast cancer in the first half of
2022.
About Celcuity
Celcuity
is a clinical-stage biotechnology company seeking to extend the
lives of cancer patients by pursuing an integrated companion
diagnostic and therapeutic strategy. Our CELsignia companion
diagnostic platform is uniquely able to analyze live patient tumor
cells to identify new groups of cancer patients likely to benefit
from targeted therapies. This enables a CELsignia CDx to support
advancement of new indications for already approved targeted
therapies. Our therapeutic efforts are focused on in-licensing and
developing molecularly targeted therapies that address the same
cancer driver our companion diagnostics can identify. By pursuing
an integrated companion diagnostic and therapeutic strategy, we
believe we are uniquely positioned to achieve our goal of helping
cancer patients receive the therapeutic best suited to treat their
cancer driver. Celcuity is headquartered in Minneapolis. Further
information about Celcuity can be found at www.celcuity.com.
Innovatus Capital Partners, LLC
Innovatus
Capital Partners, LLC, is an independent adviser and portfolio
management firm with approximately $1.54B in assets under
management. Innovatus adheres to an investment strategy that
identifies disruptive and growth opportunities across multiple
asset categories with a unifying theme of capital preservation,
income generation, and upside optionality. The firm has a dedicated
team of life sciences investment professionals with deep experience
in healthcare, including life sciences. Innovatus and its
principals have significant experience providing debt financing to
medical device, diagnostics, and biotechnology companies that
address unmet medical needs, improve patient outcomes, and reduce
overall healthcare expenditures. Further information can be found
atwww.innovatuscp.com.
Forward-Looking Statements
This
press release contains statements that constitute "forward-looking
statements." In some cases, you can identify forward-looking
statements by terminology such as "may," "should," "expects,"
"plans," "anticipates," "believes," "estimates," "predicts,"
"potential," "intends" or "continue," and other similar expressions
that are predictions of or indicate future events and future
trends, or the negative of these terms or other comparable
terminology. Forward looking statements in this press release
include, without limitation, expectations with respect the results
from the B2151009 Phase 1b clinical trial, the timing of launching
a Phase 2/3 clinical trial, the expected benefits of gedatolisib,
the growth of Celcuity’s management team, and other
statements regarding the future of Celcuity’s business and
results of operations. . Forward-looking statements are subject to
numerous conditions, many of which are beyond the control of
Celcuity, which include, but are not limited to, the unknown impact
of the COVID-19 pandemic on Celcuity's business and those other
risks set forth in the Risk Factors section in Celcuity's Annual
Report on Form 10-K for the year ended December 31, 2020 filed with
the Securities and Exchange Commission on February 16, 2021.
Readers are cautioned not to place undue reliance on these
forward-looking statements, which speak only as of the date hereof.
Celcuity undertakes no obligation to update these statements for
revisions or changes after the date of this press release, except
as required by law.
Contacts:
Celcuity
Inc.
Brian Sullivan, bsullivan@celcuity.com
Vicky Hahne, vhahne@celcuity.com
763-392-0123
Westwicke
ICR
Robert Uhl, robert.uhl@westwicke.com
(619)
228-5886
Unless otherwise provided in this
Business Update, references to the “Company,”
“we,” “us,” and “our” and
similar references refer to Celcuity Inc., a Delaware corporation.
We own various unregistered trademarks and service marks, including
our corporate logo. Solely for convenience, the trademarks, trade
names and service marks in this Business Update, including those
owned by third parties, may be referred to without
the ®,TM
or SM
symbols, but such references should
not be construed as any indicator that the owner of such
trademarks, trade names and service marks will not assert, to the
fullest extent under applicable law, their rights thereto. We do
not intend the use or display of other companies’ trademarks,
trade names and service marks to imply an endorsement or
sponsorship of us by any other companies.
We
are a clinical-stage biotechnology company seeking to extend the
lives of cancer patients by pursing an integrated companion
diagnostic (CDx) and therapeutic (Rx) strategy that leverages our
CELsignia CDx platform. CELsignia is uniquely able to analyze live
patient tumor cells to identify new groups of cancer patients
likely to benefit from targeted therapies. This enables a CELsignia
CDx to support advancement of new indications for already approved
targeted therapies. Our therapeutic strategy aims to utilize
CELsignia’s unique insights into tumor cell biology to
identify, in-license, and develop potential first-in-class or
best-in-class targeted therapies that treat the same cancer driver
a CELsignia CDx can identify. We believe this integrated CDx and Rx
strategy will maximize the impact our CELsignia platform has on the
treatment landscape for cancer patients.
Our proprietary CELsignia diagnostic platform is
the only commercially ready technology we are aware of that uses a
patient’s living tumor cells to identify the specific
abnormal cellular process driving a patient’s cancer and the
targeted therapy that best treats it. This enables us to identify
patients whose tumors may respond to a targeted therapy, even
though they lack a previously associated molecular mutation. By
identifying cancer patients whose tumors lack an associated genetic
mutation but have abnormal cellular activity a matching targeted
therapeutic is designed to inhibit, CELsignia CDx can expand the
markets for a number of already approved targeted therapies. Our
current CDx identifies breast and ovarian cancer patients whose
tumors have cancer drivers potentially responsive to treatment
with human epidermal growth
factor receptor 2-negative (HER2), mesenchymal-epithelial
transition factor (c-MET), or phosphatidylinositol 3-kinases (PI3K) targeted
therapeutics.
Our
CELsignia platform provides an important advantage over traditional
molecular diagnostics. Current molecular diagnostics analyze
fragmented cells to obtain a snapshot of the genetic mutations
present in a patient’s tumor. Using cell fragments prevents
molecular diagnostics from analyzing the dynamic cellular
activities, known as cell signaling, that regulate cell
proliferation or survival. Cancer can develop when critical cell
signaling, regulating physiologic activity such as cell
proliferation, becomes abnormal or dysregulated. Since genetic
mutations are often only weakly correlated to the dysregulated cell
signaling activity driving a patient’s cancer, a molecular
diagnostic is prone to providing an incomplete diagnosis. CELsignia
tests overcome this limitation by measuring dynamic cell signaling
activity in a cancer patient’s living tumor cells. When a
CELsignia test detects abnormal signaling activity, a more accurate
diagnosis of the patient’s cancer driver is
obtained.
We
are supporting the advancement of new potential indications for six
different targeted therapies, controlled by other pharmaceutical
companies, that would rely on a CELsignia CDx to select patients.
Five Phase 2 trials are underway to evaluate the efficacy and
safety of these therapies in CELsignia selected patients. These
patients are not currently eligible to receive these drugs and are
not identifiable with a molecular test.
The first drug candidate we are developing
internally is gedatolisib, a potent, well-tolerated, small molecule
dual inhibitor, administered intravenously, that selectively
targets all Class 1 isoforms of PI3K and mammalian target of rapamycin (mTOR). In April
2021, we obtained exclusive global development and
commercialization rights to gedatolisib under a license agreement
with Pfizer, Inc. Our interest in gedatolisib was prompted after we
conducted a study of various PI3K targeted therapeutics while developing our
CELsignia PI3K Activity test. Our CELsignia platform allows us to
obtain proprietary insights about the relative effectiveness of
PI3K targeted therapies. This study found that gedatolisib
inhibited higher levels of PI3K-involved signaling activity than
the other PI3K targeted therapeutics we evaluated and demonstrated
superior drug synergy when combined with other targeted
therapies. Gedatolisib’s
initial clinical development program will focus on the treatment of
patients with estrogen receptor positive (ER+), HER2-negative,
advanced or metastatic breast cancer. Additional clinical
development programs are expected to focus on other tumor types
that involve a hormonal signaling pathway, such as endometrial,
ovarian, or prostate cancer.
Supporting the development of a potential
first-in-class targeted therapy for breast cancer, like
gedatolisib, with our CELsignia platform is a natural extension of
our strategy to use our CELsignia CDx to enable new indications for
other companies’ targeted therapies. By combining companion
diagnostics designed to enable proprietary new drug indications
with targeted therapies that treat signaling dysregulation our CDx
identifies, we believe we are uniquely positioned to improve the
standard-of-care for many early- and late-stage breast cancer
patients. Our goal is to play a key role in the multiple treatment
approaches required to treat breast cancer patients at various
stages of their disease. With
each program, we are:
●
Leveraging
the proprietary insights CELsignia provides into live patient tumor
cell function
●
Using
a CELsignia CDx to identify new patients likely to respond to the
paired targeted therapy
●
Developing
a new targeted therapeutic option for breast cancer
patients.
●
Maximizing
the probability of getting regulatory approval to market the
targeted therapy indication
CELsignia CDx Programs
We
are collaborating with Genentech, Pfizer, Novartis, and Puma to
conduct five Phase 2 clinical trials to evaluate the efficacy of
our collaboration partners’ targeted therapies in patients
selected with one of our CELsignia tests. The goal of these trials
is to support the development of five potential new drug
indications to treat patient groups found responsive by our
CELsignia test to their approved targeted therapies. Our CELsignia
Multi-Pathway Activity Test, or CELsignia MP Test, analyzes HER2,
c-MET, and PI3K signaling activity using a patient’s live
tumor cells. These tests have the potential to diagnose oncogenic
signaling activity undetectable by molecular tests in up to one in
three HER2-negative breast cancer patients and one in five ovarian
cancer patients. We intend to use this test to identify
HER2-negative breast cancer patients whose tumors have either
abnormal HER2 signaling, abnormal c-Met and HER2 signaling, or
abnormal PI3K signaling. Our overall commercialization strategy for
our CELsignia CDx is to collaborate with pharmaceutical companies
to advance the clinical development of their targeted therapies
with the eventual goal of obtaining FDA approval of a new drug
indication.
Our
current programs include:
●
Herceptin®
and Perjeta®
for HER2-negative early-stage breast
cancer patients. Each drug targets the HER2 receptor and is owned
by Genentech, Inc. These drugs are only currently approved to treat
cancer patients who are HER2+.
●
Vizimpro®
and Xalkori®
for HER2-negative late-stage breast
cancer patients. Vizimpro, a pan-HER inhibitor, and Xalkori, a
c-Met inhibitor, are owned by Pfizer, Inc. These drugs are
currently only approved to treat patients with non-small cell lung
cancer who have specific molecular mutations.
●
Tabrecta®
and Nerlynx®
for HER2-negative late-stage breast
cancer patients. Tabrecta, a c-Met inhibitor, is owned by Novartis
AG and Nerlynx is owned by Puma Biotechnology, Inc. Tabrecta is
currently only approved to treat patients with non-small cell lung
cancer who have specific molecular mutations. Nerlynx is currently
only approved to treat HER2+ breast cancer
patients.
●
Nerlynx
and Faslodex for ER+/HER2-negative late-stage breast cancer
patients. Faslodex, a selective estrogen receptor degrader, is
owned by AstraZeneca.
●
Nerlynx
for ER-/HER2- early-stage breast cancer patients.
Gedatolisib
We are initially developing gedatolisib for the
treatment of patients with ER+/HER2-negative advanced or metastatic
breast cancer. The PI3K/mTOR
pathway is one of the most important signal transduction pathways
driving breast cancer growth in the setting of resistance to
endocrine and CDK4/6 therapies. Inhibition of this pathway by
gedatolisib may thus provide an important new therapeutic strategy
to delay tumor progression by reversing therapeutic resistance. Our
strategy is to treat metastatic ER+/HER2- breast cancer with a
combination of gedatolisib, palbociclib, an oral CDK 4/6 inhibitor,
marketed as Ibrance® by Pfizer, and an existing endocrine
therapy, to enable a more complete blockade of endocrine and CDK4/6
resistance. We believe gedatolisib in combination with palbociclib
and an endocrine therapy has the potential to become a standard of
care treatment for patients with ER+/HER2- metastatic breast
cancer, if approved.
Gedatolisib
is currently being evaluated in combination with palbociclib and an
endocrine therapy, either letrozole, or fulvestrant in an on-going
Phase 1b clinical trial that has enrolled 138 patients with
ER+/HER2-negative advanced or metastatic breast cancer. Based on
preliminary results from the on-going dose expansion portion of
this Phase 1b trial as of the database cutoff date of January 11,
2021, 53 of the 88 evaluable patients had either a confirmed or
unconfirmed partial response, an objective response rate of 60%. In
addition, 66 of the 88 evaluable patients had either a confirmed PR
or had stable disease for 24 weeks, a 75% clinical benefit rate
(CBR). In light of the results reported to date from the Phase 1b
trial, we intend to initiate, subject to feedback from the FDA, a
Phase 2/3 clinical trial evaluating gedatolisib in combination with
palbociclib and an endocrine therapy in patients with ER+/HER2-
advanced or metastatic breast cancer in the first half of
2022.
The remainder of this Business Update will focus on the specific
impacts of Gedatolisib on our business. For more information on our
ongoing CELsignia CDx programs, please see Part I, Item 1 of our
Annual Report for the year ended December 31, 2020.
Our Pipeline
Our
integrated CDx and Rx approach has allowed us to develop a broad
pipeline of potential new targeted therapy options for breast
cancer patients. Our current focus is supporting the development of
new drug indications for already approved targeted therapies or
developing our own drug candidates for breast cancer. The following
table summarizes our current pipeline of targeted therapy
development efforts.
Strategy
Our
strategy is to pursue the development of complementary companion
diagnostics and therapeutics that leverage our CELsignia platform.
CELsignia companion diagnostics are uniquely able to analyze live
patient tumor cells to identify new groups of cancer patients
likely to benefit from targeted therapies. We aim to utilize
CELsignia’s unique insights into tumor cell biology to
identify, in-license, and develop potential first-in-class or
best-in-class targeted therapies that treat the same cancer driver
a CELsignia CDx can identify. We believe this integrated CDx and Rx
strategy will maximize the impact our CELsignia platform has on the
treatment landscape for cancer patients.
Key
elements of our strategy include:
●
Leverage the proprietary insights CELsignia provides into live
patient tumor cell function.
Determining
the dysfunction driving most patient’s cancer using molecular
tests remains elusive. Less than 20% of Americans who died of
cancer in 2018 had actionable genetic or proteomic mutations that
made them eligible for treatment with a targeted therapy. This
reflects the limitations of using static measurements of proteins
or genetic mutations in cell fragments to characterize the dynamic
and complex cell signaling activity that may be driving a
patient’s cancer.
Our
CELsignia platform represents a significant departure from
molecular-based analyses. CELsignia companion diagnostics directly
measure dynamic cell signaling activity in patient tumors lacking
actionable genomic or proteomic mutations. Unlike molecular tests
that use cell fragments and can only measure the static composition
of a cell, our CELsignia platform measures real-time signaling
activity in a patient’s live tumor cells. This enables us to
(1) identify the cellular signaling dysfunction driving a
patient’s cancer; and (2) identify the targeted therapy that
matches the dysfunction in the patient’s cells.
●
Use a CELsignia CDx to enable new indications for the paired
targeted therapy.
Our
CELsignia platform enables us to discover new groups of patients
that, we believe, are likely to respond positively to a matching
targeted therapy. Since these new patient groups cannot otherwise
be identified, each CELsignia CDx creates an opportunity to expand
the number of patients approved for treatment with the targeted
therapy. Our current commercial strategy is to collaborate with
pharmaceutical companies on clinical trials to confirm the efficacy
of their already approved therapeutics in patients selected with a
CELsignia CDx. If these collaborations are successful, we believe
our CELsignia tests would expand the market for the targeted
therapy because they enable approval of new drug indications that a
pharmaceutical company would not otherwise be able to
obtain.
●
In-license additional drug candidates that CELsignia is uniquely
able to evaluate.
Supporting
the development of potential first-in-class targeted therapies for
breast cancer, such as gedatolisib, with our CELsignia platform is
a natural extension of our strategy to develop CELsignia CDx for
other breast cancer therapies. We intend to focus on drug
candidates with mechanisms of action CELsignia is uniquely able to
evaluate. We believe this gives a proprietary advantage to identify
potential first-in-class or best-in-class drug candidates for
patient populations that are most likely to respond to the
compound.
●
Maximize the impact of our CELsignia platform.
We
believe developing targeted therapies for breast cancer that
benefit from the CELsignia platform while also offering companion
diagnostics that enable new drug indications for breast cancer
patients, creates a synergistic advantage for each program. Our
goal is to play a direct role in improving the outcomes of breast
cancer patients at all stages of their disease.
●
Use CELsignia to maximize the likelihood of obtaining regulatory
approval.
CELsignia
tests enable enrollment of patients in clinical trials who we
believe are most likely to benefit because their tumors have the
same cellular dysfunction the targeted therapy being evaluated is
designed to inhibit. We believe this will improve patient response
rates, increasing the likelihood the trial meets its endpoint
target and thus the likelihood the drug receives FDA approval.
Improved patient response rates would also help reduce the size,
cost, and length of clinical trials. Thus, we believe CELsignia
tests uniquely enable us to pursue indications simultaneously for
unselected patient populations and CELsignia selected patient
sub-groups. This approach can greatly reduce the risk of pursuing
an indication for a large, but unselected patient population, as we
plan to do for the initial gedatolisib indication. Thus, our
CELsignia platform gives us the unique ability to pursue
indications for unselected patient populations with a back-up
indication for a CELsignia selected patient sub-group.
●
Employ efficient and flexible approaches to accelerate clinical
development.
The
members of our development leadership team have successfully
identified, developed and obtained regulatory approval of oncology
products. These experiences provide our team with the knowledge to
test multiple clinical hypotheses in a single trial that can be
accelerated once a signal of clinical benefit is observed. This
approach may increase the likelihood of seeing results early in
clinical trials with fewer patients, reducing our clinical
development risk and development costs, and allowing us to
potentially accelerate the development of our product
pipeline.
Gedatolisib
Overview
Gedatolisib
(PF-05212384) is a potent, reversible dual inhibitor that
selectively targets PI3K and mTOR. Gedatolisib was originally
developed by Wyeth and clinical development was continued by Pfizer
after it acquired Wyeth. We exclusively licensed global rights to
gedatolisib from Pfizer in April 2021. An on-going Phase 1b trial
evaluating patients with ER+/HER2- metastatic breast cancer was
initiated in 2016 and subsequently enrolled 138 patients. Patient
enrollment for the four expansion arms of the trial is complete.
Based on the favorable preliminary results reported to date from
the Phase 1b trial, we intend to initiate, subject to feedback from
the FDA, a Phase 2/3 clinical trial evaluating gedatolisib in
combination with palbociclib and an endocrine therapy in patients
with ER+/HER2- advanced or metastatic breast cancer in the first
half of 2022.
Background on Breast Cancer and Current Treatments
Breast
cancer is the most prevalent cancer in women, accounting for 30% of
all female cancers and 13% of cancer-related deaths in the United
States. The National Cancer Institute estimated that approximately
270,000 new cases of breast cancer would be diagnosed in the United
States in 2019, and approximately 42,000 breast cancer patients
would die of the disease. Approximately 190,000, or 70%, of these
new cases are for ER+/HER2- breast cancer.
Four
different breast cancer subtypes are currently identified using
molecular tests that determine the level of ER and HER2 expression.
About 70% of breast cancers are ER+/HER2-, which is indicative of
hormone dependency. Despite progress in treatment strategies,
metastatic ER+/HER2- breast cancer (mBC) remains an incurable
disease, with a median overall survival (OS) of three years and a
five-year survival rate of 25%.
Four
different classes of targeted therapies are currently used to treat
ER+/HER2- tumors. These drugs generated revenues of nearly $10
billion globally in 2019.
Endocrine-based
therapies. Selective ER modulators (tamoxifen), selective ER
degrader (fulvestrant), and aromatase inhibitors (AIs) are
established standards of care in women with HR+/HER2- mBC. The
choice between these regimens when treating mBC depends on the type
and duration of prior endocrine therapy treatment as well as the
time elapsed from the end of prior endocrine therapy. Besides the
well-known efficacy of these treatments as first-line therapies in
women without visceral crisis, most patients develop endocrine
resistance leading to therapeutic failure. Primary endocrine
resistance is defined as relapse during the first two years of
prior endocrine therapy or progressive disease within the first six
months of first-line endocrine therapy for mBC. Secondary
resistance is present (1) when a relapse occurs after the first two
years of adjuvant endocrine therapy; (2) when a relapse occurs
within 12 months of completing adjuvant endocrine therapy; or (3)
when a progressive disease occurs after more than six months from
the beginning of endocrine therapy for mBC.
Several
mechanisms are responsible for endocrine resistance, including the
dysregulation of multiple components of the ER pathway (aberration
in ER expression, over-expression of ER co-activators, and
down-regulation of co-repressors), altered regulation of signaling
molecules involved in cell cycle or cell survival, and the
activation of escape pathways that can provide cell
replication.
CDK4/6
inhibitors. One common
mechanism of resistance to endocrine therapies is the activation of
the cyclin-dependent kinases 4 and 6 (CDK4/6) pathway. These
kinases drive cell cycle progression and division. Inhibiting
activation of the CDK4/6 prevents estrogen from activating the
cyclin D1-CDK4/6-Rb complex, thus blockading an important mechanism
of resistance to endocrine therapies. The resulting cell cycle
arrest induces a significant delay in tumor
progression.
CDK
4/6 inhibitors were first introduced in 2015. Endocrine therapies
administered in combination with oral CDK4/6 inhibitors lead to
improved clinical efficacy when compared with endocrine therapies
as monotherapy. In two randomized, double-blind clinical trials,
treatment of HR+/HER2- advanced breast cancer patients with a
combination of palbociclib and either letrozole or fulvestrant
demonstrated a significant increase in the median progression free
survival (PFS) period for patients who received palbociclib in
combination with either letrozole or fulvestrant compared to
patients who received letrozole or fulvestrant as single agents.
These patients had previously progressed on or after prior
endocrine therapy. Worldwide sales of currently marketed CDK4/6
inhibitors, which are indicated for the treatment of breast cancer,
were $6.0 billion in 2019, and are expected to grow to $14.4
billion in 2026. Worldwide sales of Pfizer’s leading CDK4/6
inhibitor, palbocicib, or Ibrance®, were $5.4 billion in
2020.
PI3K
inhibitors. Another common
mechanism of resistance to endocrine inhibitors is the activation
of the PI3K pathway, an important intracellular pathway that
regulates cell growth and metabolism. Approximately one third of
HR+ breast cancer tumors resistant to endocrine therapy harbor
activating mutations of the catalytic subunit of PI3K, referred to
as PIK3CA. Fulvestrant used in combination with alpelisib, an oral
PI3K-α
inhibitor marketed as Piqray® by Novartis approved by the FDA
in May 2019, has demonstrated improved clinical efficacy in
patients whose tumors had a PIK3CA mutation and had not yet
received treatment with a CDK4/6 inhibitor. These patients had
previously progressed on or after prior endocrine therapy.
Worldwide sales of Piqray®, currently the only FDA-approved
for the treatment of breast cancer, limited to patients with PIK3CA
mutations, were approximately $320.0 million in
2020.
mTOR
inhibitors. Similar to CDK4/6
and PI3K, the mTOR pathway has also been identified as a mechanism
of resistance to endocrine therapy. Everolimus is an mTOR inhibitor
that is currently approved by the FDA for the treatment of
HR+/HER2- advanced breast cancer in combination with exemestane, an
AI. Everolimus has also shown clinical benefit in combination with
fulvestrant. These patients had previously progressed on or after
prior AI therapy. Worldwide sales in breast cancer of everolimus,
marketed as Afinitor® by Novartis and a leading mTOR
inhibitor, were approximately $831.0 million in
2019.
The Importance of Targeting PI3K and mTOR in Cancer
Activation
of the PI3K/mTOR pathway has been implicated in a wide variety of
human cancers, involving either activating mutations, or other
unknown drivers of pathway amplification. These include cancers of
the breast, prostate, endometrial, colon, rectum, and lung, among
others.
PI3K constitutes a
lipid kinase family involved in the regulation of diverse cellular
processes, including cell proliferation, survival, cytoskeletal
organization, and glucose transport. Class I PI3Ks are of
particular therapeutic interest. They are heterodimers, comprising
a catalytic (p110α, p110β, p110δ, or p110γ) and
a regulatory (p85α, p55α, p50α, p85β,
p55γ, or p101) subunit. Oncogenic PI3K signaling is activated
by cell-surface receptors such as receptor tyrosine kinases,
G-protein-coupled receptors, and also by well-known oncogenic
proteins such as RAS.
Activities
associated with PI3K involve complex essential cell regulatory
mechanisms including feedforward and feedback signaling loops.
Overactivation of the pathway is frequently present in human
malignancies and plays a key role in cancer progression. Each of
the four catalytic isoforms of class I PI3K preferentially mediate
signal transduction and tumor cell survival based on the type of
malignancy and the genetic or epigenetic alterations an individual
patient harbors. For example, studies have demonstrated the
p110α catalytic isoform is necessary for the growth of tumors
driven by PIK3CA mutations and/or oncogenic RAS and receptor
tyrosine kinases; the p110β catalytic isoform mediates
tumorigenesis arising from the loss of the dephosphorylase activity
of PTEN; and the p110δ catalytic isoform is highly expressed
in leukocytes, making it a desirable target for inhibition in the
treatment of hematologic malignancies. Due to the multiple
subcellular locations, activities, and importance of the different
PI3K complexes in regulating many types of cancer cell
proliferation, control of PI3K activity is an important target in
cancer therapy.
mTOR is as a
critical effector in cell-signaling pathways commonly dysregulated
in human cancers. The mTOR signaling pathway integrates both
intracellular and extracellular signals and serves as a central
regulator of cell metabolism, growth, proliferation, and survival.
mTOR is a serine/threonine protein kinase, a downstream effector of
PI3K, and regulated by hormones, growth factors, and nutrients,
that is contained in two functionally distinct protein assemblies:
mTOR complex 1 (mTORC1) and mTOR complex 2 (mTORC2). mTORC1 belongs
to a complex network of regulatory feedback loops, and once certain
levels of activation are reached, is normally responsible for
limiting the proliferative signals transmitted by upstream
effectors such as PI3K/AKT activity. Equally complex mTORC2
regulates AKT phosphorylation, GSK3β, and control over
glycolysis, and participates in organizing the cellular actin
cytoskeleton. In addition, mTORC1 activation leads to the direct
reduction of mTORC2 activity and mTOR can activate the functional
domain of the ER, leading to ligand-independent hormone receptor
activation. In cancer, dysfunctional signaling leads to various
constitutive activities of mTOR complexes, making mTOR a good
therapeutic target.
The
illustration below depicts the PI3K/AKT/mTOR pathway and various
pathway activation mechanisms.
PI3K/mTOR as Resistance Mechanism to Endocrine and CDK4/6
Inhibitors
The
upregulation of the PI3K/AKT/mTOR pathway promotes hormone
dependent and independent ER transcriptional activity, which
contributes to endocrine resistance, leading to tumor cell growth,
survival, motility, and metabolism. It has also been demonstrated
in vivo that PI3K and mTOR inhibition can restore sensitivity to
endocrine therapy, providing a strong rationale for the combination
of the two therapies.
In
addition, the PI3K/AKT/mTOR pathway, like other mitogenic pathways,
can also promote the activities of cyclin D and CDK4/6 to drive
proliferative cell cycling. Internal preclinical studies conducted
by Pfizer provided evidence in cell-line xenograft models that the
combination of PI3K and CDK4/6 inhibitors may overcome both
intrinsic and adaptive resistance to endocrine therapy, leading to
tumor regressions. In an MCF7 xenograft model (ER+/HER2-/PIK3CA
mutant) the combination of gedatolisib with palbociclib and
fulvestrant led to durable tumor regressions. Importantly, tumors
regressed to minimal volumes within 20 days of triplet therapy, and
continued to remain dormant, without further therapy, for up to 90
days.
Advantages of Gedatolisib over other PI3K and mTOR
inhibitors
The
important role the PI3K/AKT/mTOR pathway plays in cancer has led to
significant investment in the development of many different PI3K
and mTOR inhibitors for solid tumors. However, developing
efficacious and well-tolerated therapies that target this pathway
has been challenging. This reflects the inherent adaptability and
complexity of the PI3K pathway, where numerous feedforward and
feedback loops, crosstalk with other pathways, and compensatory
pathways enable resistance to PI3K inhibition. Another major hurdle
for the development of PI3K pathway inhibitors has been the
inability to achieve optimal drug-target blockade in tumors while
avoiding undue toxicities in patients. These challenges may explain
why PI3K and mTOR inhibitors have not yielded the outstanding
clinical activity many researchers expected.
We
believe there is significant potential for gedatolisib to address
previously treated breast cancer tumors and has the potential to be
used in other tumor types where the PI3K/AKT/mTOR pathway is
either: i) driving tumorigenesis directly; ii) cooperating with
other dysregulated signaling pathways; or iii) a mechanism of
resistance to other drug therapies.
As
result, we believe gedatolisib’s unique mechanism of action
and intravenous formulation offer distinct advantages over
currently approved and investigational therapies that target PI3K
or mTOR alone or together.
|
|
●
|
Overcomes drug
resistance that can occur with isoform-specific PI3K
inhibitors.
|
Gedatolisib is a
pan-class I isoform PI3K inhibitor with low nanomolar potency for
the p110α, p110β, p110γ, and p110δ isoforms.
Each isoform is known to preferentially affect different signal
transduction events that involve tumor cell survival, depending
upon the aberrations associated with the linked pathway. A pan-PI3K
inhibitor can thus treat tumors harboring abnormalities that signal
through different PI3K isoforms, which would potentially induce
anti-tumor activity in a broader population of patients than an
isoform-specific PI3K inhibitor. In addition, it has been reported
that inhibition of one PI3K isoform may be offset by the increased
activity of the other isoforms through different adaptive
mechanisms. Inhibiting all four PI3K isoforms, as gedatolisib does,
can thus prevent the confounding effect of isoform interaction that
may occur with isoform-specific PI3K inhibitors.
|
|
●
|
Overcomes
paradoxical activation of PI3K induced by mTOR
inhibition.
|
As a potent
inhibitor of mTOR, in addition to PI3K, gedatolisib, inhibits the
PI3K/AKT/mTOR pathway both upstream and downstream of AKT.
Furthermore, it has been demonstrated that the PI3K pathway is
activated following selective mTOR inhibition by relief of normal
feedback regulatory mechanisms, thus providing a compelling
rationale for simultaneous inhibition of PI3K and
mTOR.
|
|
●
|
Better tolerated
by patients than oral PI3K and mTOR drugs.
|
Gedatolisib is
administered intravenously (IV) once weekly or on a four-week cycle
of three weeks-on, one week-off, in contrast to the orally
administered pan-PI3K or dual PI3K/mTOR inhibitors that are no
longer being clinically developed. Oral pan-PI3K or PI3K/mTOR
inhibitors have repeatably been found to induce significant side
effects that were not well tolerated by patients. This typically
leads to a high proportion of patients requiring dose reductions or
treatment discontinuation. The challenging toxicity profile of
these drug candidates ultimately played a significant role in the
decisions to halt their development, despite showing promising
efficacy. By contrast, gedatolisib stabilizes at lower
concentration levels in plasma compared to orally administered PI3K
inhibitors, resulting in less toxicity, while maintaining
concentrations sufficient to inhibit PI3K/AKT/mTOR
signaling.
Isoform-specific
PI3K inhibitors administered orally were developed to reduce
toxicities in patients. While the range of toxicities associated
with isoform-specific inhibitors is narrower than oral pan-PI3K or
PI3K/mTOR inhibitors, administering them orally on a continuous
basis still leads to challenging toxicities. The experience with an
FDA approved oral p110-α specific inhibitor, Piqray,
illustrates the challenge. In its Phase 3 pivotal trial Piqray was
found to induce a Grade 3 or 4 adverse event related to
hyperglycemia in 39% of patients evaluated. In addition, 26% of
patients discontinued treatment. By contrast, in the 103-patient
dose expansion portion of the Phase 1b clinical trial with
gedatolisib, only 7% of patients experienced Grade 3 or 4
hyperglycemia and less than 10% discontinued
treatment.
Clinical Experience with Gedatolisib
As
of January 11, 2021, 457 patients with solid tumors have received
gedatolisib in eight clinical trials sponsored by Pfizer. Of the
457 patients, 129 were treated with gedatolisib as a single agent
in three clinical trials. The remaining 328 patients received
gedatolisib in combination with other anti-cancer agents in five
clinical trials. Additional patients received gedatolisib in
combination with other anti-cancer agents in nine investigator
sponsored clinical trials.
Phase 1 First-in-Human Study
Pfizer
conducted a Phase 1, open-label, dose-escalation first-in human
study of single-agent gedatolisib in patients with advanced solid
tumors. The primary objective of Part 1 of the study was to
determine the safety, tolerability, and maximum tolerated dose
(MTD) of single-agent gedatolisib administered once weekly as an
intravenous (IV) infusion. Seventy-seven patients with advanced
solid tumors received doses of gedatolisib and the MTD was
determined to be 154 mg IV once weekly (n = 42). Subsequent
analysis determined that the recommended Phase 2 dose could be
increased to 180 mg IV once weekly.
At
the MTD, the majority of patients enrolled in the MTD group
experienced only grade 1 treatment-related adverse events (AEs).
Grade 3 treatment-related adverse events were noted in 23.8% of
patients, and the most frequently reported included mucosal
inflammation and stomatitis (7.1%), increased ALT (7.1%), and
increased AST (4.8%). No treatment-related AEs of grade 4 or 5
severity were reported at any dose level.
Phase 1b ER+/HER2- mBC Clinical Trial Results
(preliminary)
In
2016, Pfizer initiated a Phase 1b trial dose-finding trial with an
expansion portion for safety and efficacy to evaluate gedatolisib
when added to either the standard doses of palbociclib plus
letrozole or palbociclib plus fulvestrant in patients with
ER+/HER2- metastatic breast cancer. PI3K mutation status was not
used as an eligibility criterion. Patient enrollment for the trial
is complete.
The
illustration below depicts how the combination of gedatolisib,
palbociclib, and fulvestrant is intended to simultaneously block
interdependent ER, PI3K, mTOR & CDK signaling pathways in ER+
breast cancer to address ER and CDKi resistance
mechanisms.
A
total of 138 patients with ER+/HER2- metastatic breast cancer were
dosed in the clinical trial.
●
35
patients were enrolled in two dose escalation arms to evaluate the
safety and tolerability and determine the MTD of gedatolisib when
used in combination with the standard doses of palbociclib and
endocrine therapies. The MTD was determined to be 180 mg
administered intravenously once weekly.
●
103
patients were enrolled in one of four expansion arms (A, B, C, D)
to determine if the triplet combination of gedatolisib plus
palbociclib and letrozole or gedatolisib plus palbociclib and
fulvestrant produced a superior objective response (OR), compared
to historical control data of the doublet combination (palbociclib
plus endocrine therapy). All patients received gedatolisib in
combination with standard doses of palbociclib and endocrine
therapy (either letrozole
or fulvestrant). In Arms A, B and C, patients received an
intravenous dose of 180 mg of gedatolisib once weekly. In Arm D,
patients received an intravenous dose of 180mg of gedatolisib on a
four-week cycle of three weeks-on, one week-off. Objective response
was determined using Response Evaluation Criteria in Solid Tumors
v1.0, or RECIST v1.0.
o
Arm A: mBC with progression and no prior
endocrine-based systemic therapy or a CDK4/6 inhibitor in the
metastatic setting. First-line endocrine-based therapy for
metastatic disease (CDK4/6 treatment naive).
o
Arm B: mBC with progression during one or two prior
endocrine-based systemic therapy in the metastatic setting, with no
prior therapy with any CDK inhibitor. Second- or third-line
endocrine-based therapy for metastatic disease.
o
Arm C: mBC with progression during one or two prior
endocrine-based systemic therapies in the metastatic setting and
following prior therapy with a CDK inhibitor. Second- or third-line
endocrine-based therapy for metastatic disease.
o
Arm D: mBC having progressed on a CDK inhibitor in
combination with endocrine therapy as the most recent regimen for
metastatic disease. Second- or third-line endocrine-based therapy
for metastatic disease.
A
preliminary analysis for the 103 patients enrolled in the expansion
portion of the Phase 1b clinical trial, as of the database cutoff
date of January 11, 2021, showed:
●
Efficacy
analysis for all arms in aggregate:
o
60%
objective response rate (ORR): 53 of the 88 evaluable patients had
either a confirmed or unconfirmed partial response, or PR (48
confirmed, 5 unconfirmed).
o
75%
clinical benefit rate (CBR): 66 of the 88 evaluable patients had
either a confirmed PR or had stable disease for 24
weeks.
●
Best
responses, as measured by RECIST v1.0, are shown in the following
chart. The dotted line represents the cutoff for PR (defined as a
30% reduction from baseline).
●
Preliminary
safety analysis:
o
For
all arms in aggregate, patients experienced at least one Grade 1 or
Grade 2 treatment-emergent adverse event. The most commonly
reported adverse events regardless of grade and occurring in at
least 30% of patients included stomatitis (81%), neutropenia (80%),
nausea (75%), fatigue (68%), dysegeusia (46%), vomiting (45%),
anemia (40%), diarrhea (34%), decreased appetite (32%), leukopenia
(32%).
o
For
all arms in aggregate, the Grade 3 and 4 treatment-emergent adverse
events occurring in at least 20% of patients were neutropenia
(67%), stomatitis (27%) and rash (20%). Neutropenia is a known
class effect of CDK4/6 inhibitors. Stomatitis was reversible in
most patients with a steroidal mouth rinse. All grades of
treatment-related adverse events related to hyperglycemia was
reported in 22% of patients; Grade 3 or 4 hyperglycemia was
reported in 7% of patients. Gedatolisib was discontinued in 10% of
patients.
o
For
the patients in Arm D, who received the recommended phase two dose,
Grade 3 and 4 treatment-emergent adverse events occurring in at
least 20% of patients were neutropenia (67%) stomatitis and (22%).
All grades of treatment-related adverse events related to
hyperglycemia was reported in 22% of patients; Grade 3 or 4
hyperglycemia was reported in 7% of patients. Gedatolisib
was discontinued in 7% of patients
o
22
patients were continuing to receive gedatolisib in combination with
the other study drugs, 17 of whom have been on study treatment for
more than two years.
●
Preliminary
best overall response data for each arm is presented in the table
below:
|
Arm
(evaluable
patients)
|
A(N=24)
|
B(N=12)
|
C(N=27)
|
D(N=25)
|
|
Patients
|
1L:
CDKi-Naïve
|
2L+:
CDKi-naïve
|
2L/3L:
CDKi-pretreated
|
2L/3L:
Immediately
prior CDKi
|
|
Overall Response Rate
(evaluable patients)
|
84%
|
75%1
|
33%2
|
60%3
|
|
Clinical Benefit Rate
(evaluable
patients)
|
92%
|
92%
|
48%
|
76%
|
1.
Arm
A: 20 of the 24 evaluable patients had a confirmed PR.
2.
Arm
B: 9 of the 12 evaluable patients had either a confirmed PR or
unconfirmed PR (7 confirmed PR, 2 unconfirmed PR).
3.
Arm
C: 9 of the 27 evaluable patients had either a confirmed PR or
unconfirmed PR (7 confirmed PR, 2 unconfirmed PR).
4.
Arm
D: 15 of the 25 evaluable patients had either a confirmed PR or
unconfirmed PR (14 confirmed PR, 1 unconfirmed PR).
●
Preliminary
progression free survival (PFS) data for each arm is presented in
the table below:
|
Arm
(enrolled
patients)
|
A(N=31)
|
B(N=13)
|
C(N=32)
|
D(N=27)
|
|
Median PFS
(months) (95% CI)
|
>29
(Not Yet Reached)
|
11.9
(3.7, NR)
|
5.1
(3.4, 7.5)
|
13.2
(9.0, 16.7)
|
In
light of the preliminary results reported to date from the Phase 1b
trial, we intend to initiate, subject to feedback from the FDA, a
Phase 2/3 clinical trial evaluating gedatolisib in combination with
palbociclib and an endocrine therapy in patients with ER+/HER2-
advanced or metastatic breast cancer in the first half of
2022.
We
expect to use the CELsignia PI3K activity test to help support
development of gedatolisib for breast cancer indications. Our
internal studies demonstrate how measurement of PI3K-involved
signaling may provide a sensitive and specific method of
identifying patients most likely to benefit from PI3K inhibitors.
We believe CELsignia tests uniquely enable us to pursue indications
simultaneously for unselected patient populations and CELsignia
selected patient sub-groups. This approach can greatly reduce the
risk of pursing an indication for a large, but unselected patient
population, as we plan to do for the initial gedatolisib
indication. By combining the capabilities of CELsignia PI3K
Activity test with a potent pan-PI3k/mTOR inhibitor like
gedatolisib, we believe we are uniquely suited to maximize the
probability of obtaining regulatory approval to market
gedatolisib.
Phase 2 Pilot Clinical Trial for HER2+/PIK3CA+
Patients
The
Korean Cancer Study Group sponsored a Phase 2 pilot clinical trial
to evaluate gedatolisib combined with a trastuzumab biosimilar
(Herzuma®), in patients with HER2+/PIK3CA+ metastatic breast
cancers whose disease had progressed after treatment with three or
more prior HER2 targeted therapy regimens. The clinical trial
commenced in December 2019 and interim efficacy data from the first
16 patients enrolled was presented at the San Antonio Breast Cancer
Symposium in December 2020. Patients received a trastusumab
biosimilar (8 mg/kg IV for 1st cycle loading dose, and then 6 mg/kg
IV every 3 weeks) plus gedatolisib (180 mg, weekly IV). The primary
endpoint was objective response, a reduction of at least 30% in
tumor volume by RECIST v1.1.
As
of a data cutoff date of October 30, 2020, nine of 16 patients
achieved a partial response, an ORR of 56%, and four patients had
stable disease. Thirteen of 16 patients thus received either a
partial response or stable disease, resulting in a clinical benefit
rate of 81%. Best responses are shown in the following chart. The
dotted lines represent the cutoff for progressive disease (>20%
tumor growth) and for partial response (>30% tumor
regression).
Best Response
*
Patient whose target lesion decreased by 63% but a new
leptomeningeal seeding occurred.
The
duration of treatment for the 16 patients evaluated is shown in the
chart below. As of the October 30, 2020 data cutoff, 16 patients
(80%) remained on therapy. Four patients discontinued treatment,
one due to disease progression, one due to an adverse event of
Grade 1 diarrhea, one participant decision, and one patient being
unable to undergo the required MRI imaging due to a titanium rod
implant from non-treatment related worsening of scoliosis. At the
time of data cut-off, the median time on treatment for these 20
patients was 10.1 cycles (approximately 10 months) and all 10
patients who had achieved an objective response remained on therapy
assessment. At the time of the analysis, nine patients had a
continuing response. The dashed lines show the response at 3 months
and 6 months.
Duration of Treatment
Pfizer License Agreement
In
April 2020, we entered into a license agreement, or the Gedatolisib
License Agreement, with Pfizer pursuant to which we acquired
exclusive (including as to Pfizer) worldwide sublicensable rights
to research, develop and manufacture, and commercialize gedatolisib
for the treatment, diagnosis and prevention of all diseases.
Pursuant to the Gedatolisib License Agreement, we are obligated to
use commercially reasonable efforts to develop and seek regulatory
approval for at least one product in the U.S. and if regulatory
approval is obtained, to commercialize such product in the U.S and
at least one international major market.
We
paid Pfizer a $5.0 million upfront fee upon execution of the
Gedatolisib License Agreement and issued to Pfizer $5.0 million of
our common stock. We are also required to make milestone payments
to Pfizer upon achievement of certain development and commercial
milestone events, up to an aggregate of $330.0 million. We will pay
Pfizer tiered royalties on sales of gedatolisib at percentages
ranging from the low to mid-teens, that may be subject to
deductions for expiration of valid claims, amounts due under
third-party licenses and generic competition. Unless earlier
terminated, the Gedatolisib License Agreement will expire upon the
expiration of all royalty obligations. The royalty period will
expire on a country-by-country basis upon the later of (a) 12 years
following the date of First Commercial Sale of such Product in such
country, (b) the expiration of all regulatory or data exclusivity
in such country for such Product or (c) the date upon which the
manufacture, use, sale, offer for sale or importation of such
Product in such country would no longer infringe, but for the
license granted herein, a Valid Claim of a Licensed Patent Right.
Capitalized terms in this paragraph have the meanings set forth in
the Gedatolisib License Agreement.
We
have the right to terminate the Gedatolisib License Agreement for
convenience upon 90 days’ prior written notice. Pfizer may
not terminate the agreement for convenience. Either we or Pfizer
may terminate the Gedatolisib License Agreement if the other party
is in material breach and such breach is not cured within the
specified cure period. In addition, either we or Pfizer may
terminate the Gedatolisib License Agreement in the event of
specified insolvency events involving the other party.
Manufacturing
We
rely on third parties to manufacture gedatolisib. We expect to
enter into agreements with contract manufacturing organizations, or
CMOs, to produce drug substance for gedatolisib. We require all of
our CMOs to conduct manufacturing activities in compliance with
current good manufacturing practice, or cGMP, requirements. We
anticipate that these CMOs will have the capacity to support both
clinical supply and commercial-scale production, but we do not have
any formal agreements at this time to cover commercial production.
We may also elect to enter into agreements with other CMOs to
manufacture supplies of drug substance and finished drug
product.
Sales and Marketing
If
any of our product candidates are approved, we intend to market and
commercialize them in the U.S. and select international markets,
either alone or in partnership with others. Cancer patients are
managed by oncologists, medical geneticists and neurologists, and
therefore we believe can be reached with a targeted sales
force.
Competition for Gedatolisib
The
pharmaceutical industry is characterized by rapid evolution of
technologies and intense competition. While we believe that our
product candidates, technology, knowledge, experience and
scientific resources provide us with competitive advantages, we
face competition from major pharmaceutical and biotechnology
companies, academic institutions, governmental agencies and public
and private research institutions, among others. Any product
candidates that we successfully develop and commercialize will
compete with approved treatment options, including off-label
therapies, and new therapies that may become available in the
future. Key considerations that would impact our ability to
effectively compete with other therapies include the efficacy,
safety, method of administration, cost, level of promotional
activity and intellectual property protection of our products. Many
of the companies against which we may compete have significantly
greater financial resources and expertise than we do in research
and development, manufacturing, preclinical testing, conducting
clinical trials, obtaining regulatory approvals and marketing
approved products.
There are several PI3K and mTOR inhibitors
approved by the FDA, including Piqray and Afinitor from Novartis
AG, Aliqopa from Bayer Corporation, Copiktra from Verastem,
Inc. Zydelig from Gilead
Sciences, Inc. and we are aware that other companies are, or may
be, developing products for this indication, including AstraZeneca
plc, BridgeBio Inc., Eli Lilly and Company, F. Hoffmann-La Roche
Ltd, Kazia Therapeutics Limited, Infinity Pharmaceuticals, Inc.,
Revolution Medicines Inc., and Takeda Pharmaceutical Company
Limited. There may be additional companies with programs suitable
for addressing these patient populations that could be competitive
with our efforts but that have not yet disclosed specific clinical
development plans. Smaller or early-stage companies, including
oncology-focused therapeutics companies, may also prove to be
significant competitors, particularly through collaborative
arrangements with large and established companies. These companies
may also compete with us in recruiting and retaining qualified
scientific and management personnel, establishing clinical trial
sites, enrolling patients in clinical trials and acquiring
technologies complementary to, or necessary for, our programs. The
availability of reimbursement from government and private payors
will also significantly impact the pricing and competitiveness of
our products. Our competitors may obtain FDA or other regulatory
approvals for their products more rapidly than we may obtain
approvals for our product candidates, which could result in our
competitors establishing a strong market position before we are
able to commercialize our product candidates.
Intellectual Property for Gedatolisib
Our
success depends in part on our ability to obtain and maintain
proprietary protection for our product candidates, manufacturing on
discoveries and other know-how, to operate without infringing the
proprietary rights of others, and to prevent others from infringing
our proprietary rights. We plan to protect our proprietary position
using a variety of methods, which include pursuit of U.S. and
foreign patent applications related to proprietary technology,
inventions and improvements, such as compositions of matter and
methods-of-use, that we determine are important to the development
and implementation of our business. For example, we, our licensors,
or our collaborators currently have, or are pursuing, patents
covering the composition of matter for our product candidates and
we plan to generally pursue patent protection covering
methods-of-use for one or more clinical programs. We also rely on
trade secrets, trademarks, know-how, continuing technological
innovation and potential in-licensing opportunities to develop and
maintain our proprietary position.
Patents
We
entered into the Gedatolisib License Agreement with Pfizer in April
2021, pursuant to which we acquired exclusive worldwide rights
under Pfizer patents and know-how to develop, manufacture and
commercialize gedatolisib. We have exclusive licenses under the
Gedatolisib License Agreement to patent rights in the U.S. and
numerous foreign jurisdictions relating to gedatolisib. The patent
rights in-licensed under the Gedatolisib License Agreement include
11 granted patents in the U.S. and more than 290 patents granted in
foreign jurisdictions including Australia, Canada, China, France,
Germany, Spain, United Kingdom and Japan. A U.S. patent covering
gedatolisib as a composition of matter has a statutory expiration
date in December 2029 and a U.S. composition of matter patent that
covers the lactic acid form of gedatolisib that is currently in
clinical development expires in December 2035, in each case, not
including patent term adjustment or any patent term extension, and
relevant foreign counterparts.
Trade Secrets
In
addition to patents, we rely on trade secrets and know-how to
develop and maintain our competitive position. We typically rely on
trade secrets to protect aspects of our business that are not
amenable to, or that we do not consider appropriate for, patent
protection. We protect trade secrets and know-how by establishing
confidentiality agreements and invention assignment agreements with
our employees, consultants, scientific advisors, contractors and
partners. These agreements generally provide that all confidential
information developed or made known during the course of an
individual or entity’s relationship with us must be kept
confidential during and after the relationship. These agreements
also generally provide that all inventions resulting from work
performed for us or relating to our business and conceived or
completed during the period of employment or assignment, as
applicable, shall be our exclusive property. In addition, we take
other appropriate precautions, such as physical and technological
security measures, to guard against misappropriation of our
proprietary information by third parties.
Coverage, Pricing and Reimbursement
Successful
commercialization of new drug products depends in part on the
extent to which reimbursement for those drug products will be
available from government health administration authorities,
private health insurers and other organizations. Government
authorities and other third-party payors, such as private health
insurers and health maintenance organizations, decide which drug
products they will pay for and establish reimbursement levels. The
availability and extent of reimbursement by governmental and
private payors is essential for most patients to be able to afford
a drug product. Sales of drug products depend substantially, both
domestically and abroad, on the extent to which the costs of drug
products are paid for by health maintenance, managed care, pharmacy
benefit and similar healthcare management organizations, or
reimbursed by government health administration authorities, private
health coverage insurers and other third-party payors.
A
primary trend in the U.S. healthcare industry and elsewhere is cost
containment. Government authorities and other third-party payors
have attempted to control costs by limiting coverage and the amount
of reimbursement for particular drug products. In many countries,
the prices of drug products are subject to varying price control
mechanisms as part of national health systems. In general, the
prices of drug products under such systems are substantially lower
than in the U.S. Other countries allow companies to fix their own
prices for drug products, but monitor and control company profits.
Accordingly, in markets outside the U.S., the reimbursement for
drug products may be reduced compared with the U.S. In the U.S.,
the principal decisions about reimbursement for new drug products
are typically made by the Centers for Medicare & Medicaid
Services, or CMS, an agency within the Department of Health and
Human Services, or HHS. CMS decides whether and to what extent a
new drug product will be covered and reimbursed under certain
federal governmental healthcare programs, such as Medicare, and
private payors tend to follow CMS to a substantial degree. However,
no uniform policy of coverage and reimbursement for drug products
exists among third-party payors and coverage and reimbursement
levels for drug products can differ significantly from payor to
payor. In the U.S., the process for determining whether a
third-party payor will provide coverage for a biological product
typically is separate from the process for setting the price of
such product or for establishing the reimbursement rate that the
payor will pay for the product once coverage is approved. With
respect to biologics, third-party payors may limit coverage to
specific products on an approved list, also known as a formulary,
which might not include all of the FDA-approved products for a
particular indication, or place products at certain formulary
levels that result in lower reimbursement levels and higher cost
sharing obligation imposed on patients. A decision by a third-party
payor not to cover our product candidates could reduce physician
utilization of a product. Moreover, a third-party payor’s
decision to provide coverage for a product does not imply that an
adequate reimbursement rate will be approved. Adequate third-party
reimbursement may not be available to enable a manufacturer to
maintain price levels sufficient to realize an appropriate return
on its investment in product development. Additionally, coverage
and reimbursement for products can differ significantly from payor
to payor. One third-party payor’s decision to cover a
particular medical product does not ensure that other payors will
also provide coverage for the medical product, or will provide
coverage at an adequate reimbursement rate. As a result, the
coverage determination process usually requires manufacturers to
provide scientific and clinical support for the use of their
products to each payor separately and is a time-consuming
process.
Coverage
policies and third-party reimbursement rates may change at any
time. Even if favorable coverage and reimbursement status is
attained for one or more products for which we receive regulatory
approval, less favorable coverage policies and reimbursement rates
may be implemented in the future. Third-party payors are
increasingly challenging the prices charged for medical products
and services, examining the medical necessity and reviewing the
cost-effectiveness of pharmaceutical products, in addition to
questioning safety and efficacy. If third-party payors do not
consider a product to be cost-effective compared to other available
therapies, they may not cover that product after FDA approval or,
if they do, the level of payment may not be sufficient to allow a
manufacturer to sell its product at a profit.
In
addition, in many foreign countries, the proposed pricing for a
drug must be approved before it may be lawfully marketed. The
requirements governing drug pricing and reimbursement vary widely
from country to country. In the European Union, or EU, governments
influence the price of products through their pricing and
reimbursement rules and control of national healthcare systems that
fund a large part of the cost of those products to consumers. Some
jurisdictions operate positive and negative list systems under
which products may only be marketed once a reimbursement price has
been agreed to by the government. To obtain reimbursement or
pricing approval, some of these countries may require the
completion of clinical trials that compare the cost effectiveness
of a particular product to currently available therapies. Other
member states allow companies to fix their own prices for
medicines, but monitor and control company profits. 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 products. The
downward pressure on healthcare costs in general, particularly
prescription products, has become very intense. As a result,
increasingly high barriers are being erected to the entry of new
products. In addition, in some countries, cross border imports from
low-priced markets exert a commercial pressure on pricing within a
country.
Government Regulation
Government
authorities in the U.S. at the federal, state and local level and
in other countries and jurisdictions, including the EU, extensively
regulate, among other things, the research, development, testing,
manufacture, quality control, approval, labeling, packaging,
storage, record-keeping, promotion, advertising, distribution,
post-approval monitoring and reporting, marketing and export and
import of drug products, such as gedatolisib. Generally, before a
new drug can be marketed, considerable data demonstrating its
quality, safety and efficacy must be obtained, organized into a
format specific for each regulatory authority and submitted for
review and approved by the regulatory authority.
Clinical Trials
The
clinical stage of development involves the administration of the
investigational product to healthy volunteers or patients under the
supervision of qualified investigators, generally physicians not
employed by, or under control of, the trial sponsor, in accordance
with Good Clinical Practices, or GCPs, which include the
requirement that all research subjects provide their informed
consent for their participation in any clinical trial. Clinical
trials are conducted under protocols detailing, among other things,
the objectives of the clinical trial, dosing procedures, subject
selection and exclusion criteria and the parameters to be used to
monitor subject safety and assess efficacy. Each protocol, and any
subsequent amendments to the protocol, must be submitted to the FDA
as part of the IND. Furthermore, each clinical trial must be
reviewed and approved by an Institutional Review Board, or IRB, for
each institution at which the clinical trial will be conducted to
ensure that the risks to individuals participating in the clinical
trials are minimized and are reasonable in relation to anticipated
benefits. The IRB also approves the informed consent form that must
be provided to each clinical trial subject or his or her legal
representative and must monitor the clinical trial until completed.
There also are requirements governing the reporting of ongoing
clinical trials and completed clinical trial results to public
registries. Information about most clinical trials must be
submitted within specific timeframes for publication on the
www.clinicaltrials.gov website. Information related to the product,
patient population, phase of investigation, trial sites and
investigators and other aspects of the clinical trial is made
public as part of the registration of the clinical trial. Sponsors
are also obligated to discuss the results of their clinical trials
after completion. Disclosure of the results of these trials can be
delayed in some cases for up to two years after the date of
completion of the trial. Competitors may use this publicly
available information to gain knowledge regarding the progress of
development programs. Human clinical trials are typically conducted
in three sequential phases, which may overlap or be
combined:
●
Phase
1 clinical trials generally involve a small number of healthy
volunteers or disease-affected patients who are initially exposed
to a single dose and then multiple doses of the product candidate.
The primary purpose of these clinical trials is to assess the
metabolism, pharmacologic action, side effect tolerability and
safety of the drug.
●
Phase
2 clinical trials involve studies in disease-affected patients to
determine the dose required to produce the desired benefits. At the
same time, safety and further pharmacokinetic and pharmacodynamic
information is collected, possible adverse effects and safety risks
are identified, and a preliminary evaluation of efficacy is
conducted.
●
Phase
3 clinical trials generally involve a larger number of patients at
multiple sites and are designed to provide the data necessary to
demonstrate the effectiveness of the product for its intended use,
its safety in use and to establish the overall benefit/risk
relationship of the product and provide an adequate basis for
product approval. These trials may include comparisons with placebo
and/or other comparator treatments. The duration of treatment is
often extended to mimic the actual use of a product during
marketing.
A registrational trial is a clinical trial that adequately meets
regulatory agency requirements for the evaluation of a drug
candidate’s efficacy and safety such that it can be used to
justify the approval of the drug. Generally, registrational trials
are Phase 3 trials but may be Phase 2 trials if the trial design
provides a reliable assessment of clinical benefit, particularly in
situations where there is an unmet medical need.
Post-approval trials, sometimes referred to as Phase 4 clinical
trials, may be conducted after initial marketing approval. These
trials are used to gain additional experience from the treatment of
patients in the intended therapeutic indication, particularly for
long-term safety follow up. In certain instances, the FDA may
mandate the performance of Phase 4 clinical trials as a condition
of approval of a Biologics License Application, or
BLA.
Progress reports detailing the results of the clinical trials must
be submitted at least annually to the FDA and more frequently if
serious adverse events occur. The FDA or the sponsor may suspend or
terminate a clinical trial at any time, or the FDA may impose other
sanctions on various grounds, including a finding that the research
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 requirements of the IRB or if the
drug has been associated with unexpected serious harm to patients.
There are also requirements related to registration and reporting
of certain clinical trials and completed clinical trial results to
public registries.
U.S. – FDA regulation
Approval Process
In
the U.S., pharmaceutical products are subject to extensive
regulation by the FDA. The Federal Food, Drug, and Cosmetic Act, or
the FDC Act, and other federal and state statutes and regulations,
govern, among other things, the research, development, testing,
manufacture, storage, recordkeeping, approval, labeling, promotion
and marketing, distribution, post-approval monitoring and
reporting, sampling, and import and export of pharmaceutical
products. Failure to comply with applicable U.S. requirements may
subject a company to a variety of administrative or judicial
sanctions, such as FDA refusal to approve pending New Drug
Applications, or NDAs, warning or untitled letters, product
recalls, product seizures, total or partial suspension of
production or distribution, injunctions, fines, civil penalties and
criminal prosecution.
Pharmaceutical
product development for a new product or certain changes to an
approved product in the U.S. typically involves preclinical
laboratory and animal tests, the submission to the FDA of an IND,
which must become effective before clinical testing may commence,
and adequate and well-controlled clinical trials to establish the
safety and effectiveness of the drug for each indication for which
FDA approval is sought. Satisfaction of FDA pre-market approval
requirements typically takes many years and the actual time
required may vary substantially based upon the type, complexity and
novelty of the product or disease.
Preclinical
tests include laboratory evaluation of product chemistry,
formulation and toxicity, as well as animal trials to assess the
characteristics and potential safety and efficacy of the product.
The conduct of the preclinical tests must comply with federal
regulations and requirements, including good laboratory practices.
The results of preclinical testing are submitted to the FDA as part
of an IND along with other information, including information about
product chemistry, manufacturing and controls and a proposed
clinical trial protocol. Long term preclinical tests, such as
animal tests of reproductive toxicity and carcinogenicity, may
continue after the IND is submitted.
A
30-day waiting period after the submission of each IND is required
prior to the commencement of clinical testing in humans. If the FDA
has neither commented on nor questioned the IND within this 30-day
period, the clinical trial proposed in the IND may
begin.
Clinical
trials involve the administration of the investigational new drug
to healthy volunteers or patients under the supervision of a
qualified investigator. Clinical trials must be conducted: (i) in
compliance with federal regulations; (ii) in compliance with GCP,
an international standard meant to protect the rights and health of
patients and to define the roles of clinical trial sponsors,
administrators, and monitors; as well as (iii) under protocols
detailing the objectives of the trial, the parameters to be used in
monitoring safety, and the effectiveness criteria to be evaluated.
Each protocol involving testing on U.S. patients and subsequent
protocol amendments must be submitted to the FDA as part of the
IND.
The
FDA may order the temporary, or permanent, discontinuation of a
clinical trial at any time, or impose other sanctions, if it
believes that the clinical trial either is not being conducted in
accordance with FDA requirements or presents an unacceptable risk
to the clinical trial patients. The trial protocol and informed
consent information for patients in clinical trials must also be
submitted to an IRB for approval. An IRB may also require the
clinical trial at the site to be halted, either temporarily or
permanently, for failure to comply with the IRB’s
requirements, or may impose other conditions. Clinical trials to
support NDAs for marketing approval are typically conducted in
three sequential phases, but the phases may overlap. In Phase 1,
the initial introduction of the drug into healthy human subjects or
patients, the drug is tested to assess metabolism,
pharmacokinetics, pharmacological actions, side effects associated
with increasing doses, and, if possible, early evidence on
effectiveness. Phase 2 usually involves trials in a limited patient
population to determine the effectiveness of the drug for a
particular indication, dosage tolerance and optimum dosage, and to
identify common adverse effects and safety risks. If a compound
demonstrates evidence of effectiveness and an acceptable safety
profile in Phase 2 evaluations, Phase 3 trials are undertaken to
obtain the additional information about clinical efficacy and
safety in a larger number of patients, typically at geographically
dispersed clinical trial sites, to permit FDA to evaluate the
overall benefit-risk relationship of the drug and to provide
adequate information for the labeling of the drug. In most cases
FDA requires two adequate and well-controlled Phase 3 clinical
trials to demonstrate the efficacy of the drug. A single Phase 3
trial with other confirmatory evidence may be sufficient in rare
instances where the trial is a large multi-center trial
demonstrating internal consistency and a statistically very
persuasive finding of a clinically meaningful effect on mortality,
irreversible morbidity or prevention of a disease with a
potentially serious outcome and confirmation of the result in a
second trial would be practically or ethically
impossible.
Pursuant
to the 21st Century Cures Act, which was enacted on December 13,
2016, the manufacturer of an investigational drug for a serious or
life-threatening disease is required to make available, such as by
posting on its website, its policy on evaluating and responding to
requests for expanded access. This requirement applies on the later
of 60 days after the date of enactment or the first initiation of a
Phase 2 or Phase 3 trial of the investigational drug. After
completion of the required clinical testing, an NDA is prepared and
submitted to the FDA. FDA approval of the NDA is required before
marketing of the product may begin in the U.S. The NDA must include
the results of all preclinical, clinical and other testing and a
compilation of data relating to the product’s pharmacology,
chemistry, manufacture and controls. The cost of preparing and
submitting an NDA is substantial. The submission of most NDAs is
additionally subject to a substantial application user fee,
currently $2,875,842 for Fiscal Year 2021, and the manufacturer
and/or sponsor under an approved NDA are also subject to annual
program fees for eligible products, which are currently $336,432
for Fiscal Year 2021.
The
FDA has 60 days from its receipt of an NDA to determine whether the
application will be accepted for filing based on the agency’s
threshold determination that it is sufficiently complete to permit
substantive review. Once the submission is accepted for filing, the
FDA begins an in-depth review. The FDA has agreed to certain
performance goals in the review of new drug applications. Most such
applications for standard review drug products are reviewed within
ten to twelve months; most applications for priority review drugs
are reviewed in six to eight months. Priority review can be applied
to drugs that the FDA determines offer major advances in treatment
or provide a treatment where no adequate therapy exists. The review
process for both standard and priority review may be extended by
FDA for three additional months to consider certain late-submitted
information, or information intended to clarify information already
provided in the submission.
The
FDA may also refer applications for novel drug products, or drug
products that present difficult questions of safety or efficacy, to
an advisory committee—typically a panel that includes
clinicians and other experts—for review, evaluation and a
recommendation as to whether the application should be approved.
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 typically inspect one or more
clinical sites to assure compliance with GCP. Additionally, the FDA
will inspect the facility or the facilities at which the drug is
manufactured. FDA will not approve the product unless compliance
with cGMP is satisfactory and the NDA contains data that provide
substantial evidence that the drug is safe and effective in the
indication studied.
After
the FDA evaluates the NDA and the manufacturing facilities, it
issues either an approval letter or a complete response letter. A
complete response letter generally outlines the deficiencies in the
submission and may require substantial additional testing, or
information, in order for the FDA to reconsider the application.
If, or when, those deficiencies have been addressed to the
FDA’s satisfaction in a resubmission of the NDA, the FDA will
issue an approval letter. FDA has committed to reviewing such
resubmissions in two or six months depending on the type of
information included.
An
approval letter authorizes commercial marketing of the drug with
specific prescribing information for specific indications. As a
condition of NDA approval, the FDA may require a risk evaluation
and mitigation strategy, or REMS, to help ensure that the benefits
of the drug outweigh the potential risks. REMS can include
medication guides, communication plans for healthcare professionals
and elements to assure safe use, or ETASU. ETASU can include, but
are not limited to, special training or certification for
prescribing or dispensing, dispensing only under certain
circumstances, special monitoring and the use of patient
registries. The requirement for a REMS can materially affect the
potential market and profitability of the drug. Moreover, product
approval may require substantial post-approval testing and
surveillance to monitor the drug’s safety or efficacy. Once
granted, product approvals may be withdrawn if compliance with
regulatory standards is not maintained or problems are identified
following initial marketing.
Changes
to some of the conditions established in an approved application,
including changes in indications, labeling or manufacturing
processes or facilities, require submission and FDA approval of a
new NDA or NDA supplement before the change can be implemented. An
NDA supplement for a new indication typically requires clinical
data similar to that in the original application, and the FDA uses
the same procedures and actions in reviewing NDA supplements as it
does in reviewing NDAs.
Exclusivity
Upon
NDA approval of a new chemical entity, or NCE, which is a drug that
contains no active moiety that has been approved by FDA in any
other NDA, that drug receives five years of marketing exclusivity
during which FDA cannot receive any Abbreviated New Drug
Application, or ANDA, seeking approval of a generic version of that
drug. Certain changes to a drug, such as the addition of a new
indication to the package insert, are associated with a three-year
period of exclusivity during which FDA cannot approve an ANDA for a
generic drug that includes the change. An ANDA may be submitted one
year before NCE exclusivity expires if a Paragraph IV certification
is filed. If there is no listed patent in the Orange Book, there
may not be a Paragraph IV certification, and, thus, no ANDA may be
filed before the expiration of the exclusivity period.
Patent Term Extension
After
NDA approval, owners of relevant drug patents may apply for up to a
five-year patent extension for one patent. The allowable patent
term extension is calculated as half of the drug’s testing
phase—the time between IND and NDA submission—and all
of the review phase—the time between NDA submission and
approval up to a maximum of five years. The time can be shortened
if FDA determines that the applicant did not pursue approval with
due diligence. The total patent term after the extension may not
exceed 14 years from approval.
For
patents that might expire during the application phase, the patent
owner may request an interim patent extension. An interim patent
extension increases the patent term by one year and may be renewed
up to four times. For each interim patent extension granted, the
post-approval patent extension is reduced by one year. The director
of the U.S. Patent and Trademark Office must determine that
approval of the drug covered by the patent for which a patent
extension is being sought is likely. Interim patent extensions are
not available for a drug for which an NDA has not been
submitted.
Fast Track Designation and Accelerated Approval
The
FDA is required to facilitate the development, and expedite the
review, of drugs that are intended for the treatment of a serious
or life-threatening disease or condition for which there is no
effective treatment, and which demonstrate the potential to address
unmet medical needs for the condition. Under the Fast Track
program, the sponsor of a new drug candidate may request that the
FDA designate the drug candidate for a specific indication as a
Fast Track drug concurrent with, or after, the filing of the IND
for the drug candidate. The FDA must determine if the drug
candidate qualifies for Fast Track Designation within 60 days of
receipt of the sponsor’s request.
Under
the Fast Track program and the FDA’s accelerated approval
regulations, the FDA may approve a drug for a serious or
life-threatening illness that provides meaningful therapeutic
benefit to patients over existing treatments based upon a surrogate
endpoint that is reasonably likely to predict clinical benefit, or
on a clinical endpoint that can be measured earlier than
irreversible morbidity or mortality, that is reasonably likely to
predict an effect on irreversible morbidity or mortality or other
clinical benefit, taking into account the severity, rarity or
prevalence of the condition and the availability or lack of
alternative treatments.
In
clinical trials, a surrogate endpoint is a measurement of
laboratory or clinical signs of a disease or condition that
substitutes for a direct measurement of how a patient feels,
functions or survives. Surrogate endpoints can often be measured
more easily or more rapidly than clinical endpoints. A drug
candidate approved on this basis is subject to rigorous
post-marketing compliance requirements, including the completion of
Phase 4 or post-approval clinical trials to confirm the effect on
the clinical endpoint. Failure to conduct required post-approval
studies, or confirm a clinical benefit during post-marketing
studies, will allow the FDA to withdraw the drug from the market on
an expedited basis. All promotional materials for product
candidates approved under accelerated regulations are subject to
prior review by the FDA.
In
addition to other benefits such as the ability to use surrogate
endpoints and engage in more frequent interactions with the FDA,
the FDA may initiate review of sections of a Fast Track
drug’s NDA before the application is complete. This rolling
review is available if the applicant provides, and the FDA
approves, a schedule for the submission of the remaining
information and the applicant pays applicable user fees. However,
the FDA’s time period goal for reviewing an application does
not begin until the last section of the NDA is submitted.
Additionally, the Fast Track Designation may be withdrawn by the
FDA if the FDA believes that the designation is no longer supported
by data emerging in the clinical trial process.
Breakthrough Therapy Designation
Breakthrough
Therapy Designation by the FDA provides more extensive development
consultation opportunities with FDA senior staff, allows for the
rolling review of the drug’s application for approval and
indicates that the product could be eligible for priority review if
supported by clinical data at the time of application submission
for drugs that are intended to treat a serious or life-threatening
disease or condition where preliminary clinical evidence indicates
that the drug may demonstrate substantial improvement over existing
therapies on one or more clinically significant endpoints. Under
the breakthrough therapy program, the sponsor of a new drug
candidate may request that the FDA designate the drug candidate for
a specific indication as a breakthrough therapy concurrent with, or
after, the filing of the IND for the drug candidate. The FDA must
determine if the drug candidate qualifies for Breakthrough Therapy
Designation within 60 days of receipt of the sponsor’s
request.
Disclosure of Clinical Trial Information
Sponsors
of clinical trials of FDA regulated products, including drugs, are
required to register and disclose certain clinical trial
information. Information related to the product, patient
population, phase of investigation, trial sites and investigators
and other aspects of the clinical trial is then made public as part
of the registration. Sponsors are also obligated to discuss the
results of their clinical trials after completion. Disclosure of
the results of these trials can be delayed in certain circumstances
for up to two years after the date of completion of the trial.
Competitors may use this publicly available information to gain
knowledge regarding the progress of development
programs.
EU Regulation
In
the EU, our product candidates also may be subject to extensive
regulatory requirements. As in the U.S., medicinal products can be
marketed only if a marketing authorization from the competent
regulatory agencies has been obtained. Similar to the U.S., the
various phases of preclinical and clinical research in the EU are
subject to significant regulatory controls.
The
Clinical Trials Directive 2001/20/EC, the Directive 2005/28/EC on
GCP, and the related national implementing provisions of the
individual EU Member States govern the system for the approval of
clinical trials in the EU. Under this system, an applicant must
obtain prior approval from the competent national authority of the
EU Member States in which the clinical trial is to be conducted.
Furthermore, the applicant may only start a clinical trial at a
specific trial site after the competent ethics committee has issued
a favorable opinion. The clinical trial application must be
accompanied by, among other documents, an IMPD, or the Common
Technical Document, with supporting information prescribed by
Directive 2001/20/EC, Directive 2005/28/EC, where relevant the
implementing national provisions of the individual EU Member States
and further detailed in applicable guidance documents. All
suspected unexpected serious adverse reactions to the investigated
drug that occur during the clinical trial have to be reported to
the competent national authority and the Ethics Committee of the
Member State where they occurred.
In
April 2014, the new Clinical Trials Regulation, (EU) No 536/2014
was adopted. Currently, the regulation is anticipated not to come
into effect before December 2021. The Clinical Trials Regulation
will be directly applicable in all the EU Member States, repealing
the current Clinical Trials Directive 2001/20/EC. Conduct of all
clinical trials performed in the EU will continue to be bound by
currently applicable provisions until the new Clinical Trials
Regulation becomes applicable. The extent to which ongoing clinical
trials will be governed by the Clinical Trials Regulation will
depend on when the Clinical Trials Regulation becomes applicable
and on the duration of the individual clinical trial. If a clinical
trial continues for more than three years from the day on which the
Clinical Trials Regulation becomes applicable the Clinical Trials
Regulation will at that time begin to apply to the clinical
trial.
The
new Clinical Trials Regulation aims to simplify and streamline the
approval of clinical trials in the EU. The main characteristics of
the regulation include: a streamlined application procedure via a
single-entry point, the “EU portal”; a single set of
documents to be prepared and submitted for the application as well
as simplified reporting procedures for clinical trial sponsors; and
a harmonized procedure for the assessment of applications for
clinical trials, which is divided in two parts. Part I is assessed
by the competent authorities of all EU Member States in which an
application for authorization of a clinical trial has been
submitted (Member States concerned). Part II is assessed separately
by each Member State concerned. Strict deadlines have been
established for the assessment of clinical trial applications. The
role of the relevant ethics committees in the assessment procedure
will continue to be governed by the national law of the concerned
EU Member State. However, overall related timelines will be defined
by the Clinical Trials Regulation.
To
obtain a marketing authorization of a drug in the EU, we may submit
Marketing Authorization Applications, or MAA, either under the
so-called centralized or national authorization
procedures.
Centralized Procedure
The
centralized procedure provides for the grant of a single marketing
authorization following a favorable opinion by the European
Medicines Agency, or EMA, that is valid in all EU Member States, as
well as Iceland, Liechtenstein and Norway. The centralized
procedure is compulsory for medicines produced by specified
biotechnological processes, products designated as orphan medicinal
products, advanced therapy medicines (such as gene-therapy, somatic
cell-therapy or tissue-engineered medicines) and products with a
new active substance indicated for the treatment of specified
diseases, such as HIV/AIDS, cancer, diabetes, neurodegenerative
disorders or autoimmune diseases and other immune dysfunctions and
viral diseases. The centralized procedure is optional for products
that represent a significant therapeutic, scientific or technical
innovation, or whose authorization would be in the interest of
public health. Under the centralized procedure the maximum
timeframe for the evaluation of an MAA by the EMA is 210 days,
excluding clock stops, when additional written or oral information
is to be provided by the applicant in response to questions asked
by the Committee of Medicinal Products for Human Use, or the CHMP.
Accelerated assessment might be granted by the CHMP in exceptional
cases, when a medicinal product is expected to be of a major public
health interest, particularly from the point of view of therapeutic
innovation. The timeframe for the evaluation of an MAA under the
accelerated assessment procedure is of 150 days, excluding
stop-clocks.
National Authorization Procedures
There
are also two other possible routes to authorize medicinal products
in several EU countries, which are available for investigational
medicinal products that fall outside the scope of the centralized
procedure:
●
Decentralized
procedure. Using the decentralized procedure, an applicant may
apply for simultaneous authorization in more than one EU country of
medicinal products that have not yet been authorized in any EU
country and that do not fall within the mandatory scope of the
centralized procedure.
●
Mutual
recognition procedure. In the mutual recognition procedure, a
medicine is first authorized in one EU Member State, in accordance
with the national procedures of that country. Following this,
further marketing authorizations can be sought from other EU
countries in a procedure whereby the countries concerned agree to
recognize the validity of the original, national marketing
authorization.
Under the above described procedures, before granting an MAA, the
EMA or the competent authorities of the Member States of the
European Economic Area, or EEA, make an assessment of the
risk-benefit balance of the product on the basis of scientific
criteria concerning its quality, safety and efficacy.
EU Regulatory Exclusivity
In
the EU, new products authorized for marketing (i.e., reference
products) qualify for eight years of data exclusivity and an
additional two years of market exclusivity upon marketing
authorization. The data exclusivity period prevents generic
applicants from relying on the preclinical and clinical trial data
contained in the dossier of the reference product when applying for
a generic marketing authorization in the EU during a period of
eight years from the date on which the reference product was first
authorized in the EU. The market exclusivity period prevents a
successful generic applicant from commercializing its product in
the EU until ten years have elapsed from the initial authorization
of the reference product in the EU. The ten-year market exclusivity
period can be extended to a maximum of eleven years if, during the
first eight years of those ten years, the marketing authorization
holder obtains an authorization for one or more new therapeutic
indications which, during the scientific evaluation prior to their
authorization, are held to bring a significant clinical benefit in
comparison with existing therapies.
Other Regulations – Rest of the World
For
other countries outside of the EU and the U.S., such as countries
in Eastern Europe, Latin America or Asia, the requirements
governing the conduct of clinical trials, product licensing,
pricing and reimbursement vary from jurisdiction to jurisdiction.
Additionally, the clinical trials must be conducted in accordance
with cGCP requirements and the applicable regulatory requirements
and the ethical principles that have their origin in the
Declaration of Helsinki. If we fail to comply with applicable
foreign regulatory requirements, we may be subject to, among other
things, fines, suspension or withdrawal of regulatory approvals,
product recalls, seizure of products, operating restrictions and
criminal prosecution.
Other Healthcare Laws
Manufacturing,
sales, promotion and other activities following product approval
are also subject to regulation by numerous regulatory authorities
in the U.S. in addition to the FDA, including CMS, the HHS Office
of Inspector General and HHS Office for Civil Rights, other
divisions of the HHS and the Department of Justice.
Healthcare
providers, physicians, and third-party payors will play a primary
role in the recommendation and prescription of any products for
which we obtain marketing approval. Our current and future
arrangements with third-party payors, healthcare providers and
physicians may expose us to broadly applicable fraud and abuse and
other healthcare laws and regulations that may constrain the
business or financial arrangements and relationships through which
we market, sell and distribute any drugs for which we obtain
marketing approval. In the U.S., these laws include, without
limitation, state and federal anti-kickback, false claims,
physician transparency, and patient data privacy and security laws
and regulations, including but not limited to those described
below.
The
U.S. federal Anti-Kickback Statute, or AKS, prohibits, among other
things, any person or entity from knowingly and willfully offering,
paying, soliciting, receiving or providing any remuneration,
directly or indirectly, overtly or covertly, to induce or in return
for purchasing, leasing, ordering or arranging for or recommending
the purchase, lease or order of any good, facility, item or service
reimbursable, in whole or in part, under Medicare, Medicaid or
other federal healthcare programs. The term
“remuneration” has been broadly interpreted to include
anything of value. The AKS has been interpreted to apply to
arrangements between pharmaceutical and medical device
manufacturers on the one hand and prescribers, purchasers,
formulary managers and beneficiaries on the other hand. Although
there are a number of statutory exceptions and regulatory safe
harbors protecting some common activities from prosecution, the
exceptions and safe harbors are drawn narrowly. Failure to meet all
of the requirements of a particular applicable statutory exception
or regulatory safe harbor does not make the conduct per se illegal
under the AKS. Instead, the legality of the arrangement will be
evaluated on a case-by-case basis based on a cumulative review of
all its facts and circumstances. Several courts have interpreted
the statute’s intent requirement to mean that if any one
purpose of an arrangement involving remuneration is to induce
referrals of federal healthcare covered business, the statute has
been violated. In addition, a person or entity does not need to
have actual knowledge of the statute or specific intent to violate
it in order to have committed a violation. Moreover, a claim
including items or services resulting from a violation of the AKS
constitutes a false or fraudulent claim for purposes of the federal
civil False Claims Act. On November 20, 2020, the Office of
Inspector General, or OIG finalized further modifications to the
AKS. Under the final rule, OIG added safe harbor protections under
the AKS for certain coordinated care and value-based arrangements
among clinicians, providers, and others. The final rule (with some
exceptions) became effective January 19, 2021. We continue to
evaluate what effect, if any, this rule will have on our
business.
Although
we would not submit claims directly to payors, drug manufacturers
can be held liable under the federal False Claims Act, which
imposes civil penalties, including through civil whistleblower or
qui tam actions, against individuals or entities (including
manufacturers) for, among other things, knowingly presenting, or
causing to be presented to federal programs (including Medicare and
Medicaid) claims for items or services, including drugs, that are
false or fraudulent, claims for items or services not provided as
claimed, or claims for medically unnecessary items or services. The
government may deem manufacturers to have “caused” the
submission of false or fraudulent claims by, for example, providing
inaccurate billing or coding information to customers or promoting
a product off-label. Several biopharmaceutical, medical device and
other healthcare companies have been prosecuted under federal false
claims and civil monetary penalty laws for, among other things,
allegedly providing free product to customers with the expectation
that the customers would bill federal programs for the product.
Other companies have been prosecuted for causing false claims to be
submitted because of the companies’ marketing of products for
unapproved (e.g., or off-label), and thus non-covered, uses. In
addition, the civil monetary penalties statute imposes penalties
against any person who is determined to have presented or caused to
be presented a claim to a federal health program that the person
knows or should know is for an item or service that was not
provided as claimed or is false or fraudulent.
Our
future marketing and activities relating to the reporting of
wholesaler or estimated retail prices for our products, if
approved, the reporting of prices used to calculate Medicaid rebate
information and other information affecting federal, state and
third-party reimbursement for our products, and the sale and
marketing of our product candidates, are subject to scrutiny under
these laws.
The
federal Health Insurance Portability and Accountability Act of
1996, or HIPAA, created additional federal criminal statutes that
prohibit, among other actions, knowingly and willfully executing,
or attempting to execute, a scheme to defraud or to obtain, by
means of false or fraudulent pretenses, representations or
promises, any money or property owned by, or under the control or
custody of, any healthcare benefit program, including private
third-party payors, knowingly and willfully embezzling or stealing
from a healthcare benefit program, willfully obstructing a criminal
investigation of a healthcare offense and knowingly and willfully
falsifying, concealing or covering up a material fact or making any
materially false, fictitious or fraudulent statement in connection
with the delivery of or payment for healthcare benefits, items or
services. Similar to the AKS, a person or entity does not need to
have actual knowledge of the statute or specific intent to violate
it in order to have committed a violation.
In addition, there has been a recent trend of
increased federal and state regulation of payments made to
physicians and certain other healthcare providers. The Affordable
Care Act, or the ACA, imposed, among other things, new annual
reporting requirements through the Physician Payments Sunshine Act
for covered manufacturers for certain payments and “transfers
of value” provided to physicians (defined to include doctors,
dentists, optometrists, podiatrists and chiropractors) and teaching
hospitals, as well as ownership and investment interests held by
physicians and their immediate family members. Effective January 1,
2022, these reporting obligations will extend to include transfers
of value made to certain non-physician providers such as physician
assistants and nurse practitioners. Failure to submit timely,
accurately and completely the required information for all
payments, transfers of value and ownership or investment interests
may result in civil monetary penalties. Covered manufacturers must
submit reports by the 90th
day of each subsequent calendar year
and the reported information is publicly made available on a
searchable website.
We
may also be subject to data privacy and security regulation by both
the federal government and the states in which we conduct our
business. HIPAA, as amended by the Health Information Technology
for Economic and Clinical Health Act, or HITECH, and their
respective implementing regulations, including the Final HIPAA
Omnibus Rule published on January 25, 2013, impose specified
requirements relating to the privacy, security and transmission of
individually identifiable health information held by covered
entities and their business associates. Among other things, HITECH
made HIPAA’s security standards directly applicable to
“business associates,” defined as independent
contractors or agents of covered entities that create, receive,
maintain or transmit protected health information in connection
with providing a service for or on behalf of a covered entity,
although it is unclear that we would be considered a
“business associate” in the normal course of our
business. HITECH also increased the civil and criminal penalties
that may be imposed against covered entities, business associates
and possibly other persons, and gave state attorneys general new
authority to file civil actions for damages or injunctions in
federal courts to enforce the federal HIPAA laws and seek
attorney’s fees and costs associated with pursuing federal
civil actions. In addition, state laws govern the privacy and
security of health information in certain circumstances, many of
which differ from each other in significant ways and may not have
the same requirements, thus complicating compliance efforts. See
“European Data Collection” below for a discussion of
data privacy and security enactments of the EU.
For
example, California’s Consumer Privacy Act, or CCPA, went
into effect in January 2020, and the California Attorney General
has since promulgated final regulations. The law provides broad
rights to California consumers with respect to the collection and
use of their personal information and imposes data protection
obligations on certain businesses. While the CCPA does not apply to
protected health information that is subject to HIPAA or personal
information collected, used or disclosed in research, as defined by
federal law, the CCPA may still affect our business activities.
Moreover, on November 3, 2020, California voters passed the
California Privacy Rights Act, or CPRA, under a ballot initiative.
The CPRA amends the existing CCPA to include new consumer rights
and additional data protection obligations. The new data protection
requirements under the CPRA apply to information collected on or
after January 1, 2022. With the promulgation of final regulations,
the California State Attorney General has commenced enforcement
actions against CCPA violators. The uncertainty surrounding the
implementation of CCPA and the amendments under the CPRA
exemplifies the vulnerability of our business to the evolving
regulatory environment related to personal data and protected
health information. The California law further expands the need for
privacy and process enhancements and commitment of resources in
support of compliance. Moreover, more than ten states have proposed
bills in the last year with provisions similar to the CCPA and
CPRA. It is likely that other states will pass laws similar to the
CCPA and the CPRA in the near future and a federal data protection
law may also be on the horizon.
Similar
state and foreign fraud and abuse laws and regulations, such as
state anti-kickback and false claims laws, may apply to sales or
marketing arrangements and claims involving healthcare items or
services. Such laws are generally broad and are enforced by various
state agencies and private actions. Also, many states have similar
fraud and abuse statutes or regulations that may be broader in
scope and may apply regardless of payor, in addition to items and
services reimbursed under Medicaid and other state programs. Some
state laws require pharmaceutical companies to comply with the
pharmaceutical industry’s voluntary compliance guidelines and
the relevant federal government compliance guidance, and require
drug manufacturers to report information related to payments and
other transfers of value to physicians and other healthcare
providers, marketing expenditures or drug pricing.
In
order to distribute products commercially, we must comply with
state laws that require the registration of manufacturers and
wholesale distributors of drug and biological products in a state,
including, in certain states, manufacturers and distributors who
ship products into the state even if such manufacturers or
distributors have no place of business within the state. Some
states also impose requirements on manufacturers and distributors
to establish the pedigree of product in the chain of distribution,
including some states that require manufacturers and others to
adopt new technology capable of tracking and tracing product as it
moves through the distribution chain. Several states have enacted
legislation requiring pharmaceutical and biotechnology companies to
establish marketing compliance programs, file periodic reports with
the state, make periodic public disclosures on sales, marketing,
pricing, clinical trials and other activities, and/or register
their sales representatives, as well as to prohibit pharmacies and
other healthcare entities from providing certain physician
prescribing data to pharmaceutical and biotechnology companies for
use in sales and marketing, and to prohibit certain other sales and
marketing practices. All of our activities are potentially subject
to federal and state consumer protection and unfair competition
laws.
The
scope and enforcement of each of these laws is uncertain and
subject to rapid change in the current environment of healthcare
reform, especially in light of the lack of applicable precedent and
regulations. Federal and state enforcement bodies have recently
increased their scrutiny of interactions between healthcare
companies and healthcare providers, which has led to a number of
investigations, prosecutions, convictions and settlements in the
healthcare industry. It is possible that governmental authorities
will conclude that our business practices may not comply with
current or future statutes, regulations or case law involving
applicable fraud and abuse or other healthcare laws and
regulations. If our operations are found to be in violation of any
of these laws or any other governmental regulations that may apply
to us, we may be subject to significant civil, criminal and
administrative penalties, damages, fines, disgorgement, contractual
damages, reputational harm, diminished profits and future earnings,
imprisonment, exclusion of drugs from government funded healthcare
programs, such as Medicare and Medicaid, and the curtailment or
restructuring of our operations, as well as additional reporting
obligations and oversight if we become subject to a corporate
integrity agreement or other agreement to resolve allegations of
non-compliance with these laws, any of which could adversely affect
our ability to operate our business and our financial results. If
any of the physicians or other healthcare providers or entities
with whom we expect to do business is found to be not in compliance
with applicable laws, they may be subject to significant criminal,
civil or administrative sanctions, including exclusions from
government funded healthcare programs. Ensuring business
arrangements comply with applicable healthcare laws, as well as
responding to possible investigations by government authorities,
can be time- and resource consuming and can divert a
company’s attention from the business.
European Data Collection
The
collection and use of personal health data in or arising from the
EU are governed by the provisions of the Data Protection Directive,
and the General Data Protection Regulation, or GDPR. This directive
imposes several requirements relating to the consent of the
individuals to whom the personal data relates, the information
provided to the individuals, notification of data processing
obligations to the competent national data protection authorities
and the security and confidentiality of the personal data. The Data
Protection Directive and GDPR also impose strict rules on the
transfer of personal data out of the EU, to the U.S. Failure to
comply with the requirements of the Data Protection Directive, the
GDPR and the related national data protection laws of the EU Member
States may result in fines and other administrative penalties. The
GDPR introduces new data protection requirements in the EU and
substantial fines for breaches of the data protection rules. The
GDPR regulations may impose additional responsibility and liability
in relation to personal data that we process, including in respect
of clinical trials, and we may be required to put in place
additional mechanisms ensuring compliance with the new data
protection rules. This may be onerous and adversely affect our
business, financial condition, results of operations and
prospects.
Current and Future Legislation
In
the U.S. and other jurisdictions, there have been a number of
legislative and regulatory changes and proposed changes regarding
the healthcare system that could prevent or delay marketing
approval of our product candidates, restrict or regulate
post-approval activities and affect our ability to profitably sell
any product candidates for which we obtain marketing approval. We
expect that current laws, as well as other healthcare reform
measures that may be adopted in the future, may result in more
rigorous coverage criteria and additional downward pressure on the
price that we, or any collaborators, may receive for any approved
products.
The
ACA, for example, contains provisions that subject biological
products to potential competition by lower-cost biosimilars and may
reduce the profitability of drug products through increased rebates
for drugs reimbursed by Medicaid programs address a new methodology
by which rebates owed by manufacturers under the Medicaid Drug
Rebate Program are calculated for drugs that are inhaled, infused,
instilled, implanted or injected, increase the minimum Medicaid
rebates owed by manufacturers under the Medicaid Drug Rebate
Program and extends the rebate program to individuals enrolled in
Medicaid managed care organizations, establish annual fees and
taxes on manufacturers of certain branded prescription drugs, and
create a new Medicare Part D coverage gap discount program, in
which manufacturers must agree to offer 70% (increased pursuant to
the Bipartisan Budget Act of 2018, effective as of 2019)
point-of-sale discounts off negotiated prices of applicable brand
drugs to eligible beneficiaries during their coverage gap period,
as a condition for the manufacturer’s outpatient drugs to be
covered under Medicare Part D.
Since
its enactment, there have been numerous judicial, administrative,
executive, and legislative challenges to certain aspects of the
ACA, and we expect there will be additional challenges and
amendments to the ACA in the future. For example, various portions
of the ACA are currently undergoing legal and constitutional
challenges in the U.S. Supreme Court, and the Trump Administration
issued various Executive Orders which eliminated cost sharing
subsidies and various provisions that would impose a fiscal burden
on states or a cost, fee, tax, penalty or regulatory burden on
individuals, healthcare providers, health insurers, or
manufacturers of pharmaceuticals or medical devices. Additionally,
Congress has introduced several pieces of legislation aimed at
significantly revising or repealing the ACA. In December 2018, the
CMS published a final rule permitting further collections and
payments to and from certain ACA qualified health plans and health
insurance issuers under the ACA risk adjustment program in response
to the outcome of the federal district court litigation regarding
the method CMS uses to determine this risk adjustment. Since then,
the ACA risk adjustment program payment parameters have been
updated annually. It is unclear whether the ACA will be overturned,
repealed, replaced, or further amended. We cannot predict what
affect further changes to the ACA would have on our business,
especially given the new Biden Administration.
Additionally,
other federal health reform measures have been proposed and adopted
in the U.S. since the ACA was enacted:
●
The
Budget Control Act of 2011, among other things, created measures
for spending reductions by Congress. A Joint Select Committee on
Deficit Reduction, tasked with recommending a targeted deficit
reduction of at least $1.2 trillion for the years 2013 through
2021, was unable to reach required goals, thereby triggering the
legislation’s automatic reduction to several government
programs. These changes included aggregate reductions to Medicare
payments to providers of up to 2% per fiscal year, which went into
effect in April 2013 and, due to subsequent legislative amendments
to the statute, including the BBA, will remain in effect through
2027, unless additional Congressional action is taken. However,
pursuant to the Coronavirus Aid, Relief and Economic Security Act,
or CARES Act, and subsequent legislation, these Medicare sequester
reductions are suspended from May 1, 2020 through March 31, 2021
due to the COVID-19 pandemic. Proposed legislation, if passed,
would extend this suspension until the end of the
pandemic.
●
The
American Taxpayer Relief Act of 2012, among other things, reduced
Medicare payments to several providers, and increased the statute
of limitations period for the government to recover overpayments to
providers from three to five years.
Further,
there has been heightened governmental scrutiny over the manner in
which manufacturers set prices for their marketed products, which
have resulted in several recent Congressional inquiries and
proposed and enacted bills designed to, among other things, bring
more transparency to product pricing, review the relationship
between pricing and manufacturer patient programs, and reform
government program reimbursement methodologies for products. In
addition, 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
for branded prescription drugs to limit the growth of government
paid healthcare costs. For example, the U.S. government has passed
legislation requiring pharmaceutical manufacturers to provide
rebates and discounts to certain entities and governmental payors
to participate in federal healthcare programs. The Trump
administration’s budget proposal for fiscal year 2021
included a $135 billion allowance to support legislative proposals
seeking to reduce drug prices, increase competition, lower
out-of-pocket drug costs for patients, and increase patient access
to lower-cost generic and biosimilar drugs. On March 10, 2020, the
Trump administration sent “principles” for drug pricing
to Congress, calling for legislation that would, among other
things, cap Medicare Part D beneficiary out-of-pocket pharmacy
expenses, provide an option to cap Medicare Part D beneficiary
monthly out-of-pocket expenses, and place limits on pharmaceutical
price increases. Further, the Trump administration also previously
released a “Blueprint” to lower drug prices and reduce
out-of-pocket costs of drugs that contains additional proposals to
increase manufacturer competition, increase the negotiating power
of certain federal healthcare programs, incentivize manufacturers
to lower the list price of their products and reduce the
out-of-pocket costs of drug products paid by consumers. The
Blueprint contains certain measures that HHS is already working to
implement. For example, in May 2019, CMS issued a final rule to
allow Medicare Advantage Plans the option of using step therapy for
Part B drugs beginning January 1, 2020. This final rule codified
CMS’s policy change that was effective January 1, 2019.
However, it is unclear whether the Biden administration will
challenge, reverse, revoke or otherwise modify these executive and
administrative actions after January 20, 2021.
Individual
states in the U.S. have also increasingly passed legislation and
implemented regulations designed to control pharmaceutical product
pricing, including price or patient reimbursement constraints,
discounts, restrictions on certain product access and marketing
cost disclosure and transparency measures, and, in some cases,
designed to encourage importation from other countries and bulk
purchasing. Congress and the Trump administration have each
indicated that it will continue to seek new legislative and/or
administrative measures to control drug costs. Individual states in
the U.S. have also been increasingly passing legislation and
implementing regulations designed to control pharmaceutical and
biological product pricing, including price or patient
reimbursement constraints, discounts, restrictions on certain
product access and marketing cost disclosure and transparency
measures, and, in some cases, designed to encourage importation
from other countries and bulk purchasing.
Risk Factor Update
Risk factors that could cause actual
results to differ from our expectations and that could negatively
impact our financial condition and results of operations are
discussed below and elsewhere herein. Additional risks and
uncertainties not presently known to us or that are currently not
believed to be significant to our business may also affect our
actual results and could harm our business, financial condition and
results of operations. If any of the risks or uncertainties
described below or any additional risks and uncertainties actually
occur, our business, results of operations and financial condition
could be materially and adversely affected. This risk factor update is
focused on the specific impacts of gedatolisib on our business. For
more information on the risks related to our operations as a whole
and our specific CELsignia CDx programs, please see Part I, Item 1A
of our Annual Report for the year ended December 31,
2020.
Risks Relating to Our Business
We have a limited operating history and we may never generate
revenue or profit.
We
are a clinical-stage biotechnology company that commenced
activities in January 2012. We only have a limited operating
history and our business plan has not been tested. Since inception,
we have had no revenue and have incurred significant operating
losses. We have financed our operations primarily through equity
and debt offerings. To generate revenue and become and remain
profitable, we must continue to pursue our integrated companion
diagnostic (CDx) and therapeutic (Rx) strategy that leverages our
CELsignia CDx platform. To do so, we need to successfully complete
our five existing clinical trial collaborations, continue to
develop other CELsignia tests for other cancer sub-types, cultivate
partnerships with pharmaceutical companies, and develop and
commercialize gedatolisib pursuant to our license agreement with
Pfizer. We must also build operational and financial infrastructure
to support commercial operations, train and manage employees, and
market and sell our CELsignia tests (as a companion diagnostic
and/or as a stand-alone test) and, once fully developed and
commercialized, our anticipated drug products.
We
may never succeed in any of these activities and, even if we do, we
may never generate revenue that is sufficient to achieve
profitability. We expect to continue to incur significant expenses
and operating losses for the foreseeable future, and the net losses
we incur may fluctuate significantly from quarter to quarter. Our
failure to become and remain profitable would decrease our value
and could impair our ability to raise capital, maintain or expand
our research and development efforts, expand our business, or
continue our operations.
Our inability to raise additional capital on acceptable terms in
the future may limit our ability to develop and commercialize our
integrated companion diagnostic and therapeutic
strategy.
We
may require additional capital to finance capital expenditures and
operating expenses over the next several years as we launch our
integrated companion diagnostic and therapeutic strategy and expand
our infrastructure, commercial operations and research and
development activities. We may seek to raise additional capital
through equity offerings, debt financings, collaborations or
licensing arrangements. Additional funding may not be available to
us on acceptable terms, or at all. If we raise funds by issuing
equity securities, dilution to our stockholders could result. Any
equity securities issued may also provide for rights, preferences
or privileges senior to those of holders of our existing
securities. The incurrence of additional indebtedness or the
issuance of certain equity securities could result in increased
fixed payment obligations and could also include restrictive
covenants, such as limitations on our ability to incur additional
debt or issue additional equity, limitations on our ability to
acquire or license intellectual property rights, and other
operating restrictions that could adversely affect our ability to
conduct our business. In the event that we enter into
collaborations or licensing arrangements to raise capital, we may
be required to accept unfavorable terms. If we are not able to
secure additional funding when needed, we may have to delay, reduce
the scope of or eliminate one or more research and development
programs or selling and marketing initiatives. In addition, we may
have to work with a partner on one or more of our products or
market development programs, which could lower the economic value
of those programs to our company.
Risks Related to Our Initial Drug Product, Gedatolisib
Our future strategy is dependent on the success of our initial drug
product, gedatolisib, as well as other drug products we may
develop. If we are unable to successfully complete clinical
development of, obtain regulatory approval for or commercialize our
drug products, or if we experience delays in doing so, our business
will be materially harmed.
To
date, we have not yet completed any registrational clinical trials
or the development of any drug products. Our future success and
ability to generate revenue from our drug products, which we do not
expect will occur for several years, if ever, is dependent on our
ability to successfully develop, obtain regulatory approval for and
commercialize one or more drug products. We may not have the
financial resources to continue development of, or to modify
existing or enter into new collaborations for, a drug product if we
experience any issues that delay or prevent regulatory approval of,
or our ability to commercialize, our drug products,
including:
●
our
inability to demonstrate to the satisfaction of the FDA or
comparable foreign regulatory authorities that our drug products
are safe and effective;
●
insufficiency
of our financial and other resources to complete the necessary
preclinical studies and clinical trials;
●
negative
or inconclusive results from our preclinical studies, clinical
trials or the clinical trials of others for drug products similar
to ours, leading to a decision or requirement to conduct additional
preclinical studies or clinical trials or abandon a
program;
●
product-related
adverse events experienced by subjects in our clinical trials or by
individuals using drugs or therapeutic biologics similar to our
drug products;
●
delays
in submitting applications, 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 regulatory authorities
regarding the scope or design of our clinical trials;
●
poor
effectiveness of our drug products during clinical
trials;
●
better
than expected performance of control arms, such as placebo groups,
which could lead to negative or inconclusive results from our
clinical trials;
●
delays
in enrolling subjects in clinical trials;
●
high
drop-out rates of subjects from clinical trials;
●
inadequate
supply or quality of drug products or other materials necessary for
the conduct of our clinical trials;
●
greater
than anticipated clinical trial or manufacturing
costs;
●
unfavorable
FDA or comparable regulatory authority 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 therapies in
particular; or
●
varying
interpretations of data by the FDA and comparable foreign
regulatory authorities.
The preliminary efficacy and safety data reported for the B2151009
Phase 1b clinical trial was provided to us by Pfizer and is subject
to change once data cleansing and data verification activities are
completed.
The
preliminary efficacy and safety data reported for the B2151009
Phase 1b clinical trial was provided to us by Pfizer. Pfizer
provided this data as of a data cutoff date of January 11, 2021,
before Pfizer had cleaned the data, locked the clinical database,
and completed preparation of a final Clinical Study Report. We have
not independently reviewed or verified the data, which includes
case report forms (CRF) for each patient and reconciliation with
the data endpoints reported. We may discover, upon performing the
study close out activities for B2151009, which includes
reconciliation and adjudication of the endpoint reported data with
the CRF, inconsistencies with the data as originally provided by
Pfizer to us. As a result, the data presented as of the date hereof
is subject to change once data cleaning and verification activities
have been completed and other study close-out procedures are
completed.
We were not involved in the early development of gedatolisib;
therefore, we are dependent on third parties having accurately
generated, collected, interpreted and reported data from certain
preclinical and clinical trials gedatolisib.
We
had no involvement with or control over the initial preclinical and
clinical development of gedatolisib. We are dependent on third
parties having conducted their research and development in
accordance with the applicable protocols and legal, regulatory and
scientific standards; having accurately reported the results of all
preclinical studies and clinical trials conducted with respect to
such drug product; and having correctly collected and interpreted
the data from these trials. If these activities were not compliant,
accurate or correct, the clinical development, regulatory approval
or commercialization of our drug product will be adversely
affected.
As an organization, we have never successfully completed any
registrational clinical trials, and we may be unable to do so for
any drug candidates we may develop.
We
will need to successfully complete registrational clinical trials
in order to obtain the approval of the FDA or comparable foreign
regulatory authorities to market our drug products. Carrying out
clinical trials, including later-stage registrational clinical
trials, is a complicated process. As an organization, we have not
previously completed any registrational clinical trials. In order
to do so, we will need to build and expand our clinical development
and regulatory capabilities, and we may be unable to recruit and
train qualified personnel. We also expect to continue to rely on
third parties to conduct our clinical trials. If these third
parties do not successfully carry out their contractual duties,
meet expected deadlines or comply with regulatory requirements, we
may not be able to obtain regulatory approval of or commercialize
any potential product candidates. Consequently, we may be unable to
successfully and efficiently execute and complete necessary
clinical trials in a way that leads to submission and approval of
our drug products. We may require more time and incur greater costs
than our competitors and may not succeed in obtaining regulatory
approval of any drug products that we develop. Failure to commence
or complete, or delays in, our planned clinical trials, could
prevent us from or delay us in commercializing our drug
products.
If we encounter difficulties enrolling patients in any of our
clinical trials, our clinical development activities could be
delayed or otherwise adversely affected.
The timely completion of clinical trials in accordance with their
protocols depends, among other things, on our ability to enroll a
sufficient number of patients who remain in the trial until its
conclusion. We may experience difficulties in patient enrollment in
our clinical trials for a variety of reasons,
including:
●
the
patient eligibility and exclusion criteria defined in the
protocol;
●
the
size of the patient population required for analysis of the
clinical trial’s primary endpoints;
●
the
proximity of patients to clinical trial sites;
●
the
design of the clinical trial;
●
our
ability to recruit clinical trial investigators with the
appropriate competencies and experience, and the ability of these
investigators to identify and enroll suitable
patients;
●
perception
of the safety profile of our drug products;
●
our
ability to obtain and maintain patient consents; and
●
the
risk that patients enrolled in clinical trials will drop out of the
trials before completion.
Delays
in patient enrollment may result in increased costs or may affect
the timing or outcome of our clinical trials, which could prevent
completion of these trials and adversely affect our ability to
advance the development of our product candidates.
Clinical development involves a lengthy and expensive process, with
an uncertain outcome. We may incur additional costs or experience
delays in completing, or ultimately be unable to complete, the
development and commercialization of our product
candidates.
To
obtain the requisite regulatory approvals to commercialize any drug
products, we must demonstrate through extensive preclinical studies
and clinical trials that such drug product is safe and effective in
humans. Clinical testing is expensive and can take many years to
complete, and its outcome is inherently uncertain. We may be unable
to establish clinical endpoints that applicable regulatory
authorities would consider clinically meaningful, and a clinical
trial can fail at any stage of testing.
Differences
in trial design between early-stage clinical trials and later-stage
clinical trials make it difficult to extrapolate the results of
earlier clinical trials to later clinical trials. Moreover,
clinical data are often susceptible to varying interpretations and
analyses, and many companies that have believed their product
candidates performed satisfactorily in clinical trials have
nonetheless failed to obtain marketing approval of their products.
Additionally, we are conducting and plan to conduct some open-label
trials, where both the patient and investigator know whether the
patient is receiving the investigational product candidate or
either an existing approved drug or placebo. Most typically,
open-label clinical trials test only the investigational product
candidate and sometimes may do so at different dose levels.
Open-label clinical trials are subject to various limitations that
may exaggerate any therapeutic effect as patients in those trials
are aware when they are receiving treatment. Open-label clinical
trials may be subject to a “patient bias” where
patients perceive their symptoms to have improved merely due to
their awareness of receiving an experimental treatment. In
addition, open-label clinical trials may be subject to an
“investigator bias” where those assessing and reviewing
the outcomes of the clinical trials are aware of which patients
have received treatment and may interpret the information of the
treated group more favorably given this knowledge. Where a
randomized, placebo-controlled clinical trial is designed to allow
enrolled subjects to cross-over to the treatment arm, there may be
a risk of inadvertent unblinding of subjects prior to cross-over,
which may limit the clinical meaningfulness of those data and may
require the conduct of additional clinical trials. As such, the
results from an open-label trial may not be predictive of future
clinical trial results with any of our product candidates for which
we include an open-label clinical trial when studied in a
controlled environment with a placebo or active
control.
Successful
completion of clinical trials is a prerequisite to submitting a new
drug application, or NDA, to the FDA and similar marketing
applications to comparable foreign regulatory authorities for each
drug product and, consequently, the ultimate approval and
commercial marketing of any drug products. We may experience delays
in initiating or completing clinical trials and preparing for
regulatory submissions. We also may experience numerous unforeseen
events during, or as a result of, any future clinical trials that
we could conduct that could delay or prevent our ability to receive
marketing approval or commercialize our current product candidates
or any future product candidates. Our costs will increase if we
experience delays in clinical testing or marketing approvals. We do
not know whether any of our clinical trials will begin as planned,
will need to be reassigned or will be completed on schedule, or at
all. Significant clinical trial delays also could shorten any
periods during which we may have the exclusive right to
commercialize our product candidates and may allow our competitors
to bring products to market before we do, potentially impairing our
ability to successfully commercialize our product candidates and
harming our business and results of operations. Any delays in our
clinical development programs may harm our business, financial
condition and results of operations significantly.
The successful development of biopharmaceuticals is highly
uncertain.
Successful
development of biopharmaceuticals is highly uncertain and is
dependent on numerous factors, many of which are beyond our
control. Product candidates that appear promising in the early
phases of development may fail to reach the market for several
reasons including, among other things, that clinical trial results
may show the product candidates to be less effective than expected
or to have unacceptable side effects or toxicities; we may fail to
receive the necessary regulatory approvals or there may be a delay
in receiving such approvals; or the proprietary rights of others
and their competing products and technologies that may prevent our
product candidates from being commercialized.
The
length of time necessary to complete clinical trials and to submit
an application for marketing approval for a final decision by a
regulatory authority varies significantly from one drug product to
the next and from one country to the next, and may be difficult to
predict. Even if we are successful in obtaining marketing approval,
commercial success of any approved products will also depend in
large part on the availability of coverage and adequate
reimbursement from third-party payors, including government payors
such as the Medicare and Medicaid programs and managed care
organizations in the U.S. or country specific governmental
organizations in foreign countries, which may be affected by
existing and future healthcare reform measures designed to reduce
the cost of healthcare. Third-party payors could require us to
conduct additional studies, including post-marketing studies
related to the cost effectiveness of a product, to qualify for
reimbursement, which could be costly and divert our resources. If
government and other healthcare payors were not to provide coverage
and adequate reimbursement for our products once approved, market
acceptance and commercial success would be reduced.
In
addition, if any of our drug products receive marketing approval,
we will be subject to significant post-approval regulatory
obligations. In addition, there is always the risk that we, a
regulatory authority or a third party might identify previously
unknown problems with a product post-approval, such as adverse
events of unanticipated severity or frequency. Compliance with
these requirements is costly, and any failure to comply or other
issues with our drug products post-approval could adversely affect
our business, financial condition and results of
operations.
We face significant competition from other biopharmaceutical
companies, and our operating results will suffer if we fail to
compete effectively.
The
biopharmaceutical industry is characterized by intense competition
and rapid innovation. Our competitors may be able to develop other
compounds or drugs that are able to achieve similar or better
results. Our potential competitors include major multinational
pharmaceutical companies, established biotechnology companies,
specialty pharmaceutical companies and universities and other
research institutions. Many of our competitors have substantially
greater financial, technical and other resources, such as larger
research and development staff and experienced marketing and
manufacturing organizations and well-established sales forces.
Smaller or early-stage companies may also prove to be significant
competitors, particularly as they develop novel approaches to
treating disease indications that our product candidates are also
focused on treating. Established pharmaceutical companies may also
invest heavily to accelerate discovery and development of novel
therapeutics or to in-license novel therapeutics that could make
the product candidates that we develop obsolete. Mergers and
acquisitions in the biotechnology and pharmaceutical industries may
result in even more resources being concentrated in our
competitors. Competition may increase further as a result of
advances in the commercial applicability of technologies and
greater availability of capital for investment in these industries.
Our competitors, either alone or with collaboration partners, may
succeed in developing, acquiring or licensing on an exclusive basis
drug or biologic products that are more effective, safer, more
easily commercialized or less costly than our product candidates or
may develop proprietary technologies or secure patent protection
that we may need for the development of our technologies and
products. We believe the key competitive factors that will affect
the development and commercial success of our product candidates
are efficacy, safety, tolerability, reliability, convenience of
use, price and reimbursement.
Even
if we obtain regulatory approval of drug products, the availability
and price of our competitors’ products could limit the demand
and the price we are able to charge for our product candidates. We
may not be able to implement our business plan if the acceptance of
our product candidates is inhibited by price competition or the
reluctance of physicians to switch from existing methods of
treatment to our product candidates, or if physicians switch to
other new drug or biologic products or choose to reserve our
product candidates for use in limited circumstances.
Even if any drug product we develop receives marketing approval, it
may fail to achieve the degree of market acceptance by physicians,
patients, third-party payors and others in the medical community
necessary for commercial success.
If
any future drug product we develop receives marketing approval,
whether as a single agent or in combination with other therapies,
it may nonetheless fail to gain sufficient market acceptance by
physicians, patients, third-party payors and others in the medical
community. If the product candidates we develop do not achieve an
adequate level of acceptance, we may not generate significant
product revenues and we may not become profitable. The degree of
market acceptance of any product candidate, if approved for
commercial sale, will depend on a number of factors,
including:
●
efficacy
and potential advantages compared to other treatments;
●
the
ability to offer our products, if approved, for sale at competitive
prices;
●
convenience
and ease of administration compared to other
treatments;
●
the
willingness of the target patient population to try new therapies
and of physicians to prescribe these therapies;
●
the
strength of marketing and distribution support;
●
the
ability to obtain sufficient third-party coverage, market access
and adequate reimbursement; and
●
the
prevalence and severity of any side effects.
Risks Related to Our Reliance on Third Parties
We will rely on third parties to conduct certain aspects of our
preclinical studies and clinical trials. If these third parties do
not successfully carry out their contractual duties, meet expected
deadlines or comply with regulatory requirements, we may not be
able to obtain regulatory approval for, or commercialize, any
potential product candidates.
We
will depend upon third parties to conduct certain aspects of our
preclinical studies and depend on third parties, including
independent investigators, to conduct our clinical trials, under
agreements with universities, medical institutions, contract
research organizations, or CROs, strategic partners and others. We
expect to negotiate budgets and contracts with such third parties,
which may result in delays to our development timelines and
increased costs.
We
continue to build our infrastructure and hire personnel necessary
to execute our operational plans. We will rely especially heavily
on third parties over the course of our clinical trials, and, as a
result, may have limited control over the clinical investigators
and limited visibility into their day-to-day activities, including
with respect to their compliance with the approved clinical
protocol. Nevertheless, we are responsible for ensuring that each
of our clinical trials is conducted in accordance with the
applicable protocol, legal and regulatory requirements and
scientific standards, and our reliance on third parties does not
relieve us of our regulatory responsibilities. We and these third
parties are required to comply with GCP requirements, which are
regulations and guidelines enforced by the FDA and comparable
foreign regulatory authorities for product candidates in clinical
development. Regulatory authorities enforce these GCP requirements
through periodic inspections of clinical trial sponsors, clinical
investigators and clinical trial sites. If we or any of these third
parties fail to comply with applicable GCP requirements, the
clinical data generated in our clinical trials may be deemed
unreliable and the FDA or comparable foreign regulatory authorities
may require us to suspend or terminate these trials or perform
additional preclinical studies or clinical trials before approving
our marketing applications. We cannot be certain that, upon
inspection, such regulatory authorities will determine that any of
our clinical trials comply with GCP requirements. In addition, our
clinical trials must be conducted with product produced under cGMP
requirements and may require a large number of
patients.
Our
failure or any failure by these third parties to comply with these
regulations may require us to repeat clinical trials, which would
delay the regulatory approval process. Moreover, our business may
be adversely affected if any of these third parties violates
federal or state fraud and abuse or false claims laws and
regulations or healthcare privacy and security laws.
Any
third parties conducting aspects of our preclinical studies or our
clinical trials will not be our employees and, except for remedies
that may be available to us under our agreements with such third
parties, we cannot control whether or not they devote sufficient
time and resources to our preclinical studies and clinical
programs. These third parties may also have relationships with
other commercial entities, including our competitors, for whom they
may also be conducting clinical trials or other product development
activities, which could affect their performance on our behalf. If
these third parties do not successfully carry out their contractual
duties or obligations or meet expected deadlines, if they need to
be replaced or if the quality or accuracy of the preclinical or
clinical data they obtain is compromised due to the failure to
adhere to our protocols or regulatory requirements or for other
reasons, our development timelines, including clinical development
timelines, may be extended, delayed or terminated and we may not be
able to complete development of, obtain regulatory approval of or
successfully commercialize our product candidates. As a result, our
financial results and the commercial prospects for our product
candidates would be harmed, our costs could increase and our
ability to generate revenue could be delayed or precluded
entirely.
Our reliance on third parties to formulate and manufacture our drug
product will expose us to a number of risks that may delay the
development, regulatory approval and commercialization of our drug
product or result in higher product costs.
We
have no direct experience in drug formulation or manufacturing and
do not intend to establish our own manufacturing facilities. We
lack the resources and expertise to formulate or manufacture our
own product candidates. Instead, we will contract with one or more
manufacturers to manufacture, supply, store and distribute drug
supplies for our clinical trials. If our drug product receives FDA
approval, we will rely on one or more third-party contractors to
manufacture our drugs. Our anticipated future reliance on a limited
number of third-party manufacturers exposes us to risks that, among
other things, we may be unable to identify manufacturers on
acceptable terms or at all because the number of potential
manufacturers is limited and the FDA must approve any replacement
contractor; our third-party manufacturers might be unable to
formulate and manufacture our drugs in the volume and of the
quality required to meet our clinical and/or commercial needs, if
any; our future contract manufacturers may not perform as agreed or
may not remain in the contract manufacturing business for the time
required to supply our clinical trials or to successfully produce,
store and distribute our products; and our contract manufacturers
may fail to comply with good manufacturing practice and other
government regulations and corresponding foreign standards. Each of
these risks could delay our clinical trials, the approval, if any,
of our product candidates by the FDA, or the commercialization of
our product candidates or result in higher costs or deprive us of
potential product revenues.
Risks Related to Intellectual Property
We depend on intellectual property licensed from third parties,
including from Pfizer for our lead product candidate, and
termination of this license could result in the loss of significant
rights, which would harm our business.
We
are dependent on patents, know-how and proprietary technology, both
our own and licensed from others. All patents covering gedatolisib
and any combination therapies using our product candidates are
licensed from third parties. Any termination of a product license
could result in the loss of significant rights and would cause
material adverse harm to our ability to commercialize our product
candidates.
Disputes
may also arise between us and our licensors regarding intellectual
property subject to a license agreement, including:
●
the
scope of rights granted under the license agreement and other
interpretation-related issues;
●
whether
and the extent to which our technology and processes infringe on
intellectual property of the licensor that is not subject to the
licensing agreement;
●
our
right to sublicense patent and other rights to third parties under
collaborative development relationships;
●
our
diligence obligations with respect to the use of licensed
technology in relation to our development and commercialization of
our product candidates and what activities satisfy those diligence
obligations; and
●
the
ownership of inventions and know-how resulting from the joint
creation or use of intellectual property by our licensors and us
and our partners.
If
disputes over intellectual property that we have licensed prevent
or impair our ability to maintain our current licensing
arrangements on acceptable terms, we may be unable to successfully
develop and commercialize the affected product
candidates.
We
are generally also subject to all of the same risks with respect to
protection of intellectual property that we own, as we are for
intellectual property that we license. If we or our licensors fail
to adequately protect this intellectual property, our ability to
commercialize products could materially suffer.
If we fail to comply with our obligations under our patent license
with Pfizer, we could lose license rights that are important to our
business.
We
are a party to a license agreement with Pfizer pursuant to which we
in-license key patents for our gedatolisib. This license imposes
various diligence, milestone payment, royalty, insurance and other
obligations on us. If we fail to comply with these obligations,
Pfizer may have the right to terminate the license, in which event
we would not be able to develop or market the products covered by
such licensed intellectual property. We may have limited control
over the maintenance and prosecution of these in-licensed rights,
activities or any other intellectual property that may be related
to our in-licensed intellectual property. For example, we cannot be
certain that such activities by these licensors have been or will
be conducted in compliance with applicable laws and regulations or
will result in valid and enforceable patents and other intellectual
property rights. We have limited control over the manner in which
our licensors initiate an infringement proceeding against a
third-party infringer of the intellectual property rights, or
defend certain of the intellectual property that is licensed to us.
It is possible that the licensors’ infringement proceeding or
defense activities may be less vigorous than had we conducted them
ourselves.
We may not be successful in obtaining or maintaining necessary
rights to develop any future product candidates on acceptable
terms.
Because
our programs may involve additional product candidates that may
require the use of proprietary rights held by third parties, the
growth of our business may depend in part on our ability to
acquire, in-license or use these proprietary rights. We may be
unable to acquire or in-license any compositions, methods of use,
processes or other third-party intellectual property rights from
third parties that we identify as necessary or important to our
business operations. We may fail to obtain any of these licenses at
a reasonable cost or on reasonable terms, if at all, which could
harm our business. We may need to cease use of the compositions or
methods covered by such third-party intellectual property rights,
and may need to seek to develop alternative approaches that do not
infringe on such intellectual property rights which may entail
additional costs and development delays, even if we were able to
develop such alternatives, which may not be feasible. Even if we
are able to obtain a license, it may be non-exclusive, thereby
giving our competitors access to the same technologies licensed to
us. In that event, we may be required to expend significant time
and resources to develop or license replacement
technology.
The
licensing and acquisition of third-party intellectual property
rights is a competitive area, and companies, which may be more
established, or have greater resources than we do, may also be
pursuing strategies to license or acquire third-party intellectual
property rights that we may consider necessary or attractive in
order to commercialize our product candidates. More established
companies may have a competitive advantage over us due to their
size, cash resources and greater clinical development and
commercialization capabilities. There can be no assurance that we
will be able to successfully complete such negotiations and
ultimately acquire the rights to the intellectual property
surrounding the additional product candidates that we may seek to
acquire.
Risks Related to Government Regulation
We may not obtain the necessary regulatory approvals to
commercialize our product candidate.
We will need FDA approval to commercialize our
product candidate in the U.S. In order to obtain FDA approval, we
must submit to the FDA a new drug application, or NDA,
demonstrating that the drug product is safe for humans and
effective for its intended use. This demonstration requires
significant research and animal tests, which are referred to as
pre-clinical studies, as well as human tests, which are referred to
as clinical trials. Satisfaction of the FDA’s regulatory
requirements typically takes many years, depends upon the type,
complexity and novelty of the drug product and requires substantial
resources for research, development and testing. We cannot predict
whether our research and clinical approaches will result in a drug
that the FDA considers safe for humans and effective for indicated
uses. The FDA has substantial discretion in the drug approval
process and may require us to conduct additional pre-clinical and
clinical testing or to perform post-marketing studies. The approval
process may also be delayed by changes in government regulation,
future legislation or administrative action or changes in FDA
policy that occur prior to or during our regulatory review. Delays
in obtaining regulatory approvals may delay
commercialization of, and our ability to derive product revenues
from, our drug product; impose costly procedures on us; or diminish
any competitive advantages that we may otherwise enjoy. Even if we comply with all FDA requests, the FDA
may ultimately reject our NDA. We cannot be sure that we will ever
obtain regulatory clearance for our drug product. Failure to obtain
FDA approval of our drug product will severely undermine our
business by reducing our number of salable products and, therefore,
corresponding product revenues.
The FDA or comparable foreign regulatory authorities may disagree
with our regulatory plan for our product candidates.
The
general approach for FDA approval of a new drug is dispositive data
from one or more well-controlled Phase 3 clinical trials of the
product candidate in the relevant patient population. Phase 3
clinical trials typically involve a large number of patients, have
significant costs and take years to complete.
Our
clinical trial results may not support approval of our product
candidates. In addition, our product candidates could fail to
receive regulatory approval, or regulatory approval could be
delayed, for many reasons, including the following:
●
the
FDA or comparable foreign regulatory authorities may disagree with
the dosing regimen, design or implementation of our clinical
trials;
●
we
may be unable to demonstrate to the satisfaction of the FDA or
comparable foreign regulatory authorities that our product
candidates are safe and effective for any of their proposed
indications;
●
we
may encounter safety or efficacy problems caused by the COVID-19
pandemic;
●
the
results of clinical trials may not meet the level of statistical
significance required by the FDA or comparable foreign regulatory
authorities for approval;
●
we
may be unable to demonstrate that our product candidates’
clinical and other benefits outweigh their safety
risks;
●
the
FDA or comparable foreign regulatory authorities may disagree with
our interpretation of data from preclinical studies or clinical
trials;
●
the
data collected from clinical trials of our product candidates may
not be sufficient to the satisfaction of the FDA or comparable
foreign regulatory authorities to support the submission of an NDA
or other comparable submission in foreign jurisdictions or to
obtain regulatory approval in the U.S. or elsewhere;
●
the
FDA or comparable foreign regulatory authorities may fail to
approve the manufacturing processes or facilities of third-party
manufacturers with which we contract for clinical and commercial
supplies; and
●
the
approval policies or regulations of the FDA or comparable foreign
regulatory authorities may significantly change in a manner
rendering our clinical data insufficient for approval.
Breakthrough Therapy Designation or Fast Track Designation from the
FDA may not actually lead to a faster development or regulatory
review or approval process.
We
may seek Breakthrough Therapy Designation or Fast Track Designation
for our product candidates. If a product is intended for the
treatment of a serious or life-threatening condition and the
product demonstrates the potential to address unmet medical needs
for this condition, the product sponsor may apply for Fast Track
Designation. The FDA has broad discretion whether or not to grant
this designation, so even if we believe one of our product
candidates is eligible for this designation, we cannot assure you
that the FDA would decide to grant it. Even if we do receive Fast
Track Designation, we may not experience a faster development
process, review or approval compared to conventional FDA
procedures. The FDA may withdraw Fast Track Designation if it
believes that the designation is no longer supported by data from
our clinical development program.
A
breakthrough therapy is defined as a product that is intended,
alone or in combination with one or more other products, to treat a
serious or life-threatening disease or condition, and preliminary
clinical evidence indicates that the product may demonstrate
substantial improvement over existing therapies on one or more
clinically significant endpoints, such as substantial treatment
effects observed early in clinical development. For products that
have been designated as breakthrough therapies, interaction and
communication between the FDA and the sponsor of the trial can help
to identify the most efficient path for clinical development while
minimizing the number of patients placed in ineffective control
regimens.
Designation
as a breakthrough therapy is within the discretion of the FDA.
Accordingly, even if we believe one of our product candidates meets
the criteria for designation as a breakthrough therapy, the FDA may
disagree and instead determine not to make such designation. In any
event, the receipt of a Breakthrough Therapy Designation may not
result in a faster development process, review or approval compared
to products considered for approval under conventional FDA
procedures and does not assure ultimate approval by the FDA. In
addition, even if a product candidate qualifies as a breakthrough
therapy, the FDA may later decide that the product no longer meets
the conditions for qualification and rescind the Breakthrough
Therapy Designation.
Obtaining and maintaining regulatory approval of our product
candidates in one jurisdiction does not mean that we will be
successful in obtaining regulatory approval of our product
candidates in other jurisdictions.
Obtaining and
maintaining regulatory approval of our product candidates in one
jurisdiction does not guarantee that we will be able to obtain or
maintain regulatory approval in any other jurisdiction, while a
failure or delay in obtaining regulatory approval in one
jurisdiction may have a negative effect on the regulatory approval
process in others. For example, even if the FDA grants marketing
approval of a product candidate, a comparable foreign regulatory
authority must also approve the manufacturing, marketing and
promotion of the product candidate in those countries.
Approval procedures
vary among jurisdictions and can involve requirements and
administrative review periods different from, and greater than,
those in the U.S., including additional preclinical studies or
clinical trials, as clinical trials conducted in one jurisdiction
may not be accepted by regulatory authorities in other
jurisdictions. In many jurisdictions outside the U.S., a product
candidate must be approved for reimbursement before it can be
approved for sale in that jurisdiction. In some cases, the price
that we intend to charge for our products is also subject to
approval.
We may
also submit marketing applications in other countries. Regulatory
authorities in jurisdictions outside of the U.S. have requirements
for approval of product candidates with which we must comply prior
to marketing in those jurisdictions. Obtaining foreign regulatory
approvals and compliance with foreign regulatory requirements could
result in significant delays, difficulties and costs for us and
could delay or prevent the introduction of our products in certain
countries. If we fail to comply with the regulatory requirements in
international markets and/or receive applicable marketing
approvals, our target market will be reduced and our ability to
realize the full market potential of our product candidates will be
harmed.
Even if we receive regulatory approval of any product candidates,
we will be subject to ongoing regulatory obligations and continued
regulatory review, which may result in significant additional
expense and we may be subject to penalties if we fail to comply
with regulatory requirements or experience unanticipated problems
with our product candidates.
If any
of our product candidates are approved, they will be subject to
ongoing regulatory requirements for manufacturing, labeling,
packaging, storage, advertising, promotion, sampling,
record-keeping, conduct of post-marketing studies and submission of
safety, efficacy and other post-marketing information, including
both federal and state requirements in the U.S. and requirements of
comparable foreign regulatory authorities. In addition, we will be
subject to continued compliance with requirements for any clinical
trials that we conduct post-approval.
Manufacturers and
manufacturers’ facilities are required to comply with
extensive FDA and comparable foreign regulatory authority
requirements. Accordingly, we and others with whom we work must
continue to expend time, money and effort in all areas of
regulatory compliance, including manufacturing, production and
quality control.
Any
regulatory approvals that we receive for our product candidates may
be subject to limitations on the approved indicated uses for which
the product may be marketed or to the conditions of approval, or
contain requirements for potentially costly post-marketing testing,
including Phase 4 clinical trials and surveillance to monitor the
safety and efficacy of the product candidate. Certain endpoint data
we hope to include in any approved product labeling also may not
make it into such labeling, including exploratory or secondary
endpoint data such as patient-reported outcome measures. The FDA
may impose consent decrees or withdraw approval if compliance with
regulatory requirements and standards is not maintained or if
problems occur after the product reaches the market. Later
discovery of previously unknown problems with our product
candidates, including adverse events of unanticipated severity or
frequency, or with our third-party manufacturers or manufacturing
processes, or failure to comply with regulatory requirements, may
result in revisions to the approved labeling to add new safety
information, imposition of post-marketing studies or clinical
trials to assess new safety risks or imposition of distribution
restrictions or other restrictions under a REMS program. Other
potential consequences include, among other things:
●
restrictions on the
marketing or manufacturing of our products, withdrawal of the
product from the market or voluntary or mandatory product
recalls;
●
fines, warning
letters or holds on clinical trials;
●
refusal by the FDA
to approve pending applications or supplements to approved
applications filed by us or suspension or revocation of license
approvals;
●
product seizure or
detention or refusal to permit the import or export of our product
candidates; and
●
injunctions or the
imposition of civil or criminal penalties.
The FDA
strictly regulates marketing, labeling, advertising and promotion
of products that are placed on the market. Products may be promoted
only for the approved indications and in accordance with the
provisions of the approved label. The policies of the FDA and
comparable foreign regulatory authorities may change and additional
government regulations may be enacted that could prevent, limit or
delay regulatory approval of our product candidates. We cannot
predict the likelihood, nature or extent of government regulation
that may arise from future legislation or administrative action,
either in the U.S. or abroad. If we are slow or unable to adapt to
changes in existing requirements or the adoption of new
requirements or policies, or if we are not able to maintain
regulatory compliance, we may lose any marketing approval that we
may have obtained and we may not achieve or sustain
profitability.
