Business
Overview
We are a development-stage biotechnology company
focused on advancing and eventually commercializing our proprietary immunomodulator platform technology. Our lead immunomodulator product
candidate, MIE-101, is based on a naturally occurring plant virus known as Cowpea mosaic virus (or CPMV) which is believed to be non-infectious
in animals including mice, dogs and humans. However, because of its virus structure and genetic composition, CPMV elicits a strong immune
response when delivered directly into tumors as shown in our preclinical studies. Data from numerous mouse cancer models and in companion
dogs with naturally occurring tumors show the ability of intratumoral (“IT”) administration of CPMV to result in anti-tumor
effects in treated tumors and systemically at other sites of disease through immune activation.
A growing body of published peer-reviewed data
further support that the CPMV anti-tumor effects are mediated through several innate immune system pattern recognition receptors (“PRRs”)
that are conserved across species and have evolved to recognize foreign pathogens such as viruses and other infectious agents. PRRs that
recognize viruses include a series of Toll-Like Receptors (“TLRs”) including TLRs 2/4/7, Retinoic acid-inducible genes (“RIG-1”),
Nucleotide oligomerization domain (NOD)-like receptors (“NLRs”), and C-type lectin receptors
(“CLRs”). Once the innate immune system is activated by MIE-101, immune cells capable of killing the tumor are recruited and
directed to the tumor resulting in an anti-cancer immune response which is enhanced because CPMV can activate through multiple PRR pathways
resulting in an amplification of immune activation. The Company believes that the data generated to date support advancing the development
of MIE-101 into additional studies in companion animals as well as human clinical trials.
Development Programs
Our lead immuno-oncology candidate, MIE-101, resulted
from years of research by our scientific co-founders that was supported by numerous grants from federal and private funding agencies.
Published preclinical data from our co-founders’ studies and ongoing research support the potential anti-cancer activity of MIE-101
as a monotherapy. In addition, preclinical data generated further support the potential of MIE-101 to improve anti-tumor effects of standard
cancer treatments including chemotherapy, radiation therapy and checkpoint inhibitors. These studies include data from multiple preclinical
tumor models, veterinary studies in companion animals with naturally occurring cancer, as well as showing the potential to activate human
immune effector cells in vitro. MIE-101 is currently in late-stage preclinical development and our goal is to advance MIE-101 into
veterinary studies in 2022 and into Phase I clinical trials in 2023, provided we are able to raise sufficient funding.
The Company’s immunomodulator platform
technology has also been used to produce modular vaccines under our Modular Vaccine Platform (“MVP”) that may help
prevent or treat diseases in studies that were supported by funding agencies. This vaccine system uses the immunomodulator
technology platform as an adjuvant by linking non-infectious virus particles directly to epitopes that correspond to disease targets
of interest. In preclinical studies, vaccination with MVP candidates have been able to protect animals from both cancer and
infectious diseases including published results demonstrating significant promise against SARS-CoV-2. We believe our MVP
platform represents a way to efficiently develop vaccine candidates in response to emerging infectious diseases. The adjuvant and
linker chemistry can be stockpiled and ready for the rapid identification of targets of interest which can be evaluated via
preclinical testing in a relatively short period time. These vaccines may also have a superior cold-chain profile that would
potentially allow distribution to vaccination centers without refrigeration or freezing. The MVP platform combined with our
proprietary trans-dermal delivery system could potentially allow for self-administration and shipment of materials at room
temperature, which makes the platform ideal for rapid response situations.
Technology Overview
MIE-101 is a nanoparticle-based treatment candidate
derived from CPMV. The product is injected directly into a tumor and can act as an in situ vaccine using markers of the injected
tumor as the target which results in the activation of a robust immune response against the primary tumor and to prime systemic anti-tumor
immunity, while reversing immunosuppressive signals in the tumor microenvironment (“TME”). Although plant viruses and their
nanoparticle formulations, such as MIE-101, are believed to be non-infectious toward mammals, their repetitive proteinaceous nature renders
them highly visible to the immune system. The structure of MIE-101 includes repetitive, multivalent coat protein assemblies known as pathogen-associated
molecular patterns (“PAMP”) that have been shown to activate the innate immune system through PRR binding on innate immune
cells. MIE-101 is recognized by multiple PRR pathways, thus priming the innate immune system with high potency. Activation of innate immune
cells within the TME leads to secretion of key cytokines involved in immunity mediated by T helper cells termed Th1 cells. Activated M1-type
macrophages and N1-type neutrophils, as well as natural killer cells lead to tumor cell killing and subsequent antigen processing leading
to adaptive anti-tumor immunity. Preclinical data show that MIE-101 treatment can lead to long-lasting immune memory, thus protecting
from recurrence of the disease. Efficacy of MIE-101 has been demonstrated in mouse models of ovarian cancer, breast cancer, colon cancer,
and melanoma. Published data from studies in companion dogs with melanoma, sarcoma, and breast cancer indicate that the potent anti-tumor
efficacy of MIE-101 can be replicated in naturally occurring cancer in canines.
Business Strategy
Our strategy is to leverage our considerable industry
experience, understanding of immunotherapies, and development expertise to identify, develop and commercialize product candidates with
significant market potential that can fulfill unmet medical needs in the treatment of cancer. We have assembled a management team along
with both scientific and business advisors, including recognized experts in the field of immunotherapy, with significant industry and
regulatory experience to lead and execute the development and commercialization of MIE-101 as our lead program.
Our initial plans are to file an investigational
new drug (“IND”) application in 2023 to evaluate the safety, tolerability, and early activity of for MIE-101 as an IT injection
in patients with accessible tumors, such as breast cancer, melanoma carcinoma, Merkel cell carcinoma, head and neck squamous cell carcinoma
(“HNSCC”), sarcoma and squamous cell carcinoma with inadequate response to PD-1/PD-L1 inhibitors. The IND enabling studies,
including the preclinical efficacy data already generated, as well as the GLP toxicology studies to be conducted, and a summary of the
Phase I clinical trial plan, will be among the components of this key regulatory submission.
The regulatory pathway required to support an
NDA submission will consist of conducting a full clinical development program which will take several years. We will continue to prioritize
our product development activities after taking into account the financial resources we have available, market dynamics and the potential
for adding value.
Our Corporate History and Background
Private Mosaic, a Delaware corporation, was formed
on March 30, 2020. On July 1, 2020, we signed a Material Transfer, Evaluation, and Exclusive Option Agreement (“License Option Agreement”)
with Case Western Reserve University (“CWRU”), granting us the exclusive right to license technology for a novel platform
technology using an immunomodulator platform technology to treat and prevent cancer and infectious diseases in humans and for veterinary
use. On August 21, 2020, we closed a Reverse Merger transaction (as discussed below) by and between Patriot Scientific Corporation (now
known as Mosaic ImmunoEngineering, Inc.) and Private Mosaic. On November 30, 2020, we filed amended and restated articles of incorporation
with the Secretary of State of the State of Delaware (“Amended and Restated Certificate”) to change the name of the Company
to Mosaic ImmunoEngineering, Inc. (“Name Change”), to implement a 1-for-500 reverse stock split (“Reverse Stock Split”),
and to reduce the number of authorized shares of common stock from 600 million to 100 million. The Reverse Stock Split was effective on
December 2, 2020. All share numbers and preferred stock conversion numbers included herein have been retroactively adjusted to reflect
the 1-for-500 Reverse Stock Split. On December 30, 2020, we changed our fiscal year end from May 31 to December 31. On May 7, 2021, we
issued unsecured convertible promissory notes in the aggregate principal amount of $575,000.
In addition, we plan to file an application with
The Nasdaq Stock Market requesting that our common stock and potentially warrants (if applicable), be listed on the Nasdaq Capital Market
in 2022. On June 10, 2021 and June 14, 2021, our Board of Directors and majority shareholders, respectively, approved a Discretionary
Reverse Stock Split whereby our Board of Directors have broad authority to implement a future reverse stock split through June 25, 2022
at a ratio ranging from 1-for-2 to 1-for-4 or any number in between in order to potentially achieve compliance with the initial listing
requirements of the Nasdaq Stock Market, if necessary.
The following discussion represents additional
information pertaining to these key corporate events:
Reverse Merger
On August 19, 2020, Patriot Scientific Corporation
(now known as Mosaic ImmunoEngineering, Inc.) and Private Mosaic entered into a stock purchase agreement (“Stock Purchase Agreement”),
whereby one of the wholly owned subsidiaries of Patriot Scientific Corporation merged with and into Private Mosaic, with Private Mosaic
surviving as wholly owned subsidiary of Patriot Scientific Corporation (the “Reverse Merger”). The transaction closed on August
21, 2020 (“Closing Date”) in accordance with the terms of the Stock Purchase Agreement.
On the Closing Date, Patriot Scientific Corporation
acquired 100% of the issued and outstanding common stock of Private Mosaic, representing 630,000 shares of its Class A common stock (“Class
A Stock”) and 70,000 shares of its Class B common stock (“Class B Stock”) (collectively referred to as “Target
Common Stock”). In exchange for the Target Common Stock, the holders of the Class A Stock received 630,000 shares of the Company’s
Series A Convertible Voting Preferred Stock (“Series A Preferred”) and holders of the Class B Stock received 70,000 shares
of the Company’s Series B Convertible Voting Preferred Stock (“Series B Preferred”). Each share of Series A Preferred
converted into 10.194106 shares of common stock as defined in the Series A Certificate of Designation. Each share of Series B Preferred
converts into 11.46837 shares of common stock of the Company, possesses full voting rights, on an as-converted basis, as the common stock
of the Company and contains certain anti-dilution rights, as defined in the Series B Certificate of Designation. On a fully diluted, as
converted basis, the holders of Series A Preferred and Series B Preferred, in aggregate, owned 90% of the issued and outstanding common
stock of the Company as of the Closing Date.
The Reverse Merger was treated by the Company
as a reverse merger in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”).
For accounting purposes, Private Mosaic was considered to have acquired PTSC as the accounting acquirer because: (i) Private Mosaic
stockholders owned 90% of the combined company, on an as-converted basis, immediately following the Closing Date, (ii) Private Mosaic
directors held a majority of board seats in the combined company and (iii) Private Mosaic management held all key positions in the
management of the combined company. Accordingly, Private Mosaic’s historical results of operations replaced PTSC’s historical
results of operations for all periods prior to the Closing Date of the Reverse Merger and, for all periods following the Closing Date
of the Reverse Merger, the results of operations of the combined company are included in the Company’s financial statements.
Name Change
On November 30, 2020, Patriot Scientific Corporation
changed its name to Mosaic ImmunoEngineering, Inc. to align the Company’s corporate name with its new strategic direction, upon
filing its Amended and Restated Certificate.
Reverse Stock Split
On October 21, 2020 and October 22, 2020, our
Board of Directors and majority shareholders, respectively, approved the Reverse Stock Split of one (1) share of our common stock for
every 500 shares of our common stock (“1-for-500”). On November 30, 2020, we filed the Amended and Restated Certificate to
effect a Reverse Stock Split on December 2, 2020, whereby every 500 shares of the Company’s issued and outstanding common stock
were combined into one share of its common stock, except to the extent that the Reverse Stock Split resulted in any of the Company’s
stockholders owning a fractional share, which was rounded up to the next highest whole share. In connection with the Reverse Stock Split,
there was no change in the par value per share of $0.00001.
Change in Fiscal Year
On December 30, 2020, the Board approved a change
to our fiscal year end from May 31 to December 31. The change in fiscal year was effective for the Company’s 2020 fiscal year.
License Option Agreement
On July 1, 2020, we signed a License Option Agreement
with CWRU, granting us the exclusive right to license technology for a novel platform technology using an immunomodulator platform technology
to treat and prevent cancer and infectious diseases in humans and for veterinary use. Under the License Option Agreement, CWRU granted
us an exclusive option for a period of two (2) years to negotiate and enter into a license agreement with CWRU, provided that we meet
certain diligence milestones, including but not limited to, (i) delivering a development plan within 18 months, (ii) raising $3 million
in either equity, debt, or grant funding, or a combination thereof within 18 months, (iii), generating sufficient preclinical data to
support the identification of the initial field of use to support the initial planned clinical indication for the technology, (iv) determining
manufacturing processes and cGMP requirements to manufacture the initial product for use in toxicology studies, and (v) identifying required
toxicology studies required to support Phase I clinical trials in the initial field of use. We are currently in negotiations on the final
license agreement with CWRU and since July 2020, we have incurred in excess of $4 million towards advancing the Company and the underlying
technology and we currently believe we have met the aforementioned development milestones.
Under the License Option Agreement, we issued
CWRU 70,000 shares of Series B Preferred under the Reverse Merger, which included certain anti-dilution rights. Pursuant to the Certificate
of Designation, the Series B Preferred holder will continue to maintain ownership equal to 10% of the fully diluted shares of common stock
outstanding of the Company, including for such purposes all other convertible securities outstanding and reserved for issuance except
stock options issued and outstanding and reserved for issuance under a Board approved employee stock option plans reserving for issuance
no more than ten percent (10%) of the outstanding common stock of the Company then outstanding, until we initially raise at least $1 million
from the sale of either preferred or common stock, or a combination thereof (“Capital Threshold”). In addition, pursuant to
the License Option Agreement, net working capital acquired under the Reverse Merger of approximately $374,000 was applied against the
Capital Threshold. As of December 31, 2021, the remaining Capital Threshold was approximately $626,000.
Convertible Notes
On May 7, 2021 (“Effective Date”),
we issued unsecured convertible promissory notes (“Convertible Notes”) in the aggregate principal amount of $575,000 to five
(5) accredited investors, including three members of our Board of Directors that participated on the same terms as other accredited investors
(collectively, the “Investors”) in exchange for $525,003 in gross proceeds in addition to $49,997 in accrued payable to founder
that was converted into Convertible Notes. The Convertible Notes have no stated maturity date; bear interest at a simple rate equal to
eight percent (8.0%) per annum until converted; and automatically convert into the same equity securities issued for cash in the Qualified
Financing (as described below), or at the option of the Investors, into the same equity securities issued for cash in a Smaller Financing
(as described below). Interest on the Convertible Notes will be accreted and added to the unpaid principal balance prior to conversion.
The Convertible Notes will convert into the same
equity securities offered in the Qualified Financing or Smaller Financing (“Conversion Shares”), as described below, at a
conversion price equal to the lower of (i) the product equal to 80% times the lowest per unit purchase price of the equity securities
issued for cash in the Qualified Financing or Smaller Financing, or (ii) $2.377 (“Conversion Price”). The Conversion Price
may be reduced or increased proportionately as a result of stock splits, stock dividends, recapitalizations, reorganizations, and similar
transactions. Upon any conversion of the Convertible Notes in connection with a Qualified Financing or a Smaller Financing, as applicable,
the Convertible Notes shall convert immediately prior to the closing thereof, such that the investors paying cash in such Qualified Financing
or Smaller Financing, as applicable, are not diluted by the conversion of the Convertible Notes.
Pursuant to the Note Agreement, a Qualified Financing
represents a single transaction or series or transactions whereby the Company receives aggregate gross proceeds of at least $5 million
from the sale of equity securities following the Effective Date (excluding proceeds from the issuance of any future Convertible Notes).
A Smaller Financing represents any sale of equity securities whereby the aggregate gross proceeds are less than $5 million (excluding
proceeds from the issuance of any future Convertible Notes).
In addition, in the event of a corporate transaction
covering the sale of all or substantially all of the Company’s assets, or merger or consolidation with or into another entity, or
change in ownership of at least 50% in voting securities of the Company, the holder of the Convertible Note may elect that either: (a)
the Company pay the holder of such Convertible Note an amount equal to the sum of (i) all accrued and unpaid interest due on such Convertible
Note and (ii) one and one-half (1.5) times the outstanding principal balance of such Convertible Note; or (b) such Convertible Note will
convert into that number of conversion shares equal to the quotient obtained by dividing (i) the outstanding principal balance and unpaid
accrued interest of such Convertible Note on the date of conversion by (ii) $2.377.
Discretionary Authority to Implement a Reverse
Stock Split at a Ratio of 1:2 to 1:4 (“Discretionary Reverse Stock Split”)
We plan to file an application with The Nasdaq
Stock Market requesting that our common stock and potentially warrants (if applicable), be listed on the Nasdaq Capital Market in 2022.
On June 10, 2021 and June 14, 2021, our Board of Directors and majority shareholders, respectively, approved a Discretionary Reverse Stock
Split whereby our Board of Directors have broad authority to implement a future reverse stock split through June 25, 2022 at a ratio ranging
from 1-for-2 to 1-for-4 in order to meet the Nasdaq Stock Market initial listing requirements. The Board maintains the right to elect
not to proceed with the Discretionary Reverse Stock Split if it determines, in its sole discretion, that the Company will be able to satisfy
the initial listing requirements of the Nasdaq Stock Market without implementing the Discretionary Reverse Stock Split or if it is otherwise
no longer in the best interests of the Company. However, the effect of a Discretionary Reverse Stock Split on the market price of the
common stock cannot be predicted with any certainty, and the history of similar stock split combinations for companies in like circumstances
is varied. It is possible that the per share price of the common stock after the Discretionary Reverse Stock Split will not rise in proportion
to the reduction in the number of shares of the common stock outstanding resulting from the Discretionary Reverse Stock Split, effectively
reducing our market capitalization, and there can be no assurance that the market price per post-reverse split share will either exceed
or remain in excess of the prescribed initial listing minimum bid price for a sustained period of time. The market price of our common
stock may vary based on other factors that are unrelated to the number of shares outstanding, including the Company’s future performance.
THE DATA CONTAINED IN THIS ANNUAL REPORT ON FORM
10-K, INCLUDING BUT NOT LIMITED TO SHARE NUMBERS AND CONVERSION RATIOS, DOES NOT REFLECT THE IMPACT OF THE DISCRETIONARY REVERSE STOCK
SPLIT THAT MAY BE EFFECTUATED.
Patents and Proprietary Rights
Our License Option Agreement
Under the License Option Agreement, we have the
rights to evaluate the development of products under three patent families for an initial period of two years ending July 1, 2022. Within
the two-year period, provided we achieve certain diligence milestones, we have the right to negotiate and execute a license agreement
with CWRU. We are currently in negotiations on the final license agreement with CWRU and since July 2020, we have incurred in excess of
$4 million towards advancing the Company and the underlying technology and we currently believe we have met the development milestones.
In the event we are not able to negotiate a final license agreement, our core technology may no longer be available to us to further develop.
If we are able to secure a definitive license under the License Option Agreement, the following represents a summary of the three main
patent families that may be available to us:
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1.
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Immuno-Oncology: “Cancer Immunotherapy using Virus Particles”, with PCT Patent Application, Publication No. WO 2016/073972 and associated U.S. applications, including U.S. application Serial No. 16/851,778, and foreign patents or applications in Europe, Japan, China, Canada and Australia.
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Vaccine and Transdermal Delivery: “Melt Processed Viral Nanoparticle Constructs”, with U.S. Patent Application, Publication No. US 2019/0350871 and European Patent Application, Publication No. EP 3 535 283 (PCT, WO 2018/085658).
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Drug Delivery: “Non-Covalent Loading of Plant Picornavirus Particles”, with US Patent No. 10,590,394 and European Patent No. 2 958 993.
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As of December 31, 2021, the aforementioned patent
families included two (2) issued U.S. patents, five (5) issued or granted foreign patents and fourteen (14) additional pending U.S. and
foreign patent applications claiming methods of treating cancer using certain plant viruses, both alone and in combination therapies,
and certain methods of manufacture thereof. The Immuno-Oncology patent family covers the intratumoral administration of CPMV, including
MIE-101, to treat cancer in humans and animals, both as a single-agent therapy and in combination regimens, including with radiotherapy,
chemotherapy and immunotherapy.
Our patent strategy is to in-license and/or file
patent applications on innovations and improvements to cover a significant majority of the major pharmaceutical markets in the world.
Generally, assuming all maintenance fees are paid, patents have a term of twenty years from the earliest priority date (other than a priority
date for a provisional application). In some instances, patent terms can be increased or decreased, depending on the laws and regulations
of the country or jurisdiction that issued the patent. Notwithstanding the foregoing, the patent position of biotechnology and pharmaceutical
companies generally is highly uncertain, involves complex legal and factual questions and has in recent years been the subject of much
litigation. In addition, the laws of foreign countries may not protect our rights to the same extent as the laws of the United States.
Publications of discoveries in the scientific literature often lag behind the actual discoveries, and patent applications in the United
States and other jurisdictions are typically not published until 18 months after filing, or in limited cases not at all. Therefore, we
cannot know with certainty whether we were the first to make the inventions claimed in our owned or licensed patents or pending patent
applications, or that we were the first to file for patent protection of such inventions. Also, examination is often lengthy and can involve
numerous challenges to the claims sought. As a result, the issuance, scope, validity, enforceability and commercial value of our patent
rights are highly uncertain. Pending and future patent applications may not result in patents being issued which protect our technology
or products, in whole or in part, or which effectively prevent others from commercializing competitive technologies and products. Changes
in either the patent laws or interpretation of the patent laws in the United States, the European Union, and other countries may diminish
the value of the underlying patents under our License Option Agreement or narrow the scope of our patent protection.
Our success depends in large part on our ability
and CWRU’s ability to obtain and maintain patent protection in the United States, the European Union, and other major pharmaceutical
markets with respect to our proprietary technology and products under the License Option Agreement. We or CWRU will seek to protect our
proprietary position by filing patent applications in the United States and internationally that are related to our novel technologies
and product candidates. We currently heavily rely on CWRU to assist with protecting the underlying patents and patent applications under
the License Option Agreement.
In addition, the patent prosecution process is
expensive and time-consuming, and we may not be able to file and prosecute all necessary or desirable patent applications at a reasonable
cost or in a timely manner. We or CWRU may choose not to seek patent protection for certain innovations and may choose not to pursue patent
protection in certain jurisdictions, and under the laws of certain jurisdictions, patents or other intellectual property rights may be
unavailable or limited in scope. It is also possible that we or CWRU will fail to identify patentable aspects of our discovery and preclinical
development output before it is too late to obtain patent protection. Moreover, in some circumstances, we may not have the right to control
the preparation, filing and prosecution of patent applications, or to maintain the patents, covering technology under the License Option
Agreement. Therefore, these patents and applications may not be prosecuted and enforced in a manner consistent with the best interests
of our business. Any inability by us or CWRU to protect adequately the underlying intellectual property covered by the License Option
Agreement may have a material adverse effect on our business, operating results, and financial position.
Our Trade Secrets
We also rely upon unpatented trade secrets, and
there is no assurance that others will not independently develop substantially equivalent proprietary information and techniques or otherwise
gain access to our trade secrets or disclose such technology, or that such rights can be meaningfully protected. We require our employees,
consultants, outside scientific collaborators, and other advisers to execute confidentiality agreements upon the commencement of employment
or consulting relationships with us. These agreements provide that all confidential information developed or made known to the individual
during the course of the individual's relationship with us is to be kept confidential and not disclosed to third parties except in specific
circumstances. In the case of our employees, the agreement provides that all inventions conceived by such employees shall be our exclusive
property. There can be no assurance, however, that these agreements will provide meaningful protection or adequate remedies for our trade
secrets in the event of unauthorized use or disclosure of such information.
Third-Party Rights
Our success also depends in part on our ability
to gain access to third-party patent and proprietary rights and to operate our business without infringing on third-party patent rights.
We may be required to obtain licenses to patents or other proprietary rights from third parties to develop, manufacture and commercialize
our product candidates. Licenses required under third-party patents or proprietary rights may not be available on terms acceptable to
us, if at all. If we do not obtain the required licenses, we could encounter delays in product development while we attempt to redesign
products or methods or we could be unable to develop, manufacture or sell products, if approved, requiring these licenses at all. The
failure to obtain licenses, if needed, may have a material adverse effect on our business, operating results, and financial position.
Government
Regulation
Regulatory Compliance
Our planned research and development activities,
including testing in laboratory animals and in humans, our manufacture of MIE-101, and oversight of suppliers and contract manufacturers
involved in the production of our product candidates, as well as the design, manufacturing, safety, efficacy, handling, labeling, storage,
record-keeping, advertising, promotion and marketing of the product candidates that we are developing, are all subject to stringent regulation,
primarily by the FDA in the United States under the Federal Food, Drug, and Cosmetic Act (the "FDCA") and its implementing regulations,
and the Public Health Service Act ("PHS Act") and its implementing regulations, and by comparable authorities under similar
laws and regulations in other countries. If for any reason we do not comply with applicable requirements, such noncompliance can result
in various adverse consequences, including one or more delays in approval of, or even the refusal to approve, product licenses or other
applications, the suspension or termination of clinical investigations, the revocation of approvals if granted, as well as fines, criminal
prosecution, recall or seizure of products, injunctions against shipping products and total or partial suspension of production and/or
refusal to allow us to enter into governmental supply contracts.
Product Development and Approval Process
In the United States, our product candidates are
regulated as biologic pharmaceuticals, or biologics. The FDA's regulatory authority for the approval of biologics resides in the PHS Act.
However, biologics are also subject to regulation under the FDCA because most biological products also meet the FDCA's definition of "drugs."
Most pharmaceuticals or "conventional drugs" consist of pure chemical substances and their structures are known. Most biologics,
however, are complex mixtures that are not easily identified or characterized. Biological products differ from conventional drugs in that
they tend to be heat-sensitive and susceptible to microbial contamination, thus requiring sterile manufacturing processes. The process
required by the FDA before biologic product candidates may be marketed in the United States generally involves the following:
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completion of preclinical laboratory tests and
animal studies performed in accordance with the FDA’s current Good Laboratory Practices regulations;
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submission to the FDA of an IND which must become effective before human clinical
trials may begin and must be updated annually;
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approval by an independent Institutional Review
Board (“IRB”) ethics committee at each clinical site before the trial is initiated;
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performance of adequate and well-controlled clinical
trials to establish the safety, purity and potency of the proposed biologic, and its safety and efficacy for each indication;
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preparation of and submission to the FDA of a
Biologics License Application (“BLA”) for a new biologic, after completion of all pivotal clinical trials;
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satisfactory completion of an FDA Advisory Committee
review, if applicable;
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a determination by the FDA within 60 days of
its receipt of a BLA to file the application for review;
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satisfactory completion of an FDA pre-approval
inspection of the manufacturing facilities to assess compliance with current Good Manufacturing Practice (“cGMP”) regulations; and
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FDA review and approval of a BLA for a new biologic,
prior to any commercial marketing or sale of the product in the United States.
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Preclinical tests assess the potential safety
and efficacy of a product candidate in animal models. Clinical trials involve the administration of the investigational product to human
subjects under the supervision of qualified investigators in accordance with current Good Clinical Practices (“cGCPs”), which
include the requirement that all research subjects provide their informed consent for their participation in any clinical trial. A protocol
for each clinical trial and any subsequent protocol amendments must be submitted to the FDA as part of the IND. Additionally, approval
must also be obtained from each clinical trial site’s IRB before the trials may be initiated, and the IRB must monitor the study
until completed. There are also requirements governing the reporting of ongoing clinical trials and clinical trial results to public registries.
The clinical investigation of a pharmaceutical,
including a biologic, is generally divided into three phases. Although the phases are usually conducted sequentially, they may overlap
or be combined.
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Phase I studies are designed to evaluate the
safety, dosage tolerance, metabolism and pharmacologic actions of the investigational product in humans, the side effects associated with
increasing doses, and if possible, to gain early evidence on effectiveness.
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Phase II includes controlled clinical trials
conducted to preliminarily or further evaluate the effectiveness of the investigational product for a particular indication(s) in patients
with the disease or condition under study, to determine dosage tolerance and optimal dosage, and to identify possible adverse side effects
and safety risks associated with the product.
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Phase III clinical trials are generally controlled
clinical trials conducted in an expanded patient population generally at geographically dispersed clinical trial sites, and are intended
to further evaluate dosage, clinical effectiveness and safety, to establish the overall benefit-risk relationship of the investigational
product, and to provide an adequate basis for product approval.
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Phase IV clinical trials may be required to as
post-marketing studies to find out more about the product’s long-term risks, benefits, and optimal use, or to test the drug in different
populations.
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The FDA may place clinical trials on hold at any
point in this process if, among other reasons, it concludes that clinical subjects are being exposed to an unacceptable health risk. Trials
may also be terminated by IRBs, which must review and approve all research involving human subjects. Side effects or adverse events that
are reported during clinical trials can delay, impede or prevent marketing authorization.
The results of the preclinical and clinical testing,
along with information regarding the manufacturing of the product and proposed product labeling, are evaluated and, if determined appropriate,
submitted to the FDA through a BLA. The application includes all relevant data available from pertinent preclinical and clinical trials,
including negative or ambiguous results as well as positive findings, together with detailed information relating to the product’s
chemistry, manufacturing, controls and proposed labeling, among other things. Once the BLA submission has been accepted for filing,
the FDA’s standard goal is to review applications within ten months of the filing date or, if the application relates to a drug
that treats a serious condition and would provide a significant improvement in safety or effectiveness qualifying for Priority Review,
six months from the filing date. The review process is often significantly extended by FDA requests for additional information or
clarification.
The FDA offers certain programs, such as Breakthrough
Therapy Designation (“BTD”) and Fast Track designation, designed to expedite the development and review of applications for
products intended for the treatment of a serious or life-threatening disease or condition. For BTD, preliminary clinical evidence of the
product indicates that it may demonstrate substantial improvement over existing therapies on one or more clinically significant endpoints,
such as substantial treatment effects observed early in clinical development. If BTD or Fast Track designation is obtained, the FDA may
initiate review of sections of a BLA before the application is complete, and the product may be eligible for accelerated approval. However,
receipt of BTD or Fast Track designation for a product candidate does not ensure that a product will be developed or approved on an expedited
basis, and such designation may be rescinded if the product candidate is found to no longer meet the qualifying criteria.
The FDA reviews the BLA to determine, among other
things, whether the proposed product is safe, pure and potent, which includes determining whether it is effective for its intended use,
and whether the product is being manufactured in accordance with cGMP, to assure and preserve the product’s identity, strength,
quality, potency and purity. The FDA may refer an application to an advisory committee for review, evaluation and recommendation as to
whether the application should be approved, and applications for new molecular entities and original BLAs are generally discussed at advisory
committee meetings unless the FDA determines that this type of consultation is not needed under the circumstances. The FDA is not bound
by the recommendation of an advisory committee, but it typically follows such recommendations.
After the FDA evaluates the BLA and conducts inspections
of manufacturing facilities, it may issue an approval letter or a complete response letter (“CRL”). An approval letter authorizes
commercial marketing of the biologic with specific prescribing information for specific indications. A CRL indicates that the review cycle
of the application is complete and the application is not ready for approval. A CRL may require additional inspections, and/or other significant,
expensive and time-consuming requirements related to clinical trials, preclinical studies or manufacturing. Even if such additional information
is submitted, the FDA may ultimately decide that the BLA does not satisfy the criteria for approval. The FDA could approve the BLA with
a Risk Evaluation and Mitigation Strategy ("REMS") plan to mitigate risks, which could include medication guides, physician
communication plans, or elements to assure safe use, such as restricted distribution methods, patient registries and other risk minimization
tools. The FDA also may condition approval on, among other things, changes to proposed labeling, development of adequate controls and
specifications, or a commitment to conduct one or more post-market studies or clinical trials. Such post-market testing may include Phase IV
clinical trials and surveillance to further assess and monitor the product’s safety and effectiveness after commercialization.
Foreign Regulation
In addition to regulations in the United States,
we are subject to a variety of foreign regulations governing clinical trials and commercial sales and distribution of our product candidates
being developed, and products being marketed outside of the United States. We must obtain approval by the comparable regulatory authorities
of foreign countries before we can commence clinical trials or marketing of our products in those countries. The approval process varies
from country to country, and the time may be longer or shorter than that required by the FDA for BLA licensure. The requirements governing
the conduct of clinical trials, product licensing, pricing and reimbursement vary greatly from country to country.
Manufacturing
While our scientific collaborators have manufactured
MIE-101 for preclinical research studies and companion animal studies, we have limited experience in the manufacturing of MIE-101. In
addition, we currently do not possess any internal manufacturing infrastructure or capabilities, especially in the growth and manufacturing
of plant viruses. We plan to rely on internal manufacturing and development capabilities, as capital resources become available and capabilities
are developed, in addition to third-party contract manufacturing and development organizations, or CDMOs, to manufacture our biological
product candidates for clinical testing, as well as for commercial manufacture if our product candidates receive marketing approval. We
believe that this hybrid strategy will enable us to control and manage preclinical and early-stage clinical manufacturing while outsourcing
other aspects of manufacturing and later-stage clinical manufacturing that would likely require higher infrastructure cost to build and
operate. As with any supply program, obtaining pre-clinical and clinical materials of sufficient quality and quantity to meet the requirements
of our development programs cannot be guaranteed and we cannot ensure that we will be successful in this endeavor. To date, we have not
manufactured any of our products candidates due to our limited capital resources.
Sales
and Marketing
None of our product candidates has been approved
for sale. If and when our product candidates advance closer to marketing approval, we may commercialize them on our own in the United
States and potentially with pharmaceutical or biotechnology partners in other geographies. We currently have no sales, marketing or commercialization
capabilities and have no experience as a company doing such activities. However, we may build the necessary capabilities and infrastructure
over time following the advancement of our product candidates. Clinical data, the size of the opportunity and the size of the commercial
infrastructure required will influence our commercialization plans and decision making.
Competition
Competition in the pharmaceutical and biotechnology
industry is intense and characterized by aggressive research and development and rapidly evolving science, technology, and standards of
medical care throughout the world. Regarding our competitive position in the industry, our lead product, MIE-101, is in preclinical development
in oncology and would face competition with all other immuno-oncology products either in development or already approved. Many of the
companies against which we are competing or against which we may compete in the future, such as biotechnology and pharmaceutical companies
focused on cancer immunotherapies, including but not limited to, Amgen, Inc., AstraZeneca plc, Bristol-Myers Squibb Company (“BMS”),
Genentech, Inc., GlaxoSmithKline PLC, Merck & Co., Inc., Novartis AG, Pfizer Inc., Roche Holding Ltd and Sanofi S.A., all have
significantly greater financial resources and expertise in research and development, manufacturing, conducting preclinical studies, conducting
clinical trials, obtaining regulatory approvals and marketing approved products than we do. Paradoxically, many of these companies are
developing systemic immunotherapies which have the potential to be developed in combination with MIE-101 and so we view them both from
a competitive and complementary perspective. Oncology drugs and therapeutics on the market range from traditional cancer therapies, including
chemotherapy, to immune checkpoint inhibitors targeting CTLA-4, such as BMS’ YERVOY, and PD-1/PD-L1, such as BMS’ OPDIVO,
Merck & Co.’s KEYTRUDA and Genentech’s TECENTRIQ, to T cell-engager immunotherapies, such as Amgen’s BLINCYTO
and to oncolytic immunotherapies, including Amgen’s T-Vec, an FDA-approved oncolytic immunotherapy for treating advanced melanoma.
Additionally, we view as our most direct potential
competitors are companies such as Sumitomo Dainippon Pharma Oncology, Inc., a wholly owned subsidiary of Sumitomo Dainippon Pharma Co.,
Ltd. (developing DSP-0509, a TLR7 agonist), Ascendis Pharma A/S (developing TransCon TLR 7/8 agonist), Roche Holding Ltd (developing R017119929,
a TLR7 agonist), Nektar Therapeutics (developing NKTR-262, a TLR 7/8 agonist), BioNTech SE (developing BTN411, a TLR7 agonist), which
are developing therapies utilizing TLR-agonists in cancer immunotherapy that may have utility for similar indications that we may be targeting.
Moreover, mergers and acquisitions in the pharmaceutical
and biotechnology industries may result in even more resources being concentrated among a smaller number of our competitors. Smaller and
other early-stage companies may also prove to be significant competitors, particularly through collaborative arrangements with large and
established companies. Potential competitors also include academic institutions, government agencies and other public and private research
organizations that conduct research, seek patent protection and establish collaborative arrangements for research, development, manufacturing
and commercialization. These third parties also compete with us in recruiting and retaining qualified scientific and management personnel,
establishing clinical trial sites and patient registration for clinical trials, as well as in acquiring technologies complementary to,
or necessary for, our programs. Our commercial opportunity could be reduced or eliminated if our competitors develop and commercialize
products that are safer, more effective, have fewer or less severe side effects, are more convenient or are less expensive than any products
that we may develop. In addition, our ability to compete may be affected in many cases by insurers or other third-party payers seeking
to encourage the use of biosimilar or generic products.
Segment
information
The Company manages its operations as a single
operating segment for the purposes of assessing performance and making operating decisions. The Company's primary focus is on research
and development of immunotherapies with broad potential to treat cancer.
Corporate
Information
Mosaic ImmunoEngineering, Inc., formerly known
as Patriot Scientific Corporation, is a corporation organized under Delaware law on March 24, 1992. The Company has two wholly owned
subsidiaries: Mosaic ImmunoEngineering Development Company (formerly referred to as Private Mosaic in connection with the Reverse Merger),
a corporation organized under Delaware law on March 30, 2020 (date of inception) and Patriot Data Solutions Group, Inc., an inactive
subsidiary of PTSC.
Our business address is 1537 South Novato
Blvd., #5, Novato, California 94947 and our telephone number is (657) 208-0890. Our website address is www.mosaicie.com. The
information contained in, or that can be accessed through, our website is not part of, and is not incorporated in this Annual Report
on Form 10-K, and should not be relied upon.
Human Capital
At December 31, 2021, we have three full-time
employees and four part-time employees. We also engage consultants and part-time assistance, as needed. Our employees are not represented
by a labor union, and we consider our relations with our employees to be good. Our employees are not covered by a key person life insurance
policy.
Available
Information
Reports we file with the Securities and Exchange
Commission (“SEC”) pursuant to the Exchange Act of 1934, as amended (the “Exchange Act”), including annual and
quarterly reports, and other reports we file, are available for inspection and review on the website of the SEC at www.sec.gov. In addition,
we also make available, free of charge, through our website at www.mosaicie.com, our reports filed with the SEC or by written request
to the Company at Mosaic ImmunoEngineering, Inc., 9114 Adams Avenue, #202, Huntington Beach, California 92646, Attention: Corporate Secretary.
The information contained in, or that can be accessed through, our website is not part of, and is not incorporated in this Annual Report
on Form 10-K, and should not be relied upon.
Smaller
Reporting Company
We are currently a “smaller reporting company”
as defined by Rule 12b-2 of the Exchange Act, and are thus allowed to provide simplified executive compensation disclosures in our filings,
are exempt from the provisions of Section 404(b) of the Sarbanes-Oxley Act requiring that an independent registered public accounting
firm provide an attestation report on the effectiveness of internal control over financial reporting and have certain other reduced disclosure
obligations with respect to our SEC filings.
Investing in our common stock is speculative
and illiquid and involves a high degree of risk including the risk of a loss of your entire investment. You should carefully consider
the risks and uncertainties described below and the other information contained in this Annual Report on Form 10-K before investing in
our common stock. The risks set forth below are not the only ones facing us. Additional risks and uncertainties may exist that could also
adversely affect our business, operations and prospects. If any of the following risks actually materialize, our business, financial condition,
prospects and/or operations could suffer. In such event, the value of our common stock could decline, and you could lose all or a substantial
portion of the money that you pay for our common stock.
Unless the context otherwise requires, references
to the “Company,” the “combined company,” “Mosaic,” “we,” “our,” or “us”
in this Annual Report on Form 10-K refer to Mosaic ImmunoEngineering, Inc. and its subsidiaries (formerly known as Patriot Scientific
Corporation). References to “PTSC” refer to Patriot Scientific Corporation prior to the completion of the Reverse Merger and
references to “Private Mosaic” refer to privately held Mosaic ImmunoEngineering, Inc. prior to the completion of the Reverse
Merger.
Risks
Related to Our Operations
The Company’s financial statements have
been prepared on a going concern basis, and do not include adjustments that might be necessary if the Company is unable to continue as
a going concern.
The Company’s consolidated financial statements
have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal
course of business. As of December 31, 2021, the Company had incurred operating losses since inception, and continues to generate losses
from operations, and has an accumulated deficit of $4,527,232. These matters raise substantial doubt about the Company’s ability
to continue as a going concern. The consolidated financial statements included in this Annual Report on Form 10-K do not include any adjustments
relating to the recoverability and classification of asset amounts or the classification of liabilities that might be necessary should
the Company be unable to continue as a going concern
We expect that we will incur significant losses
over the next several years and may never achieve or maintain profitability.
Private Mosaic was formed on March 30, 2020; therefore,
we have limited operating history. We have not raised any capital other than $575,000 from the issuance of our Convertible Notes in May
2021. Our historical results do not reflect the significant costs required to develop our product candidates. In addition, our products
are in preclinical development and therefore, we anticipate that our expenses will increase substantially over the next several years,
if and as we:
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develop product manufacturing processes under the Food and Drug Administration's (“FDA’s”) current Good Manufacturing Practice regulations (“cGMP”) for each of our product candidates and enter into manufacturing supply agreements to support toxicology studies and our planned Phase I clinical trials;
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contract preclinical toxicology studies to support the safety of our product candidates prior to starting any human trial;
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continue preclinical research and translational studies to enhance our understanding of the mechanism of action of the product candidates;
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enter into collaboration arrangements with regards to product discovery and product development;
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in-license our products and technologies from Case Western Reserve University and acquire rights to other technologies;
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prepare regulatory filings, such as filing IND applications with the FDA that
are required prior to starting any human clinical trial;
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plan, initiate, enroll, and complete clinical trials;
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maintain, expand and protect our intellectual property portfolio;
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hire additional personnel to support our research, development, and administrative efforts; and
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operate as a public company.
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We expect that it will be several years, if ever,
before we have a product candidate ready for commercialization. If we are unable to advance our product candidates and begin to generate
clinical data, we may have greater difficulty raising capital on favorable terms, or at all. In addition, there are many risks associated
with our financial position and need for additional capital, as further described below under the section titled “Risks Related
to Our Financial Position and Need for Additional Capital”.
If we are able to raise sufficient capital, we
expect to continue to incur significant expenses and increasing operating losses for the foreseeable future. The net losses that we incur
may fluctuate significantly from quarter to quarter and year to year.
To become and remain profitable, we or a potential
partner must develop and eventually commercialize a product or products with significant market potential. This will require us to be
successful in a range of challenging activities, including completing all phases of clinical trials of our product candidates, obtaining
marketing approval for these product candidates and manufacturing, marketing and selling those products for which we obtain marketing
approval. We or a potential partner may never succeed in these activities and, even if we do, may never generate revenues that are significant
or large enough to achieve profitability. If we do achieve profitability, we may not be able to sustain or increase profitability on a
quarterly or annual basis. Our development efforts will take several years and will require significant capital, which will dilute the
ownership interest of common stockholders. A decline in the value of the Company could also cause stockholders to lose all or part of
their investment.
We are early in our development efforts and
our product candidates are in preclinical development.
We currently do not have any products that have
gained regulatory approval. Our ability to generate product revenues, which we do not expect will occur for several years, if ever, will
depend heavily on the successful development and eventual commercialization of our product candidates. As a result, our business is substantially
dependent on our ability to successfully complete the development of and obtain regulatory approval for our product candidates.
We have not yet demonstrated an ability to successfully
overcome many of the risks and uncertainties frequently encountered by companies in new and rapidly evolving fields, particularly in the
nanotechnology area. If we are unsuccessful in accomplishing the numerous and complex objectives in developing our product candidates,
we may not be able to successfully develop and commercialize our two product candidates, and our business will suffer.
Our short operating history may make it difficult
to evaluate the success of our business to date and to assess our future viability.
We are an early development stage biotechnology
company formed on March 30, 2020. Our ongoing operations to date have been limited to organizing the Company, business planning, acquiring
rights to license the technology, identifying potential product candidates, and undertaking preclinical studies in collaboration with
our external researchers under university approved grants. In addition, we have limited human resources to help us achieve our goals.
Consequently, any predictions made about our future success or viability based on our short operating history to date may not be as accurate
as they could be if we had a longer and more established operating history. In addition, as an early-stage business, we may encounter
unforeseen expenses, difficulties, complications, delays and other known and unknown factors.
Business interruptions resulting from the coronavirus
disease (COVID-19) outbreak or similar public health crises could cause a disruption of the development of our product candidates and
adversely impact our business.
In March 2020, the World Health Organization declared
the novel coronavirus disease (COVID-19) outbreak a global pandemic. To limit the spread of COVID-19, governments have taken various actions
including the issuance of stay-at-home orders and physical distancing guidelines. Accordingly, businesses have adjusted, reduced or suspended
operating activities. We may experience disruptions as a result of COVID-19 that could severely impact our business and planned clinical
trials, including:
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delays
or difficulties in planned clinical site initiation, including difficulties in recruiting clinical site investigators and clinical site
staff;
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delays
or difficulties in enrolling patients in our planned clinical trials and further incurrence of additional costs as a result of preclinical
study and clinical trial delays and adjustments;
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challenges
related to ongoing and increased operational expenses related to the COVID-19 pandemic;
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delays,
difficulties or increased costs to comply with COVID-19 protocols;
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diversion
of healthcare resources away from the conduct of clinical trials, including the diversion of hospitals serving as our clinical trial
sites and hospital staff supporting the conduct of clinical trials;
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interruption
of key clinical trial activities, such as clinical trial site monitoring, due to limitations on travel imposed or recommended by federal
or state governments, employers and others;
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limitations
in resources that would otherwise be focused on the conduct of our business or our clinical trials, including because of sickness or
the desire to avoid contact with large groups of people or as a result of government-imposed “Stay-at-Home” orders or similar
working restrictions;
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delays
in receiving approval from local regulatory authorities to initiate our planned clinical trials;
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delays
in preclinical and clinical sites receiving the supplies and materials needed to conduct our planned clinical trials;
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interruption
in global shipping that may affect the transport of clinical trial materials, such as investigational drug product used in our planned
clinical trials;
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changes
in regulations as part of a response to the COVID-19 pandemic which may require us to change the ways in which our planned clinical trials
may be conducted, or which may result in unexpected costs;
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delays
in necessary interactions with regulators, ethics committees and other important agencies and contractors due to limitations in employee
resources or forced furlough of government or contractor personnel; and
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increased
competition for contract research organizations (“CROs”),
suppliers and vendors.
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We will continue to assess the impact that COVID-19
may have on our ability to effectively conduct our business operations as planned and there can be no assurance that we will be able to
avoid a material impact on our business from the spread of COVID-19 or its consequences, including disruption to our business and downturns
in business sentiment generally or in our industry. Should COVID-19 cases in USA increase, the country or states may institute stricter
social distancing protocols.
Additionally, third parties that we may engage,
including our collaborators, contract organizations, third-party manufacturers, suppliers, clinical trial sites, regulators and other
third parties with whom we conduct business are similarly adjusting their operations and assessing their capacity in light of the COVID-19
pandemic. If these third parties experience shutdowns or continued business disruptions, our ability to conduct our business in the manner
and on the timelines presently planned could be materially and negatively impacted. It is likely that the disproportionate impact of COVID-19
on hospitals and clinical sites will have an impact on recruitment and retention for our planned clinical trials. In addition, our future
clinical trial sites could experience delays in collecting, receiving and analyzing data from patients enrolled in our planned clinical
trial due to limited staff at such sites, limitation or suspension of on-site visits by patients, or patients’ reluctance to visit
the clinical trial sites during the pandemic. As a result, research and development expenses and general and administrative expenses may
vary significantly if there is an increased impact from COVID-19 on the costs and timing associated with the conduct of our panned clinical
trial and other related business activities.
As we continue to actively advance our clinical
programs and discovery and research programs, we are assessing the impact of the COVID-19 pandemic on each of our programs, expected timelines
and costs on an ongoing basis. In light of ongoing developments relating to the COVID-19 pandemic, the focus of healthcare providers and
hospitals on fighting the virus, and consistent with the FDA’s industry guidance for conducting clinical trials issued in March
2020, as updated subsequently. We and our CROs have also made certain adjustments to the operation of such trials in an effort to ensure
the monitoring and safety of patients and minimize risks to trial integrity during the pandemic in accordance with the guidance issued
by the FDA on June 19, 2020 on good manufacturing practice considerations for responding to COVID-19 infection in employees in biopharmaceutical
products manufacturing and generally and may need to make further adjustments in the future. Other COVID-related guidance recently released
by FDA that apply to us and our third-party manufacturers include guidance addressing cGMP considerations for responding to COVID-19 infections
in employees and statistical considerations for clinical trials during the COVID-19 public health emergency. Many of these adjustments
are new and untested, may not be effective, and may have unforeseen effects on the enrollment, progress and completion of these trials
and the findings from these trials. While we are currently continuing our clinical trial and seeking to add new clinical trial sites,
we may not be successful in adding trial sites, may experience delays in patient enrollment or in the progression of our clinical trial,
may need to suspend our clinical trial, and may encounter other negative impacts to our trials, due to the effects of the COVID-19 pandemic.
The global outbreak of COVID-19 continues to rapidly
evolve. The extent to which the COVID-19 pandemic impacts our business will depend on future developments such as the rate of the spread
of the disease, travel restrictions and social distancing in the United States and other countries, business closures or business disruptions
and the effectiveness of actions taken in the United States and other countries to contain and treat the disease and to address its impact,
including on financial markets or otherwise. Further, a lack of coordinated response on risk mitigation and vaccination deployment with
respect to the COVID-19 pandemic on a local or federal level could result in significant increases to the duration and severity of the
pandemic in the United States as compared to the rest of the world and could have a corresponding negative impact on our business. While
the extent of the impact of the current COVID-19 pandemic on our business and financial results is uncertain, a continued and prolonged
public health crisis such as the COVID-19 pandemic could have a material negative impact on our business, financial condition and operating
results.
To the extent the COVID-19 pandemic adversely
affects our business, financial condition and operating results, it may also have the effect of heightening many of the risks described
in this “Risk Factors” section.
The Company and its subsidiaries have limited
insurance for their operations and are subject to various risks of loss.
The Company and its subsidiaries carry limited
directors’ and officers’ insurance with a high deductible. In addition, we do not carry general business liability insurance
or other insurance applicable to our business. Successful claims against the Company would likely render us insolvent. The Company has
not reserved any amounts in connection with self-insuring against any potential claims against the Company or its subsidiaries. Once we
are able to raise sufficient funding to advance our business, we plan to secure additional insurance coverage to better protect our business.
There can no assurance that we will obtain sufficient insurance coverage to cover all possible risks and potential related losses.
Drug development involves a lengthy and expensive
process with an uncertain outcome, including failure to demonstrate safety and efficacy to the satisfaction of the FDA or similar regulatory
authorities outside the United States. We may incur additional costs or experience delays in completing, or ultimately be unable to complete,
the product manufacturing of our product candidates.
Given the early stage of development for both
product candidates, the risk of failure for our product candidates is high. Before obtaining marketing approval from regulatory authorities
for the sale of any product candidate, we must complete formulation development for our products, conduct nonclinical trials, and then
conduct extensive clinical trials to demonstrate the safety and efficacy of our product candidates in humans. In addition, product manufacturing
and process development along with preclinical and clinical testing are all expensive activities, difficult to design and implement, and
can take several years to complete. The outcome of preclinical and clinical trials is inherently uncertain. Failure can occur at any time
during the development program, including during the clinical trial process. Further, the results of preclinical studies and early clinical
trials of our product candidates, may not be predictive of the results of later-stage clinical trials. Moreover, preclinical and clinical
data are often susceptible to varying interpretations and analyses, and many companies that have believed their product candidates performed
satisfactorily in preclinical and clinical trials have nonetheless failed to obtain marketing approval of their products. It is impossible
to predict when or if any of our product candidates will prove effective and safe in humans or will receive regulatory approval.
We may experience delays in our planned clinical
trials, and we do not know whether planned clinical trials will begin or enroll subjects on time, need to be redesigned or be completed
on schedule, if at all. There can be no assurance that the FDA or any other foreign regulatory body will not put any of our product candidates
on clinical hold in the future. We may experience numerous unforeseen events during, or as a result of, clinical trials that could delay
or prevent our ability to receive marketing approval or commercialize our product candidates. Planned clinical trials may be delayed,
suspended or prematurely terminated for a variety of reasons, such as:
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delay or failure in reaching agreement with the FDA, European Medicines Agency (“EMA”), or a comparable foreign regulatory authority on a trial design that we want to execute;
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delay or failure in obtaining authorization to commence a trial or inability to comply with conditions imposed by a regulatory authority regarding the scope or design of a clinical study;
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delays in reaching, or failure to reach, agreement on acceptable clinical trial contracts or clinical trial protocols with prospective trial sites;
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inability, delay, or failure in identifying and maintaining a sufficient number of trial sites, many of which may already be engaged in other clinical programs;
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delay or failure in recruiting and enrolling suitable subjects to participate in a trial;
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delay or failure in having subjects complete a trial or return for post-treatment follow-up;
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clinical sites and investigators deviating from trial protocol, failing to conduct the trial in accordance with regulatory requirements, or dropping out of a trial;
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lack of adequate funding to continue the clinical trial, including the incurrence of unforeseen costs due to enrollment delays, requirements to conduct additional clinical studies and increased expenses associated with the services of our contract research organizations (“CROs”) and other third parties;
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clinical trials of our product candidates may produce negative or inconclusive results, and we may decide, or regulators may require us, to conduct additional clinical trials or abandon product development programs;
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the number of patients required for clinical trials of our product candidates may be larger than we anticipate, enrollment in these clinical trials may be slower than we anticipate, or participants may drop out of these clinical trials at a higher rate than we anticipate;
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we may experience delays or difficulties in the enrollment of patients that our product candidates are designed to target based on the inclusion and exclusion criteria;
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our third-party contractors may fail to comply with regulatory requirements or meet their contractual obligations to us in a timely manner, or at all;
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we may have difficulty partnering with experienced Clinical Research Organization
and study sites that can identify patients that our product candidates are designed to target and run our clinical trials effectively;
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regulators or institutional review boards (“IRBs”) may require that we or our investigators suspend or terminate clinical research for various reasons, including noncompliance with regulatory requirements or a finding that the participants are being exposed to unacceptable health risks;
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the supply or quality of our product candidates or other materials necessary to conduct clinical trials of our product candidates may be insufficient or inadequate; or
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there may be changes in governmental regulations or administrative actions.
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If we are required to conduct additional clinical
trials or other testing of our product candidates beyond those that we currently contemplate, if we are unable to successfully complete
clinical trials of our product candidates or other testing, if the results of these trials or tests are not positive or are only modestly
positive, or if there are safety concerns, we may:
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be delayed in obtaining marketing approval for our product candidates, if ever;
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obtain approval for indications or patient populations that are not as broad as intended or desired;
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obtain approval with labeling that includes significant use or distribution restrictions or safety warnings that would reduce the potential market for our products or inhibit our ability to successfully commercialize our product candidates;
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be subject to additional post-marketing restrictions and/or testing requirements; or
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have the product removed from the market after obtaining marketing approval.
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Product development costs will also increase if
we experience delays in testing or marketing approvals. We do not know whether any of our preclinical studies or clinical trials will
need to be restructured or will be completed on schedule, or at all. Significant preclinical or clinical trial delays also could shorten
any periods during which we may have the exclusive right to commercialize our product candidates or may allow our competitors to bring
products to market before we do and impair our ability to successfully commercialize our product candidates and may harm our business
and results of operations. In addition, enrollment delays in our clinical trials may result in increased development costs for our product
candidates, which would cause the value of the Company to decline and limit our ability to obtain additional financing.
If serious adverse events or unacceptable side
effects are identified during the development of our product candidates, we may need to abandon or limit our development of some of our
product candidates.
If our product candidates are associated with
undesirable effects in preclinical or clinical trials or have characteristics that are unexpected, we may need to interrupt, delay or
abandon their development or limit development to more narrow uses or subpopulations in which the undesirable side effects or other characteristics
are less prevalent, less severe or more acceptable from a risk-benefit perspective. Currently unknown, drug-related side effects may be
identified in our planned clinical studies and, as such, these possible drug-related side effects could affect patient recruitment, the
ability of enrolled subjects to complete the trial, or result in potential product liability claims. Reported serious adverse events may
arise and the occurrence, whatever the cause, may impact the conduct of any ongoing or future clinical trial. To date, our product candidates
have not been evaluated in any human clinical studies. Any occurrence of clinically significant adverse events may harm our business,
financial condition and prospects significantly.
Our business and operations would suffer in
the event of computer system failures, cyber-attacks or deficiencies in our or third parties’ cyber security.
Given our limited operating history, we are still
in the process of implementing our internal security measures. Our internal computer systems and those of current and future third parties
on which we rely may fail and are vulnerable to damage from computer viruses and unauthorized access. Our information technology and other
planned internal infrastructure systems, including corporate firewalls, servers, connection to the Internet, face the risk of systemic
failure that could disrupt our operations. If such an event were to occur and cause interruptions in our operations, it could result in
a material disruption of our development programs and our business operations. To the extent that any disruption or security breach were
to result in a loss of, or damage to, our data or applications, or inappropriate disclosure of confidential or proprietary information,
we could incur liability, our competitive position could be harmed and the further development and commercialization of our product candidates
or any future product candidates could be hindered or delayed. In addition, due to limited corporate infrastructure, our entire workforce
is currently working remotely. This could increase our cyber security risk, create data accessibility concerns, and make us more susceptible
to communication disruptions.
We do not presently maintain insurance coverage
to protect against cybersecurity risks. If we procure such coverage in the future, we cannot ensure that it will be sufficient to cover
any loss we may experience as a result of such cyberattacks. Any cyber incident could have a material adverse effect on our business,
financial condition, and results of operations.
If we fail to establish and maintain proper
and effective internal control over financial reporting, our operating results and our ability to operate our business could be harmed.
Ensuring that we will have adequate internal financial
and accounting controls and procedures in place so that we can produce accurate financial statements on a timely basis is a costly and
time-consuming effort that needs to be re-evaluated frequently. Internal control over financial reporting is a process designed to provide
reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements in accordance with Generally
Accepted Accounting Principles or GAAP.
In addition, we are required to be compliant with
public company internal control requirements mandated under Section 302 and 906 of the Sarbanes-Oxley Act. If we are unable to successfully
implement internal controls over financial reporting, the accuracy and timing of our financial reporting, and our stock price, may be
adversely affected.
Risks
Related to Our Financial Position and Need for Additional Capital
We will need substantial additional funding.
If we are unable to raise capital when needed, we would be compelled to delay, reduce or eliminate our product development programs or
commercialization efforts.
We expect our expenses to significantly increase
in parallel with our ongoing activities, particularly as we initiate product manufacturing to support preclinical and clinical testing,
preclinical studies, including toxicology studies, clinical development, and eventually, if successful, seek marketing approval for, our
product candidates. If we are unable to raise capital when needed or on attractive terms, we would be forced to further delay our preclinical
and clinical development programs or any future commercialization efforts.
Based upon current operating plans, our current
working capital is insufficient to fund our operations for the next twelve months. We will require additional capital to support our development
plans and eventually the commercialization of our product candidates, if approved, and may also need to raise additional funds to pursue
other development activities related to additional product candidates. Our funding needs may fluctuate significantly based on several
factors, including, but not limited to:
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the scope, progress, results and costs of product development and manufacture of drug product to support preclinical and clinical development of our product candidates;
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the extent to which we enter into additional collaboration arrangements regarding product discovery or development;
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the costs, timing and outcome of regulatory review of our product candidates;
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our ability to establish additional collaborations with favorable terms, if at all;
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the costs of future commercialization activities, including product sales, marketing, manufacturing and distribution, for any of our product candidates for which we receive marketing approval;
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the costs of preparing, filing and prosecuting patent applications, maintaining and enforcing our intellectual property rights and defending intellectual property-related claims;
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The costs to in-license our product candidates from Case Western Reserve University, and others if we acquire or in-license other products or technologies; and
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revenue, if any, received from commercial sales of our product candidates, should any of our product candidates receive marketing approval.
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Identifying potential product candidates and conducting
manufacturing and process development, preclinical testing and clinical trials is a time-consuming, expensive and uncertain process that
takes years to complete, and we may never generate the necessary data or results required to obtain marketing approval and achieve product
sales. In addition, our product candidates, if approved, may not achieve commercial success. Our commercial revenues, if any, will be
derived from sales of products that we do not expect to be commercially available for several years, if at all. Accordingly, we will need
to continue to rely on additional financing to achieve our business objectives. Adequate additional financing may not be available to
us on acceptable terms, or at all.
Raising capital will cause dilution to our
stockholders, restrict our operations, or require us to relinquish rights to our technologies or product candidates.
Until such time, if ever, as we can generate substantial
product revenues, we expect to finance our cash needs through a combination of equity offerings and/or debt financings. We do not have
any committed external source of funds. To the extent that we raise additional capital through the sale of equity and/or debt securities,
the ownership interest of common stockholders will be diluted, and the terms of these securities may include liquidation or other preferences
that adversely affect the rights of common stockholders. Debt financing and preferred equity financing, if available, may involve agreements
that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital
expenditures, or restricting the use of proceeds for only certain operational activities.
We cannot be certain that additional funding will
be available on acceptable terms, or at all. If we are unable to raise additional funds when needed, we may be required to delay, limit,
reduce or terminate our product development or future commercialization efforts.
Because the Reverse Merger resulted in an ownership
change under Section 382 of the Internal Revenue Code for PTSC, PTSC’s pre-merger net operating loss carryforwards and certain
other tax attributes may be subject to limitations.
If a corporation undergoes an “ownership
change” within the meaning of Section 382 of the Code, the corporation’s net operating loss carryforwards and certain
other tax attributes arising from before the ownership change are subject to limitations on use after the ownership change. In general,
an ownership change occurs if there is a cumulative change in the corporation’s equity ownership by certain stockholders that exceeds
50 percentage points over a rolling three-year period. Similar rules may apply under state tax laws. The Reverse Merger resulted in an
ownership change for PTSC and, accordingly, PTSC’s net operating loss carryforwards and certain other tax attributes may be subject
to limitations (or disallowance) on their use after the Reverse Merger. Additional ownership changes in the future could result in additional
limitations on the Company’s post-merger net operating loss carryforwards. Consequently, even if the Company achieves profitability,
it may not be able to utilize a material portion of PTSC’s, or the post-merger Company’s net operating loss carryforwards
and other tax attributes, which could have a material adverse effect on cash flow and results of operations.
Risks
Related to the Commercialization of Our Product Candidates
We face substantial competition, which may
result in others discovering, developing or commercializing competing products before or more successfully than we do.
The development and commercialization of new drug
products is highly competitive. We face competition with respect to our current product candidates, and will face competition with respect
to any product candidates that we may seek to develop or commercialize in the future, from major pharmaceutical companies, specialty pharmaceutical
companies and biotechnology companies worldwide. There are a number of large pharmaceutical and biotechnology companies that currently
market and sell products or are pursuing the development of products for the treatment of the disease indications for which we are developing
our product candidates. Some of these competitive products and therapies are based on scientific approaches in immuno-oncology that are
similar to our approach, and others are based on entirely different approaches. Potential competitors also include academic institutions,
government agencies and other public and private research organizations that conduct research, seek patent protection and establish collaborative
arrangements for research, development, manufacturing and commercialization.
Our commercial opportunity could be reduced or
eliminated if our competitors develop and commercialize products that are safer, more effective, have fewer or less severe side effects,
are more convenient or are less expensive than any products that we may develop. In addition, our ability to compete may be affected in
many cases by insurers or other third-party payers seeking to encourage the use of biosimilar or generic products.
Many of the companies against which we are competing
or against which we may compete in the future have significantly greater financial resources and expertise in research and development,
manufacturing, conducting preclinical studies, conducting clinical trials, obtaining regulatory approvals and marketing approved products
than we do. Mergers and acquisitions in the pharmaceutical and biotechnology industries may result in even more resources being concentrated
among a smaller number of our competitors. Smaller and other early-stage companies may also prove to be significant competitors, particularly
through collaborative arrangements with large and established companies. These third parties compete with us in recruiting and retaining
qualified scientific and management personnel, establishing clinical trial sites and patient registration for clinical trials, as well
as in acquiring technologies complementary to, or necessary for, our programs.
Product liability lawsuits against us could
cause us to incur substantial liabilities and to limit commercialization of any products that we may develop.
We will face an inherent risk of product liability
exposure related to the testing of our product candidates in human clinical trials and will face an even greater risk if we commercially
sell any products that we may develop. If we cannot successfully defend against claims that our product candidates or products caused
injuries, we will incur substantial liabilities. Regardless of merit or eventual outcome, liability claims may result in:
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decreased demand for any product candidates or products that we may develop, if approved;
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injury to our reputation and significant negative media attention;
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withdrawal of clinical trial participants;
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significant costs to defend the related litigation;
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substantial monetary awards to trial participants or patients;
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loss of revenue, if approved;
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reduced resources of our management to pursue our business strategy; and
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the inability to commercialize any products that we may develop.
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We currently have no product liability insurance
coverage as our product candidates are not ready for clinical testing in patients. When we secure product liability insurance, it may
not be adequate to cover all liabilities that we may incur. We may need to increase our insurance coverage as we expand our clinical trials
or if we commence commercialization of our product candidates. Insurance coverage is increasingly expensive. We may not be able to maintain
insurance coverage at a reasonable cost or in an amount adequate to satisfy any liability that may arise.
Risks Related to Our Dependence
on Third Parties
Future development collaborations may be important
to us. If we are unable to enter into or maintain these collaborations, or if these collaborations are not successful, our business could
be adversely affected.
For any of our product candidates, we may in the
future determine to seek to collaborate with pharmaceutical and biotechnology companies for development of our product candidates. We
face significant competition in seeking appropriate collaborators. Our ability to reach a definitive agreement for any collaboration will
depend, among other things, upon our assessment of the collaborator’s resources and expertise, the terms and conditions of the proposed
collaboration and the proposed collaborator’s evaluation of a number of factors. If we are unable to reach agreements with suitable
collaborators on a timely basis, on acceptable terms, or at all, we may have to curtail the development of a product candidate, reduce
or delay its development program or one or more of our other potential development programs, delay its potential development schedule
or reduce the scope of research activities, or increase our expenditures and all development activities at our own expense. If we fail
to enter into collaborations and do not have sufficient funds or expertise to undertake the necessary development activities, we may not
be able to further develop our product candidates or continue to develop our product candidates, and our business may be materially and
adversely affected.
If any future collaboration does not result in
the successful development of products or product candidates, product candidates could be delayed, and we may need additional resources
to develop product candidates. All of the risks relating to product development, regulatory approval and commercialization described in
this periodic report also apply to the activities of our collaborators.
We may contract with third parties for the
manufacture of our product candidates for preclinical and clinical studies and may expect to continue to do so for commercialization.
This potential reliance on third parties increases the risk that we will not have sufficient quantities of our product candidates or products
at an acceptable cost and quality, which could delay, prevent or impair our development or commercialization efforts.
Due to our limited operations and no existing
manufacturing infrastructure or capabilities, we may utilize third parties to formulate, manufacture, package, and distribute preclinical
and clinical supplies of our product candidates. In addition, these materials are custom-made and available from only a limited number
of sources. Despite drug substance and product risk management, this reliance on third parties presents a risk that we will not have sufficient
quantities of our product candidates or products or such quantities at an acceptable cost or quality, which could delay, prevent or impair
our development or commercialization efforts. Any performance failure on the part of our future manufacturers of drug substance or drug
products could delay clinical development or potential marketing approval.
We also expect to rely on other third parties
to label, store, and distribute drug supplies for our clinical trials. Any performance failure on the part of our distributors could delay
clinical development or marketing approval of our product candidates or commercialization of our products, producing additional losses
and depriving us of potential product revenue.
We may be unable to establish any agreements with
third-party manufacturers or to do so on acceptable terms. Even if we can establish agreements with third-party manufacturers, reliance
on third-party manufacturers entails additional risks, including:
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reliance on the third party for regulatory compliance and quality assurance;
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the possible breach of the manufacturing agreement by the third party;
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the possible misappropriation of our proprietary information, including our trade secrets and know-how; and
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the possible termination or nonrenewal of the agreement by the third party at a time that is costly or inconvenient for us.
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The third parties we may rely on for manufacturing
and packaging are also subject to regulatory review, and any regulatory compliance problems with these third parties could significantly
delay or disrupt our clinical or commercialization activities. Third-party manufacturers may not be able to comply with cGMP regulations
or similar regulatory requirements outside the United States. Our failure, or the failure of our third-party manufacturers, to comply
with applicable regulations could result in sanctions being imposed on us, including clinical holds, fines, injunctions, civil penalties,
delays, suspension or withdrawal of approvals, license revocation, seizures or recalls of product candidates or products, operating restrictions
and criminal prosecutions, any of which could significantly and adversely affect supplies of our products. Additionally, macro-economic
conditions may adversely affect these third parties, causing them to suffer liquidity or operational problems. If a key third-party vendor
becomes insolvent or is forced to lay off workers assisting with our projects, our results and development timing could suffer.
In addition, our product candidate, and any products
that we may develop may compete with other product candidates and products for access to manufacturing facilities. There are a limited
number of manufacturers that operate under cGMP regulations and that might be capable of manufacturing for us. Our anticipated future
dependence upon others for the manufacture of our product candidates or products may adversely affect our future profit margins and our
ability to commercialize any products that receive marketing approval on a timely and competitive basis.
Data provided by collaborators and other parties
upon which we rely have not been independently verified and could turn out to be inaccurate, misleading, or incomplete.
We rely and intend to rely on third-party vendors,
scientists, and collaborators to provide us with significant data and other information related to our projects, clinical trials, and
business. We do not independently verify or audit all of such data (including possibly material portions thereof). As a result, such
data may be inaccurate, misleading, or incomplete.
Risks
Related to Our Intellectual Property
If we or CWRU are unable to obtain and maintain
intellectual property protection for technology and products under the License Option Agreement or if the scope of the intellectual property
protection obtained by CWRU is not sufficiently broad, our competitors could develop and commercialize technology and products similar
or identical to ours, and our ability to successfully commercialize our technology and products may be impaired.
Our success depends in large part on our ability
and CWRU’s ability to obtain and maintain patent protection in the United States, the European Union, and other countries with respect
to our proprietary technology and products. We or CWRU have and will seek to protect our proprietary position by filing patent applications
in the United States and internationally that are related to our novel technologies and product candidates. We currently heavily rely
on CWRU to assist with protecting the underlying patents and patent applications under the License Option Agreement.
The patent prosecution process is expensive and
time-consuming, and we may not be able to file and prosecute all necessary or desirable patent applications at a reasonable cost or in
a timely manner. We or CWRU may choose not to seek patent protection for certain innovations and may choose not to pursue patent protection
in certain jurisdictions, and under the laws of certain jurisdictions, patents or other intellectual property rights may be unavailable
or limited in scope. It is also possible that we or CWRU will fail to identify patentable aspects of our discovery and preclinical development
output before it is too late to obtain patent protection. Moreover, in some circumstances, we may not have the right to control the preparation,
filing and prosecution of patent applications, or to maintain the patents, covering technology that we license from third parties. Therefore,
these patents and applications may not be prosecuted and enforced in a manner consistent with the best interests of our business.
The patent position of biotechnology and pharmaceutical
companies generally is highly uncertain, involves complex legal and factual questions and has in recent years been the subject of much
litigation. In addition, the laws of foreign countries may not protect our rights to the same extent as the laws of the United States.
Publications of discoveries in the scientific literature often lag behind the actual discoveries, and patent applications in the United
States and other jurisdictions are typically not published until 18 months after filing, or in limited cases not at all. Therefore, we
cannot know with certainty whether we were the first to make the inventions claimed in our owned or licensed patents or pending patent
applications, or that we were the first to file for patent protection of such inventions. Also, examination is often lengthy and can involve
numerous challenges to the claims sought. As a result, the issuance, scope, validity, enforceability and commercial value of our patent
rights are highly uncertain. Pending and future patent applications may not result in patents being issued which protect our technology
or products, in whole or in part, or which effectively prevent others from commercializing competitive technologies and products. Changes
in either the patent laws or interpretation of the patent laws in the United States, the European Union, and other countries may diminish
the value of the underlying patents under our License Option Agreement or narrow the scope of our patent protection.
Any inability by us or CWRU to protect adequately
the underlying intellectual property covered by the License Option Agreement may have a material adverse effect on our business, operating
results, and financial position.
If we fail to comply with our obligations in
the License Option Agreement with CWRU or other agreements under which we may license intellectual property and other rights from third
parties or otherwise experience disruptions to our business relationships with our future licensors, we could lose the option to license
those rights or other rights that are important to our business.
On July 1, 2020, we signed a License Option Agreement
with CWRU, granting us the exclusive right to license technology and patent portfolios concerning certain immunostimulatory nanotechnology-based
therapeutics and formulations to treat cancer and diseases in humans and for veterinary use. Under the License Option Agreement, CWRU
granted us the exclusive option for a period of two (2) years to negotiate and enter into a license agreement with CWRU, provided that
we meet certain diligence milestones, including but not limited to, (i) delivering a development plan within 18 months, (ii) raising $3
million in either equity, debt, or grant funding, or a combination thereof within 18 months, (iii), generating sufficient preclinical
data to support the identification of the initial field of use to support the initial planned clinical indication for the technology,
(iv) determining manufacturing processes and cGMP requirements to manufacture the initial product for use in toxicology studies, and (v)
identifying required toxicology studies required to support Phase I clinical trials in the initial field of use. In addition, if we enter
into a license agreement with CWRU, we would be responsible for the reimbursement of all past patent costs incurred by CWRU though the
date of the License Option Agreement, which amount has been estimated to be approximately $267,000. We are currently in negotiations on
the final license agreement with CWRU and since July 2020, we have incurred in excess of $4 million towards advancing the Company and
the underlying technology and we currently believe we have met the initial development milestones.
If we fail to comply with our obligations under
the License Option Agreement, or any other future agreement, we may lose the exclusivity of our License Option Agreement, and CWRU may
have the right to terminate the License Option Agreement or restrict our rights, in which event we would not be able to develop or market
products covered by the License Option Agreement, which are the products upon which our business depends. Additionally, any milestones
and other payments associated with these future licenses will make it less profitable for us to develop our drug candidates than if we
had developed the licensed technology internally.
Also, patent prosecution under the License Option
Agreement is controlled by CWRU. If CWRU fails to obtain and maintain patent or other protection for the proprietary intellectual property
we plan to license from them, we could lose our rights to the intellectual property or our exclusivity with respect to those rights, and
our competitors could market competing products using the intellectual property. If disputes over intellectual property and other rights
that we have licensed or plan to license 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. In addition, even if we meet all conditions
under the License Option Agreement, we may not be able to successfully negotiate a license agreement with CWRU with mutually acceptable
terms and conditions that would allow us to pursue a commercial product, which will preclude us from further developing our lead product
candidate, MIE-101.
We may become involved in lawsuits to protect
or enforce our patents or other intellectual property, which could be expensive, time consuming and unsuccessful.
Because competition in our industry is intense,
competitors may infringe or otherwise violate our rights to patents of our licensors or other intellectual property. To counter infringement
or unauthorized use, we or CWRU may be required to file infringement claims, which can be expensive and time-consuming. Any claims we
assert against perceived infringers could provoke these parties to assert counterclaims against us alleging that we infringe their patents.
In addition, in a patent infringement proceeding, a court may decide that a patent of ours or CWRU is invalid or unenforceable, in whole
or in part, construe the patent’s claims narrowly, or refuse to stop the other party from using the technology at issue on the grounds
that our patents do not cover the technology in question. An adverse result in any litigation proceeding could put one or more of our
patents at risk of being invalidated or interpreted narrowly. We may also elect to enter into license agreements in order to settle patent
infringement claims or to resolve disputes prior to litigation, and any such license agreements may require us to pay royalties and other
fees that could be significant. Furthermore, because of the substantial amount of discovery required in connection with intellectual property
litigation, there is a risk that some of our confidential information could be compromised by disclosure.
We may need to license certain intellectual
property from third parties, and such licenses may not be available or may not be available on commercially reasonable terms.
A third party may hold intellectual property,
including patent rights, which are important or necessary to the development of our products. It may be necessary for us to use the patented
or proprietary technology of third parties to commercialize our products, in which case, we would be required to obtain a license from
these third parties on commercially reasonable terms, or our business could be harmed, possibly materially. If we were not able to obtain
a license, or we are not able to obtain a license on commercially reasonable terms, our business could be harmed, possibly materially.
Third parties may initiate legal proceedings
alleging that we are infringing their intellectual property rights, the outcome of which would be uncertain and could have a material
adverse effect on the success of our business.
Our commercial success depends upon our ability,
and the ability of our licensors and collaborators, to develop, manufacture, market and sell our product candidates and use our proprietary
technologies without infringing the proprietary rights of third parties. There is considerable intellectual property litigation in the
biotechnology and pharmaceutical industries. We may become party to, or threatened with, future adversarial proceedings or litigation
regarding intellectual property rights with respect to our products and technology, including proceedings challenging validity before
the United States Patent and Trademark Office (“USPTO”) and/or European Patent Office (“EPO”). Third parties may
assert infringement claims against us or CWRU based on existing patents or patents that may be granted in the future.
If we are found to infringe a third party’s
intellectual property rights, we could be required to obtain a license from such third party to continue developing and marketing our
products and technology. However, we may not be able to obtain any required license on commercially reasonable terms or at all. Even if
we were able to obtain a license, it could be non-exclusive, thereby giving our competitors access to the same technologies licensed to
us. We could be forced, including by court order, to cease commercializing any infringing technology or product. In addition, we could
be found liable for monetary damages, including treble damages and attorneys’ fees if we are found to have willfully infringed a
patent. A finding of infringement could prevent us from commercializing our product candidates or force us to cease some of our business
operations, which could materially harm our business. Claims that we have misappropriated the confidential information or trade secrets
of third parties could have a similar negative impact on our business.
If we are unable to protect the confidentiality
of our trade secrets, our business and competitive position would be harmed.
In addition to seeking patents for some of our
technology and product candidates, we also plan to rely on trade secrets, including unpatented know-how, technology and other proprietary
information, to maintain our competitive position. Any NDAs or similar agreements entered into by the Company may not be with all relevant
parties, or adequately protect the confidentiality of our trade secrets. Moreover, to the extent we enter into such agreements, any of
these parties may breach the agreements and disclose our proprietary information, including our trade secrets, and we may not be able
to obtain adequate remedies for such breaches. Enforcing a claim that a party illegally disclosed or misappropriated a trade secret is
difficult, expensive and time-consuming, and the outcome is unpredictable. In addition, some courts inside and outside the United States
are less willing or unwilling to protect trade secrets. If any of our trade secrets were to be lawfully obtained or independently developed
by a competitor, we would have no right to prevent them, or those to whom they communicate them, from using that technology or information
to compete with us. If any of our trade secrets were to be disclosed to or independently developed by a competitor, our competitive position
would be harmed.
Risks
Related to Our Employee Matters, Managing Growth and Macroeconomic Conditions
Our future success depends on our ability to
attract, hire, retain and motivate executives, key employees, and our general workforce.
We are highly dependent on the product development,
clinical and business development expertise of the principal members of our management, scientific and clinical teams. Although we have
entered into offer letters with our executives and employees, each of them may terminate their employment with us at any time. We do not
maintain “key person” insurance for any of our executives or other employees.
In addition, our business plan relies significantly
on the continued services of our President and Chief Executive Officer, Steven King. If we were to lose his services, including through
death or disability, our ability to continue to execute our business plan would be materially impaired. The Company has not entered into
an employment agreement with Mr. King, or any other officer of the Company.
Recruiting and retaining qualified scientific,
clinical, regulatory, and manufacturing personnel is critical to our success. Due to the small size of the Company and the limited number
of employees, each of our executives and key employees serves in a critical role. The loss of the services of our executive officers or
other key employees could impede the achievement of our development objectives and seriously harm our ability to successfully implement
our business strategy. Furthermore, replacing executive officers and key employees may be difficult and may take an extended period of
time because of the limited number of individuals in our industry with the breadth of skills and experience required to successfully develop,
gain regulatory approval of, and commercialize products. Competition to hire from this limited pool is intense, and we may be unable to
hire, train, retain or motivate these key personnel on acceptable terms given the competition among numerous pharmaceutical and biotechnology
companies for similar personnel. We also may experience competition for the hiring of scientific and clinical personnel from universities
and research institutions. In addition, we rely on consultants and advisors, including scientific and clinical advisors, to assist us
in product manufacturing, preclinical development, clinical development, regulatory strategy, and commercial strategy. Our consultants
and advisors may be employed by employers other than us and may have commitments under consulting or advisory contracts with other entities
that may limit their availability to provide services to us. If we are unable to continue to attract and retain high quality personnel,
our ability to pursue our development strategy will be limited.
We expect to expand our research and development
function, as well as our corporate operations, and as a result, we may encounter difficulties in managing our growth, which could disrupt
our operations.
We expect to experience significant growth in
the number of our employees and the scope of our operations, particularly in the areas of product manufacturing, preclinical research,
clinical development, and regulatory affairs, as capital resources become available. To manage our anticipated future growth, we must
also implement and improve our managerial, operational and financial systems, identify new facilities and continue to recruit and train
additional qualified personnel. Due to our limited financial resources, we may not be able to effectively manage the expansion of our
operations or recruit and train additional qualified personnel. The expansion of our operations may lead to significant costs and may
divert our management and business development resources. Any inability to manage growth could delay the execution of our business plans
or disrupt our operations.
We may face risks related to securities litigation
that could result in significant legal expenses and settlement or damage awards.
We may in the future become subject to claims
and litigation alleging violations of the securities laws or other related claims, which could harm our business and require us to incur
significant costs. We are generally obliged, to the extent permitted by law, to indemnify our current and former directors and officers
who are named as defendants in these types of lawsuits. Regardless of the outcome, litigation may require significant attention from
management and could result in significant legal expenses, settlement costs or damage awards that could have a material impact on our
financial position, results of operations and cash flows.
Risks
Related to Our Common Stock
Our common stock is quoted on the OTCQB tier
of the OTC Markets, which could adversely affect the market price and liquidity of our common stock.
Our common stock is quoted on OTCQB tier of the
OTC Markets. The quotation of our shares on such marketplace may result in a less liquid market available for existing and potential stockholders
to trade shares of our common stock, could depress the trading price of our common stock and could have a long-term adverse impact on
our ability to raise capital in the future.
There can be no assurance that there will be an
active market for our shares of common stock either now or in the future or that stockholders will be able to liquidate their investment
or liquidate it at a price that reflects the value of the business. As a result, our stockholders may not find purchasers for our securities
should they to desire to sell them.
If we fail to meet the eligibility requirements
of OTCQB, we could be removed from the OTCQB which would limit the ability of broker-dealers to sell our securities in the secondary market.
The companies whose securities are quoted on the
OTCQB Venture Market must maintain certain eligibility criteria, including having a minimum bid price for of $0.01, having at least 50
beneficial shareholders owning at least 100 shares of common stock, a public float of at least 10% of total issued and outstanding shares
of common stock, as defined by OTC Markets, current in the payment of annual fees and certifications, among other requirements as defined
by the OTC Markets, to continue to be quoted on the OTCQB. There is no guarantee that we will continue to meet OTCQB criteria
to continue to have our common stock be quoted thereon. As a result, failure to be quoted on the OTCQB would cause the Company’s
common stock to be quoted on the OTC Pink Open Market, which may severely adversely affect the market liquidity for our shares by limiting
the ability of broker-dealers to sell such shares, and the ability of stockholders to sell their shares in the secondary market. In addition,
if we are no longer quoted on the OTCQB, there can be no assurance that will meet the eligibility criteria and requalify for quotation
on the OTCQB.
Although our stock is quoted on the OTCQB,
we could subsequently be removed from the OTCQB if we fail to remain current with our financial reporting requirements.
Companies trading on the OTCQB must be reporting
issuers under Section 12 of the Exchange Act and must be current in their reports under Section 13 in order to maintain price quotation
privileges on the OTCQB. If we fail to remain current in our reporting requirements, we would be removed from the OTCQB. As a result,
the market liquidity of our securities could be severely adversely affected by limiting the ability of broker-dealers to trade our securities
and the ability of stockholders to sell their securities in the secondary market.
Our Board has discretionary authority to implement
a reverse stock split at a ratio of 1:2 to 1:4 at any time on or before June 25, 2022
While we aim that the Discretionary Reverse Stock
Split will be sufficient to obtain our planned listing on the Nasdaq Stock Market or other national exchange, it is possible that, the
ratio of the Discretionary Reverse Stock Split may be inadequate to meet the minimum bid price requirements and we may not be able to
achieve our planned listing on the Nasdaq Stock Market or other national exchange.
In addition, there are several risks associated
with the Discretionary Reverse Stock Split, including that the Discretionary Reverse Stock Split may not result in a sustained increase
in the per share price of our common stock. There is no assurance that:
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the market price per share of the common stock
after the Discretionary Reverse Stock Split will rise in proportion to the reduction in the number of shares of the common stock outstanding
before the Discretionary Reverse Stock Split;
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the Discretionary Reverse Stock Split will result
in a per share price that will attract brokers and investors who do not trade in lower priced stocks;
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the Discretionary Reverse Stock Split will result
in a per share price that will increase our ability to attract and retain employees and other service providers; and
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The Discretionary Reverse Stock Split will result
in a sustained per share price that meets the initial listing requirements of the Nasdaq Stock Market.
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Stockholders should note that the effect of the
Discretionary Reverse Stock Split, if any, upon the market price for the common stock cannot be accurately predicted. In particular, we
cannot assure you that prices for shares of the common stock after the Discretionary Reverse Stock Split will be two (2) to four (4) times,
as applicable, the prices for shares of the common stock immediately prior to the Discretionary Reverse Stock Split. Furthermore, even
if the market price of the common stock does rise following the Discretionary Reverse Stock Split, we cannot assure you that the market
price of the common stock immediately after the proposed Discretionary Reverse Stock Split will be maintained for any period of time.
Even if an increased per-share price can be maintained, the Discretionary Reverse Stock Split may not achieve the desired results of listing
our common stock on The Nasdaq Stock Market. Moreover, because some investors may view the reverse stock split negatively, we cannot assure
you that the Discretionary Reverse Stock Split will not adversely impact the market price of the common stock.
The market price of the common stock will also
be based on our performance and other factors, some of which are unrelated to the Discretionary Reverse Stock Split or the number of shares
outstanding. If the Discretionary Reverse Stock Split is effected and the market price of the common stock declines, the percentage decline
as an absolute number and as a percentage of our overall market capitalization may be greater than would occur in the absence of a reverse
stock split. The total market capitalization of the common stock after implementation of the Discretionary Reverse Stock Split when and
if implemented may also be lower than the total market capitalization before the Discretionary Reverse Stock Split. Furthermore, the liquidity
of the common stock could be adversely affected by the reduced number of shares that would be outstanding after the Discretionary Reverse
Stock Split.
While we aim that the Discretionary Reverse Stock
Split will be sufficient to obtain our listing on the Nasdaq Stock Market, it is possible that, even if the Discretionary Reverse Stock
Split results in a bid price for the common stock that exceeds the required price per share, another reverse split may be necessary in
the future and we may not be able to continue to satisfy the other criteria for continued listing of the common stock on the Nasdaq Stock
Market.
In addition, the Reverse Stock Split may result
in some stockholders owning “odd lots” of less than 100 shares of common stock. Odd lot shares may be more difficult to sell,
and brokerage commissions and other costs of transactions in odd lots are generally somewhat higher than the costs of transactions in
“round lots” of even multiples of 100 shares.
The market for our common stock is subject
to rules relating to low-priced stock (“Penny Stock”) which may limit our ability to raise capital.
Our common stock is currently subject to the “penny
stock rules” adopted pursuant to Section 15(g) of the Exchange Act. In general, the penny stock rules apply to non-NASDAQ or non-national
stock exchange companies whose common stock trades at less than $5.00 per share or which have tangible net worth of less than $5,000,000
($2,000,000 if the company has been operating for three or more years). Such rules require, among other things, that brokers who trade
“penny stock” on behalf of persons other than “established customers” complete certain documentation, make suitability
inquiries of investors and provide investors with certain information concerning trading in the security, including a risk disclosure
document, quote information, broker’s commission information and rights and remedies available to investors in penny stocks. Many
brokers have decided not to trade “penny stock” because of the requirements of the penny stock rules, and as a result, the
number of broker-dealers willing to act as market makers in such securities is limited. The “penny stock rules,” therefore,
may have an adverse impact on the market for our common stock and may affect our ability to raise additional capital.
FINRA sales practice requirements may limit
a stockholder’s ability to buy and sell our common stock.
The Financial Industry Regulatory Authority, or
FINRA, has adopted rules requiring that, in recommending an investment to a customer, a broker-dealer must have reasonable grounds for
believing that the investment is suitable for that customer. Prior to recommending speculative or low-priced securities to their non-institutional
customers, broker-dealers must make reasonable efforts to obtain information about the customer’s financial status, tax status,
investment objectives and other information. Under interpretations of these rules, FINRA has indicated its belief that there is a high
probability that speculative or low-priced securities will not be suitable for at least some customers. If these FINRA requirements are
applicable to us or our securities, they may make it more difficult for broker-dealers to recommend that at least some of their customers
buy our common stock, which may limit the ability of our stockholders to buy and sell our common stock and could
have an adverse effect on the market for and price of our common stock.
Future sales of shares by existing stockholders
could cause the Company’s stock price to decline.
If existing stockholders of the Company sell,
or indicate an intention to sell, substantial amounts of the Company’s common stock in the public market after the Reverse Merger,
the trading price of the common stock of the combined company could decline. Pursuant to the Reverse Merger, shareholders of Private Mosaic
owned approximately 88% of the fully diluted shares of common stock outstanding as of December 31, 2021, on an as-converted basis. In
addition, our shareholders are not restricted in the price at which they can sell their shares. Shares sold at a price below the current
market price at which our common stock is trading may cause the market price of our common stock to decline.
We expect our stock price to be volatile, and
the market price of our common stock may drop unexpectedly.
The market price of our common stock could be
subject to significant fluctuations. For instance, during the year ended December 31, 2021, the low and high trading prices of our common
stock has ranged from $0.10 to $5.00 per share. Market prices for securities of early-stage pharmaceutical, biopharmaceutical, and other
life sciences companies have historically been particularly volatile.
Some of the factors that may cause the market
price of our common stock to fluctuate include:
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results from preclinical testing and clinical trial results, and our ability to obtain regulatory approvals for our product candidates, and delays or failures to obtain such approvals;
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issues in manufacturing our product candidates;
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the entry into, or termination of, key agreements, including our License Option Agreement with CWRU and any future license agreement;
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the initiation of, material developments in, or conclusion of litigation to enforce or defend any of the underlying intellectual property rights under the License Option Agreement or defend against the intellectual property rights of others;
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announcements by competitors of new commercial products, clinical progress or the lack thereof, significant contracts, or commercial relationships;
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the introduction of technological innovations or new therapies that compete with our potential products;
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the loss of key employees;
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general and industry-specific economic conditions that may affect our research and development expenditures;
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changes in the structure of healthcare payment systems; and
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issuance of new shares of common stock from raising additional capital, which may not be available on acceptable terms, or at all; and
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period-to-period fluctuations in our financial results.
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Moreover, the stock markets in general have experienced
substantial volatility that has often been unrelated to the operating performance of individual companies. These broad market fluctuations
may also adversely affect the trading price of our common stock.
In the past, following periods of volatility in
the market price of a company’s securities, stockholders have often instituted class action securities litigation against those
companies. Such litigation, if instituted, could result in substantial costs and diversion of management attention and resources, which
could significantly harm our financial position.
Our share price could decline as a result of
short sales.
When an investor sells stock that he does not
own, it is known as a short sale. The seller, anticipating that the price of the stock will go down, intends to buy stock to cover his/her
sale at a later date. If the price of the stock goes down, the seller will profit to the extent of the difference between the price at
which he originally sold it less his later purchase price. Short sales enable the seller to profit in a down market. Short sales could
place significant downward pressure on the price of our common stock. Penny stocks which do not trade on an exchange, such as our common
stock, are particularly susceptible to short sales.
We may issue preferred stock, and the terms
of such preferred stock may reduce the value of our common stock.
We are authorized to issue up to a total of 5,000,000
shares of preferred stock in one or more series, of which, 4,300,000 has been undesignated as of December 31, 2021. Our Board of Directors
may determine whether to issue shares of preferred stock without further action by holders of our common stock. If we issue shares of
preferred stock, it could affect the rights or reduce the value of our common stock. In particular, specific rights granted to future
holders of preferred stock could be used to restrict our ability to merge with or sell our assets to a third party. These terms may include
voting rights, preferences as to dividends and liquidation, conversion and redemption rights, and sinking fund provisions. As we seek
capital for our business, such capital may be raised through the issuance of preferred stock.
Our executive officers, directors and principal
stockholders, if they choose to act together, will have the ability to control all matters submitted to stockholders for approval.
Shareholders of Private Mosaic beneficially own
shares representing approximately 88% of our capital stock, on an as-converted basis, including the Series B Preferred Stock. As a result,
if these stockholders were to choose to act together, they would be able to control all matters submitted to our stockholders for approval,
as well as our management and affairs. For example, these persons, if they choose to act together, would control the election of directors
and approval of any merger, consolidation or sale of all or substantially all of our assets. This concentration of ownership control may:
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delay, defer or prevent a change in control;
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entrench our management and the board of directors; or
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impede a merger, consolidation, takeover or other business combination involving the Company that other stockholders may desire.
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Our amended and restated certificate of incorporation
and amended and restated bylaws provides that state or federal court located within the state of Delaware will be the sole and exclusive
forum for substantially all disputes between us and our stockholders, which could limit its stockholders’ ability to obtain a favorable
judicial forum for disputes with us or our directors, officers or other employees.
Section XIV of our amended and restated certificate
of incorporation provides that “Unless the Corporation consents in writing to the selection of an alternative forum, the Court of
Chancery of the State of Delaware shall, to the fullest extent permitted by applicable law, be the sole and exclusive forum for any stockholder
(including a beneficial owner) to bring (A) any derivative action or proceeding brought on behalf of the Corporation, (B) any action asserting
a claim of breach of a fiduciary duty owed by any director, officer, employee or agent of the Corporation to the Corporation or the Corporation’s
stockholders, (C) any action asserting a claim against the Corporation, its directors, officers or employees or agents arising pursuant
to any provision of the DGCL, this Amended and Restated Certificate of Incorporation or the Corporation’s bylaws, or (D) any action
asserting a claim against the Corporation, its directors, officers or employees or agents governed by the internal affairs doctrine, except
as to each of (A) through (D) above, for any claim as to which the Court of Chancery determines that there is an indispensable party not
subject to the jurisdiction of the Court of Chancery (and the indispensable party does not consent to the personal jurisdiction of the
Court of Chancery within ten days following such determination), which is vested in the exclusive jurisdiction of a court or forum other
than the Court of Chancery, or over which the Court of Chancery does not have subject matter jurisdiction. To the fullest extent permitted
by law, any person or entity purchasing or otherwise acquiring any interest in shares of capital stock of the Corporation shall be deemed
to have notice of and consented to the provisions of this Article XIV.”
The exclusive forum provision in our amended and
restated certificate of incorporation and amended and restated bylaws will not relieve us of our duty to comply with the federal securities
laws and the rules and regulations thereunder, and shareholders will not be deemed to have waived our compliance with these laws, rules
and regulations.
This exclusive forum provision may limit a shareholder’s
ability to bring a claim in a judicial forum of its choosing for disputes with us or our directors, officers or other employees, which
may discourage lawsuits against us or our directors, officers or other employees. In addition, shareholders who do bring a claim in the
state or federal court in the State of Delaware could face additional litigation costs in pursuing any such claim, particularly if they
do not reside in or near Delaware. The state or federal court of the State of Delaware may also reach different judgments or results than
would other courts, including courts where a shareholder would otherwise choose to bring the action, and such judgments or results may
be more favorable to us than to our shareholders. However, the enforceability of similar exclusive forum provisions in other companies’
certificates of incorporation have been challenged in legal proceedings, and it is possible that a court could find this type of provision
to be inapplicable to, or unenforceable in respect of, one or more of the specified types of actions or proceedings. If a court were to
find the exclusive forum provision contained in our amended and restated certificate of incorporation to be inapplicable or unenforceable
in an action, we might incur additional costs associated with resolving such action in other jurisdictions.
Anti-takeover provisions contained in our amended
and restated certificate of incorporation and amended and restated bylaws, as well as provisions of Delaware law, could impair a takeover
attempt.
The Company’s amended and restated certificate
of incorporation and amended and restated bylaws contain provisions that could have the effect of delaying or preventing changes in control
or changes in our management without the consent of our board of directors.
These provisions include:
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providing that our directors may be removed only for cause by the affirmative vote of the holders of at least 75% of the voting power of our then outstanding shares of common stock entitled to vote generally for the election of directors;
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providing that any action required or permitted to be taken by the stockholders must be effected at a duly called annual or special meeting of stockholders and may not be effected by any consent in writing in lieu of a meeting of such stockholders, subject to the rights of the holders of any series of preferred stock with respect to such series, if any;
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providing that special meetings of our stockholders may only be called by the board of directors pursuant to a resolution adopted by the affirmative vote of a majority of the board of directors;
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providing that our board of directors can be divided into three classes of directors, with each class as nearly equal in number as possible, serving staggered three year terms, other than directors which may be elected by holders of preferred stock, if any. This system of electing and removing directors may tend to discourage a third party from making a tender offer or otherwise attempting to obtain control of us, because it could have the effect of increasing the length of time necessary to change the composition of a majority of the board of directors. In general, at least two annual meetings of stockholders will be necessary for stockholders to effect a change in a majority of the members of the board of directors;
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providing that all board vacancies, including newly created directorships, may, except as otherwise required by law, be filled by the affirmative vote of a majority of directors then in office, even if less than a quorum, or by a sole remaining director and shall not be filled by the stockholders;
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providing that our amended and restated bylaws may only be amended by the affirmative vote of the holders of at least two-thirds of our then outstanding common stock;
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providing the ability of our board of directors to determine whether to issue shares of our preferred stock and to determine the price and other terms of those shares, including preferences and voting rights, without stockholder approval, which could be used to significantly dilute the ownership of a hostile acquirer; and
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limiting the liability of, and providing indemnification to, our directors and officers.
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These provisions, alone or together, could delay
hostile takeovers and changes in control of the Company or changes in our board of directors and management.
Any provision of our amended and restated certificate
of incorporation or amended and restated bylaws or Delaware law that has the effect of delaying or deterring a change in control could
limit the opportunity for our security holders to receive a premium for their securities and could also affect the price that some investors
are willing to pay for our securities
We do not expect to pay any cash dividends
in the foreseeable future.
We expect to retain our future earnings, if any,
to fund the development and growth of our business. As a result, capital appreciation, if any, of our common stock will be the sole source
of gain, if any, for any stockholders for the foreseeable future.