UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
10-K
(Mark
One)
☒ Annual Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For
the Fiscal Year Ended December 31, 2020
☐
Transition
Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the transition period from
_______________ to
________________
Commission
File Number: 001-39070
MONOPAR
THERAPEUTICS INC.
(Exact
name of registrant as specified in its charter)
DELAWARE
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32-0463781
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(State
or other jurisdiction of incorporation or
organization)
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(I.R.S.
employer identification number)
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1000
Skokie Blvd., Suite 350, Wilmette, IL
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60091
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(Address
of principal executive offices)
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(zip
code)
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(847)
388-0349
(Registrant’s
telephone number, including area code)
Securities
registered pursuant to Section 12(b) of the Act:
Title
of each class
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Trading
Symbol(s)
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Name
of each exchange on which registered
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Common stock, $0.001 par value
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MNPR
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The
Nasdaq Stock Market LLC
(Nasdaq
Capital Market)
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Securities
registered pursuant to section 12(g) of the Act:
None
Indicate by check mark if the registrant is a
well-known seasoned issuer, as defined in Rule 405 of the
Securities Act. Yes ☐ No ☒
Indicate by check mark if the registrant is not
required to file reports pursuant to Section 13 or Section 15(d) of
the Act. Yes ☐ No ☒
Indicate by check mark whether the registrant (1)
has filed all reports required to be filed by Section 13 or 15(d)
of the Securities Exchange Act of 1934 during the preceding 12
months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has
submitted electronically every Interactive Data File required to be
submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of
this chapter) during the preceding 12 months (or for such shorter
period that the registrant was required to submit and post such
files). Yes ☒ No ☐
Indicate
by check mark whether the registrant is a large accelerated filer,
an accelerated filer, a non-accelerated filer, a smaller reporting
company or emerging growth company. See the definitions of
“large accelerated filer,” “accelerated
filer,” “smaller reporting company” and
“emerging growth company” in Rule 12b-2 of the Exchange
Act.
Large
accelerated filer
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☐
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Accelerated
filer
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☐
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Non-accelerated
filer
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☒
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Smaller reporting
company
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☒
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Emerging
growth company
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☒
|
If an emerging growth company, indicate by check
mark if the registrant has elected not to use the extended
transition period for complying with any new or revised financial
accounting standards provided pursuant to Section 13(a) of the
Exchange Act. ☒
Indicate by check
mark whether the registrant has filed a report on and attestation
to its management’s assessment of the effectiveness of its
internal control over financial reporting under Section 404(b) of
the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public
accounting firm that prepared or issued its audit
report. ☐
Indicate by check mark whether the registrant is a
shell company (as defined in Rule 12b-2 of the Act). Yes
☐ No
☒
State the aggregate market value of the voting and non-voting
common equity held by non-affiliates computed by reference to the
price at which the common equity was last sold, or the average bid
and asked price of such common equity, as of the last business day
of the registrant’s most recently completed second fiscal
quarter. The aggregate market value of the voting and non-voting
common stock held by non-affiliates of the registrant as of
June 30, 2020 was $17,438,356, based on the closing price
reported for such date on the Nasdaq Capital Market.
The
number of shares outstanding with respect to each of the classes of
our common stock, as of March 5, 2021, is set forth
below:
Class
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Number
of shares outstanding
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Common stock, par
value $0.001 per share
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12,566,929
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The
documents incorporated by reference are as follows: portions of the
Registrant’s Proxy Statement for its 2021 annual meeting of
stockholders are incorporated by reference into Part
III.
MONOPAR
THERAPEUTICS INC.
TABLE
OF CONTENTS
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Page
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Part I
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Item 1.
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3
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Item 1A.
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27
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Item 2.
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55
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Item 3.
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55
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Part II
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Item 5.
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56
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Item 7.
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57
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Item 8.
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73
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Item 9.
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74
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Item 9A.
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74
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Part III
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Item 10.
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75
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Item 11.
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75
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Item 12.
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75
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Item 13.
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75
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Item 14.
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75
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Part IV
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Item 15.
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76
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Item 16.
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Form 10-K Summary
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N/A
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Forward-Looking
Statements
This
Annual Report on Form 10-K contains “forward-looking
statements” within the meaning of Section 27A of the
Securities Act of 1933, as amended (the “Act”) and
Section 21E of the Securities Exchange Act of 1934, as amended. All
statements other than statements of historical facts included in
this Annual Report on Form 10-K are forward-looking statements. The
words “hopes,” “believes,”
“anticipates,” “plans,”
“seeks,” “estimates,”
“projects,” “expects,”
“intends,” “may,” “could,”
“should,” “would,” “will,”
“continue,” and similar expressions are intended to
identify forward-looking statements. The following uncertainties
and factors, among others, could affect future performance and
cause actual results to differ materially from those matters
expressed in or implied by forward-looking statements:
● our ability
to raise sufficient funds in the next 12 months in order for us to
complete the Phase 3 portion of our Validive Phase 2b/3 clinical
trial and if required, complete a smaller second confirmatory Phase
3 clinical trial, to support further
development of camsirubicin beyond Phase 2 clinical trial, to
support further development of potential radio-immuno-therapeutics
to treat severe COVID-19 (patients with SARS-CoV-2 infection), to
support additional development of MNPR-101 and related compounds
and generally to support our current and any future product
candidates through completion of trials, approval processes and, if
applicable, commercialization;
● our ability
to find a suitable pharmaceutical partner to further our
development efforts, if we are unable to raise sufficient
additional financing;
● risks and
uncertainties associated with our research and development
activities, including our clinical trials;
● estimated
timeframes for our clinical trials and regulatory reviews for
approval to market products;
● plans to
research, develop and commercialize our current and future product
candidates;
● the rate
and degree of market acceptance and the competitive clinical
efficacy and safety of any products for which we receive marketing
approval;
● the
difficulties of commercialization, marketing and manufacturing
capabilities and strategy;
●
uncertainties of intellectual property position and
strategy;
● challenging
future financial performance;
● our ability
to attract and retain key personnel;
● the risks
inherent in our estimates regarding expenses, capital requirements
and need for additional financing;
● the impact
of government laws and regulations;
● the
uncertain impact of the COVID-19 pandemic on our ability to advance
our clinical programs and raise additional financing;
and
● uncertainty
of financial and operational projections.
Although we believe
that the expectations reflected in such forward-looking statements
are appropriate, we can give no assurance that such expectations
will be realized. Cautionary statements are disclosed in this
Annual Report on Form 10-K, including without limitation statements
in the section entitled “Risk Factors,” addressing
forward-looking statements. All subsequent written and oral
forward-looking statements attributable to us or persons acting on
our behalf are expressly qualified in their entirety by the
cautionary statements. We undertake no obligation to update any
statements made in this Annual Report on Form 10-K or elsewhere,
including without limitation any forward-looking statements, except
as required by law.
Any
forward-looking statements in this Annual Report reflect our
current views with respect to future events or to our future
financial performance and involve known and unknown risks,
uncertainties and other factors that may cause our actual results,
performance or achievements to be materially different from any
future results, performance or achievements expressed or implied by
these forward-looking statements. Information that is based on
estimates, forecasts, projections, market research or similar
methodologies is inherently subject to uncertainties and actual
events or circumstances may differ materially from events and
circumstances reflected in this information.
Risks Associated with our Business
Our
business is subject to numerous risks and uncertainties, including
those highlighted in “Item 1A - Risk Factors”. These
risks include, among others, the following:
● We are a
clinical stage biopharmaceutical company with a history of
financial losses. We expect to continue to incur significant losses
for the foreseeable future and may never achieve or maintain
profitability, which could result in a decline in the market value
of our common stock.
● Funds
raised to-date are not sufficient to complete the Validive Phase
2b/3 ("VOICE") clinical program, including, if required, completing
a smaller second Phase 3 confirmatory clinical trial, to support
further development of camsirubicin beyond Phase 2, or to support
continued development of MNPR-101 and related compounds. If we are
unable to raise enough funds in the next 12 months from the sale of
our common stock or other financing efforts, we may have to
consider strategic options such as out-licensing Validive or other
product candidates, entering into a clinical partnership, or
terminating one or more programs. There can be no assurance that we
can find a suitable partner on satisfactory terms.
● We have a
limited operating history, no revenues from operations, and are
dependent upon raising capital to continue our drug development
programs.
● We do not
have and may never have any approved products on the market. Our
business is highly dependent upon receiving approvals from various
U.S. and international governmental agencies and will be severely
harmed if we are not granted approval to manufacture and sell our
product candidates.
● Our
clinical trials may not yield sufficiently conclusive results for
regulatory agencies to approve the use of our
products.
● If we
experience delays or difficulties in the enrollment of subjects in
clinical trials, our receipt of necessary regulatory approvals will
be delayed or prevented, which will materially delay our program
schedules and adversely affect our financial
condition.
● We rely on
third parties to conduct our manufacturing, non-clinical studies,
and our clinical trials. If these third parties do not successfully
carry out their contractual duties or meet expected deadlines or
performance goals, the initiation or conduct of our clinical trials
may be delayed and we may be unable to obtain regulatory approval
for, or commercialize our, current product candidates or any future
products, and our financial condition will be adversely
affected.
● We face
significant competition from other biotechnology and pharmaceutical
companies, and our operating results will suffer if we fail to
compete effectively. Competition and technological change may make
our product candidates obsolete or non-competitive.
● The
termination of third-party licenses will adversely affect our
rights to important compounds or technologies.
● If we and
our third-party licensors do not obtain and preserve protection for
our respective intellectual property rights, our competitors may be
able to take advantage of our development efforts to develop
competing drugs.
● If we lose
key management leadership, and/or scientific personnel, and if we
cannot recruit qualified employees or other significant personnel,
we may experience program delays and increased compensation costs,
and our business will be materially disrupted.
● The
COVID-19 pandemic could have a substantial negative impact on our
business, financial condition, operating results, stock price and
ability raise additional funds.
PART
I
You should read the following
discussion in conjunction with our financial statements as of
December 31, 2020 and the notes to such financial statements
included elsewhere in this Annual Report on Form 10-K.
Overview
We are a clinical stage
biopharmaceutical company focused on developing proprietary
therapeutics designed to extend life or improve quality of life for
cancer patients. We are building a drug development pipeline
through the licensing and acquisition of oncology therapeutics in
late preclinical and clinical development stages. We leverage our
scientific and clinical experience to help reduce the risk and
accelerate the clinical development of our drug product
candidates.
Given the COVID-19 pandemic
and its effects on clinical trials, we have adjusted and simplified
the design of the clinical trial for our lead product candidate,
Validive (clonidine mucobuccal tablet; clonidine MBT) for the
prevention of chemoradiotherapy (“CRT”)-induced
severe
oral
mucositis in patients with
oropharyngeal cancer
(“VOICE”), to a seamless Phase 2b/3 design. This design
is based on a binary primary endpoint, incidence of severe oral
mucositis (“SOM”), and will minimize touch points with
the clinical trial sites and patients. The VOICE trial
(NCT04648020) is randomized, placebo-controlled and double blinded
and allows a sample size adjustment for the Phase 3 portion of the
trial if supported by the interim analysis at the end of Phase 2b.
The entire trial has been designed to enroll up to 260 evaluable
patients. This modification in design allowed us to activate and
commence dosing the VOICE trial without requiring near-term
financing. To complete the VOICE clinical program, including, if
required, completing a smaller second Phase 3 confirmatory clinical
trial, we will require additional funding in the millions or tens
of millions of dollars (depending on if we have consummated a
collaboration or partnership or neither for Validive) which we are
planning to pursue in the next 12 months.
Along with our VOICE trial,
we continue to prioritize supporting the camsirubicin Phase 2
clinical trial for which we signed a collaboration agreement in
June 2019 with Grupo Español de Investigación en Sarcomas
(“GEIS”), discussed in further detail below. We believe
we have funds sufficient to enable GEIS to commence its open label
Phase 2 clinical trial in the second quarter of 2021 and to obtain
results from the run-in portion of the trial.
Additionally, we continue to
develop MNPR-101 in several indications as discussed
below.
Our
Product Pipeline
Our Product Candidates
Validive (clonidine mucobuccal tablet; clonidine MBT)
Validive is designed to be
used prophylactically to prevent SOM in patients undergoing CRT for
oropharyngeal cancer (“OPC”). SOM is a painful and
debilitating inflammation and ulceration of the mucous membranes
lining the oral cavity and oropharynx in response to
chemoradiation. The majority of patients receiving CRT to treat
their OPC develop SOM, which remains one of the most common and
devastating side effects of treatment in this indication. The
potential clinical benefits to preventing SOM in patients include:
reduced treatment discontinuations leading to potentially improved
overall survival outcomes; reduced mouth and throat pain avoiding
the need for feeding tube intervention; decreased long-term and
often permanent debilitation arising from swallowing difficulties,
neck and throat spasms, and lung complications due to food
aspiration; and decreased reliance on pain medication. Our
mucobuccal tablet (“MBT”) formulation is a novel
delivery system for clonidine that allows for prolonged and
enhanced local delivery of drug in the regions of mucosal radiation
damage in patients with OPC. Validive has been granted fast track
designation in the U.S., orphan drug designation in the EU, and has
global intellectual property patent protection through mid-2029 not
accounting for possible extensions.
In September 2017, we
exercised an option to license Validive from Onxeo S.A., the
company that developed Validive through its Phase 2 clinical trial.
In the completed Phase 2 clinical trial, Validive demonstrated
clinically meaningful efficacy signals within the 64-patient OPC
population randomized to placebo, Validive 50 µg dose and
Validive 100 µg dose. The absolute incidence of SOM in OPC
patients who received a dose of Validive 100 µg once per day
was reduced by 26.3% (incidence rate of 65.2% in placebo, 45.0% in
Validive 50 µg group, and 38.9% in Validive 100 µg
group). The median time to onset of SOM was 37 days in the placebo
cohort; 45 days in the Validive 50 µg cohort and no median
time of onset was reached in the Validive 100 µg group since
fewer than half of this cohort of patients developed SOM. There was
also a 37.8% reduction in the median duration of the SOM for the
Validive 100 µg group versus placebo (41.0 days placebo group,
34.0 days Validive 50 µg group, and 25.5 days Validive 100
µg group) in patients that developed SOM. Median duration of
SOM across all patients, inclusive of both those that did and did
not develop SOM, was 17 days in the placebo group and 0 days in
each of the Validive 50 and 100 µg groups. A positive dose
response was seen in each of these three clinical endpoints.
Additionally, patients in the Validive cohorts in the Phase 2
clinical trial demonstrated a safety profile similar to that of
placebo. Onxeo’s promising preclinical studies and Phase 2
clinical trial have informed the design and conduct of what we
believe will be an effective Phase 2b/3 and smaller confirmatory
Phase 3 clinical program.
SOM typically arises in the
immune tissue at the back of the tongue and throat, which comprise
the oropharynx, and consists of acute severe tissue damage and pain
that prevents patients from swallowing, eating and drinking.
Validive stimulates the alpha-2 adrenergic receptor (alpha-2AR) on
macrophages (white blood cells present in the immune tissues of the
oropharynx) suppressing pro-inflammatory cytokine expression.
Validive exerts its effects locally in the oral cavity and
oropharynx over a prolonged period of time through its unique MBT
formulation. Patients who develop SOM are also at increased risk of
developing late onset toxicities, including trismus (jaw, neck, and
throat spasms), dysphagia, and lung complications, which are often
irreversible and lead to increased hospitalization and the need for
further interventions sometimes years after completion of CRT. We
believe that the prevention of SOM by Validive will have the
potential to reduce treatment discontinuation and/or treatment
delays potentially leading to improved survival outcomes, and
reducing or eliminating these long-term morbidities resulting from
CRT.
The OPC target population for
Validive is the most rapidly growing segment of head and neck
cancer (“HNC”) patients, with an estimated greater than
40,000 new cases of OPC in the U.S alone in 2021. The growth in OPC
is driven by the increasing prevalence of oral human papilloma
virus (“HPV”) infections in the U.S. and around the
world. Despite the availability of a pediatric/adolescent HPV
vaccine, the rate of OPC incidence in adults is not anticipated to
be materially reduced for decades due to low adoption of the
vaccine to date. As a result, the incidence of HPV-driven OPC is
projected to increase for years to come and will continue to
represent a clinical need for Validive for the prevention of
CRT-induced SOM in patients with OPC since CRT is the standard of
care treatment, and we anticipate that radiation will remain an
important treatment modality for these patients for years to
come.
Validive is an MBT of
clonidine. The MBT formulation was developed to enhance drug
delivery to the oral mucosa while minimizing systemic absorption.
The Validive tablet is tasteless and odorless and is
self-administered once daily by affixing it to the outside of the
patient’s upper gum where it dissolves slowly over a period
of several hours, resulting in the extended release of clonidine
into the oral cavity and oropharynx, the sites of SOM following CRT
for OPC. Validive treatment begins on the first day of CRT and
continue daily through the last day of radiation.
The VOICE trial is a double blinded, placebo
controlled Phase 2b/3 clinical trial of Validive which is estimated
to recruit up to 260 OPC patients receiving CRT. The VOICE trial
has been activating sites and dosing has begun. An interim analysis
at the end of Phase 2b is anticipated in Q1, 2022 with the Phase 3
portion of the trial to immediately follow. To complete the
VOICE clinical program, including, if required, completing a
smaller second Phase 3 confirmatory clinical trial, we will require
additional funding in the millions or tens of millions of dollars
(depending on if we have consummated a collaboration or partnership
or neither for Validive), which we are planning to pursue in the
next 12 months.
Validive U.S. Market Opportunity
The incidence of HNC (all
anatomical types, including larynx, oral cavity, oropharynx, etc.)
in the U.S. was estimated to be approximately 65,630 cases in 2020
(American Society of Clinical Oncology, cancer.net). The most
rapidly growing type of HNC is OPC. The oropharynx is comprised
largely of immune tissue and includes the soft palate, the base
(rear one third) of the tongue, and the tonsils. In the U.S., the
incidence of OPC is estimated to be greater than 40,000 cases in
2021. The majority of these OPC patients (approximately 70%) are
human papilloma virus positive (“HPV+”). The incidence
of OPC is also increasing in the rest of the world (>30% of
HNC), with >50% of all OPC being HPV+. While certain types of
HNC have been in decline in the U.S., such as laryngeal cancer as a
result of a reduction in the smoking population, the total
incidence of HNC has been growing steadily primarily due to OPC.
The increase in OPC is directly associated with increased infection
with the human papilloma virus. The incidence of HPV+ OPC has
outpaced the incidence of HPV– HNC by 4-5-fold over the past
decade. This trend of HPV+ OPC driving an increase in overall HNC
is expected to continue for some time as the relatively recent
introduction of a vaccine designed to prevent the transfer and
colonization with HPV is only effective if administered prior to
infection, and until October 2018, it was only recommended for
those under the age of 26 (newer FDA guidelines include those up to
age 45). Even for those under the age of 26 who are eligible for
the vaccine, oral HPV infections are predicted to increase due to
the lack of adequate use of HPV vaccinations. Approximately 50% of
eligible females and 33% of eligible males are presently being
vaccinated.
Most OPC is caused by the
HPV16 strain, with virus detectable in the tumor. More than 3% of
adult men and 1% of adult woman have HPV16 detectable in their
saliva at any one time. The virus is transmitted through sexual
contact and CDC estimates 10% of men and 3.6% of women in the U.S.
have an active oral HPV infection. The latency period for that
proportion that do go on to develop HPV+ OPC is 15-20+ years. This
HPV+ OPC population is expected to be a long-term driver of the
incidence of OPC and the resultant SOM associated with what is
frequently curative therapy for this serious
malignancy.
In previous studies describing SOM in OPC
patients receiving the CRT regimen we are using in our VOICE
clinical program, patients had a SOM incidence rate of 55-90%
across studies. In the Validive Phase 2 trial, the incidence of SOM
in OPC patients receiving placebo was 65.2% (see
“Validive Phase 2 Clinical
Trial Data” section
below). Currently there is no way to predict which patients will
develop SOM, so any active preventive treatment for SOM will likely
be used in most OPC patients receiving CRT. With the consistently
growing incidence of OPC as a result of the human papillomavirus,
there is the potential for a substantial and growing market for
Validive.
Validive Mechanism of Action
Validive is designed to
deliver high local concentrations of clonidine, an agonist of
alpha-2AR, to the oral cavity and oropharynx, the site of
irradiation in the treatment of OPC. In the oropharynx, alpha-2AR
is expressed on macrophages, immune cells that produce inflammatory
cytokines, the molecules that are responsible for the development
of SOM, in response to CRT. Several published clinical reports have
demonstrated that chemoradiation treatment substantially increased
salivary cytokine levels and a recent study demonstrated that these
were positively associated with the formation of SOM in patients
with head and neck cancer. Patients with HPV+ OPC demonstrate an
increased accumulation of macrophages in the tumor microenvironment
compared to patients with OPC that were negative for human
papilloma virus (“HPV–”), thus further priming
HPV+ OPC patients for the development of SOM. The alpha-2AR
regulates the expression of cytokines by macrophages, and clonidine
reduces this cytokine production. Macrophages are the primary
immune cells in the oropharynx that express alpha-2AR, making
clonidine’s mechanism of cytokine suppression macrophage
selective and distinct from the mechanism of other
anti-inflammatory drugs. Further, Validive delivers clonidine to
the mucosal surface, the site most affected by chemoradiation
treatment in OPC. This results in high salivary concentrations of
clonidine, minimizing systemic absorption, and allowing for maximal
exposure the at-risk oral mucosa and the OPC microenvironment to
drug. Preclinical studies and a Phase 2 clinical trial of Validive
have provided data that support Validive’s mechanism of
action and therapeutic potential for reducing the incidence of SOM
in patients with OPC, improving oral mucositis-related symptoms,
and decreasing CRT-related adverse events, while exhibiting a
favorable safety profile and high compliance rate in
patients.
Validive Phase 2 Clinical Trial Data
In October 2015, the results
from an international Phase 2 clinical trial of Validive were
announced, demonstrating promising signs of clinical activity and
safety compared to placebo. The trial enrolled 183 patients and was
conducted in more than thirty centers in Europe and the United
States. HNC patients who had undergone surgical resection of their
head and neck cancer with curative intent and who were planned to
receive at least 50 Gray (Gy) of radiation in combination with
chemotherapy, regardless of anatomical location of disease, were
included in this study. This global, multi-center, double-blind,
randomized, placebo-controlled, three-arm study (NCT01385748)
compared the efficacy and safety of Validive 50 µg and 100
µg to placebo in patients with HNC receiving CRT. Of the 183
HNC patients, 64 had OPC (placebo = 24, Validive 50 µg = 21,
Validive 100 µg = 19). Validive and placebo were administered
once daily beginning 1 to 3 days prior to CRT and continuing until
the end of chemoradiation.
We believe
the Phase 2 clinical trial data support the development of Validive
for the prevention of SOM in OPC patients. The analysis of OPC
patients in this study showed:
●
The incidence of SOM (primary endpoint) was reduced by 26.3% (40%
relative to placebo) in OPC patients treated with Validive 100
µg (p=0.09, a meaningful trend but not statistically
significant). 65.2% of OPC patients on placebo experienced SOM
compared to only 38.9% of OPC patients on Validive 100
µg.
■
Incidence of SOM in OPC Patients
Validive has
demonstrated reduced incidence of SOM in a Phase 2 clinical trial
(p=0.09)
●
Patients on Validive experienced a delay in the time to onset of
SOM. Patients receiving placebo experienced a median time to onset
of SOM of 37 days; patients receiving Validive (50 µg one per
day) experienced a 45 day median time to onset of SOM; and patients
receiving Validive (100 µg once per day) did not reach a
median time to onset. A comparison of hazards for time to onset
demonstrated that patients that received Validive 100 µg had a
hazard ratio (HR)=0.48 compared to placebo.
●
Patients receiving Validive experienced a decrease in the median
duration of SOM. In patients that developed SOM, a 15.5 day
reduction (by 37.8%) in the median duration of SOM was observed in
patients treated with Validive 100 µg (41 day median duration
with placebo, 34 days in the Validive 50 µg group, and 25.5
days in the Validive 100 µg group). Median duration across all
patients, inclusive of both those that did and did not develop SOM,
was 17 days in the placebo group and 0 days in each of the Validive
50 and 100 µg groups.
■
Median Duration of SOM in OPC Patients
Validive decreased duration of SOM in a Phase 2 clinical
trial
●
Severe drinking, eating, and speaking limitations due to mouth and
throat soreness (“MTS”) score were also reduced in the
Validive 100 µg treated cohort.
●
Improvements in other indicators of clinical benefit, including
decreased weight loss, decreased opiate use and increased
cumulative dose of radiation received, strongly favored the
Validive 100 µg treated group.
●
A dose response was observed with the Validive 100 µg dose,
demonstrating a trend toward superiority over the Validive 50
µg dose as well as placebo. Individual patient-level data
supports advancing the Validive 100 µg dose into Phase
3.
Individual Patient Data Showing Incidence, Time to Onset, and
Duration of SOM in OPC patients
Treated with Placebo and Two Different Doses of Validive (50 and
100 µg/day)
![](a4indpatientdata.jpg)
For the full 183-patient
Phase 2 population, which included various types of head and neck
cancer such as oral and laryngeal cancer in addition to OPC, the
incidence of SOM was lower in patients treated with Validive (45.3%
when the 50 and 100 µg dose groups were pooled together) than
in patients receiving placebo (60.0%) (p = 0.064). Additionally,
Validive was very well tolerated, with the occurrence of adverse
events of any type or grade being similar between placebo and
Validive treated groups. Patients treated with Validive experienced
less nausea and dysphagia compared to placebo. No clinically
meaningful decreases in systolic blood pressure or diastolic blood
pressure were noted between the placebo and Validive arms. There
was no statistical difference in the number of patients having
experienced at least one treatment emergent adverse event related
to the study treatment between placebo and Validive as summarized
in the table below. Two patients in the placebo group and 2
patients in the Validive 50 µg group experienced a serious
treatment-emergent adverse event (“STEAE”). No STEAEs
were observed in the Validive 100 µg cohort. No patients in
the Validive-treated cohorts were discontinued due to study drug.
The 2-year survival rate was not statistically different between
patients treated with placebo and Validive indicating that Validive
did not interfere with primary disease treatment.
All Serious Treatment-Emergent Adverse Events Related to Study
Drug
MBT=mucoadhesive buccal tablet; n=number of patients
studied
The mean overall patient
compliance as assessed by the investigators was approximately 90%,
and similar across all treatment groups. Overall compliance
according to patient diaries was also similar in all treatment
groups and consistent with the compliance according to the
investigator’s evaluation. The mean incidence of swallowing
the MBT was low (4.7%) for all patients based on 7,366 daily MBT
applications across all treatment groups.
Our review of the Phase 2
clinical trial data suggests that the effect of Validive was much
greater in OPC compared to non-OPC patients. We believe the Phase 2
data along with the mechanism of action of Validive provide a
rationale for developing Validive for the treatment of
chemoradiation induced SOM in OPC patients as a first indication.
The most rapidly growing sub-population of HNC in the U.S. and
Europe is OPC, largely driven by HPV+ disease. The oropharynx is
the part of the throat at the back of the mouth, which includes the
soft palate, the base (rear one third) of the tongue, and the
tonsils. HPV+ OPC is a molecularly defined population of HNC
characterized by the expression of a protein biomarker, p16 INK4a,
and the presence of HPV DNA in the tumor. Evaluation of HPV status
is part of the routine clinical assessment of patients with OPC
prior to initiating treatment.
Validive Phase 1 Clinical Trial Data
A Phase 1 clinical trial in
36 healthy volunteers comparing the pharmacokinetics of the
systemic (oral tablet) clonidine HCl with clonidine MBT (local and
sustained delivery of clonidine to oral mucosa and oropharynx
– Validive’s formulation) was completed. This was a
single-center, Phase 1, single-blind randomized, three-period,
three-sequence, single-dose crossover study was conducted between
August and November 2015. Healthy volunteers receiving Validive had
far less systemic exposure to clonidine with the 50 µg and 100
µg clonidine MBTs (Validive) versus 100 µg clonidine HCl
tablets (swallowed oral tablet). In contrast, levels of clonidine
in saliva in volunteers receiving a single dose of 50 µg and
100 µg clonidine MBT (Validive) was much greater than saliva
levels in volunteers receiving a single dose of 100 µg
clonidine HCl tablets. Additionally, no significant effects on
blood pressure were observed with the clonidine MBTs (Validive).
Blood pressure effects were tested because clonidine is known to
lower blood pressure when absorbed systemically. These results are
consistent with the expectation that the MBT formulation (Validive)
is designed to release clonidine in the oral cavity and oropharynx,
as opposed to distributed systemically.
![](a6plasmasalivaconcentrati.jpg)
Both
Validive 50 µg and 100 µg showed high salivary exposure
(as seen above), with low systematic and blood pressure effect (as
seen below):
Validive Preclinical Data
The anti-inflammatory
properties of clonidine were studied in a human oral mucosa
organotypic culture model, as pro-inflammatory cytokines are
believed to drive the development of SOM. Samples of healthy
non-keratinized human oral mucosa were obtained from patients
undergoing surgery. The experimental oral mucosa pro-inflammatory
process was mediated by the addition of neuropeptide substance P
(“SP”) to the culture medium. The addition of SP on
human gingiva induced a significant increase in TNF-alpha, an
important pro-inflammatory molecule involved in mucositis
pathogenesis. Overall, on human gingiva stimulated by SP, a
concentration dependent decrease in TNF-alpha production was
observed with clonidine, which was statistically significant at 3
µg/ml clonidine; see below:
Clonidine
Inhibits the Production of Pro-Inflammatory Cytokine Release from
Oral Tissue
**
= different from SP treatment alone, p<0.01
Camsirubicin (5-imino-13-deoxydoxorubicin; formerly MNPR-201,
GPX-150)
Our second product candidate,
camsirubicin, is a novel analog of doxorubicin which has been
designed to reduce the cardiotoxic side effects generated by
doxorubicin while retaining anti-cancer activity. A Phase 2
clinical trial for camsirubicin has been completed in patients with
advanced (e.g. unresectable or metastatic) soft tissue sarcoma
(“ASTS”). Average life expectancy for these patients is
12-15 months. In this study, 52.6% of patients evaluable for tumor
progression demonstrated clinical benefit (partial response or
stable disease), which was proportional to dose and consistently
observed at higher cumulative doses of camsirubicin (>1000
mg/m2).
Camsirubicin was very well tolerated in this study and underscored
the ability to potentially administer camsirubicin without
restriction of cumulative dose in patients with ASTS. Although doxorubicin has been the standard of care
treatment for ASTS for over 40 years, doxorubicin is limited
to a lifetime cumulative dose maximum of 450 mg/m2. Even if a patient
is responding to doxorubicin, their treatment is discontinued once
this cumulative dose has been reached.
Camsirubicin is a proprietary doxorubicin
analog that is selective for topoisomerase II-alpha. Doxorubicin is
used to treat adult and pediatric solid and blood (hematologic)
cancers, including soft tissue sarcomas, breast, gastric, ovarian
and bladder cancers, leukemias and lymphomas. Despite clinical
studies demonstrating the anti-cancer benefit of higher cumulative
doses of doxorubicin, the clinical efficacy of doxorubicin has
historically been limited by the risk of patients developing
irreversible, potentially life-threatening cardiotoxicity. For
example, several clinical studies completed in the 1990s
demonstrated that concurrent doxorubicin (60
mg/m2,
8 cycles) and paclitaxel gave a 94% overall response rate in
patients with metastatic breast cancer but led to 18% of these
patients developing congestive heart failure. Reduction of
doxorubicin to 4-6 cycles of treatment decreased the incidence of
congestive heart failure, but also reduced response rates to
45-55%. In a clinical study looking at dose response, sarcoma
patients on the high dose (75 mg/m2)
doxorubicin had a response rate of 37% compared to just 18% in the
low dose (45 mg/m2)
doxorubicin group. With the cumulative dose restriction on
doxorubicin, the median progression free survival for ASTS patients
is approximately 6 months, with median overall survival of 12-15
months. There is a significant unmet opportunity to develop a
replacement for doxorubicin that can be dosed higher and for
longer.
Camsirubicin has been
engineered specifically to retain the anticancer activity of
doxorubicin while minimizing the toxic effects on the heart.
Similar to doxorubicin, the antitumor effects of camsirubicin are
mediated through the stabilization of the topoisomerase II complex
after a DNA strand break and DNA intercalation leading to tumor
cell apoptosis (cell death). Inhibiting the topoisomerase II-alpha
isoform is desired for the anti-cancer effect, while inhibiting the
topoisomerase II-beta isoform has been demonstrated to mediate, at
least in part, the cardiotoxicity associated with all anthracycline
drugs currently used in the clinic. Camsirubicin is substantially
more selective than doxorubicin for inhibiting topoisomerase
II-alpha versus topoisomerase II-beta. This selectivity may partly
explain the minimal cardiotoxicity that has been observed for
camsirubicin in preclinical and clinical studies to date. We
believe that these attributes provide a strong rationale for
developing camsirubicin as a monotherapy as well as in combination
with other anticancer agents, without potential restrictions on
cumulative dose, and offer the opportunity to pursue a large market
opportunity for camsirubicin in a broad spectrum of cancer
types.
Based on the encouraging
clinical results to date, we plan to continue the development of
camsirubicin as first-line treatment in patients with ASTS. The aim
is to administer camsirubicin without restricting cumulative dose,
thereby potentially improving efficacy by keeping patients who are
responding on treatment. These are
patients who are not candidates for surgery or radiation treatment,
and are largely made up of patients with metastatic disease.
Doxorubicin is the current standard of care in the first-line
setting for these patients. In June 2019, we entered into a
clinical collaboration with Grupo
Español de Investigación en Sarcomas
(“GEIS”). GEIS is an internationally renowned
non-profit organization focused on the research, development and
management of clinical trials for sarcoma, that has worked with
many of the leading biotech and global pharmaceutical companies.
GEIS will lead a multi-country, randomized, open-label Phase 2
clinical trial evaluating camsirubicin head-to-head against
doxorubicin in patients with ASTS. Patients randomized to the doxorubicin cohort are
expected to receive the standard of care dosing of doxorubicin
limited to 6 cycles at 75 mg/m2
(cumulative dose of ≤450
mg/m2).
Patients in the camsirubicin cohort would have no
cumulative dose restriction and would be allowed to continue
on camsirubicin as long as their disease does not
progress and the drug is well-tolerated. All patients on
camsirubicin will be given growth factor support
(“granulocyte colony stimulating factor” or
“G-CSF”) prophylactically to allow for higher dosing of
camsirubicin before running into the dose-limiting neutropenia
observed with all anthracyclines. The adverse event profile
of camsirubicin in the previously completed Phase 2 ASTS
trial suggests that, in the presence of G-CSF, the dose
of camsirubicin may be safely escalated beyond 265 mg/
m2 administered
once every three weeks. The Phase 2 trial will have a short run-in
phase to dose-escalate camsirubicin when given with G-CSF to
optimize the dose. Enrollment of the trial is currently
anticipated to begin in the second quarter of 2021, and to include
approximately 170 ASTS patients, an interim analysis, and take
around two years to enroll. The primary endpoint of the trial will
be progression-free survival, with secondary endpoints including
response rate, overall survival and incidence of treatment-emergent
adverse events. We will provide study drug to GEIS and supplemental
financial support for the clinical trial. In addition to
camsirubicin’s orphan drug designation in the U.S. by the
FDA, the European Commission also granted orphan drug designation
for camsirubicin for the treatment of soft tissue sarcoma in the EU
in November 2019.
Camsirubicin U.S. Market Opportunity
Camsirubicin is an analog of doxorubicin,
the first anthracycline to gain FDA approval. Anthracyclines are a
class of drugs that are among the most commonly used agents in the
treatment of cancer. They have demonstrated efficacy in a wide
variety of cancers, including soft tissue sarcoma, breast cancer,
lung cancer, ovarian cancer, and lymphomas, among other types.
Although doxorubicin was approved decades ago, it is still widely
used. According to QY Research, in 2020 the global doxorubicin
market was $1.1836 billion, and expected to grow at a 7.7%
compounded annual growth rate, with projections surpassing $1.8
billion by 2026. According to IMS Health (now known as IQVIA), in
2015 the European Union had over $270 million in sales between
doxorubicin HCl and liposomal doxorubicin. Liposomal versions of
doxorubicin (e.g. Doxil®)
demonstrated that a different formulation of doxorubicin with
improved clinical benefits can command a significantly higher price
premium compared to generic doxorubicin HCl.
The market opportunity for
the first indication, ASTS, is anticipated to be substantial. In
2020, there were an estimated 13,130 new cases of soft tissue
sarcoma (STS) in the US, and approximately 5,350 deaths from STS,
mainly from metastatic disease. Additionally, a few years ago a
PDGFR-targeted antibody (olaratumab) was granted accelerated
approval based on data from an open label Phase 2 trial. In 2019,
the olaratumab Phase 3 trial as first line for advanced soft tissue
sarcoma came back negative, resulting in the drug being pulled from
the market. Olaratumab had just completed its second full year on
the market in the US and abroad before being pulled, reaching over
$304 million in sales in 2018 , demonstrating the large unmet
medical need and considerable market opportunity in
ASTS.
Camsirubicin Clinical Data
Several clinical studies
of camsirubicin have been completed.
In October 2013, a Phase 1 dose escalation study
conducted at the University of Iowa completed enrolment of 24
patients who received one of eight different dose levels
of camsirubicin ranging from 14 to 265
mg/m2.
No evidence of irreversible cardiotoxicity was observed in any of
these patients, including 4 patients who received prior
anthracycline (doxorubicin or related molecules)
treatment. Stable disease was observed in 55.0% of patients in
this Phase 1 study, including 3 out of 4 patients with
leiomyosarcoma, which is a type of soft tissue sarcoma that
originates in connective tissue and smooth muscle most commonly in
the uterus, stomach and small intestine. No growth factor support
(G-CSF) was given to patients, and the limiting toxicity was
neutropenia.
In January 2015, a multi-center open label
single arm Phase 2 clinical trial was initiated in
doxorubicin-naïve patients with ASTS. This Phase 2 clinical
trial enrolled 22 patients and was completed in August
2016. Camsirubicin was administered intravenously at 265
mg/m2 every
3 weeks for up to 16 doses, with all patients being given growth
factor support, and there was clear indication of anticancer
activity at this well-tolerated dose and schedule. The majority of
patients (52.6%) evaluable for tumor
progression demonstrated clinical benefit (stable disease or
partial response), which was proportional to dose and consistently
observed at higher cumulative doses of camsirubicin (>1000
mg/m2).
The progression-free survival at 6 months was 38%, higher than the
6-month PFS of doxorubicin in three recent studies, which showed
23%, 25%, and 33% 6-month PFS for doxorubicin. Camsirubicin was
very well tolerated in this study and underscored the potential
ability to administer camsirubicin without restriction for
cumulative dose in patients with ASTS. Under compassionate use
access, one patient received 20 cycles
of camsirubicin (cumulative dose 5,300
mg/m2).
Apart from one patient who developed febrile neutropenia and severe
leukopenia, there were no grade 4 toxicities reported and no grade
3 side effects other than anemia. A transient decrease in left
ventricular ejection fraction (“LVEF”) was observed in
four patients treated with camsirubicin. These decreases in
LVEF in camsirubicin treated patients were not serious
adverse events and were transient, with LVEF subsequently returning
to normal levels in all four subjects. Despite some subjects in
this study receiving camsirubicin for up to 20 cycles,
effects on cardiac function were of no clinical significance and
there was no evidence of irreversible heart failure in any
subject.
Camsirubicin Preclinical Data
In preclinical
studies, camsirubicin showed a lack of acute as well as
chronic functional cardiotoxicity and did not cause the cardiac
histopathologic lesions observed with doxorubicin in a chronic
rabbit model. Below is in vitro data showing the lack of altered
contractility with acute exposure of rabbit atria
to camsirubicin, even at high
concentrations:
Camsirubicin Cardiac Contractility
Camsirubicin demonstrated limited effect on cardiac
contractility, in-line with control
Chronic IV administration
of camsirubicin two times per week into rabbits over the
course of 13 weeks also showed a lack of cardiotoxicity
of camsirubicin when compared to doxorubicin
(“DOX”). Echocardiography was performed weekly to
obtain left ventricular fractional shortening (“LVFS”)
measurements to assess cardiac function. At sacrifice, all six
doxorubicin-treated rabbits showed cardiac dysfunction by
echocardiography, and LVFS was significantly different from control
values (p<0.001). In contrast, none of
the camsirubicin-treated rabbits exhibited cardiac dysfunction
by echocardiography at any time during the study. Below is a graph
of the results:
Weekly Cardiac Echoes
None of the camsirubicin treated rabbits showed
significant cardiac dysfunction compared to the vehicle
control.
At the conclusion of the 13 weeks of drug
dosing, the rabbits were sacrificed, and the left atria were
studied to assess cardiac function ex vivo. Atria from the doxorubicin-treated rabbits had
impaired cardiac contractility (dF/dt) compared to controls over
the entire force-frequency range (1, 2 and 3 Hz). Cardiac
contractility for the camsirubicin treated cohort was not
significantly different than the vehicle control. Below is a graph
of the results:
Camsirubicin Cardiac Contractility
Cardiac contractility (dF/dt) of isolated atria at the three
contraction rates (1, 2, and 3 contractions/sec) obtained from
rabbits chronically infused with either
doxorubicin, camsirubicin or saline vehicle
(control).
Values are mean, error bars are standard error of the mean
(SEM). Camsirubicin demonstrated limited effect on
cardiac contractility, in-line with placebo.
Finally, cardiac
scoring of the left ventricle walls obtained from the rabbits in
this study by a histopathologist showed increased microscopic
injury in hearts from doxorubicin-treated rabbits compared to
hearts from rabbits administered the vehicle control. Heart tissues
from camsirubicin-treated rabbits were the same as the vehicle
controls.
MNPR-101 (formerly huATN-658) and Related Compounds
Our third program, MNPR-101
(formerly huATN-658), is a novel first-in-class humanized
monoclonal antibody to the urokinase plasminogen activator receptor
(“uPAR”) for the treatment of advanced cancers and
severe COVID-19. uPAR is highly expressed in tumors while healthy
tissue rarely, if ever, expresses uPAR. In the context of COVID-19,
uPAR cell surface expression is upregulated on aberrantly activated
immune cells (i.e. macrophages), which then produce inflammatory
molecules called cytokines that contribute to the severe symptoms
observed in COVID-19. The expression of uPAR on diseased cells and
tissues allows for selective targeting of MNPR-101, which may be
designed to carry therapeutic agents.
MNPR-101 is a humanized
monoclonal antibody designed to bind a specific cell surface
receptor found on cancer cells, the urokinase plasminogen activator
receptor (“uPAR”), and to interrupt several pathways
required for tumor growth and progression. MNPR-101 represents a
novel approach for drug targeting of uPAR as it does not interfere
with normal binding of uPA to uPAR. It blocks the CD11b
(alpha-M)-uPAR interaction, a possible regulator of tumor immunity
expressed by myeloid derived suppressor cells. MNPR-101 is believed
to have potential activity against many different cancer types and
respiratory diseases including severe COVID-19 because
it:
●
is selectively expressed on metastatic tumor, tumor-associated
immune, and angiogenic endothelial cells, but not on most normal
cells. Several Phase 1 positron emission tomography (PET) imaging
studies in human advanced cancer patients show that uPAR can only
be detected in the tumor and not in normal tissues;
●
is central to several extracellular and intracellular oncogenic
pathways required for metastasis (inhibiting the uPA system in turn
inhibits many other downstream targets, such as MAPK, AKT, MEK, and
FAK, that are currently being targeted by other
companies);
●
is expressed on immune cells that allow the tumor to evade
recognition by the immune system;
●
is expressed by aberrantly activated immune cells in the context of
respiratory disease and chronic inflammation (i.e. severe
COVID-19);
●
mediates antibody-dependent cellular cytotoxicity (ADCC);
and
●
has the potential to interfere at several different signaling
pathways that converge at uPAR.
Based upon the
non-overlapping toxicity and distinct mechanism of action, we plan
to develop MNPR-101 in combination with existing cancer therapies.
The selective expression of uPAR in tumors underpins our
expectation that MNPR-101 will be well-tolerated and amenable to a
variety of treatment approaches, including combinations with
existing treatments, radiopharmaceutical, and antibody-drug
conjugate approaches. Published preclinical data have shown the
ability of MNPR-101 to enhance the anti-tumor activity of
chemotherapies such as paclitaxel and gemcitabine. The expression
and targeting of uPAR, in general, also suggests that MNPR-101 may
combine with other targeted agents that mediate signaling leading
to tumor growth including the ability of tumors to evade immune
response. In particular, uPAR is selectively expressed on cells of
the myeloid lineage, such as myeloid derived suppressor cells,
neutrophils and macrophages, all of which drive tumor progression
and may mediate resistance to immune checkpoint inhibitors. Our
current thinking is to run a Phase 1a/1b trial in indications where
uPAR expression is highly prevalent, and explore novel combinations
in the Phase 1b portion. These indications could include
pancreatic, glioblastoma, metastatic breast, metastatic melanoma,
and ovarian cancers.
MNPR-101 as a Potential Imaging Agent
Beyond the potential use of
MNPR-101 as a therapeutic, the selectivity of uPAR expression in
human cancer also makes it an attractive target for the development
of imaging agents for the diagnosis and surveillance of a wide
variety of cancer types. In collaboration with colleagues at Leiden
University Medical Center (“LUMC”), a multimodal
imaging probe developed using the MNPR-101 antibody backbone was
tested in vivo in human
bladder cancer models. High expression of uPAR in bladder cancer
(>96%) has been demonstrated to be localized at the tumor
periphery. The results in the bladder cancer models suggest that
using an imaging probe derived from MNPR-101 may allow surgeons to
better visualize the borders of the tumor, potentially resulting in
more complete tumor resection and thereby minimizing relapse.
Similar approaches have been utilized successfully in the resection
of other tumor types, such as breast cancer, and are now
commercially available.
Bladder cancer is often
treated with transurethral resection to remove cancerous tissue;
however, many resections are incomplete and recurrence can occur in
up to 78% of patients within 5 years. Up to 40% of recurrent cases
develop muscle invasive disease, which has a poor prognosis and
requires complete removal of the bladder. Many patients with
muscle-invasive bladder cancer go on to develop and succumb to
metastatic disease. Thus, a MNPR-101 based probe that could be used
to improve the success rate of bladder cancer resection would be
expected to have a positive impact on recurrence and
prognosis.
MNPR-101 Conjugate uPRIT as a Potential Therapeutic for Severe
COVID-19
MNPR-101 is also being
developed for the treatment of severe COVID-19 and other
respiratory diseases. We have entered into a collaboration with
NorthStar Medical Radioisotopes, LLC (“NorthStar”) to
co-develop potential uPRITs to treat severe COVID-19. This
collaboration combines NorthStar’s expertise in the
innovative production, supply, and distribution of important
medical radioisotopes with our expertise in therapeutic drug
development. NorthStar and we have coupled MNPR-101 with a
therapeutic radioisotope. uPAR seems to be selectively expressed on
aberrantly activated immune cells. In response to coronavirus
infection, these rogue immune cells produce pro-inflammatory
cytokines that can cause runaway inflammation throughout the body,
commonly referred to as a cytokine storm. It is this systemic
hyper-inflammatory state that is thought to be largely responsible
for the severe lung injury and further multiple organ damage that
contributes to poor outcomes and death in patients with severe
COVID-19.
In collaboration with NorthStar, we have filed a
provisional patent application entitled “Precision
Radioimmunotherapeutic Targeting of the Urokinase Plasminogen
Activator Receptor (uPAR) for Treatment of Severe COVID-19
Disease” with the U.S. Patent and Trademark Office
(“USPTO”). This application covers novel compositions
and uses of cytotoxic radioisotopes attached to antibodies that
bind to uPAR, thereby creating precision targeted
radiotherapeutics, also known as uPRITs, for the treatment of
severe COVID-19 and other respiratory diseases. Advanced COVID-19
patients frequently develop severe, life-threatening, pulmonary
inflammation as a result of a viral induced cytokine storm. The
development of this cytokine storm is associated with a high rate
of mortality in severe COVID-19 patients, even with oxygen support
and mechanical ventilation. uPRITs have been designed with the goal
of selectively eliminating the aberrantly activated immune cells
responsible for causing the cytokine storm. By eradicating these
cells with a targeted RIT, the goal is to spare healthy cells while
quickly reducing the cytokine storm and its harmful systemic
effects. The co-inventors of the provisional patent application are
James Harvey, Chief Scientific Officer of NorthStar, and Andrew P.
Mazar, our Chief Scientific Officer. We have also entered into
collaborations with: IsoTherapeutics Group, LLC, who
generated the uPRIT candidates; Aragen Bioscience Inc., who
screened the uPRIT candidates through preclinical biochemical
testing; and Texas Lung Injury Institute / University of Texas
Health Science Center at Tyler, which plan to perform preclinical
testing and if successful, clinical testing.
ATN-658 as a Potential Diagnostic for Severe COVID-19
A prototype enzyme-linked
immunosorbent assay (“ELISA”) for measuring blood suPAR
levels using the non-humanized version of MNPR-101
(“ATN-658”)has been developed, and we are in
discussions with several parties to further develop and
commercialize either an ELISA or other suPAR-based test using
ATN-658. The aim is to clinically validate the suPAR-based test in
COVID-19 patients.
The use of suPAR for triaging
COVID-19 patients is supported by a growing body of recent studies.
Rovina et al. 2020 showed that patients with elevated levels of
suPAR at the time of hospital admission are 17 times more likely to
develop severe respiratory failure (p=.0000000012). Arnold et al.
2020 showed suPAR to have the best performance in predicting
outcome (such as intensive care unit admission and death) of all
the biomarkers examined; and Eugen-Olsen et al. 2020 showed that
low levels of suPAR are predictive of mild outcome in COVID-19
patients (Negative Predictive Value 99.5%).
MNPR-101 Preclinical Studies
MNPR-101 has demonstrated significant anti-tumor
activity as a monotherapy in numerous preclinical models of tumor
growth as well as an enhanced effect when used in
combination in vivo with multiple different approved
chemotherapeutics.
License, Development
and Collaboration Agreements
Onxeo
S.A.
In June 2016, we executed an
agreement with Onxeo S.A., a French public company, which gave us
the exclusive option to license (on a world-wide exclusive basis)
Validive (clonidine mucobuccal tablet; clonidine MBT a mucoadhesive
tablet of clonidine based on the Lauriad mucoadhesive technology).
The agreement includes clinical, regulatory, developmental and
sales milestones that could reach up to $108 million if we achieve
all milestones, and escalating royalties from 5% to 10% on net
sales. In September 2017, we exercised the option to license
Validive from Onxeo for $1 million, but as of March 5, 2021, we
have not been required to pay Onxeo any other funds under the
agreement.
Under the agreement, we are
required to pay royalties to Onxeo on a product-by-product and
country-by-country basis until the later of (1) the date when a
given product is no longer within the scope of a patent claim in
the country of sale or manufacture, (2) the expiry of any extended
exclusivity period in the relevant country (such as orphan drug
exclusivity, pediatric exclusivity, new chemical entity
exclusivity, or other exclusivity granted beyond the expiry of the
relevant patent), or (3) a specific time period after the first
commercial sale of the product in such country. In most countries,
including the U.S., the patent term is generally 20 years from the
earliest claimed filing date of a non-provisional patent
application in the applicable country, not taking into
consideration any potential patent term adjustment that may be
filed in the future or any regulatory extensions that may be
obtained. The royalty termination provision pursuant to (3)
described above is shorter than 20 years and is the least likely
cause of termination of royalty payments.
The Onxeo license agreement
does not have a pre-determined term, but expires on a
product-by-product and country-by-country basis; that is, the
agreement expires with respect to a given product in a given
country whenever our royalty payment obligations with respect to
such product have expired. The agreement may also be terminated
early for cause if either we or Onxeo materially breach the
agreement, or if either we or Onxeo become insolvent. We may also
choose to terminate the agreement, either in its entirety or as to
a certain product and a certain country, by providing Onxeo with
advance notice.
Grupo
Español de Investigación en Sarcomas
(“GEIS”)
In June 2019, we executed a
clinical collaboration with GEIS for the development of
camsirubicin in patients with advanced soft tissue sarcoma
(“ASTS”). GEIS is the study sponsor and will lead a
multi-country, randomized, open-label Phase 2 clinical trial to
evaluate camsirubicin head-to-head against doxorubicin in patients
with ASTS. Enrollment of the trial is anticipated to begin in the
second quarter of 2021 and will include approximately 170 ASTS
patients. We will provide study drug and supplemental financial
support for the clinical trial averaging approximately $2 million
to $3 million per year. During the year ended December
31, 2020, we incurred $1.4 million in expenses under the GEIS
agreement and other clinical-related expenses including clinical
material manufacturing and database management expenses in support
of GEIS’s Phase 2 camsirubicin clinical trial. During the
year ended December 31, 2019, we incurred $0.2 million in expenses
related to the GEIS collaboration. We can terminate the
agreement by providing GEIS with advance notice, and without
affecting the Company’s rights and ownership to any
intellectual property or clinical data.
XOMA
Ltd.
To humanize our MNPR-101
antibody, we have taken a non-exclusive license to XOMA (US)
LLC’s humanization technology and know-how. Humanization
involves replacing most of the non-critical parts of the mouse
sequence of an antibody with the human sequence to minimize the
ability of the human immune system to recognize this antibody as
foreign. As such, MNPR-101 has been engineered to be 95% human
sequence using the XOMA technology. Under the terms of the license,
we are to pay only upon developmental and sales milestone
achievements which could reach up to $14.925 million if we achieve
all milestones. The agreement does not require the payment of sales
royalties. There can be no assurance that we will reach any
milestones. As of March 5, 2021, we had not reached any
milestones and had not been required to pay XOMA Ltd. any funds
under this license agreement. The first milestone payment is
payable upon first dosing of a human patient in a Phase 2 clinical
trial.
Intellectual Property Portfolio and Exclusivity
An important part of our
strategy is obtaining patent protection to help preserve the
proprietary nature of our product candidates, and to prevent others
from developing competitive agents that are similar. Our patent
portfolio includes issued patents and pending patent applications
in the U.S. and in foreign countries. Our general practice is to
seek patent protection in major markets worldwide.
Validive
We license all intellectual
property related to Validive from Onxeo S.A., a French public
company. See “Business – License, Development and
Collaboration Agreements”. Validive is covered by 57 issued
patents in 31 jurisdictions, including the U.S., EU, Japan, and
other Asian countries, and has orphan drug designation in the EU as
well as Fast Track designation from the FDA. These patents are
method of use patents that cover the use of Validive to prevent
and/or treat inflammation and inflammatory pain of the mucosa
including cancer therapy-induced mucositis; the use of clonidine or
clonidine derivatives for the prevention or treatment of adverse
side effects of chemotherapy; and clonidine and/or clonidine
derivatives for use in the prevention of skin injury resulting from
radiotherapy, and have been assigned to us pursuant to our license
agreement with Onxeo. The latest patent expires in 2035 not
accounting for possible extensions.
In November 2020, we
announced a series of recently issued patents for Validive
(clonidine HCl mucobuccal tablet). These patents, including U.S.
Patent No. 10,675,271, provide claims covering “Clonidine
and/or clonidine derivatives for use in the prevention and/or
treatment of adverse side effects of chemotherapy”. These
patents expand the potential use of Validive in cancer patients,
beyond the earlier allowed claims for the prevention of oral
mucositis in patients receiving CRT. Specifically, they provide
protection for the potential ability of Validive to prevent or
treat common chemotherapy-associated side effects such as asthenia
and fatigue and would provide protection should we determine in the
future to conduct additional Validive development activities
related to adverse side effects of chemotherapy beyond
oropharyngeal cancer.
Camsirubicin
Camsirubicin (GPX-150)
is covered by manufacturing process patents. We have a patent for
chemical synthesis technology that efficiently converts cardiotoxic
“13-keto” anthracyclines such as doxorubicin,
daunorubicin, epirubicin, and idarubicin into novel, patentable,
and most likely less-cardiotoxic “5-imino-13-deoxy”
analogs. A novel chemical composition of an intermediate for this
synthesis is also patented. In addition, we have a patent covering
the combination of camsirubicin with paclitaxel for the
treatment of cancer, plus covering the method of use of these two
drugs for this purpose. Our camsirubicin patent portfolio
contains eight issued U.S. patents (two of which have expired) and
one U.S. pending patent application. We have certain corresponding
patents and applications in twenty-nine foreign jurisdictions,
including the U.S., EU, Japan, and other Asian countries. The
process patents for the synthesis
of camsirubicin intermediates will expire in 2024 and the
patents covering the combination use of camsirubicin and
its analogs with taxanes will expire in 2026. The patent covering
novel, potentially more potent analogs of camsirubicin expires in
2038. We may pursue patent term extensions where appropriate. We
have obtained patent protection around the intermediates and
process used to manufacture camsirubicin and we expect to
obtain Hatch-Waxman exclusivity (applicable to new chemical
entities) for 5 years that will prevent generic competition. We
have also obtained U.S. and EU orphan drug status in soft tissue
sarcoma with additional orphan cancer indications expected to
follow.
In December 2020, we
announced the issuance of a U.S. patent (US 10,450,340) covering
compositions of matter (2-pyrrilino camsirubicin) for a novel
family of camsirubicin analogs. This patent, which expands the
Company’s camsirubicin intellectual property portfolio, is
expected to expire in 2038 not including any patent term
extensions. The patent broadens our camsirubicin portfolio and
creates a pipeline that has been designed to retain the potentially
favorable non-cardiotoxic chemical backbone of camsirubicin and the
potent broad-spectrum antitumor activity of doxorubicin. Further,
preclinical evidence suggests that this new family of 2-pyrrilino
camsirubicin analogs could be active in doxorubicin-resistant tumor
cells which may enable use in cancer types beyond those possible
with camsirubicin.
MNPR-101
Our patent portfolio for our
MNPR-101 antibody (huATN-658), as well as its epitope, consists of
two issued U.S. composition of matter and their methods of use
patents and corresponding (granted and pending) patents and patent
applications in twenty-two foreign jurisdictions, including the
European Union, Japan, and other Asian countries. These patents are
owned by us. The patents covering the composition of matter of
MNPR-101 will expire in 2025 and the patents covering the MNPR-101
epitope will expire in 2027. Being a novel biologic, it is eligible
for 12 years of exclusivity in the U.S. under the Biologics Price
Competition and Innovation Act (“BPCI Act”), and it
will benefit from varying durations of similar exclusivity in
numerous other countries. The Radio-Immuno-Therapeutic derivative
of MNPR-101 (uPRIT) patent, if granted expires in
2041.
Patent life determination
depends on the date of filing of the application and other factors
as promulgated under the patent laws. In most countries, including
the U.S., the patent term is generally 20 years from the earliest
claimed filing date (the priority date) of a non-provisional patent
application in the applicable country, not taking into
consideration any potential patent term adjustment that may be
filed in the future or any regulatory extensions that may be
obtained. Some of our patents are currently near expiration and we
may pursue patent term extensions for these where appropriate. See
“Risk Factors – Risks Related to our Intellectual
Property”.
Manufacturing
We do not currently own or
operate manufacturing facilities for the production or testing of
Validive, camsirubicin, MNPR-101 or uPRITs, nor do we have
plans to develop our own manufacturing operations in the
foreseeable future. We presently depend on third-party contract
manufacturers for all our required raw materials, Active
Pharmaceutical Ingredients (“API”), and finished drug
products for our preclinical and clinical studies. We have
completed manufacturing of the clinical batch of drug product for
Validive, which will provide sufficient drug to complete the Phase
2b/3 VOICE clinical trial. We have also engaged contract
manufacturers for the camsirubicin API and drug product in order to
supply clinical material for the GEIS camsirubicin Phase 2 clinical
trial. We have not yet secured a manufacturing agreement for
MNPR-101 or uPRITs.
Sales and Marketing
In light of our stage of
development, we have not yet established a commercial organization
or distribution capabilities. We have retained worldwide commercial
rights for our product candidates. If our product candidates
receive marketing approval, we plan to commercialize them in the
U.S. and potentially in Europe with our own focused, specialty
sales force. We would expect to conduct most of the buildout of
this organization following approval in the U.S. or following
similar marketing authorizations in Europe of any of our product
candidates. We expect to explore commercialization of Validive and
potentially other product candidates in certain markets outside the
U.S., including the EU, utilizing a variety of collaboration,
distribution and other sales and marketing arrangements with one or
more third parties.
Oncology Market Competition
The pharmaceutical industry
in general, and the oncology therapeutics sector in particular, are
characterized by intense competition. We face competition from
pharmaceutical and biotechnology companies, many of which are
larger and better financed than us. We also face competition in our
efforts to develop and commercialize new oncology therapeutics from
academic and government laboratories. The therapeutics that we are
developing, if successfully commercialized, will have to compete
with existing therapeutics already on the market and novel
therapeutics currently in development, as well as new therapeutics
that may be discovered and developed in the future. Our product
candidates will also have to compete with alternate treatment
modalities, such as improvements in radiation treatments, which are
also subject to continual innovation and improvement. Additional
information can be found in the section entitled “Risk
Factors – Risks Related to Our Business Operations and
Industry.”
There is no effective
standard of care or FDA approved preventive or therapeutic
treatment for patients that develop chemoradiation-induced SOM.
Only symptomatic treatments such as opioids and palliative
mouthwashes are available but have no effect on the occurrence,
time to onset, or duration of SOM. Our primary competitor is a
dismutase mimetic in Phase 3 clinical development, which is
administered through a daily 60-minute intravenous
(“IV”) infusion to be completed within an hour before
each radiation treatment. Validive, in comparison, is an easy to
use, once daily self-administered oral/buccal tablet that acts
locally at the sites of SOM.
We believe
our camsirubicin program, if approved, could replace
doxorubicin as the first-line treatment for ASTS. In addition, we
believe that camsirubicin would compete with a number of currently
available anthracycline-based drugs on the market for other cancer
indications. These are largely derivatives of doxorubicin, or
reformulations of doxorubicin such as liposomal doxorubicin (e.g.
Doxil, owned by Johnson & Johnson). All of these have the issue
of cardiotoxicity. In addition to approved products, there are a
number of product candidates in development, largely as new
formulations or derivatives of doxorubicin.
Our MNPR-101 program is in
the early stages of development and the most susceptible to all of
the competitive factors listed in the first paragraph of this
section.
Government Regulation and Product Approval
Government authorities in the
U.S., at the federal, state and local level, and other countries
extensively regulate, among other things, the research,
development, testing, manufacture, quality control, approval,
labeling, packaging, storage, record-keeping, promotion,
advertising, distribution, post-approval monitoring and reporting,
marketing and export and import of products such as those we are
developing. The pharmaceutical product candidates that we develop
must be approved by the FDA before they may be legally marketed in
the U.S. See “Risk Factors – Risks Related to Clinical
Development and Regulatory Approval”.
U.S. Pharmaceutical Product Development Process
In the U.S., the FDA
regulates pharmaceutical products under the Federal Food, Drug and
Cosmetic Act (“FDCA”) and implementing regulations.
Pharmaceutical products are also subject to other federal, state
and local statutes and regulations. The process of obtaining
regulatory approvals and the subsequent compliance with appropriate
federal, state, local and foreign statutes and regulations require
the expenditure of substantial time and financial resources.
Failure to comply with the applicable U.S. requirements at any time
during the product development process, approval process or after
approval, may subject an applicant to administrative or judicial
enforcement. FDA enforcement could result in refusal to approve
pending applications, withdrawal of an approval, a clinical hold,
warning letters, product recalls, product seizures, total or
partial suspension of production or distribution injunctions,
fines, refusals of government contracts, restitution, disgorgement
or civil or criminal penalties. Any agency or judicial enforcement
action could have a material adverse effect on us. The process
required by the FDA before a non-biological pharmaceutical product
may be marketed in the U.S. generally involves the
following:
●
Completion of preclinical laboratory tests, animal studies and
formulation studies according to Good Laboratory Practices
(“GLP”), or other applicable regulations;
●
Submission to the FDA of an Investigational New Drug application
(“IND”), which must become effective before human
clinical studies may begin;
●
Performance of adequate and well-controlled human clinical studies
according to the FDA’s current Good Clinical Practices
(“GCP”), to establish the safety, efficacy and optimum
dose of the proposed pharmaceutical product for its intended
use;
●
Submission to the FDA of a New Drug Application (“NDA”)
or Biologics License Application (“BLA”), for a new
pharmaceutical product;
●
Satisfactory completion of an FDA inspection of the manufacturing
facility or facilities where the pharmaceutical product is produced
to assess compliance with the FDA’s current Good
Manufacturing Practice standards (“cGMP:”), to assure
that the facilities, methods and controls are adequate to preserve
the pharmaceutical product’s identity, strength, quality and
purity;
●
FDA audits of the preclinical and clinical study sites that
generated the data in support of the NDA or BLA; and
●
FDA review and
approval of the NDA.
The lengthy process of
seeking required approvals and the continuing need for compliance
with applicable statutes and regulations require the expenditure of
substantial resources, and approvals are inherently
uncertain.
Before testing any compounds
with potential therapeutic value in humans, the pharmaceutical
product candidate enters the preclinical testing stage. Preclinical
tests include laboratory evaluations of product chemistry, toxicity
and formulation, as well as animal studies to assess the potential
safety and activity of the pharmaceutical product candidate. These
early proof-of-principle studies are done using sound scientific
procedures and thorough documentation. The conduct of single and
repeat dose toxicology and toxicokinetic studies in animals must
comply with federal regulations and requirements including GLP. The
sponsor must submit the results of the preclinical tests, together
with manufacturing information, analytical data, any available
clinical data or literature and a proposed clinical protocol, to
the FDA as part of the IND. The IND automatically becomes effective
30 days after receipt by the FDA, unless the FDA has concerns and
notifies the sponsor. In such a case, the IND sponsor and the FDA
must resolve any outstanding concerns before the clinical study can
begin. If resolution cannot be reached within the 30-day review
period, either the FDA places the IND on clinical hold or the
sponsor withdraws the application. The FDA may also impose clinical
holds on a pharmaceutical product candidate at any time before or
during clinical studies due to safety concerns or non-compliance.
Accordingly, it is not certain that submission of an IND will
result in the FDA allowing clinical studies to begin, or that, once
begun, issues will not arise that suspend or terminate such
clinical studies.
During the development of a
new drug, sponsors are given opportunities to meet with the FDA at
certain points. These points may be prior to submission of an IND,
at the end of Phase 2, and before an NDA or BLA is submitted.
Meetings at other times may be requested. These meetings can
provide an opportunity for the sponsor to share information about
the data gathered to date, for the sponsor to ask specific
questions to the FDA, for the FDA to provide advice, and for the
sponsor and FDA to reach agreement on the next phase of
development. Sponsors typically use the end of Phase 2 meeting to
discuss their Phase 2 clinical results and present their plans for
the pivotal Phase 3 clinical (registration) trial(s) that they
believe will support approval of the new drug. A sponsor may be
able to request a Special Protocol Assessment (“SPA”),
the purpose of which is to reach agreement with the FDA on the
Phase 3 clinical trial protocol design and analyses that will form
the primary basis of an efficacy claim.
According to FDA guidance for
industry on the SPA process, a sponsor which meets the
prerequisites may make a specific request for a SPA and provide
information regarding the design and size of the proposed clinical
trial. The FDA’s goal is to evaluate the protocol within 45
days of the request to assess whether the proposed trial is
adequate, and that evaluation may result in discussions and a
request for additional information. A SPA request must be made
before the proposed trial begins, and all open issues must be
resolved before the trial begins. If a written agreement is
reached, it will be documented and made part of the IND record. The
agreement will be binding on the FDA and may not be changed by the
sponsor or the FDA after the trial begins except with the written
agreement of the sponsor and the FDA or if the FDA determines that
a substantial scientific issue essential to determining the safety
or efficacy of the drug was identified after the testing
began.
Clinical studies involve the
administration of the pharmaceutical product candidate to healthy
volunteers or patients under the supervision of qualified
investigators, generally physicians not employed by or under the
clinical study sponsor’s control. Clinical studies are
conducted under protocols detailing, among other things, the
objectives of the clinical study, dosing procedures, subject
selection and exclusion criteria, how the results will be analyzed
and presented and the parameters to be used to monitor subject
safety. Each protocol must be submitted to the FDA as part of the
IND. Clinical studies must be conducted in accordance with Good
Clinical Practice (“GCP”) guidelines. Further, each
clinical study must be reviewed and approved by an independent
institutional review board (“IRB”), at, or servicing,
each institution at which the clinical study will be conducted. An
IRB is charged with protecting the welfare and rights of study
participants and is tasked with considering such items as whether
the risks to individuals participating in the clinical studies are
minimized and are reasonable in relation to anticipated benefits.
The IRB also approves the informed consent form that must be
provided to each clinical study subject or his or her legal
representative and must monitor the clinical study until
completed.
Human clinical studies are
typically conducted in three sequential phases that may overlap or
be combined:
●
Phase 1. The pharmaceutical product is initially introduced into
healthy human subjects and tested for safety, dosage tolerance,
absorption, metabolism, distribution and excretion.
●
Phase 2. The pharmaceutical product is evaluated in a limited
patient population to identify possible adverse effects and safety
risks, to preliminarily evaluate the efficacy of the product for
specific targeted diseases, to determine dosage tolerance, optimal
dosage and dosing schedule and to identify patient populations with
specific characteristics where the pharmaceutical product may be
more effective.
●
Phase 3. Clinical studies are undertaken to further evaluate
dosage, clinical efficacy and safety in an expanded patient
population at geographically dispersed clinical study sites. These
clinical studies are intended to establish the overall risk/benefit
ratio of the product and provide an adequate basis for product
labeling. The studies must be well-controlled and usually include a
control arm for comparison. One or two Phase 3 studies are required
by the FDA for an NDA or BLA approval, depending on the disease
severity and other available treatment options.
●
Post-approval studies, or Phase 4 clinical studies, may be
conducted after initial marketing approval. These studies are used
to gain additional experience from the treatment of patients in the
intended therapeutic indication.
●
Progress reports detailing the results of the clinical studies must
be submitted at least annually to the FDA and written IND safety
reports must be submitted to the FDA and the investigators for
serious and unexpected adverse events or any finding from tests in
laboratory animals that suggests a significant risk for human
subjects. Phase 1, Phase 2 and Phase 3 clinical studies may not be
completed successfully within any specified period, if at all. The
FDA or the sponsor or its data safety monitoring board may suspend
a clinical study at any time on various grounds, including a
finding that the research subjects or patients are being exposed to
an unacceptable health risk. Similarly, an IRB can suspend or
terminate approval of a clinical study at its institution if the
clinical study is not being conducted in accordance with the
IRB’s requirements or if the pharmaceutical product has been
associated with unexpected serious harm to patients.
Concurrent with clinical
studies, companies usually complete additional animal studies and
must also develop additional information about the chemistry and
physical characteristics of the pharmaceutical product as well as
finalize a process for manufacturing the product in commercial
quantities in accordance with cGMP requirements. The manufacturing
process must be capable of consistently producing quality batches
of the pharmaceutical product candidate and, among other things,
must develop methods for testing the identity, strength, quality
and purity of the final pharmaceutical product. Additionally,
appropriate packaging must be selected and tested and stability
studies must be conducted to demonstrate that the pharmaceutical
product candidate does not undergo unacceptable deterioration over
its shelf life.
U.S. Review and Approval Processes
The results of product
development, preclinical studies and clinical studies, along with
descriptions of the manufacturing process, analytical tests
conducted on the chemistry of the pharmaceutical product, proposed
labeling and other relevant information are submitted to the FDA as
part of an NDA or BLA requesting approval to market the product.
The submission of an NDA or BLA is subject to the payment of
substantial user fees; a waiver of such fees may be obtained under
certain limited circumstances.
In addition, under the
Pediatric Research Equity Act (“PREA”), an NDA, BLA or
a supplement thereof must contain data to assess the safety and
effectiveness of the pharmaceutical product for the claimed
indications in all relevant pediatric subpopulations and to support
dosing and administration for each pediatric subpopulation for
which the product is safe and effective. The FDA may grant
deferrals for submission of data or full or partial waivers. Unless
otherwise required by regulation, PREA does not apply to any
pharmaceutical product for an indication for which orphan
designation has been granted.
The FDA reviews all NDAs and
BLAs submitted before it accepts them for filing and may request
additional information rather than accepting an NDA or BLA for
filing. Once the submission is accepted for filing, the FDA begins
an in-depth review of the NDA or BLA. Under the goals and policies
agreed to by the FDA under the Prescription Drug User Fee Act
(“PDUFA”), the FDA has 10 months in which to complete
its initial review of a standard NDA or BLA and respond to the
applicant, and six months for a priority NDA or BLA. The FDA does
not always meet its PDUFA goal dates for standard and priority NDAs
or BLAs. The review process and the PDUFA goal date may be extended
by three months if the FDA requests or if the NDA or BLA sponsor
otherwise provides additional information or clarification
regarding information already provided in the submission within the
last three months before the PDUFA goal date.
After the NDA or BLA
submission is accepted for filing, the FDA reviews the NDA or BLA
application to determine, among other things, whether the proposed
product is safe and 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 and
purity. The FDA may refer applications for novel pharmaceutical
products or pharmaceutical products which present difficult
questions of safety or efficacy to an advisory committee, typically
a panel that includes clinicians and other experts, for review,
evaluation and a recommendation as to whether the application
should be approved and under what conditions. The FDA is not bound
by the recommendations of an advisory committee, but it considers
such recommendations carefully when making decisions. During the
pharmaceutical product approval process, the FDA also will
determine whether a risk evaluation and mitigation strategy
(“REMS”), is necessary to assure the safe use of the
pharmaceutical product. If the FDA concludes that a REMS is needed,
the sponsor of the NDA or BLA must submit a proposed REMS; the FDA
will not approve the NDA or BLA without a REMS, if
required.
Before approving an NDA or
BLA, the FDA will inspect the facilities at which the product is
manufactured. The FDA will not approve the product unless it
determines that the manufacturing processes and facilities are in
compliance with cGMP requirements and adequate to assure consistent
production of the product within required specifications.
Additionally, before approving an NDA or BLA, the FDA will
typically inspect one or more clinical sites as well as the site
where the pharmaceutical product is manufactured to assure
compliance with GCP and cGMP. If the FDA determines the
application, manufacturing process or manufacturing facilities are
not acceptable, it will outline the deficiencies in the submission
and often will request additional testing or information. In
addition, the FDA will require the review and approval of product
labeling.
The NDA and BLA review and
approval process is lengthy and difficult and the FDA may refuse to
approve an NDA or BLA if the applicable regulatory criteria are not
satisfied or may require additional clinical data or other data and
information. Even if such data and information are submitted, the
FDA may ultimately decide that the NDA or BLA does not satisfy the
criteria for approval. Data obtained from clinical studies are not
always conclusive and the FDA may interpret data differently than
the sponsor interprets the same data. The FDA will issue a complete
response letter if the agency decides not to approve the NDA or
BLA. The complete response letter usually describes all of the
specific deficiencies in the NDA or BLA identified by the FDA. The
deficiencies identified may be minor, for example, requiring
labeling changes, or major, for example, requiring additional
clinical studies. Additionally, the complete response letter may
include recommended actions that the applicant might take to place
the application in a condition for approval. If a complete response
letter is issued, the applicant may either resubmit the NDA or BLA,
addressing all of the deficiencies identified in the letter, or
withdraw the application.
If a product receives
regulatory approval, the approval may be significantly limited to
specific diseases and dosages or the indications for use may
otherwise be limited, which could restrict the commercial value of
the product. Further, the FDA may require that certain
contraindications, warnings or precautions be included in the
product labeling. In addition, the FDA may require Phase 4 testing
which involves clinical studies designed to further assess
pharmaceutical product safety and effectiveness and may require
testing and surveillance programs to monitor the safety of approved
products that have been commercialized.
Expedited Development and Review Programs
The FDA has a Fast Track
program that is intended to expedite or facilitate the process for
reviewing new pharmaceutical products that meet certain criteria.
Specifically, new pharmaceutical products are eligible for Fast
Track designation if they are intended to treat a serious or
life-threatening condition and demonstrate the potential to address
unmet medical needs for the condition. The Fast Track designation
must be requested by the sponsor. Fast Track designation applies to
the combination of the product and the specific indication for
which it is being studied. With a Fast Track designated product,
the FDA may consider for review sections of the NDA or BLA on a
rolling basis before the complete application is submitted, if the
sponsor provides a schedule for the submission of the sections of
the NDA or BLA, if the FDA agrees to accept sections of the NDA or
BLA and determines that the schedule is acceptable and if the
sponsor pays any required user fees upon submission of the first
section of the NDA or BLA.
Any product submitted to the
FDA for marketing approval, including a Fast Track program, may
also be eligible for other types of FDA programs intended to
expedite development and review, such as priority review and
accelerated approval. Any product is eligible for priority review
if it has the potential to provide safe and effective therapy where
no satisfactory alternative therapy exists or a significant
improvement in the treatment, diagnosis or prevention of a disease
compared to marketed products. The FDA will attempt to direct
additional resources to the evaluation of an application for a new
pharmaceutical product designated for priority review in an effort
to facilitate the review. Additionally, a product may be eligible
for accelerated approval. Pharmaceutical products studied for their
safety and effectiveness in treating serious or life-threatening
illnesses and that provide meaningful therapeutic benefit over
existing treatments may receive accelerated approval, which means
that the products may be approved on the basis of adequate and
well-controlled clinical studies establishing that the product has
an effect on a surrogate endpoint that is reasonably likely to
predict a clinical benefit, or on the basis of an effect on a
clinical endpoint other than survival or irreversible morbidity. As
a condition of approval, the FDA may require that a sponsor of a
pharmaceutical product receiving accelerated approval perform
adequate and well-controlled post-marketing clinical studies. In
addition, the FDA currently requires as a condition for accelerated
approval pre-approval of promotional materials, which could
adversely impact the timing of the commercial launch of the
product. Fast Track designation, priority review and accelerated
approval do not change the standards for approval but may expedite
the development or approval process.
Breakthrough Therapy Designation
The FDA is also required to
expedite the development and review of the application for approval
of drugs that are intended to treat a serious or life-threatening
disease or condition where preliminary clinical evidence indicates
that the drug may demonstrate substantial improvement over existing
therapies on one or more clinically significant endpoints. Under
the breakthrough therapy program, the sponsor of a new product
candidate may request that the FDA designate the product candidate
for a specific indication as a breakthrough therapy concurrent
with, or after, the filing of the IND for the product candidate.
The FDA must determine if the product candidate qualifies for
breakthrough therapy designation within 60 days of receipt of the
sponsor’s request. Validive, camsirubicin and MNPR-101 may
all be eligible for breakthrough therapy designation pending
additional data.
European Union Drug Review and Approval
In the European Economic Area
(“EEA”) (which is comprised of the 28 Member States of
the European Union plus Norway, Iceland and Liechtenstein),
medicinal products can only be commercialized after obtaining a
Marketing Authorization (“MA”). There are two types of
MA:
The Community MA, which is
issued by the European Commission through the Centralized
Procedure, based on the opinion of the CHMP, or Committee for
Medicinal Products for Human Use, of the European Medicines Agency
(“EMA”), is valid throughout the entire territory of
the EEA. The Centralized Procedure is mandatory for certain types
of products, such as biotechnology medicinal products, orphan
medicinal products, and medicinal products containing a new active
substance indicated for the treatment of AIDS, cancer,
neurodegenerative disorders, diabetes and auto-immune and viral
diseases. The Centralized Procedure is optional for products
containing a new active substance not yet authorized in the EEA, or
for products that constitute a significant therapeutic, scientific
or technical innovation or which are in the interest of public
health in the EU.
National MAs, which are
issued by the competent authorities of the Member States of the EEA
and only cover their respective territory, are available for
products not falling within the mandatory scope of the Centralized
Procedure. Where a product has already been authorized for
marketing in a Member State of the EEA, this National MA can be
recognized in other Member States through the Mutual Recognition
Procedure. If the product has not received a National MA in any
Member State at the time of application, it can be approved
simultaneously in various Member States through the Decentralized
Procedure. Under the above described procedures, before granting
the MA, the EMA or the competent authorities of the Member States
of the EEA make an assessment of the risk-benefit balance of the
product on the basis of scientific criteria concerning its quality,
safety and efficacy.
PRIME Designation
The EMA launched its PRIME
regulatory initiative to enhance support for the development of
therapies that target an unmet medical need. The initiative focuses
on drugs that may offer a major therapeutic advantage over existing
treatments, or benefit patients with no treatment options. These
therapies are considered priority medicines within the EU. Through
PRIME, the EMA offers early, proactive and enhanced support to drug
developers to optimize the generation of robust data on a
therapy’s benefits and risks and enable accelerated
assessment of drug applications. MNPR-101 may be eligible for PRIME
designation.
Post-Approval Requirements
Any pharmaceutical products
for which a sponsor receives FDA approvals are subject to
continuing regulation by the FDA, including, among other things,
record-keeping requirements, reporting of adverse experiences with
the product, providing the FDA with updated safety and efficacy
information, product sampling and distribution requirements,
complying with certain electronic records and signature
requirements and complying with FDA and FTC promotion and
advertising requirements, which include, among others, standards
for direct-to-consumer advertising, prohibitions on promoting
pharmaceutical products for uses or in patient populations that are
not described in the pharmaceutical product’s approved
labeling (known as “off-label use”), industry-sponsored
scientific and educational activities and promotional activities
involving the internet. Failure to comply with FDA requirements can
have negative consequences, including adverse publicity,
enforcement letters from the FDA, actions by the U.S. Department of
Justice and/or U.S. Department of Health and Human Services Office
of Inspector General, mandated corrective advertising or
communications with doctors, and civil or criminal penalties.
Although physicians may prescribe legally available pharmaceutical
products for off-label uses, manufacturers may not directly or
indirectly market or promote such off-label uses.
Manufacturers of FDA approved
products are required to comply with applicable FDA manufacturing
requirements contained in the FDA’s cGMP regulations. cGMP
regulations require, among other things, quality control and
quality assurance, as well as the corresponding maintenance of
records and documentation. Pharmaceutical product manufacturers and
other entities involved in the manufacture and distribution of
approved pharmaceutical products are required to register their
establishments with the FDA and certain state agencies, and are
subject to periodic unannounced inspections by the FDA and certain
state agencies for compliance with cGMP and other laws.
Accordingly, manufacturers must continue to expend time, money and
effort in the area of production and quality control to maintain
cGMP compliance. Discovery of problems with a product after
approval may result in restrictions on a product, manufacturer or
holder of an approved NDA or BLA, including withdrawal of the
product from the market. In addition, changes to the manufacturing
process generally require prior FDA approval before being
implemented and other types of changes to the approved product,
such as adding new indications and additional labeling claims, are
also subject to further FDA review and approval. The FDA also may
require post-marketing testing, known as Phase 4 testing, risk
minimization action plans and surveillance to monitor the effects
of an approved product or place conditions on an approval that
could restrict the distribution or use of the product.
U.S. Foreign Corrupt Practices Act
(“FCPA”)
The FCPA prohibits certain
individuals and entities from promising, paying, offering to pay,
or authorizing the payment of anything of value to any foreign
government official, directly or indirectly, to obtain or retain
business or an improper advantage. The U.S. Department of Justice
and the SEC have increased their enforcement efforts with respect
to the FCPA. Violations of the FCPA may result in large civil and
criminal penalties and could result in an adverse effect on a
company’s reputation, operations, and financial condition. A
company may also face collateral consequences such as debarment and
the loss of export privileges.
Federal and State Pharmaceutical Legislation
In addition to FDA
restrictions on marketing of pharmaceutical products, several other
types of state and federal laws have been applied to restrict
certain business practices in the biopharmaceutical
industry.
Anti-Kickback Statute of 1972
The
federal Anti-Kickback Statute prohibits, among other things,
knowingly and willfully offering, paying, soliciting, or receiving
remuneration to induce or in return for purchasing, leasing,
ordering, or arranging for the purchase, lease, or order of any
healthcare item or service reimbursable under Medicare, Medicaid,
or other federally financed healthcare programs. The term
“remuneration” has been broadly interpreted to include
anything of value, including for example, gifts, discounts, the
furnishing of supplies or equipment, credit arrangements, payments
of cash, waivers of payment, ownership interests and providing
anything at less than its fair market value. The Anti-Kickback
Statute has been interpreted to apply to arrangements between
pharmaceutical manufacturers on one hand and prescribers,
purchasers, and formulary managers on the other. Although there are
a number of statutory exemptions and regulatory safe harbors
protecting certain common activities from prosecution, the
exemptions and safe harbors are drawn narrowly, and a
company’s practices may not in all cases meet all of the
criteria for statutory exemptions or safe harbor protection.
Practices that involve remuneration that may be alleged to be
intended to induce prescribing, purchases, or recommendations may
be subject to scrutiny if they do not qualify for an exemption or
safe harbor. Several courts have interpreted the statute’s
intent requirement to mean that if any one purpose of an
arrangement involving remuneration is to induce referrals of
federal healthcare covered business, the statute has been violated.
The reach of the Anti-Kickback Statute was also broadened by the
PPACA, which, among other things, amends the intent requirement of
the federal Anti-Kickback Statute. Pursuant to the statutory
amendment, a person or entity no longer needs to have actual
knowledge of this statute or specific intent to violate it in order
to have committed a violation. In addition, the PPACA provides that
the government may assert that a claim including items or services
resulting from a violation of the federal Anti-Kickback Statute
constitutes a false or fraudulent claim for purposes of the civil
False Claims Act (discussed below) or the civil monetary penalties
statute, which imposes penalties against any person who is
determined to have presented or caused to be presented a claim to a
federal health program that the person knows or should know is for
an item or service that was not provided as claimed or is false or
fraudulent.
False Claims Act of 1986
The
federal False Claims Act prohibits any person from knowingly
presenting, or causing to be presented, a false claim for payment
to the federal government. Recently, several pharmaceutical and
other healthcare companies have been prosecuted under these laws
for allegedly providing free product to customers with the
expectation that the customers would bill federal programs for the
product. Other companies have been prosecuted for causing false
claims to be submitted because of the companies’ marketing of
the product for unapproved, and thus non-reimbursable, uses. Many
states also have statutes or regulations similar to the federal
Anti-Kickback Statute and False Claims Act, which state laws apply
to items and services reimbursed under Medicaid and other state
programs, or, in several states, apply regardless of the
payer.
Health Insurance Portability and Accountability Act of 1996
("HIPAA")
HIPAA
created new federal criminal statutes that prohibit knowingly and
willfully executing a scheme to defraud any healthcare benefit
program, including private third-party payers and knowingly and
willfully falsifying, concealing or covering up a material fact or
making any materially false, fictitious or fraudulent statement in
connection with the delivery of or payment for healthcare benefits,
items or services. Because of the breadth of these laws and the
narrowness of the federal Anti-Kickback Statute’s safe
harbors, it is possible that some of a company’s business
activities could be subject to challenge under one or more of such
laws. Such a challenge could have a material adverse effect on a
company’s business, financial condition and results of
operations. See “Risk Factors – Risks Related to
Commercialization of Our Product Candidates”.
HIPAA as Amended by Health Information Technology for Economic and
Clinical Health Act of 2009 ("HITECH")
HIPAA, as
amended by HITECH and its implementing regulations, imposes certain
requirements relating to the privacy, security and transmission of
individually identifiable health information. Among other things,
HITECH makes HIPAA’s privacy and security standards directly
applicable to “business associates”—independent
contractors or agents of covered entities that receive or obtain
protected health information in connection with providing a service
on behalf of a covered entity. HITECH also increased the civil and
criminal penalties that may be imposed against covered entities,
business associates and possibly other persons, and gave state
attorneys general new authority to file civil actions for damages
or injunctions in federal courts to enforce the federal HIPAA laws
and seek attorney’s fees and costs associated with pursuing
federal civil actions. In addition, state laws govern the privacy
and security of health information in certain circumstances, many
of which differ from each other in significant ways and may not
have the same effect, complicating compliance efforts. See
“Risk Factors – Risks Related to Commercialization of
Our Product Candidates”.
The Medicare Prescription Drug, Improvement and Modernization Act
of 2003 (“MMA”)
In the
U.S. and foreign jurisdictions, there have been a number of
legislative and regulatory changes to the healthcare system, in
particular, there have been and continue to be a number of
initiatives at the U.S. federal and state levels that seek to
reduce healthcare costs. The MMA imposed new requirements for the
distribution and pricing of prescription drugs for Medicare
beneficiaries. Under Part D, Medicare beneficiaries may enroll in
prescription drug plans offered by private entities, which will
provide coverage of outpatient prescription drugs. Part D plans
include both stand-alone prescription drug benefit plans and
prescription drug coverage as a supplement to Medicare Advantage
plans. Unlike Medicare Part A and B, Part D coverage is not
standardized. Part D prescription drug plan sponsors are not
required to pay for all covered Part D drugs, and each drug plan
can develop its own drug formulary that identifies which drugs it
will cover and at what tier or level. However, Part D prescription
drug formularies must include drugs within each therapeutic
category and class of covered Part D drugs, though not necessarily
all the drugs in each category or class. Any formulary used by a
Part D prescription drug plan must be developed and reviewed by a
pharmacy and therapeutic committee. Moreover, while the MMA applies
only to drug benefits for Medicare beneficiaries, private payers
often follow Medicare coverage policy and payment limitations in
setting their own payment rates. Any reduction in payment that
results from Medicare Part D may result in a similar reduction in
payments from non-governmental payers.
The American Recovery and Reinvestment Act of 2009
The
American Recovery and Reinvestment Act of 2009 provides funding for
the federal government to compare the effectiveness of different
treatments for the same illness. A plan for the research will be
developed by the Department of Health and Human Services, the
Agency for Healthcare Research and Quality and the National
Institutes for Health, and periodic reports on the status of the
research and related expenditures will be made to Congress.
Although the results of the comparative effectiveness studies are
not intended to mandate coverage policies for public or private
payers, it is not clear what effect, if any, the research will have
on the sales of any product, if any such product or the condition
that it is intended to treat is the subject of a
study.
Physician Payments Sunshine Act of 2010
The
federal Physician Payments Sunshine Act requires certain
manufacturers of drugs, devices, biologics and medical supplies for
which payment is available under Medicare, Medicaid or the
Children’s Health Insurance Program, with specific
exceptions, to report annually to the Centers for Medicare &
Medicaid Services (“CMS”) information related to
payments or other transfers of value made to physicians and
teaching hospitals, and applicable manufacturers and applicable
group purchasing organizations to report annually to CMS ownership
and investment interests held by the physicians and their immediate
family members.
Patent Protection and Affordable Care Act of 2010
("PPACA")
In March 2010, the PPACA was
enacted, which includes measures to significantly change the way
healthcare is financed by both governmental and private insurers.
Among the provisions of the PPACA of importance to the
pharmaceutical and biotechnology industry are the
following:
●
extension
of manufacturers’ Medicaid rebate liability to covered drugs
dispensed to individuals who are enrolled in Medicaid managed care
organizations;
●
expansion
of eligibility criteria for Medicaid programs by, among other
things, allowing states to offer Medicaid coverage to additional
individuals and by adding new mandatory eligibility categories for
certain individuals with income at or below 133% of the Federal
Poverty Level beginning in 2014, thereby potentially increasing
manufacturers’ Medicaid rebate liability;
●
expansion
of the entities eligible for discounts under the Public Health
Service pharmaceutical pricing program;
●
new
requirements under the federal Open Payments program, created under
Section 6002 of the PPACA and its implementing regulations, that
manufacturers of drugs, devices, biologics and medical supplies for
which payment is available under Medicare, Medicaid or the
Children’s Health Insurance Program (with certain exceptions)
report annually to the U.S. Department of Health and Human Services
(“HHS”), information related to “payments or
other transfers of value” made or distributed to physicians
(defined to include doctors, dentists, optometrists, podiatrists
and chiropractors) and teaching hospitals, and that applicable
manufacturers and applicable group purchasing organizations report
annually to HHS ownership and investment interests held by
physicians (as defined above) and their immediate family members,
with data collection required beginning August 1, 2013 and
reporting to CMS, required by March 31, 2014 and by the 90th day of
each subsequent calendar year;
●
a
requirement to annually report drug samples that manufacturers and
distributors provide to physicians, effective April 1,
2012;
●
expansion
of health care fraud and abuse laws, including the False Claims Act
and the Anti-Kickback Statute, new government investigative powers,
and enhanced penalties for noncompliance;
●
a
licensure framework for follow-on biologic products;
●
a
new Patient-Centered Outcomes Research Institute to oversee,
identify priorities in, and conduct comparative clinical
effectiveness research, along with funding for such
research;
●
creation
of the Independent Payment Advisory Board which, beginning in 2014,
will have authority to recommend certain changes to the Medicare
program that could result in reduced payments for prescription
drugs and those recommendations could have the effect of law even
if Congress does not act on the recommendations; and
●
establishment
of a Center for Medicare Innovation at CMS to test innovative
payment and service delivery models to lower Medicare and Medicaid
spending, potentially including prescription drug spending that
began on January 1, 2011.
Budget Control Act of 2011
In August
2011, the President signed into law the Budget Control Act of 2011,
which, among other things, created the Joint Select Committee on
Deficit Reduction, or joint committee, to recommend proposals in
spending reductions to Congress. The joint committee did not
achieve its targeted deficit reduction of at least $1.2 trillion
and for the years 2013 through 2021, triggering automatic
reductions to several government programs. These reductions include
aggregate reductions to Medicare payments to providers of up to 2%
per fiscal year, starting in 2013.
American Taxpayer Relief Act of 2012
In
January 2013, the President signed into law the American Taxpayer
Relief Act of 2012, which, among other things, reduced Medicare
payments to several providers and increased the statute of
limitations period for the government to recover overpayments to
providers from three to five years. These new laws may result in
additional reductions in Medicare and other healthcare
funding.
Proposals in Congress to repeal or replace parts of the
PPACA
There have
been a number of proposals in the U.S. Congress to repeal or
replace parts of the PPACA. On December 22, 2017, the Tax Cuts and
Jobs Act became law. One of its provisions repealed what is known
as the individual mandate under PPACA, which could have the effect
of negating such law. Other proposals include the repeal of the tax
on prescription medications, repeal of the medical device excise
tax for sales, and repeal of the elimination of a deduction for
expenses allocable to Medicare Part D subsidy. It is uncertain
whether any repeal or replace legislation will be passed and signed
into law or what effect any such legislation may have on our
commercialization strategy. See “Risk Factors - Future
Legislation or Executive or Private Sector Action May Increase the
Difficulty and Cost for us to Commercialize our Products and Affect
the Prices Obtained for Such Products”.
Patent Term Restoration and Marketing Exclusivity
Depending
upon the timing, duration and specifics of the FDA approval of the
use of our pharmaceutical product candidates, some of our products
to be licensed under U.S. patents may be eligible for limited
patent term extension under the Drug Price Competition and Patent
Term Restoration Act of 1984, commonly referred to as the
Hatch-Waxman Amendments. The Hatch-Waxman Amendments permits a
patent restoration term of up to five years as compensation for
patent term lost during product development and the FDA regulatory
review process. However, patent term restoration cannot extend the
remaining term of a patent beyond a total of 14 years from the
product’s approval date. The patent term restoration period
is generally one-half the time between the effective date of an IND
and the submission date of an NDA or BLA plus the time between the
submission date of an NDA or BLA and the approval of that
application. Only one patent applicable to an approved
pharmaceutical product is eligible for the extension and the
application for the extension must be submitted prior to the
expiration of the patent. The U.S. Patent and Trademark Office
(“USPTO”), in consultation with the FDA, reviews and
approves the application for any patent term extension or
restoration.
Market exclusivity provisions
under the U.S. Food, Drug, and Cosmetic Act can also delay the
submission or the approval of certain applications of other
companies seeking to reference another company’s NDA or
BLA.
The Biologics Price Competition and Innovation Act (“BPCI
Act”)
The BPCI
Act authorizes the FDA to license a biological product that is
biosimilar to an FDA-licensed biologic through an abbreviated
pathway. The BPCI Act establishes criteria for determining that a
product is biosimilar to an already-licensed biologic, or reference
product, and establishes a process by which an abbreviated BLA for
a biosimilar product is submitted, reviewed and approved. The BPCI
Act provides periods of exclusivity that protect a reference
product from biosimilars competition. Under the BPCI Act, the FDA
may not accept a biosimilar application for review until four years
after the date of first licensure of the reference product, and the
biosimilar may not be licensed until at least 12 years after the
reference product’s approval. Additionally, the BPCI Act
establishes procedures by which the biosimilar applicant provides
information about its application and product to the reference
product sponsor, and by which information about potentially
relevant patents may be shared and litigation over patents may
proceed in advance of approval. The BPCI Act also provides a period
of exclusivity for the first biosimilar determined by the FDA to be
interchangeable with the reference product.
We
anticipate that the contours of the BPCI Act will continue to be
defined as the statute is implemented over a period of years. This
likely will be accomplished by a variety of means, including
decisions related to the statute by the relevant federal courts,
FDA issuance of guidance documents, and FDA decisions in the course
of considering specific applications. The FDA has to date issued
various guidance documents and other materials indicating the
agency’s thinking regarding a number of issues implicated by
the BPCI Act. Additionally, the FDA’s approval of several
biosimilar applications in recent years has helped define the
agency’s approach to certain issues.
Pharmaceutical Coverage, Pricing and Reimbursement
Significant uncertainty exists as to the coverage and reimbursement
status of any pharmaceutical product candidates for which we obtain
regulatory approval. In the U.S. and markets in other countries,
sales of any products for which we receive regulatory approval for
commercial sale will depend in part upon the availability of
reimbursement from third-party payers. Third-party payers include
government payers such as Medicare and Medicaid, managed care
providers, private health insurers and other organizations. The
process for determining whether a payer will provide coverage for a
pharmaceutical product may be separate from the process for setting
the price or reimbursement rate that the payer will pay for the
pharmaceutical product. Third-party payers may limit coverage to
specific pharmaceutical products on an approved list, or formulary,
which might not include all of the FDA-approved pharmaceutical
products for a particular indication. Third-party payers are
increasingly challenging the price and examining the medical
necessity and cost-effectiveness of medical products and services,
in addition to their safety and efficacy. We may need to conduct
expensive pharmaco-economic studies in order to demonstrate the
medical necessity and cost-effectiveness of its products, in
addition to the costs required to obtain the FDA approvals. A
payer’s decision to provide coverage for a pharmaceutical
product does not imply that an adequate reimbursement rate will be
approved.
In 2003,
the federal government enacted legislation providing a partial
prescription drug benefit for Medicare recipients, which became
effective at the beginning of 2006. However, to obtain payments
under this program, a company would be required to sell products to
Medicare recipients through prescription drug plans operating
pursuant to this legislation. As part of their participation in the
Medicare prescription drug program, these plans negotiate
discounted prices for prescription drugs. Federal, state and local
governments in the U.S. continue to consider legislation to limit
the growth of health care costs, including the cost of prescription
drugs. Future legislation and regulations could limit payments for
pharmaceuticals such as the product candidates that we are
developing.
Different
pricing and reimbursement schemes exist in other countries. In the
European Community, governments influence the price of
pharmaceutical products through their pricing and reimbursement
rules and control of national health care systems that fund a large
part of the cost of those products to consumers. Some jurisdictions
operate positive and negative list systems under which products may
only be marketed once a reimbursement price has been agreed upon.
To obtain reimbursement or pricing approval, some of these
countries may require the completion of clinical studies that
compare the cost-effectiveness of a particular pharmaceutical
product candidate to currently available therapies. Other member
states allow companies to fix their own prices for medicines, but
monitor and control company profits. The downward pressure on
health care costs in general, particularly prescription drugs, has
become very intense. As a result, increasingly high barriers are
being erected to the entry of new products. In addition, in some
countries, cross-border imports from low-priced markets exert a
commercial pressure on pricing within a country.
International Regulation
In
addition to regulations in the U.S., there are a variety of foreign
regulations governing clinical studies and commercial sales and
distribution of our future product candidates. Whether or not FDA
approval is obtained for a product, approval of a product must be
obtained by the comparable regulatory authorities of foreign
countries before clinical studies or marketing of the product can
commence in those countries. The approval process varies from
country to country, and the time may be longer or shorter than that
required for FDA approval. The requirements governing the conduct
of clinical studies, product licensing, pricing and reimbursement
vary greatly from country to country. In addition, certain
regulatory authorities in select countries may require us to repeat
previously conducted preclinical and/or clinical studies under
specific criteria for approval in their respective country which
may delay and/or greatly increase the cost of approval in certain
markets targeted for approval by us.
Under E.U.
regulatory systems, marketing applications for pharmaceutical
products must be submitted under a centralized procedure to the
EMA. The centralized procedure provides for the granting of a
single marketing authorization that is valid for all E.U. member
states. The EMA also has designations for Orphan Drugs, which, if
applicable, can provide for faster review, lower fees and more
access to advice during drug development. While the marketing
authorization in the European Union is centralized, the system for
clinical studies (application, review and requirements) is handled
by each individual country. Approval to run a clinical study in one
country does not guarantee approval in any other country. The
pharmaceutical industry in Canada is regulated by Health Canada. A
New Drug Submission (“NDS”) is the equivalent of a U.S.
NDA and must be filed to obtain approval to market a pharmaceutical
product in Canada. Marketing regulations and reimbursement are
subject to national and provincial laws. In Japan, applications for
approval to manufacture and market new drugs must be approved by
the Ministry of Health, Labor and Welfare. Nonclinical and clinical
studies must meet the requirements of Japanese laws. Results from
clinical studies conducted outside of Japan must be supplemented
with at least a bridging clinical study conducted in Japanese
patients.
In
addition to regulations in Europe, Canada, Japan and the U.S.,
there are a variety of foreign regulations governing clinical
studies, commercial distribution and reimbursement of future
product candidates which we may be subject to as we pursue
regulatory approval and commercialization of
Validive, camsirubicin, MNPR-101, or any future product
candidates internationally.
Compliance with Environmental Laws
Since we do not have our own
laboratory facilities, we do not estimate any annual costs of
compliance with environmental laws.
Employees
Our
operations are currently managed by five individuals (including our
executive chairman and Acting Chief Medical Officer), of whom three
have a PhD, two have an MD, one has an MBA, one has an MSc in
health economics and policy, and one is a former CPA. They have
worked at industry leading companies such as BioMarin
Pharmaceutical Inc., Raptor Pharmaceuticals, Abbott Laboratories,
and Onyx Pharmaceuticals. As of March 5, 2021, we had ten
employees; nine of whom were full-time. We anticipate hiring
additional employees in clinical operations, regulatory affairs and
other departments, to help manage our clinical studies, regulatory
submissions, and manufacturing to support Validive and camsirubicin
program development, business development and corporate strategy.
In addition, to complement our internal expertise, we have
contracts with medical and scientific consultants, manufacturers,
laboratories, and contract research organizations that specialize
in various aspects of drug development including clinical
development, preclinical development, manufacturing and regulatory
affairs.
Available Information
Our corporate website is located at
www.monopartx.com.
The
reference to these website addresses does not constitute
incorporation by reference of the information contained on the
websites and should not be considered part of this Annual Report on
Form 10-K.
We intend to satisfy any
disclosure requirement under Item 5.05 of Form 8-K regarding an
amendment to, or waiver from, a provision of our Code of Business
Conduct and Ethics by posting such information on our website as
specified above.
RISK
FACTORS
An investment in our common
stock involves a high degree of risk. A prospective investor should
carefully consider the following information about these risks,
together with other information appearing elsewhere in this Annual
Report on Form 10-K, before deciding to invest in our common stock.
The occurrence of any of the following risks could have a material
adverse effect on our business, financial condition, results of
operations and future prospects and prospective investors could
lose all or part of their investment. The risk factors discussed
below and elsewhere in this Annual Report on Form 10-K are not
exhaustive; other significant risks may exist that are not
identified in this Annual Report on Form 10-K, but that might still
materially and adversely affect our business, prospects, financial
condition, and results of operations were any of such risks to
occur.
Risks Related to Our Financial Condition and Capital
Requirements
We
have a limited operating history, expect to incur significant
operating losses, and have a high risk of never being
profitable.
We commenced operations in
December 2014 and have an operating history of six years.
Therefore, there is limited historical financial or operational
information upon which to evaluate our performance. Our prospects
must be considered in light of the uncertainties, risks, expenses,
and difficulties frequently encountered by companies in their early
clinical stages of operations. Many, if not most, companies in our
industry at our stage of development never become profitable and
are acquired, merge, sell major product assets or go out of
business before successfully developing any product that generates
revenue from commercial sales and enables
profitability.
From inception in December
2014 through December 31, 2020, we have incurred losses of
approximately $32.2 million, which includes $13.5 million of
non-cash in-process research and development, which was incurred in
connection with our acquisition of camsirubicin. We expect to
continue to incur substantial operating losses over the next
several years for the clinical development of our current and
future licensed or purchased product candidates.
The amount of future losses
and when, if ever, we will become profitable are uncertain. We do
not have any products that have generated revenues from commercial
sales, and do not expect to generate revenues from the commercial
sale of products in the near future, if ever. Our ability to
generate revenue and achieve profitability will depend on, among
other things, successful completion of the development of our
product candidates; obtaining necessary regulatory approvals from
the FDA and international regulatory agencies; establishing
manufacturing/quality, sales, and marketing arrangements with third
parties; obtaining adequate reimbursement by third-party payers;
and raising sufficient funds to finance our activities. If we are
unsuccessful at some or all of these undertakings, our business,
financial condition, and results of operations are expected to be
materially and adversely affected.
The funds raised to-date from the sales of our common stock should
enable us to obtain topline results for the run-in portion of the
camsirubicin Phase 2 clinical trial and commence the Phase 3
portion of our Validive Phase 2b/3 (VOICE) clinical program, but
will not be sufficient for us to complete our VOICE clinical
program, which will require that we raise significant additional
funds or find a suitable pharmaceutical partner. If we are able to
raise additional funds in the next 12 months, to complete our VOICE
clinical program, it may not be on favorable terms. If we are
unable to raise enough funds in the future, or find a suitable
pharmaceutical partner, we may have to discontinue or delay our
Validive clinical development.
In order to be commercially
viable, we must successfully research, develop, test, obtain
regulatory approval for, manufacture, introduce, market and
distribute Validive, camsirubicin, MNPR-101 and, if applicable, any
current and future product candidates we may develop. The estimated
required capital and time-frames necessary to achieve these
developmental milestones as described in this Annual Report on Form
10-K or as we may state from time to time is subject to inherent
risks, which are beyond our control. Clinical development of
Validive, camsirubicin and MNPR-101 will require significant funds.
Proceeds to-date from the sales of our common stock should enable
us to obtain topline results for the run-in portion of the
camsirubicin Phase 2 clinical trial and commence the Phase 3
portion of our VOICE clinical trial, however, these funds will not
be sufficient to complete our VOICE clinical program. As such, we
will be required to raise significant additional funds or find a
suitable pharmaceutical partner in the next 12 months to complete
our VOICE clinical program, including, if required, completing a
smaller second Phase 3 confirmatory clinical trial, to support
further development of camsirubicin beyond Phase 2, to support
MNPR-101 and related compounds in various indications and generally
to support our current and any future product candidates through
completion of trials, approval processes and, if applicable,
commercialization, If we are able to raise financing, it may be on
terms that are unfavorable to us and if we are unable to raise
sufficient funds or find a suitable pharmaceutical partner, we may
have to discontinue or delay clinical development of Validive
and/or any other of our current or future product
candidates.
Our operations and financial results could be adversely impacted by
the global outbreak of the COVID-19, which may negatively impact
our ability to manufacture our product candidates for our clinical
trials, our ability to accrue and conduct our clinical trials, and
may delay regulatory agency responses. Any such impact will
negatively impact our financial condition and could require us to
delay our clinical development programs.
In December 2019, a novel
strain of coronavirus (“COVID-19”) was reported to have
surfaced in Wuhan, China, resulting in significant disruptions to
Chinese manufacturing and supply chain, as well as travel
restrictions in many countries. In March 2020, COVID-19 was
designated a global pandemic and many countries, including the
United States, have declared national emergencies and have
implemented preventive measures by limiting large public
gatherings, setting separation distances between individuals
(social distancing), rules for mandatory use of personal protective
equipment (primarily masks) and in shelter-in-place mandates. Many
employers are restricting non-essential work travel and are
requiring that employees work from their homes to limit personal
interaction if required by local regulations. Many businesses have
closed or are operating in a substantially reduced fashion and many
employees have been laid off. In response to the current COVID-19
pandemic and its effects on clinical trials, we have modified the
original adaptive design Phase 3 clinical trial for our lead
product candidate, Validive, to be a Phase 2b/3 VOICE clinical
trial to better fit the types of trials which can enroll patients
in the current environment. We have activated sites and commenced
dosing in our VOICE clinical program. The Phase 3 portion of the
VOICE trial is anticipated to start immediately after the Phase 2b
portion. To complete VOICE clinical program, including, if
required, completing a smaller second Phase 3 confirmatory clinical
trial, we will need to raise additional funding in the millions or
tens of millions of dollars (depending on if we have consummated a
collaboration or partnership or neither for Validive), or find a
suitable pharmaceutical partner, both of which we are planning to
pursue in the next 12 months. There can be no assurance that any
such events will occur and the ongoing COVID-19 pandemic continues
to create uncertainties and challenges to our ability to seek
additional funding and explore collaborations and
partnerships.
While we are currently
continuing our ongoing and planned clinical trials, the COVID-19
pandemic and related precautions have directly or indirectly
impacted the timeline for certain of our clinical trials. We are
continuing to monitor the impact of the COVID-19 pandemic on our
operations and ongoing clinical development activity, generally. As
a result of the COVID-19 pandemic, we may experience further
disruptions that could severely impact our business, preclinical
studies and clinical trials, including:
●
Delays in receiving
approval from the FDA and foreign regulatory authorities to
initiate our planned clinical trials;
●
Delays or
difficulties in enrolling and monitoring patients in our clinical
trials;
●
Delays or
difficulties in clinical site initiation, including difficulties in
recruiting clinical site investigators and clinical site
staff;
●
Delays in trial
drug shipments due to COVID-19 vaccine shipments tying up available
pharmaceutical product shipping lanes and increasing their
cost;
●
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 our clinical
trials;
●
Risk that
participants enrolled in our clinical trials will acquire COVID-19
while the clinical trial is ongoing, which could impact the results
of the clinical trial, including by increasing the number of
observed adverse events;
●
Interruption of key
clinical trial activities, such as clinical trial site data
monitoring, due to limitations on travel imposed or recommended by
federal or state governments, employers and others or interruption
of clinical trial subject visits and study procedures, which may
impact the integrity of subject data and clinical study
endpoints;
●
Interruption or
delays in the operations of the FDA and foreign regulatory
agencies, which may impact approval timelines;
●
Interruption of, or
delays in receiving, supplies of our product candidates from our
contract manufacturing organizations due to staffing or supply
shortages, production slowdowns, global shipping delays or
stoppages and disruptions in delivery systems;
●
Limitation on
employee resources that would otherwise be focused on the conduct
of our preclinical studies and clinical trials, including because
of sickness of our employees or their families or the desire of
employees to avoid contact with large groups of
people.
●
Refusal of the FDA
to accept data from clinical trials in affected geographies;
and
●
Impacts from
prolonged remote work arrangements, such as increased cybersecurity
risks.
The extent to which the
outbreak further impacts our business, including our preclinical
studies and clinical trials, results of operations and financial
condition will depend on future developments which are highly
uncertain and cannot be predicted with confidence. Such factors
include but are not limited to the global availability and
acceptability of the vaccination roll-out, the potential and
duration of another major outbreak, continued travel restrictions,
local states of emergency requiring quarantines and
shelter-in-place orders, adherence to social distancing and
mask-wearing recommendations in the U.S. and other countries and
the availability of effective global therapeutics to treat
COVID-19.
If we continue to incur operating losses and fail to obtain the
capital necessary to fund our operations, we will be unable to
advance our development programs, complete our clinical trials, or
bring products to market, or may be forced to reduce or cease
operations entirely. In addition, any capital obtained by us may be
obtained on terms that are unfavorable to us, our investors, or
both.
Developing a new drug and
conducting clinical trials and the regulatory review processes for
one or more disease indications involves substantial costs. We have
projected cash requirements for the near term based on a variety of
assumptions, but some or all of such assumptions are likely to be
incorrect and/or incomplete, possibly materially in an adverse
direction. Our actual cash needs may deviate materially from those
projections, changes in market conditions or other factors may
increase our cash requirements, or we may not be successful even in
raising the amount of cash we currently project will be required
for the near term. We will need to raise additional capital in the
future; the amount of additional capital needed will vary as a
result of a number of factors, including without limitation the
following:
● receiving
less funding than we require;
● higher than
expected costs to manufacture and ship our active pharmaceutical
ingredient and our product candidates;
● higher than
expected costs for preclinical testing;
● an increase
in the number, size, duration, and/or complexity of our clinical
trials;
● slower than
expected progress in developing Validive, camsirubicin, MNPR-101,
or other product candidates, including without limitation,
additional costs caused by program delays;
● higher than
expected costs associated with attempting to obtain regulatory
approvals, including without limitation additional costs caused by
additional regulatory requirements or larger clinical trial
requirements;
● higher than
expected personnel, consulting or other costs, such as adding
personnel or industry expert consultants or pursuing the
licensing/acquisition of additional assets; and
● higher than
expected costs to protect our intellectual property portfolio or
otherwise pursue our intellectual property strategy.
When we attempt to raise
additional financing, there can be no assurance that we will be
able to secure such additional financing in sufficient quantities
or at all. We may be unable to raise additional capital for reasons
including, without limitation, our operational and/or financial
performance, investor confidence in us and the biopharmaceutical
industry, credit availability from banks and other financial
institutions, the status of current projects, and our prospects for
obtaining any necessary regulatory approvals. Potential
investors’ capital investments may have shifted to other
opportunities with perceived greater returns and/or lower risk,
thereby reducing capital available to us, if available at
all.
In addition, any additional
financing might not be available, and even if available, may not be
available on terms acceptable to us or our then-existing investors.
We will seek to raise funds through public or private equity
offerings, debt financings, corporate collaboration or licensing
arrangements, mergers, acquisitions, sales of intellectual
property, or other financing vehicles or arrangements. To the
extent that we raise additional capital by issuing equity
securities or other securities, our then-existing investors will
experience dilution. If we raise funds through debt financings or
bank loans, we may become subject to restrictive covenants, our
assets may be pledged as collateral for the debt, and the interests
of our then-existing investors would be subordinated to the debt
holders or banks. In addition, our use of and ability to exploit
assets pledged as collateral for debt or loans may be restricted or
forfeited. To the extent that we raise additional funds through
collaboration or licensing arrangements, we may be required to
relinquish significant rights (including without limitation
intellectual property rights) to our technologies or product
candidates, or grant licenses on terms that are not favorable to
us. If we are not able to raise needed funding under acceptable
terms or at all, then we will have to reduce expenses, including
the possible options of curtailing operations, abandoning
opportunities, licensing or selling off assets, reducing costs to a
point where clinical development or other progress is impaired, or
ceasing operations entirely.
Unstable market and economic conditions may have serious adverse
consequences on our ability to raise funds, which may cause us to
cease or delay our operations.
From time to time, global and
domestic credit and financial markets have experienced extreme
disruptions, including severely diminished liquidity and credit
availability, declines in consumer confidence, declines in economic
growth, increases in unemployment rates, and uncertainty about
economic stability. Our financing strategy will be adversely
affected by any such economic downturn, volatile business
environment and continued unpredictable and unstable market
conditions. If the equity and credit markets deteriorate, it may
make a debt or equity financing more difficult to complete,
costlier, and more dilutive. Failure to secure any necessary
financing in a timely manner and on favorable terms will have a
material adverse effect on our business strategy and financial
performance, and could require us to cease or delay our
operations.
Risks Related to Clinical Development and Regulatory
Approval
We do not have and may never have any approved products on the
market. Our business is highly dependent upon receiving approvals
from various U.S. and international governmental agencies and will
be severely harmed if we are not granted approval to manufacture
and sell our product candidates.
In order for us to
commercialize any treatment for chemoradiation-induced SOM, cancer
or for any other disease indication, we must obtain regulatory
approvals of such treatment for that indication. Satisfying
regulatory requirements is an expensive process that takes many
years and involves compliance with requirements covering research
and development, testing, manufacturing, quality control, labeling,
and promotion of drugs for human use. To obtain necessary
regulatory approvals, we must, among other requirements, complete
clinical trials demonstrating that our products are safe and
effective for a particular indication. There can be no assurance
that our products will prove to be safe and effective, that our
clinical trials will demonstrate the necessary safety and
effectiveness of our product candidates, or that we will succeed in
obtaining regulatory approval for any treatment we develop even if
such safety and effectiveness are demonstrated.
Any delays or difficulties we
encounter in our clinical trials may delay or preclude regulatory
approval from the FDA or from international regulatory
organizations. Any delay or preclusion of regulatory approval would
be expected to delay or preclude the commercialization of our
products. Examples of delays or difficulties that we may encounter
in our clinical trials include without limitation the
following:
● Clinical
trials may not yield sufficiently conclusive results for regulatory
agencies to approve the use of our products.
● Our
products may fail to be more effective than current therapies, or
to be effective at all.
● We may
discover that our products have adverse side effects, which could
cause our products to be delayed or precluded from receiving
regulatory approval or reduce the effective size of our target
patient population or otherwise expose us to significant commercial
and legal risks.
● It may take
longer than expected to determine whether or not a treatment is
safe and effective.
● Patients
involved in our clinical trials may suffer severe adverse side
effects even up to death, whether as a result of treatment with our
products, the withholding of such treatment, or other reasons which
may not include the effects of our treatment (whether within or
outside of our control).
● We may fail
to be able to enroll a sufficient number of patients in our
clinical trials, or it may take longer than expected to
enroll.
● Patients
enrolled in our clinical trials may not have the safety or efficacy
characteristics necessary to obtain regulatory approval for a
particular indication or patient population.
● We may be
unable to produce sufficient quantities of product to complete the
clinical trials.
● Even if we
are successful in our clinical trials, required governmental
approvals may still not be obtained or, if obtained, may not be
maintained.
● If approval
for commercialization is granted, it is possible the authorized use
will be more limited than is necessary for commercial success, or
that approval may be conditioned on completion of further clinical
trials or other activities, which will cause a substantial increase
in costs and which we might not succeed in performing or
completing.
● If granted,
approval may be withdrawn or limited if problems with our products
emerge or are suggested by the data arising from their use or if
there is a change in law or regulation.
Any success we may achieve at
a given stage of our clinical trials does not guarantee that we
will achieve success at any subsequent stage, including without
limitation final FDA or other regulatory organizations’
approval.
We may encounter delays or
rejections in the regulatory approval process because of additional
government regulation resulting from future legislation or
administrative action, or from changes in the policies of the FDA
or other regulatory bodies during the period of product
development, clinical trials, or regulatory review. Failure to
comply with applicable regulatory requirements may result in
criminal prosecution, civil penalties, recall or seizure of
products, total or partial suspension of production, or an
injunction preventing certain activity, as well as other regulatory
action against our product candidates or us. As a company, we have
no experience in successfully obtaining regulatory approval for a
product and thus may be poorly equipped to gauge, and may prove
unable to manage, risks relating to obtaining such
approval.
Outside the U.S., our ability
to market a product is contingent upon receiving clearances from
appropriate non-U.S. regulatory authorities. Non-U.S. regulatory
approval typically includes all of the risks associated with FDA
clearance discussed above as well as geopolitical uncertainties and
the additional uncertainties and potential prejudices faced by U.S.
pharmaceutical companies conducting business abroad. In certain
cases, governmental pricing restrictions and practices can make
achieving even limited profitability very difficult.
Even if we complete the clinical trials we discussed with the FDA,
there is no guarantee that at the time of submission the FDA will
accept our new drug application (“NDA”) based on the
trials discussed.
The FDA provided guidance on
our proposed VOICE adaptive design trial, but the FDA is not bound
by the guidance they give, and can change their position in the
future. Any future decision by the FDA will be driven largely by
the data generated from the VOICE clinical program. However, the
FDA and other regulatory organizations will learn from their total
experience in the review of multiple drugs in multiple indications
and they will apply the knowledge of broad and diverse experience
even if not a perfect match with our product.
As a company, we have never completed a clinical trial and have
limited experience in completing regulatory filings and any delays
in regulatory filings could materially affect our financial
condition.
While members of our team
have conducted numerous clinical trials at previous companies, and
have launched and marketed innovative pharmaceutical products in
the U.S. and internationally, as a company, we have not yet
completed any clinical trials of our product candidates, nor have
we demonstrated the ability to obtain marketing approvals,
manufacture product candidates at a commercial scale, or conduct
sales and marketing activities necessary for the successful
commercialization of a product. Consequently, we have no historical
basis as a company by which one can evaluate or predict reliably
our future success or viability.
Additionally, while our team
has experience at prior companies with regulatory filings, as a
company, we have limited experience with regulatory filings with
agencies such as the FDA or EMA. Any delay in our regulatory
filings for our product candidates, and any adverse development or
perceived adverse development with respect to the applicable
regulatory authority’s review of such filings, including,
without limitation, the FDA’s issuance of a “refuse to
file” letter or a request for additional information, could
materially affect our financial condition.
We may seek fast track designation for one or more of our current
and future product candidates, but we might not receive such
designation, and even if we do, such designation may not actually
lead to a faster development or regulatory review or approval
process.
Our lead product candidate,
Validive, has been given fast track designation from the FDA. Fast
track designation does not ensure that we will receive marketing
approval or that approval will be granted within any particular
timeframe. We may not experience a faster development, regulatory
review or approval process with fast track designation compared to
conventional FDA procedures. Additionally, the FDA may withdraw
fast track designation, for reasons such as it comes to believe a
drug candidate no longer adequately addresses an unmet medical
need. Fast track designation alone does not guarantee qualification
for the FDA’s priority review procedures. If we seek fast
track designation for other product candidates, we may not receive
such a designation from the FDA.
We, or any future collaborators, may not be able to obtain and
maintain orphan drug exclusivity for our product candidates in the
U.S. and Europe.
Validive has been granted
orphan drug designation for the treatment of SOM in the EU.
Camsirubicin has been granted orphan drug designation for the
treatment of soft tissue sarcoma in the U.S. and in the EU. We may
seek additional orphan drug designations or regulatory incentives
for our pipeline product candidates, for other indications or for
future product candidates. There can be no assurances that we will
be able to obtain such designations.
Even if we obtain orphan drug
designation for a product candidate, we may not be able to maintain
orphan drug exclusivity for that drug. For example, orphan drug
designation may be removed if the prevalence of an indication
increases beyond the patient number limit required to maintain
designation. Generally, if a drug with an orphan drug designation
subsequently receives the first marketing approval for the
indication for which it has such designation, the drug is entitled
to a period of marketing exclusivity, which precludes the EMA or
the FDA from approving another marketing application for the same
product in the same indication for that time period. Orphan drug
exclusivity may be lost if the FDA or EMA determines that the
request for designation was materially defective or if the
manufacturer is unable to assure sufficient quantity of the product
to meet the needs of patients with the rare disease or condition.
Moreover, even after an orphan drug is approved, the FDA can
subsequently approve a different drug for the same condition if the
FDA concludes that the later drug is clinically superior in that it
is shown to be safer, more effective or makes a major contribution
to patient care compared to our product.
The FDA may reevaluate the
Orphan Drug Act and its regulations and policies, and similarly the
EMA may reevaluate its policies and regulations. We do not know if,
when, or how the FDA or EMA may change their orphan drug
regulations and policies in the future, and it is uncertain how any
changes might affect our business. Depending on what changes the
FDA and/or EMA may make to their orphan drug regulations and
policies, our business could be adversely impacted.
If serious adverse or undesirable side effects are identified
during the development of our product candidates, we may abandon or
limit our development or commercialization of such product
candidates.
If our product candidates are
associated with undesirable side effects or have unexpected
characteristics, we may need to abandon their development or limit
development to certain 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.
If we elect or are forced to
suspend or terminate any clinical trial with one of our product
candidates, the commercial prospects of such product candidate will
be harmed, and our ability to generate revenue from such product
candidate will be delayed or eliminated. Any of these occurrences
may harm our business, financial condition and prospects
significantly.
With regard to our lead
product candidate, unforeseen side effects from Validive could
arise either during clinical development or, if approved, after
Validive has been marketed. This could cause regulatory approvals
for, or market acceptance of, Validive harder and costlier to
obtain.
To date, no difference in the
frequency of serious adverse events (“SAEs”) has been
observed in patients treated with Validive compared to placebo. In
the Phase 2 clinical trial, two patients in the placebo group and 2
patients in the Validive 50 µg group experienced SAEs that
were assessed as treatment related. No patients in the Validive
treated cohorts were discontinued due to study drug. Clonidine, the
active ingredient of Validive, has been used for over 50 years as
an orally swallowed systemic treatment for high blood pressure.
Validive administration leads to very low, but still detectable
exposure of clonidine outside the oral cavity. Thus, there is some
risk that patients may experience side effects due to this systemic
exposure, which could include a reduction in blood pressure,
irregular heartbeat, drowsiness or dry mouth.
The results of our current or
any future clinical trials may show that the side effects of
Validive are unacceptable or intolerable, which could interrupt,
delay or halt clinical trials, and result in delay of, or failure
to obtain, marketing approval from the FDA or EMA and other
regulatory authorities, or result in marketing approval from the
FDA or EMA and other regulatory authorities with restrictive label
warnings.
If Validive receives
marketing approval and we or others later identify undesirable or
unacceptable side effects caused by the use of
Validive:
●
regulatory authorities may withdraw their approval of the product,
which would force us to remove Validive from the
market;
●
regulatory authorities may require the addition of labeling
statements, specific warnings, a contraindication, or field alerts
to physicians and pharmacies;
●
we may be required to change instructions regarding the way the
product is administered, conduct additional clinical trials or
change the labeling of the product;
●
we may be subject to limitations on how we may promote the
product;
●
sales of the product may decrease significantly;
●
we may be subject to litigation or product liability claims;
and
●
our reputation may suffer.
Any of these events could
prevent us or our potential future collaborators from achieving or
maintaining market acceptance of Validive and/or could
substantially increase commercialization costs and expenses, which
in turn could delay or prevent us from generating significant
revenues from the sale of Validive.
As with
any clinical trial, our VOICE clinical program entails
significant risk of not meeting clinical endpoints. If the results
of VOICE are not statistically significant, the FDA will likely not
approve Validive for marketing which will result in a decrease in
our stock price and market value.
The VOICE
clinical program has been designed based on an analysis of the 64
oropharyngeal cancer (“OPC”) patients included in the
Phase 2 trial (n= 24 in the placebo group, n= 21 Validive 50
µg group, and n= 19 Validive 100 µg group). While a dose
response was observed in the Validive treated OPC cohorts compared
to placebo across multiple clinically meaningful endpoints, the
ability to establish statistical significance was limited by the
relatively small sample size. This increases the risk that the
VOICE may not achieve its prospectively defined endpoints. Given
the large unmet medical need for the prevention of CRT-induced SOM
in OPC patients, we have decided to pursue an adaptive design Phase
2b/3 clinical development strategy in an effort to mitigate this
risk. VOICE has a simplified design and includes an interim analysis after the 2b
portion that allows for an assessment of the primary (and only)
endpoint, incidence of SOM, before proceeding to the Phase 3
portion of the trial. By focusing VOICE on a single endpoint, touch
points with patients and sites are minimized. This seamless design
will allow us to immediately advance to the Phase 3 portion of the
trial if supported by the interim data at the end of the Phase 2b
portion of the trial. We may also be required to conduct a smaller
second Phase 3 confirmatory clinical trial which may not yield the
same results. If our VOICE clinical trial results are not
statistically significant, the FDA will likely not approve Validive
for marketing, which will result in a decrease in our stock price
and market value.
If we experience delays or difficulties in the enrollment of
subjects to our clinical trials, our receipt of necessary
regulatory approvals could be delayed or prevented, which could
materially affect our financial condition.
Identifying, screening and
enrolling patients to participate in clinical trials of our product
candidates is critical to our success, and we may not be able to
identify, recruit, enroll and dose a sufficient number of patients
with the required or desired characteristics to complete our
clinical trials in a timely manner. The timing of our clinical
trials depends on our ability to recruit patients to participate as
well as to subsequently dose these patients and complete required
follow-up periods. In particular, because our current clinical
trials of Validive and camsirubicin are focused on indications with
relatively small patient populations, our ability to enroll
eligible patients may be limited or may result in slower enrollment
than we anticipate.
In addition, we may
experience enrollment delays related to increased or unforeseen
regulatory, legal and logistical requirements and COVID-19-related
issues at certain clinical trial sites. These delays could be
caused by reviews by regulatory authorities and contractual
discussions with individual clinical trial sites. Any delays in
enrolling and/or dosing patients in our current clinical trials
could result in increased costs, delays in advancing our product
candidates, delays in testing the effectiveness of our product
candidates or in termination of the clinical trials
altogether.
Patient enrollment may be
affected if our competitors have ongoing clinical trials with
products for the same indications as our product candidates, and
patients who would otherwise be eligible for our clinical trials
instead enroll in our competitors’ clinical trials. Patient
enrollment may also be affected by other factors,
including:
●
delays in U.S. or foreign regulatory approval to start the clinical
trial;
●
coordination with clinical research organizations to enroll and
administer the clinical trials;
●
coordination and recruitment of collaborators and investigators at
individual sites;
●
size of the patient population and process for identifying
patients;
●
design of the clinical trial protocol;
●
eligibility and exclusion criteria;
●
perceived risks and benefits of the product candidates under
study;
●
availability of competing commercially available therapies and
other competing products’ clinical trials;
●
time of year in which the trials are initiated or
conducted;
●
severity of the diseases under investigation;
●
ability to obtain and maintain subject consents;
●
ability to enroll and treat patients in a timely
manner;
●
risk that enrolled subjects will drop out before completion of the
trials;
●
proximity and availability of clinical trial sites for prospective
patients;
●
ability to monitor subjects adequately during and after
treatment;
●
patient referral practices of physicians; and
●
potential effects of the COVID-19 pandemic.
Our inability to enroll a
sufficient number of patients for clinical trials would result in
significant delays and could require us to abandon one or more
clinical trials altogether. Enrollment delays in these clinical
trials may result in increased development costs for our product
candidates, which could materially affect our financial
condition.
If we or our licensees, development collaborators, or suppliers are
unable to manufacture our products in sufficient quantities or at
defined quality specifications, or are unable to obtain regulatory
approvals for the manufacturing facility, we may be unable to
develop and/or meet demand for our products and lose time to market
and potential revenues.
Completion of our clinical
trials and commercialization of our product candidates require
access to, or development of, facilities to manufacture a
sufficient supply of our product candidates. We will utilize third
parties to manufacture Validive, camsirubicin, and MNPR-101. We
currently have manufacturing arrangements for Validive and
camsirubicin. We have not yet secured a manufacturing agreement for
MNPR-101 or uPRITs.
In the future we may become
unable, for various reasons, to rely on our sources for the
manufacture of our product candidates, either for clinical trials
or, at some future date, for commercial distribution. We may not be
successful in identifying additional or replacement third-party
manufacturers, or in negotiating acceptable terms with any we do
identify. We may face competition for access to these
manufacturers’ facilities and may be subject to manufacturing
delays if the manufacturers give other clients higher priority than
they give to us. Even if we are able to identify an additional or
replacement third-party manufacturer, the delays and costs
associated with establishing and maintaining a relationship with
such manufacturer may have a material adverse effect on
us.
Before we can begin to
commercially manufacture Validive, camsirubicin, MNPR-101, or any
other product candidate, we must obtain regulatory approval of the
manufacturing facility and process. Manufacturing of drugs for
clinical and commercial purposes must comply with current Good
Manufacturing Practices requirements, commonly known as
“cGMP.” The cGMP requirements govern quality control
and documentation policies and procedures. Complying with cGMP and
non-U.S. regulatory requirements will require that we expend time,
money, and effort in production, recordkeeping, and quality control
to ensure that the product meets applicable specifications and
other requirements. We, or our contracted manufacturing facility,
must also pass a pre-approval inspection prior to FDA approval.
Failure to pass a pre-approval inspection may significantly delay
or prevent FDA approval of our products. If we fail to comply with
these requirements, we would be subject to possible regulatory
action and may be limited in the jurisdictions in which we are
permitted to sell our products and will lose time to market and
potential revenues.
It is uncertain whether product liability insurance will be
adequate to address product liability claims, or that insurance
against such claims will be affordable or available on acceptable
terms in the future.
Clinical research involves
the testing of new drugs on human volunteers pursuant to a clinical
trial protocol. Such testing involves a risk of liability for
personal injury to or death of patients due to, among other causes,
adverse side effects, improper administration of the new drug, or
improper volunteer behavior. Claims may arise from patients,
clinical trial volunteers, consumers, physicians, hospitals,
companies, institutions, researchers, or others using, selling, or
buying our products, as well as from governmental bodies including
a possibility in some states for product liability claims being
made based on generic copies of our drugs. In addition, product
liability and related risks are likely to increase over time, in
particular upon the commercialization or marketing of any products
by us or parties with which we enter into development, marketing,
or distribution collaborations. Although we have obtained product
liability insurance in connection with our clinical trials, there
can be no assurance that the amount and scope of such insurance
coverage will be appropriate and sufficient in the event any claims
arise, that we will be able to secure additional coverage should we
attempt to do so, or that our insurers would not contest or refuse
any attempt by us to collect on such insurance policies. Regardless
of their merit or eventual outcome, product liability claims may
result in:
●
withdrawal of clinical trial volunteers;
●
decreased demand for our products when approved;
●
injury to our reputation and significant, adverse media attention;
and
●
potentially significant litigation costs, including without
limitation, any damages awarded to the plaintiffs if we lose or
settle claims.
If the market opportunities for our current and potential future
drug candidates are smaller than we believe they are, our ability
to generate product revenues will be adversely affected and our
business may suffer.
Our understanding of the
number of people who suffer from SOM resulting from CRT for the
treatment of OPC, whom Validive may have the potential to treat, is
based upon estimates and on various reports from governments or
medical institutions. These estimates or reports may prove to be
incorrect, and new studies may demonstrate or suggest a lower
estimated incidence or prevalence of this condition. The number of
patients in the U.S. or elsewhere may turn out to be lower than
expected, may not be otherwise amenable to Validive treatment, or
treatment-amenable patients may become increasingly difficult to
identify and access, all of which would adversely affect our
business prospects and financial condition. In particular, the
treatable population for Validive may further be reduced if our
estimates of addressable populations are erroneous or
sub-populations of patients within the addressable population do
not derive benefit from Validive.
Risks Related to Our Reliance on Third Parties
Corporate, non-profit, and academic collaborators may take actions
(including lack of effective actions) to delay, prevent, or
undermine the success of our products.
Our operating and financial
strategy for the development, clinical testing, manufacture, and
commercialization of product candidates is heavily dependent on us
entering into collaborations with corporations, non-profit
organizations, academic institutions, licensors, licensees, and
other parties. There can be no assurance that we will be successful
in establishing such collaborations. Current and future
collaborations are and may be terminable at the sole discretion of
the collaborator. The activities of any collaborator will not be
within our direct control and may not be in our power to influence.
There can be no assurance that any collaborator will perform its
obligations to our satisfaction or at all; that we will derive any
revenue, profits, or benefit from such collaborations; or that any
collaborator will not compete with us. If any collaboration is not
pursued, we may require substantially greater capital to undertake
development and commercialization of our proposed products, and may
not be able to develop and commercialize such products effectively,
if at all. In addition, a lack of development and commercialization
collaborations may lead to significant delays in introducing
proposed products into certain markets and/or reduced sales of
proposed products in such markets. Furthermore, current and future
collaborators may act deliberately or inadvertently in ways
detrimental to our interests.
The termination of third-party licenses could adversely affect our
rights to important compounds or technologies.
We have exercised our option
to license Validive; as such, Onxeo has the ability to terminate
the license if we breach our obligations under the license
agreement. A termination of the license agreement might force us to
cease developing and/or selling Validive, if it gets to market. We
rely on certain rights to MNPR-101 that we have secured through a
non-exclusive license agreement with XOMA. XOMA, as licensor, has
the ability to terminate the license if we breach our obligations
under the license agreement and do not remedy any such breach
within a set time after receiving written notice of such breach
from XOMA. A termination of the license agreement might force us to
cease developing and/or selling MNPR-101, if it gets to
market.
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 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.
In certain cases, we may need to rely on a single supplier for a
particular manufacturing material or service, and any interruption
in or termination of service by such supplier could delay or
disrupt the commercialization of our products.
We rely on third-party
suppliers for the materials used to manufacture our compounds. Some
of these materials may at times only be available from one
supplier. Any interruption in or termination of service by such
single source suppliers could result in a delay or disruption in
manufacturing until we locate an alternative source of supply.
There can be no assurance that we would be successful in locating
an alternative source of supply or in negotiating acceptable terms
with such prospective supplier.
Our Validive manufacturer is in the United Kingdom
(“UK”), and it is unknown in the long-term how they
will be impacted by Brexit; however, if they are negatively
impacted, this could increase our manufacturing costs, delivery
schedules, and adversely impact our financial
condition.
The UK left the European
Union (“EU”) on January 31, 2020, which is commonly
referred to as “Brexit.” The full long-term impact of Brexit, however,
remains uncertain. Our Validive manufacturer may be
negatively affected by interest rate, exchange rate and other
market and economic volatility, as well as regulatory and political
uncertainty. The tax consequences of the UK’s withdrawal
from the EU are uncertain as well. If Brexit has a detrimental
effect on our Validive manufacturer, it could, in turn, adversely
impact our manufacturing costs and financial
condition.
Our contracted camsirubicin manufacturing plant is located outside
of the U.S. and may be affected by imposed tariffs and regional
geopolitical factors outside of its control, which may affect the
supply of camsirubicin active pharmaceutical ingredient. If we need
to enlist a new contract manufacturer and it will delay our
camsirubicin clinical program with GEIS and may increase our cost
in supporting the GEIS Phase 2 clinical trial.
We currently have a single
manufacturer of camsirubicin active pharmaceutical ingredient
outside of the U.S. If we need to retain another contract
manufacturer, it will cause a further delay to our GEIS-sponsored
Phase 2 clinical program and may increase our manufacturing
costs.
We rely on third parties to conduct our non-clinical studies and
our clinical trials. If these third parties do not successfully
carry out their contractual duties or meet expected deadlines, we
may be unable to obtain regulatory approval for or commercialize
our current product candidates or any future products, on a timely
basis or at all, and our financial condition will be adversely
affected.
We do not have the ability to
independently conduct non-clinical studies and clinical trials. We
rely on medical institutions, clinical investigators, contract
laboratories, collaborative partners and other third parties, such
as contract research organizations or clinical research
organizations, to conduct non-clinical studies and clinical trials
on our product candidates. The third parties with whom we contract
for execution of our non-clinical studies and clinical trials play
a significant role in the conduct of these studies and trials and
the subsequent collection and analysis of data. However, these
third parties are not our employees, and except for contractual
duties and obligations, we have limited ability to control the
amount or timing of resources that they devote to our
programs.
Although we rely on third
parties to conduct our non-clinical studies and clinical trials, we
remain responsible for ensuring that each of our non-clinical
studies and clinical trials is conducted in accordance with its
investigational plan and protocol. Moreover, the FDA, EMA and other
foreign regulatory authorities require us to comply with
regulations and standards, including some regulations commonly
referred to as good clinical practices (“GCPs”), for
conducting, monitoring, recording and reporting the results of
clinical trials to ensure that the data and results are
scientifically credible and accurate, and that the trial subjects
are adequately informed of the potential risks of participating in
clinical trials.
In addition, the execution of
non-clinical studies and clinical trials, and the subsequent
compilation and analyses of the data produced, requires
coordination among various parties. In order for these functions to
be carried out effectively and efficiently, it is imperative that
these parties communicate and coordinate with one another.
Moreover, these third parties may also have relationships with
other commercial entities, some of which may compete with us. Under
certain circumstances, these third parties may be able to terminate
their agreements with us upon short notice. If the third parties
conducting our clinical trials do not perform their contractual
duties or obligations, experience work stoppages, do not meet
expected deadlines, terminate their agreements with us or need to
be replaced, or if the quality or accuracy of the clinical data
they obtain is compromised due to the failure to adhere to our
clinical trial protocols or GCPs, or for any other reason, we may
need to enter into new arrangements with alternative third parties,
which could be difficult, costly or impossible, and our clinical
trials may be extended, delayed or terminated or may need to be
repeated. If any of the foregoing were to occur, we may not be able
to obtain, on a timely basis or at all, regulatory approval for or
to commercialize the product candidate being tested in such trials,
and as a result, our financial condition will be adversely
affected.
Risks Related to Commercialization of Our Product
Candidates
We have no experience as a company in commercializing any product.
If we fail to obtain commercial expertise, upon product approval by
regulatory agencies, our product launch and revenues could be
delayed.
As a company, we have never
obtained regulatory approval for, or commercialized, any product.
Accordingly, we have not yet begun to build out any sales or
marketing or distribution capabilities. If we are unable to
establish, or contract for, effective sales and marketing and
distribution capabilities, or if we are unable to enter into
agreements with third parties to commercialize our product
candidates on favorable terms or on any reasonable terms at all, we
may not be able to effectively generate product revenues once our
product candidates are approved for marketing. If we fail to obtain
commercial expertise or capabilities, upon drug approval, our
product launch and subsequent revenues could be delayed and /or
fail to reach their commercial potential.
Our product development efforts are at an early stage. We have not
yet undertaken any marketing efforts, and there can be no assurance
that future anticipated market testing and analyses will validate
our marketing strategy. We may need to modify the products, or we
may not be successful in either developing or marketing those
products.
As a company, we have not
completed the development or clinical trials of any product
candidates and, accordingly, have not yet begun to market or
generate revenue from the commercialization of any products.
Obtaining approvals of these product candidates will require
substantial additional research and development as well as costly
clinical trials. There can be no assurance that we will
successfully complete development of our product candidates or
successfully market them. We may encounter problems and delays
relating to research and development, regulatory approval,
intellectual property rights of product candidates, or other
factors. There can be no assurance that our development programs
will be successful, that our product candidates will prove to be
safe and effective in or after clinical trials, that the necessary
regulatory approvals for any product candidates will be obtained,
or, even if obtained, will be as broad as sought or will be
maintained for any period thereafter, that patents will issue on
our patent applications, that any intellectual property protections
we secure will be adequate, or that our collaboration arrangements
will not diminish the value of our intellectual property through
licensing or other arrangements. Furthermore, there can be no
assurance that any product we might market will be received
favorably by customers (whether physicians, payers, patients, or
all three), adequately reimbursed by third-party payers, or that
competitive products will not perform better and/or be marketed
more successfully. Additionally, there can be no assurances that
any future market testing and analyses will validate our marketing
strategies. We may need to seek to modify the product labels
through additional studies in order to be able to market them
successfully to reach their commercial potential.
If we are unable to establish relationships with licensees or
collaborators to carry out sales, marketing, and distribution
functions or to create effective marketing, sales, and distribution
capabilities, we will be unable to market our products
successfully.
Our business strategy may
include out-licensing product candidates to or collaborating with
larger firms with experience in marketing and selling
pharmaceutical products. There can be no assurance that we will
successfully be able to establish marketing, sales, or distribution
relationships with any third-party, that such relationships, if
established, will be successful, or that we will be successful in
gaining market acceptance for any products we might develop. To the
extent that we enter into any marketing, sales, or distribution
arrangements with third parties, our product revenues per unit sold
are expected to be lower than if we marketed, sold, and distributed
our products directly, and any revenues we receive will depend upon
the efforts of such third parties.
If we are unable to establish
such third-party marketing and sales relationships, or choose not
to do so, we would have to establish in-house marketing and sales
capabilities. We have no experience in marketing or selling
oncology pharmaceutical products, and currently have no marketing,
sales, or distribution infrastructure and no experience developing
or managing such infrastructure for an oncology related product. To
market any products directly, we would have to establish a
marketing, sales, and distribution force that has technical
expertise and could support a distribution capability. Competition
in the biopharmaceutical industry for technically proficient
marketing, sales, and distribution personnel is intense and
attracting and retaining such personnel may significantly increase
our costs. There can be no assurance that we will be able to
establish internal marketing, sales, or distribution capabilities
or that these capabilities will be sufficient to meet our
needs.
Commercial success of our product candidates will depend on the
acceptance of these products by physicians, payers, and
patients.
Any product candidate that we
may develop may not gain market acceptance among physicians, payers
and patients. Market acceptance of and demand for any product that
we may develop will depend on many factors, including without
limitation:
●
Comparative superiority of the efficacy and safety in the treatment
of the disease indication compared to alternative
treatments;
●
Less incidence, less prevalence and more severity of adverse side
effects;
●
Potential advantages over alternative treatments;
●
Cost effectiveness;
●
Convenience and ease of administration, stability and shelf life,
for distributor, physician and patient;
●
Sufficient third-party coverage and/or reimbursement;
●
Strength of sales, marketing and distribution support;
and
●
Our ability to provide acceptable and compelling evidence of safety
and efficacy.
If any product candidate
developed by us receives regulatory approval but does not achieve
an adequate level of market acceptance by physicians, payers, and
patients, we may generate insufficient, little, or no product
revenue to earn appropriate returns on the investment of
product development costs and may not become profitable at
sufficient product sales volumes to earn sustainable
profitability.
Our products may not be accepted for reimbursement or adequately
reimbursed by third-party payers.
The successful
commercialization of any products we might develop will depend
substantially on whether the costs of our products and related
treatments are reimbursed at acceptable levels by government
authorities, private healthcare insurers, and other third-party
payers, such as health maintenance organizations. Reimbursement
rates may vary, depending upon the third-party payer, the type of
insurance plan, and other similar or dissimilar factors. If our
products do not achieve adequate reimbursement, then the number of
physician prescriptions of our products may not be sufficient to
make our products profitable, and to earn a sufficient profit to
earn a reasonable return on our investment and a provide a cash
flow to finance future investments on the next generation of
products and investments in new technological
platforms.
Comparative effectiveness
research demonstrating benefits of a competitor’s product
could adversely affect the sales of our product candidates. If
third-party payers do not consider our products to be
cost-effective compared to other available therapies, they may not
cover our products as a benefit under their plans or, if they do,
the level of payment may not be sufficient to allow us to sell our
products on a profitable basis sufficient for our Company to remain
competitive and thrive.
Adequate third-party
reimbursement may not be available to enable us to maintain price
levels sufficient to realize an appropriate return on our
investment in the product development of that product. In addition,
in the U.S. there is a growing emphasis on comparative
effectiveness research, both by private payers and by government
agencies. To the extent other drugs or therapies are found to be
more effective than our products, payers may elect to cover such
therapies in lieu of our products or reimburse our products at a
lower rate.
The effects of economic and political pressure to lower
pharmaceutical prices are a major threat to the economic viability
of new research-based pharmaceutical products, and any significant
decrease in drug prices could materially and adversely affect our
prospects.
Emphasis on managed care and
government price controls in the U.S. has increased and we expect
this will continue to increase the pressure on pharmaceutical
pricing. Coverage policies and third-party reimbursement rates may
change at any time. Even if favorable coverage and reimbursement
status is attained for one or more products for which we receive
regulatory approval, less favorable coverage policies and
reimbursement rates may be implemented in the future.
Any development along these
lines could materially and adversely affect our prospects. We are
unable to predict what political, legislative or regulatory changes
relating to the healthcare industry, including without limitation
any changes affecting governmental and/or private or third-party
coverage and reimbursement, may be enacted in the future, or what
effect such legislative or regulatory changes would have on our
business. However, if governmental price management does not
provide for the very high price of pharmaceutical research, it
could create very demanding challenges for our industry and our
prospects or require breakthroughs in research productivity, which
there can be no assurance of.
If we obtain FDA approval for any of our product candidates, we
will be subject to various federal and state fraud and abuse laws;
these laws may impact, among other things, our proposed sales,
marketing and education programs. Fraud and abuse laws are expected
to increase in breadth and in detail, which will likely increase
our operating costs and the complexity of our programs to ensure
compliance with such enhanced laws.
If we obtain FDA approval for
any of our product candidates and begin commercializing those
products in the U.S., our operations may be directly, or indirectly
through our customers, distributors, or other business partners,
subject to various federal and state fraud and abuse laws,
including, without limitation, anti-kickback statutes and false
claims statutes which may increase our operating costs. These laws
may impact, among other things, our proposed sales, marketing and
education programs. In addition, we may be subject to data privacy
and security regulation by both the federal government and the
states in which we conduct business.
If our operations are found to be in violation of any of the
federal and state fraud and abuse laws or any other governmental
regulations that apply to us, we may be subject to criminal actions
and significant civil monetary penalties, which would adversely
affect our ability to operate our business and our results of
operations.
If our operations are found
to be in violation, even inadvertently, of any of the federal and
state fraud and abuse laws, including, without limitation,
anti-kickback statutes and false claims statutes or any other
governmental regulations that apply to us, we may be subject to
penalties, including criminal and significant civil monetary
penalties, damages, fines, imprisonment, exclusion from
participation in government healthcare programs, and the
curtailment or restructuring of our operations, any of which could
adversely affect our ability to operate our business and our
results of operations. To the extent that any of our product
candidates are ultimately sold in a foreign country, we may be
subject to similar foreign laws and regulations, which may include,
for instance, applicable post-marketing requirements, including
safety surveillance, anti-fraud and abuse laws, and implementation
of corporate compliance programs and reporting of payments or
transfers of value to healthcare professionals.
Negotiated prices for our products covered by a Part D prescription
drug plan and other government programs will be lower than the
prices we might otherwise obtain.
Government payment for some
of the costs of prescription drugs may increase demand for our
products for which we receive marketing approval; however, any
negotiated prices for our products covered by a Part D prescription
drug plan and other government programs will be lower than the
prices we might otherwise obtain. We anticipate that the number and
type of products that will be subject to federal pricing will
increase over time. There may be rules to demand that the
government and medical institutions, which are in part supported by
government funding, will be granted access to medicines at the same
highly favorable prices given to the governmental direct medical
care programs.
Risks Related to Our Intellectual Property
If we and our third-party licensors do not obtain and preserve
protection for our respective intellectual property rights, our
competitors may be able to take advantage of our (and our
licensors’) development efforts to develop competing
drugs.
Our commercial success will
depend in part on obtaining patent protection for any products and
other technologies we might develop, and successfully defending any
patents we obtain against third-party challenges. We have licensed
all intellectual property related to Validive from Onxeo S.A., a
French public company. See “Business – License,
Development and Collaboration Agreements”. The assignment and
transfer of the camsirubicin (formerly GPX-150) patent
portfolio from TacticGem, LLC (“TacticGem”) to us has
been completed. We filed and have been granted in the U.S. and
various countries around the world patents for antibodies that
target uPAR for our MNPR-101 program. We have also been granted in
the U.S. and various countries around the world patents to a
specific sequence of amino acids on uPAR, to which our MNPR-101
antibody binds. We are currently prosecuting this patent in other
countries around the world to further protect MNPR-101. The patent
process is subject to numerous risks and uncertainties, and there
can be no assurance that we will be successful in obtaining and
defending patents. See “Business - Intellectual Property
Portfolio and Exclusivity”. These risks and uncertainties
include without limitation the following:
●
Patents that may be issued or licensed may be challenged,
invalidated, or circumvented; or may not provide any competitive
advantage for other reasons.
●
Our licensors may terminate or breach our existing or future
license agreements, thereby reducing or preventing our ability to
exclude competition; termination of such license agreements may
also subject us to risk of patent infringement of patents to which
we no longer have a license.
●
Our competitors, many of which have substantially greater resources
than us and have made significant investments in competing
technologies, may seek, or may already have obtained, patents that
will limit, interfere with, or eliminate our ability to make, use,
and sell our potential products either in the U.S. or in
international markets.
●
As a matter of public policy regarding worldwide health concerns,
there may be significant pressure on the U.S. government and other
international governmental bodies to limit the scope of domestic
and international patent protection for cancer treatments that
prove successful.
●
Countries other than the U.S. may have less restrictive patent laws
than those upheld by the U.S. courts; therefore, non-U.S.
competitors could exploit these laws to create, develop, and market
competing products. In some countries, the legal compliance with
pharmaceutical patents, patent applications and other intellectual
property regulations is very weak or actively evaded in some cases
with government aid.
In addition, the U.S. Patent
and Trademark Office (“USPTO”) and patent offices in
other jurisdictions have often required that patent applications
concerning pharmaceutical and/or biotechnology-related inventions
be limited or narrowed substantially to cover only the specific
innovations exemplified in the patent application, thereby limiting
their scope of protection against competitive challenges. Thus,
even if we or our licensors are able to obtain patents, the scope
of the patents may be substantially narrower than
anticipated.
If we permit our patents to
lapse or expire, we will not be protected and will have less of a
competitive advantage. The value of our products may be greatly
reduced if this occurs. Our patents expire at different times and
are subject to the laws of multiple countries. Some of our patents
are currently near expiration and we may pursue patent term
extensions for these where appropriate. See “Business -
Intellectual Property Portfolio and
Exclusivity”.
In addition to patents, we
also rely on trade secrets and proprietary know-how. While we take
measures to protect this information by entering into
confidentiality and invention agreements with our employees,
consultants and collaborators, we cannot provide any assurances
that these agreements will be fully enforceable and will not be
breached, that we will be able to protect ourselves from the
harmful effects of disclosure if they are not fully enforceable or
are breached, that any remedy for a breach will adequately
compensate us, that these agreements will achieve their intended
aims, or that our trade secrets will not otherwise become known or
be independently discovered by competitors. 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
U.S., are less willing or unwilling to protect trade secrets. If
any of our trade secrets were to be lawfully obtained or
independently developed by a competitor, we would have no right to
prevent them from using that technology or information to compete
with us. If any of our trade secrets were to be disclosed to or
independently developed by a competitor, our competitive position
would be harmed and the value of the trade secrets may be greatly
reduced.
The patent protection we obtain and preserve for our product
candidates may not be sufficient to provide us with any material
competitive advantage.
We may be subject to
competition despite the existence of intellectual property we
license or own. We can give no assurances that our intellectual
property claims will be sufficient to prevent third parties from
designing around patents we own or license and developing and
commercializing competitive products. The existence of competitive
products that avoid our intellectual property could materially
adversely affect our operating results and financial condition.
Furthermore, limitations, or perceived limitations, in our
intellectual property may limit the interest of third parties to
partner, collaborate or otherwise transact with us, if third
parties perceive a higher than acceptable risk to commercialization
of our products or future products. When looking at our Validive
patents’ ability to block competition, the protection offered
by our patents may be, to some extent, more limited than the
protection provided by patents claiming the composition of matter
of entirely new chemical structures previously unknown. If a
competitor were able to successfully design around any method of
use and formulation patents we may have now or in the future, it is
highly likely that our business and competitive advantage would be
adversely affected.
Patent terms may be inadequate to protect our competitive position
on our product candidates for an adequate amount of
time.
Patents have a limited
lifespan. In the U.S., if all maintenance fees are timely paid, the
natural expiration of a patent is generally 20 years from its
earliest U.S. non-provisional filing date. Various extensions may
be available, but the life of a patent, and the protection it
affords, is limited. Even if patents covering our product
candidates are obtained, once the patent life has expired for a
product candidate, we may be open to competition from competitive
medications, including generic medications. Given the amount of
time required for the development, testing and regulatory review of
new product candidates, patents protecting such product candidates
might expire before or shortly after such product candidates are
commercialized. As a result, our owned and licensed patent
portfolio may not provide us with sufficient rights to exclude
others from commercializing product candidates similar or identical
to ours.
Depending upon the timing,
duration and conditions of any FDA marketing approval of our
product candidates, one or more of our U.S. patents may be eligible
for limited patent term extension under the Drug Price Competition
and Patent Term Restoration Act of 1984, referred to as the
Hatch-Waxman Amendments, and similar legislation in the European
Union. The Hatch-Waxman Amendments permit a patent term extension
of up to five years for a patent covering an approved product as
compensation for effective patent term lost during product
development and the FDA regulatory review process. However, we may
not receive an extension if we fail to exercise due diligence
during the testing phase or regulatory review process, fail to
apply within applicable deadlines, fail to apply prior to
expiration of relevant patents or otherwise fail to satisfy
applicable requirements. Moreover, the length of the extension
could be less than we request. Only one patent per approved product
can be extended, the extension cannot extend the total patent term
beyond 14 years from approval and only those claims covering the
approved drug, a method for using it or a method for manufacturing
it may be extended. If we are unable to obtain patent term
extension or the term of any such extension is less than we
request, the period during which we can enforce our patent rights
for the applicable product candidate will be shortened and our
competitors may obtain approval to market competing products
sooner. As a result, our revenue from applicable products could be
reduced. Further, if this occurs, our competitors may take
advantage of our investment in development and trials by
referencing our clinical and preclinical data and launch their
product earlier than might otherwise be the case, and our
competitive position, business, financial condition, results of
operations, and prospects would be materially harmed.
Intellectual property disputes could require us to spend time and
money to address such disputes and could limit our intellectual
property rights.
The biopharmaceutical
industry has been characterized by extensive litigation regarding
patents and other intellectual property rights, and companies have
employed intellectual property litigation and USPTO post-grant
proceedings to gain a competitive advantage. We may become subject
to infringement claims or litigation arising out of patents and
pending applications of our competitors, or additional interference
proceedings declared by the USPTO to determine the priority and
patentability of inventions. The defense and prosecution of
intellectual property suits, USPTO proceedings, and related legal
and administrative proceedings are costly and time-consuming to
pursue, and their outcome is uncertain. Litigation may be necessary
to enforce our issued patents, to protect our trade secrets and
know-how, or to determine the enforceability, scope, and validity
of the proprietary rights of others. An adverse determination in
litigation or USPTO post-grant and interference proceedings to
which we may become a party could subject us to significant
liabilities, require us to obtain licenses from third parties, or
restrict or prevent us from selling our products in certain
markets. Even if a given patent or intellectual property dispute
were settled through licensing or similar arrangements, our costs
associated with such arrangements may be substantial and could
include the payment by us of large fixed payments and ongoing
royalties. Furthermore, the necessary licenses may not be available
on satisfactory terms or at all. Even where we have meritorious
claims or defenses, the costs of litigation may prevent us from
pursuing these claims or defenses and/or may require extensive
financial and personnel resources to pursue these claims or
defenses. In addition, it is possible there may be defects of form
in our current and future patents that could result in our
inability to defend the intended claims. Intellectual property
disputes arising from the aforementioned factors, or other factors,
may materially harm our business.
We may not be able to enforce our intellectual property rights
throughout the world.
The laws of some foreign
countries do not protect intellectual property rights to the same
extent as the laws of the U.S. Companies have encountered
significant problems in protecting and defending intellectual
property rights in certain foreign jurisdictions. The legal systems
of some countries, particularly developing countries, do not favor
the enforcement of patents and other intellectual property
protection, especially those relating to life sciences. This could
make it difficult for us to stop the infringement of our patents or
the misappropriation of our other intellectual property rights. For
example, many foreign countries have compulsory licensing laws
under which a patent owner must grant licenses to third parties. In
addition, many countries limit the enforceability of patents
against third parties, including government agencies or government
contractors. In these countries, patents may provide limited or no
benefit.
Proceedings to enforce our
patent rights in foreign jurisdictions, whether or not successful,
could result in substantial costs and divert our efforts and
attention from other aspects of our business. Furthermore, while we
intend to protect our intellectual property rights in our expected
significant markets, we cannot ensure that we will be able to
initiate or maintain similar efforts in all jurisdictions in which
we may wish to market Validive or any future products. Accordingly,
our efforts to protect our intellectual property rights in such
countries may be inadequate. In addition, changes in the law and
legal decisions by courts in the U.S. and foreign countries may
affect our ability to obtain and enforce adequate intellectual
property protection for our products and technology.
Changes to the patent law in the U.S. and other jurisdictions could
diminish the value of patents in general, thereby impairing our
ability to protect our product candidates.
As is the case with other
biopharmaceutical companies, our success is heavily dependent on
intellectual property, particularly patents. Obtaining and
enforcing patents in the biopharmaceutical industry involves both
technological and legal diligence and complexity. Therefore,
obtaining and enforcing biopharmaceutical patents is costly, time
consuming and inherently uncertain. In addition, the U.S. has
recently enacted and is currently implementing wide ranging patent
reform legislation. The U.S. Supreme Court has ruled on several
patent cases in recent years, either narrowing the scope of patent
protection available in certain circumstances or weakening the
rights of patent owners in certain situations. In addition to
increasing uncertainty with regard to our ability to obtain patents
in the future, this combination of events has created uncertainty
with respect to the value of patents once obtained. Depending on
future actions by the U.S. Congress, the federal courts and the
USPTO, as well as other jurisdictions around the world, the laws
and regulations governing patents could change in unpredictable
ways that would weaken our ability to obtain new patents or to
enforce our existing patents and patents that we might obtain in
the future.
Obtaining and maintaining our patent protection depends on
compliance with various procedural, document submission, fee
payment and other requirements imposed by governmental patent
agencies, and our patent protection could be reduced or eliminated
for non-compliance with these requirements.
The USPTO and various foreign
governmental patent agencies require compliance with a number of
procedural, documentary, fee payment and other provisions during
the patent process. There are situations in which noncompliance can
result in abandonment or lapse of a patent or patent application,
resulting in partial or complete loss of patent rights in the
relevant jurisdiction. In such an event, competitors might be able
to enter the market earlier than would otherwise have been the
case.
If we fail to comply with our obligations under any license,
collaboration or other intellectual property-related agreements, we
may be required to pay damages and could lose intellectual property
rights that may be necessary for developing, commercializing and
protecting our current or future technologies or drug candidates or
we could lose certain rights to grant sublicenses.
Any license, collaboration or
other intellectual property-related agreements impose, and any
future license, collaboration or other intellectual
property-related agreements we enter into are likely to impose,
various development, commercialization, funding, milestone,
royalty, diligence, sublicensing, insurance, patent prosecution and
enforcement or other obligations on us. If we breach any of these
obligations, or use the intellectual property licensed to us in an
unauthorized manner, we may be required to pay damages and the
licensor may have the right to terminate the license. In spite of
our best efforts, any of our future licensors might conclude that
we have materially breached our license agreements and might
therefore terminate the license agreements, thereby removing our
ability to develop and commercialize products and technologies
covered by these license agreements. Any license agreements we
enter into may be complex, and certain provisions in such
agreements may be susceptible to multiple interpretations. The
resolution of any contract interpretation disagreement that may
arise could narrow what we believe to be the scope our rights to
the relevant intellectual property or technology, or increase what
we believe to be our financial or other obligations under the
relevant agreement, either of which could have a material adverse
effect on our business, financial condition, results of operations,
and prospects.
We may seek to obtain
licenses from licensors in the future, however, we may be unable to
obtain any such licenses at a reasonable cost or on reasonable
terms, if at all. In addition, if any of our future licensors
terminate any such license agreements, such license termination
could result in our inability to develop, manufacture and sell
products that are covered by the licensed technology or could
enable a competitor to gain access to the licensed technology. Any
of these events could have a material adverse effect on our
competitive position, business, financial condition, results of
operations, and ability to achieve profitability.
Furthermore, we may not have
the right to control the preparation, filing, prosecution,
maintenance, enforcement and defense of patents and patent
applications that we license from third parties. Therefore, we
cannot be certain that these patents and patent applications will
be prepared, filed, prosecuted, maintained, enforced and defended
in a manner consistent with the best interests of our business. If
our future licensors fail to prosecute, maintain, enforce and
defend patents we may in-license, or lose rights to licensed
patents or patent applications, our license rights may be reduced
or eliminated. In such circumstances, our right to develop and
commercialize any of our products or drug candidates that is the
subject of such licensed rights could be materially adversely
affected. In certain circumstances, our licensed patent rights are
subject to our reimbursing our licensors for their patent
prosecution and maintenance costs.
Moreover, our licensors may
own or control intellectual property that has not been licensed to
us and, as a result, we may be subject to claims, regardless of
their merit, that we are infringing, misappropriating or otherwise
violating the licensor’s intellectual property rights and the
amount of any damages or future royalty obligations that would
result, if any such claims were successful, would depend on the
technology and intellectual property we use in products that we
successfully develop and commercialize, if any. Therefore, even if
we successfully develop and commercialize products, due to such
obligations, we may be unable to achieve or maintain
profitability.
Third parties may initiate legal proceedings alleging that we are
infringing, misappropriating or otherwise violating their
intellectual property rights, the outcome of which would be
uncertain and could have a material adverse impact on the success
of our business.
Our commercial success
depends, in part, upon our ability or the ability of any of our
future collaborators to develop, manufacture, market and sell our
current or any future drug candidates and to use our proprietary
technologies without infringing, misappropriating or otherwise
violating the proprietary and intellectual property rights of third
parties. The biotechnology and pharmaceutical industries are
characterized by extensive and complex litigation regarding patents
and other intellectual property rights.
We or any of our future
licensors or strategic partners, may be party to, or be threatened
with, adversarial proceedings or litigation regarding intellectual
property rights with respect to our current or any potential future
drug candidates and technologies, including derivation,
reexamination, inter partes review, post-grant review or
interference proceedings before the USPTO and similar proceedings
in jurisdictions outside of the U.S. such as opposition
proceedings. If we or our licensors or strategic partners are
unsuccessful in any interference proceedings or other priority or
validity disputes (including through any patent oppositions) to
which we or they are subject, we may lose valuable intellectual
property rights through the loss of one or more patents or our
patent claims may be narrowed, invalidated, or held unenforceable.
In some instances, we may be required to indemnify our licensors or
strategic partners for the costs associated with any such
adversarial proceedings or litigation. Third parties may also
assert infringement, misappropriation or other claims against us,
our licensors or our strategic partners based on existing patents
or patents that may be granted in the future, as well as other
intellectual property rights, regardless of their merit. There is a
risk that third parties may choose to engage in litigation or other
adversarial proceedings with us, our licensors or our strategic
partners to enforce or otherwise assert their patent rights or
other intellectual property rights. Even if we believe such claims
are without merit, a court of competent jurisdiction could hold
that these third-party patents and other intellectual property
rights are valid, enforceable and infringed, which could have a
material adverse impact on our ability to utilize our developed
technologies or to commercialize our current or any future drug
candidates deemed to be infringing. In order to successfully
challenge the validity of any such U.S. patent in federal court, we
would need to overcome a presumption of validity by presenting
clear and convincing evidence of invalidity. There is no assurance
that a court of competent jurisdiction, even if presented with
evidence we believe to be clear and convincing, would invalidate
the claims of any such U.S. patent.
Further, we cannot guarantee
that we will be able to successfully settle or otherwise resolve
such adversarial proceedings or litigation. If we are unable to
successfully settle future claims on terms acceptable to us, we may
be required to engage in or to continue costly, unpredictable and
time-consuming litigation and may be prevented from or experience
substantial delays in marketing our drug candidates. If we or any
of our licensors or strategic partners are found to infringe,
misappropriate or violate a third-party patent or other
intellectual property rights, we could be required to pay damages,
including treble damages and attorney’s fees, if we are found
to have willfully infringed. In addition, we, or any of our
licensors or strategic partners may choose to seek, or be required
to seek, a license from a third-party, which may not be available
on commercially reasonable terms, if at all. Even if a license can
be obtained on commercially reasonable terms, the rights may be
non-exclusive, which could give our competitors access to the same
technology or intellectual property rights licensed to us, and we
could be required to make substantial licensing and royalty
payments. We also could be forced, including by court order, to
cease utilizing, developing, manufacturing and commercializing our
developed technologies or drug candidates deemed to be infringing.
We may be forced to redesign current or future technologies or
products. Any of the foregoing could have a material adverse effect
on our ability to generate revenue or achieve profitability and
possibly prevent us from generating revenue sufficient to sustain
our operations.
In addition, we or our
licensors or strategic partners may find it necessary to pursue
claims or to initiate lawsuits to protect or enforce our patent or
other intellectual property rights. If we or our licensors or
strategic partners were to initiate legal proceedings against a
third-party to enforce a patent covering one of our drug candidates
or our developed technology, the defendant could counterclaim that
such patent is invalid or unenforceable. In patent litigation in
the U.S., defendant counterclaims alleging invalidity or
unenforceability are commonplace. Grounds for a validity challenge
could be an alleged failure to meet any of several statutory
requirements, for example, claiming patent-ineligible subject
matter, lack of novelty, indefiniteness, lack of written
description, non-enablement, anticipation or obviousness. Grounds
for an unenforceability assertion could be an allegation that
someone connected with prosecution of the patent withheld relevant
information from the USPTO or made a misleading statement during
prosecution. The outcome of such invalidity and unenforceability
claims is unpredictable. With respect to the validity question, for
example, we cannot be certain that there is no invalidating prior
art of which we or our licensors or strategic partners and the
patent examiner were unaware during prosecution. If a defendant
were to prevail on a legal assertion of invalidity or
unenforceability, we could lose at least part, and perhaps all, of
the patent protection for one or more of our drug candidates. The
narrowing or loss of our owned and licensed patent claims could
limit our ability to stop others from using or commercializing
similar or identical technologies and products. All of these events
could have a material adverse effect on our business, financial
condition, results of operations and prospects. Patent and other
intellectual property rights also will not protect our drug
candidates and technologies if competitors or third parties design
around such drug candidates and technologies without legally
infringing, misappropriating or violating our patent or other
intellectual property rights.
The cost to us in defending
or initiating any litigation or other proceedings relating to our
patent or other intellectual property rights, even if resolved in
our favor, could be substantial, and any litigation or other
proceedings would divert our management’s attention and
distract our personnel from their normal responsibilities. Such
litigation or proceedings could materially increase our operating
losses and reduce the resources available for development
activities or any future sales, marketing or distribution
activities. We may not have sufficient financial or other resources
to conduct such litigation or proceedings adequately. Some of our
competitors may be able to more effectively sustain the costs of
complex patent litigation because they have substantially greater
resources. Uncertainties resulting from the initiation and
continuation of patent litigation or other proceedings could delay
our research and development efforts and materially limit our
ability to continue our operations. Furthermore, because of the
substantial amount of discovery required in connection with certain
such proceedings, there is a risk that some of our confidential
information could be compromised by disclosure. In addition, there
could be public announcements of the results of hearings, motions
or other interim proceedings or developments and if securities
analysts or investors perceive these results to be negative, such
announcements could have a material adverse effect on the price of
our common stock.
Intellectual property rights of third parties could adversely
affect our ability to commercialize our current or future
technologies or drug candidates, and we might be required to
litigate or obtain licenses from third parties to develop or market
our current or future technologies or drug candidates, which may
not be available on commercially reasonable terms, or at
all.
There are numerous companies
that have pending patent applications and issued patents broadly
covering immune-therapies generally or covering small molecules
directed against the same targets as, or targets similar to, those
we are pursuing. Our competitive position may materially suffer if
patents issued to third parties or other third-party intellectual
property rights cover our current or future technologies, drug
candidates or elements thereof, or our manufacture or uses relevant
to our development plans. In such cases, we may not be in a
position to develop or commercialize current or future technologies
or drug candidates unless we successfully pursue litigation to
nullify or invalidate the third-party intellectual property rights
concerned, or enter into a license agreement with the intellectual
property rights holder, if available on commercially reasonable
terms. There may be issued patents of which we are not aware, held
by third parties that, if found to be valid and enforceable, could
be alleged to be infringed by our current or future technologies or
drug candidates. There also may be pending patent applications of
which we are not aware that may result in issued patents, which
could be alleged to be infringed by our current or future
technologies or drug candidates. Should such an infringement claim
be successfully brought, we may be required to pay substantial
damages or be forced to abandon our current or future technologies
or drug candidates or to seek a license from any patent holders. No
assurances can be given that a license will be available on
commercially reasonable terms, if at all.
Third-party intellectual
property rights holders may also actively bring infringement,
misappropriation or other claims alleging violations of
intellectual property rights against us. We cannot guarantee that
we will be able to successfully settle or otherwise resolve such
claims. If we are unable to successfully settle future claims on
terms acceptable to us, we may be required to engage in or to
continue costly, unpredictable and time-consuming litigation and
may be prevented from, or experience substantial delays in,
marketing our drug candidates. If we fail in any such dispute, in
addition to being forced to pay damages, we may be temporarily or
permanently prohibited from commercializing any of our current or
future technologies or drug candidates that are held to be
infringing, misappropriating or otherwise violating third-party
intellectual property rights. We might, if possible, also be forced
to redesign current or future technologies or drug candidates so
that we no longer infringe, misappropriate or violate the
third-party intellectual property rights. Any of these events, even
if we were ultimately to prevail, could require us to divert
substantial financial and management resources that we would
otherwise be able to devote to our business, which could have a
material adverse effect on our financial condition and results of
operations.
Risks Related to Our Business Operations and Industry
As a recently established entity, we have a limited operating
history.
To date, we have engaged
exclusively in acquiring pharmaceutical product candidates,
licensing rights to product candidates and entering into
collaboration agreements with respect to key services or
technologies for our drug product development, and have not
completed any clinical trials, received any governmental approvals,
brought any product to market, manufactured products in clinical or
commercial quantities or sold any pharmaceutical products. As a
company we have limited experience in negotiating, establishing,
and maintaining strategic relationships, conducting clinical
trials, and managing the regulatory approval process, all of which
will be necessary if we are to be successful. Our lack of
experience in these critical areas makes it difficult for a
prospective investor to evaluate our abilities and increases the
risk that we will fail to successfully execute our
strategies.
Furthermore, if our business
grows rapidly, our operational, managerial, legal, and financial
resources will be strained. Our development will require continued
improvement and expansion of our management team and our
operational, managerial, legal, and financial systems and
controls.
In the normal course of
business, we have evaluated and expect to evaluate potential
acquisitions and/or licenses of patents, compounds, and
technologies that our management believes could complement or
expand our business. In the event that we identify an acquisition
or license candidate we find attractive, there is no assurance that
we will be successful in negotiating an agreement to acquire or
license, or in financing or profitably exploiting, such patents,
compounds, or technologies. Furthermore, such an acquisition or
license could divert management time and resources away from other
activities that would further our current business
development.
If we lose key management leadership, and/or scientific personnel,
and if we cannot recruit qualified employees, managers, directors,
officers, or other significant personnel, it is highly likely that
we will experience program delays and increases in compensation
costs, and our business will be materially disrupted.
Our future success is highly
dependent on the continued service of principal members of our
management, leadership, and scientific personnel, who are able to
terminate their employment with us at any time and may be able to
compete with us. The loss of any of our key management, leadership,
or scientific personnel including, in particular, Christopher M.
Starr, our Executive Chairman of the Board of Directors (referred
to as the “Board”), Chandler D. Robinson, our President
and CEO, and Andrew P. Mazar, our Executive Vice President of
Research and Development and Chief Scientific Officer, could
materially disrupt our business and materially delay or prevent the
successful product development and commercialization of our product
candidates. We have employment agreements with Dr. Robinson and Dr.
Mazar which have no term but are for at-will employment, meaning
the executives have the ability to terminate their employment at
any time. We do not have an employment agreement with Dr.
Starr.
Our future success will also
depend on our continuing ability to identify, hire, and retain
highly skilled personnel for all areas of the organization.
Competition in the biopharmaceutical industry for scientifically
and technically qualified personnel is intense, and we may be
unsuccessful in identifying, hiring, and retaining qualified
personnel. Our continued requirement to identify, hire, and retain
highly competent personnel may cause our compensation costs to
increase materially.
We incur costs as a result of operating as a stock trading public
company, and our management is required to devote substantial time
to investor relations, information and communication to the public,
and related compliance initiatives and corporate governance
practices.
As a stock trading public
company, and particularly after we are no longer an emerging growth
company, we will incur significant legal, accounting and other
expenses that we did not incur as a private company. The
Sarbanes-Oxley Act, the Dodd-Frank Wall Street Reform and Consumer
Protection Act, the listing requirements of the Nasdaq Capital
Market and other applicable securities rules and regulations impose
various requirements on stock trading public companies, including
establishment and maintenance of effective disclosure and financial
controls and corporate governance practices. Our management and
other personnel devote a substantial amount of time to these
compliance initiatives. Moreover, these rules and regulations
increase our legal and financial compliance costs and make some
activities more time-consuming and costly. For example, we expect
that these rules and regulations may make it more difficult and
more expensive for us to obtain director and officer liability
insurance, which in turn could make it more difficult for us to
attract and retain qualified members of our Board. However, these
rules and regulations are often subject to varying interpretations,
in many cases due to their lack of specificity, and, as a result,
their application in practice may evolve over time as new guidance
is provided by regulatory and governing bodies. This could result
in continuing uncertainty regarding compliance matters and higher
costs necessitated by ongoing revisions to disclosure and
governance practices.
Despite ongoing compliance training and periodic education, our
employees and consultants may engage in misconduct or other
improper activities, including noncompliance with regulatory
standards and requirements, which could result in delays or
terminations of our development programs and adversely affect our
business.
Although we regularly train
our employees on compliance and we are aware of no misconduct or
improper activities to date, we are exposed to the risk of employee
or consultant fraud or other misconduct. Misconduct by our
employees or consultants could include intentional failures to:
comply with FDA regulations; provide accurate information to the
FDA; comply with manufacturing standards; comply with federal and
state healthcare fraud and abuse laws and regulations; report
financial information or data accurately or disclose unauthorized
activities to us. In particular, sales, marketing and business
arrangements in the healthcare industry are subject to extensive
laws and regulations intended to prevent fraud, kickbacks,
self-dealing and other abusive practices. These laws and
regulations may restrict or prohibit a wide range of pricing,
discounting, marketing and promotion, sales commission, customer
incentive programs and other business arrangements. Employee and
consultant misconduct could also involve the improper use of
information obtained in the course of clinical trials, which could
result in regulatory sanctions and serious harm to our reputation.
It is not always possible to identify and deter such misconduct,
and the precautions we take to detect and prevent this activity may
not be effective in controlling unknown or unmanaged risks or
losses or in protecting us from governmental investigations or
other actions or lawsuits stemming from a failure to be in
compliance with such laws or regulations. If any such actions are
instituted against us, and we are not successful in defending
ourselves or asserting our rights, those actions could have a
significant impact on our business, including the imposition of
significant fines or other sanctions. Such actions could adversely
affect our business including delaying or terminating one or more
of our development programs.
We are an emerging growth company and we cannot be certain if the
reduced disclosure requirements applicable to emerging growth
companies will make our common stock less attractive to
investors.
We are an emerging growth
company. Under the Jumpstart Our Business Startups Act of 2012 (the
“JOBS Act”), emerging growth companies can delay
adopting new or revised accounting standards until such time as
those standards apply to private companies. We have
irrevocably elected to opt out of this provision and, as a result,
we will comply with new or revised accounting standards when they
are required to be adopted by public companies that are not
emerging growth companies.
For as long as we continue to
be an emerging growth company, we also intend to take advantage of
certain other exemptions from various reporting requirements that
are applicable to other public companies including, but not limited
to, reduced disclosure obligations regarding executive compensation
in our periodic reports and proxy statements, exemptions from the
requirements of holding a nonbinding advisory stockholder vote on
executive compensation and any golden parachute payments not
previously approved, exemption from the requirement of auditor
attestation in the assessment of our internal control over
financial reporting and exemption from any requirement that may be
adopted by the Public Company Accounting Oversight Board regarding
mandatory audit firm rotation or a supplement to the
auditor’s report providing additional information about the
audit and the financial statements (auditor discussion and
analysis). If we do take advantage of these exemptions, the
information that we provide stockholders will be different than
what is available with respect to other public companies. We cannot
predict if investors will find our common stock less attractive
because we will rely on these exemptions. If investors find our
common stock less attractive as a result of our status as an
emerging growth company, there may be less liquidity for our common
stock and our stock price may be more volatile.
We will remain an emerging
growth company until the earliest of (1) the last day of the year
(a) following the fifth anniversary of the completion of our
initial public offering, (b) in which we have total annual gross
revenue of at least $1.07 billion or (c) in which we are deemed to
be a large accelerated filer, which means the market value of our
common stock that is held by non-affiliates exceeds $700 million as
of the prior June 30th, and (2) the date on which we have issued
more than $1.0 billion in non-convertible debt securities during
the prior three-year period.
Competition and technological change may make our product
candidates less competitive or obsolete.
The biopharmaceutical
industry is subject to rapid technological change. We have many
potential competitors, including major drug and chemical companies,
specialized biopharmaceutical firms, universities and other
research institutions. These companies, firms, and other
institutions may develop products that are more effective than our
product candidates or that would make our product candidates less
competitive or obsolete. Many of these companies, firms, and other
institutions have greater financial resources than us and may be
better able to withstand and respond to adverse market conditions
within the biopharmaceutical industry, including without limitation
the lengthy product development and regulatory approval processes
for product candidates.
We face significant competition from other biotechnology and
pharmaceutical companies, and our operating results will suffer if
we fail to compete effectively.
The biotechnology and
pharmaceutical industries are characterized by rapidly advancing
technologies, intense competition and a strong emphasis on
proprietary products. While we believe we have significant
competitive advantages with our expertise in small molecules and
biologics, and rare disease clinical development, along with a
strong intellectual property portfolio, we currently face and will
continue to face competition for our drug development programs from
companies that target SOM, are developing doxorubicin
analogs/replacement, are targeting severe COVID-19 and are
targeting uPAR. The competition is likely to come from multiple
sources, including larger pharmaceutical companies, biotechnology
companies and academia. Accordingly, our competitors may have more
resources and be more successful than us in obtaining approval for
treatments and achieving widespread market acceptance. For any
products that we may ultimately commercialize, not only will we
compete with any existing therapies and those therapies currently
in development, we will have to compete with new therapies that may
become available in the future.
We may engage in strategic transactions that could impact our
liquidity, increase our expenses and present significant
distractions to our management.
From time to time, we may
consider strategic transactions, such as acquisitions of companies,
asset purchases, and out-licensing or in-licensing of products,
product candidates or technologies. Additional potential
transactions that we may consider include a variety of different
business arrangements, including spin-offs, strategic partnerships,
joint ventures, restructurings, divestitures, business combinations
and investments. Any such transaction will require us to incur
non-recurring or other charges, may increase our near- and
long-term expenditures and may pose significant integration
challenges or disrupt our management or business, which could
adversely affect our operations and financial results. For example,
these transactions may entail numerous operational and financial
risks, including:
●
exposure to unknown technologies, product candidates, medical
conditions and indications, product manufacturing challenges and
uncertainties, and other unknown factors of potential high
risk;
●
disruption of our business and diversion of our management's time
and attention in order to develop acquired products, product
candidates or technologies;
●
incurrence of substantial debt or dilutive issuances of equity
securities to pay for acquisitions;
●
higher-than-expected acquisition and integration
costs;
●
write-downs of assets, goodwill or impairment charges;
●
increased amortization expenses;
●
difficulty and cost in combining the operations and personnel of
any acquired businesses with our operations and
personnel;
●
impairment of relationships with key suppliers or customers of any
acquired businesses due to changes in management and ownership;
and
●
inability to retain key employees of any acquired businesses or for
our current business based on changed circumstances.
Accordingly, although there
can be no assurance that we will undertake or successfully complete
any transactions of the nature described above, any transactions
that we do complete may be subject to the foregoing or other risks,
and could have a material adverse effect on our business, results
of operations, financial condition and prospects.
Our business and operations are vulnerable to computer system
failures, cyber-attacks or deficiencies in our cyber-security,
which could increase our expenses, divert the attention of our
management and key personnel away from our business operations and
adversely affect our results of operations.
Despite the implementation of
security measures, our internal computer systems, and those of
third parties on which we rely, are vulnerable to damage from:
computer viruses; malware; natural disasters; terrorism; war;
telecommunication and electrical failures; cyber-attacks or
cyber-intrusions over the Internet; attachments to emails; persons
inside our organization; or persons with access to systems inside
our organization. The risk of a security breach or disruption,
particularly through cyber-attacks or cyber intrusion, including by
computer hackers, foreign governments, and cyber terrorists, has
generally increased as the number, intensity and sophistication of
attempted attacks and intrusions from around the world have
increased. If such an event were to occur and cause interruptions
in our operations, it could result in a material disruption of our
product development programs. For example, the loss of clinical
trial data from completed or ongoing or planned clinical trials
could result in delays in our regulatory approval efforts and
significantly increase our costs to recover or reproduce the data.
To the extent that any disruption or security breach was to result
in a loss of or damage to our data or applications, or
inappropriate disclosure of confidential or proprietary
information, we could incur material legal claims and liability,
and damage to our reputation, and the further development of our
product candidates could be delayed. We could be forced to expend
significant resources in response to a cyber security breach,
including repairing system damage, increasing cyber security
protection costs by deploying additional personnel and protection
technologies, paying regulatory fines and resolving legal claims
and regulatory actions, all of which would increase our expenses,
divert the attention of our management and key personnel away from
our business operations and adversely affect our results of
operations.
Failure to comply with health and data protection laws and
regulations could lead to government enforcement actions (which
could include civil or criminal penalties), private litigation or
adverse publicity and could negatively affect our operating results
and business.
We and our current and any of
our future collaborators may be subject to federal, state and
foreign data protection laws and regulations (i.e., laws and
regulations that address privacy and data security). In the U.S.,
numerous federal and state laws and regulations, including federal
health information privacy laws (e.g., the Health Insurance
Portability and Accountability Act (“HIPAA”), as
amended by the Health Information Technology for Economic and
Clinical Health Act (“HITECH”)), state data breach
notification laws, state health information privacy laws and
federal and state consumer protection laws (e.g., Section 5 of the
Federal Trade Commission Act), that govern the collection, use,
disclosure and protection of health-related and other personal
information could apply to our operations or the operations of our
collaborators. In addition, we may obtain health information from
third parties (including research institutions from which we obtain
clinical trial data) that are subject to privacy and security
requirements under HIPAA, as amended by HITECH, or other privacy
and data security laws. Depending on the facts and circumstances,
we could be subject to criminal penalties if we knowingly obtain,
use, or disclose individually identifiable health information
maintained by a HIPAA-covered entity in a manner that is not
authorized or permitted by HIPAA.
International data protection
laws, including Regulation 2016/679, known as the General Data
Protection Regulation (“GDPR”) may also apply to
health-related and other personal information obtained outside of
the U.S. The GDPR went into effect on May 25, 2018. The GDPR
introduced new data protection requirements in the EU, as well as
potential fines for non-compliant companies of up to the greater of
€20 million or 4% of annual global revenue. The regulation
imposes numerous new requirements for the collection, use, storage
and disclosure of personal information, including more stringent
requirements relating to consent and the information that must be
shared with data subjects about how their personal information is
used, the obligation to notify regulators and affected individuals
of personal data breaches, extensive new internal privacy
governance obligations and obligations to honor expanded rights of
individuals in relation to their personal information (e.g., the
right to access, correct and delete their data). In addition, the
GDPR includes restrictions on cross-border data transfers. The GDPR
increased our responsibility and liability in relation to personal
data that we process where such processing is subject to the GDPR,
and we may be required to put in place additional mechanisms to
ensure compliance with the GDPR, including as implemented by
individual countries. Further Brexit has created uncertainty with
regard to data protection regulation in the United Kingdom. In
particular, it is unclear how data transfers to and from the United
Kingdom will be regulated.
In addition, California
recently enacted the California Consumer Privacy Act
(“CCPA”), which creates new individual privacy rights
for California consumers (as defined in the law) and places
increased privacy and security obligations on entities handling
personal data of consumers or households. The CCPA will require
covered companies to provide new disclosure to consumers about such
companies’ data collection, use and sharing practices,
provide such consumers new ways to opt-out of certain sales or
transfers of personal information, and provide consumers with
additional causes of action. The CCPA went into effect on January
1, 2020, and the California Attorney General may bring enforcement
actions for violations beginning July 1, 2020. The CCPA was amended
on September 23, 2018, and it remains unclear what, if any, further
modifications will be made to this legislation or how it will be
interpreted. As currently written, the CCPA may impact our business
activities and exemplifies the vulnerability of our business to the
evolving regulatory environment related to personal data and
protected health information.
Compliance with U.S. and
international data protection laws and regulations could require us
to take on more onerous obligations in our contracts, restrict our
ability to collect, use and disclose data, or in some cases, impact
our ability to operate in certain jurisdictions. Failure to comply
with U.S. and international data protection laws and regulations
could result in government enforcement actions (which could include
civil or criminal penalties), private litigation or adverse
publicity and could negatively affect our operating results and
business.
If we, our contract research organizations ("CROs") or our IT
vendors experience security or data privacy breaches or other
unauthorized or improper access to, use of, or destruction of
personal data, we may face costs, significant liabilities, harm to
our brand and business disruption.
In connection with our drug
research and development efforts, we or our CROs may collect and
use a variety of personal data, such as names, mailing addresses,
email addresses, phone numbers and clinical trial information.
Although we have extensive measures in place to prevent the sharing
and loss of patient data in our clinical trial processes associated
with our developed technologies and drug candidates, any failure to
prevent or mitigate security breaches or improper access to, use
of, or disclosure of our clinical data or patients’ personal
data could result in significant liability under state (e.g., state
breach notification laws), federal (e.g., HIPAA, as amended by
HITECH), and international laws (e.g., the GDPR). Any failure to
prevent or mitigate security breaches or improper access to, use
of, or disclosure of our clinical data or patients’ personal
data may cause a material adverse impact to our reputation, affect
our ability to conduct new studies and potentially disrupt our
business. We may also rely on third-party IT vendors to host or
otherwise process some of our data and that of users, and any
failure by such IT vendor to prevent or mitigate security breaches
or improper access to or disclosure of such information could have
similarly adverse consequences for us. If we are unable to prevent
or mitigate the impact of such security or data privacy breaches,
we could be exposed to litigation and governmental investigations,
which could lead to a potential disruption to our
business.
If we do not comply with laws regulating the protection of the
environment and health and human safety, our business could be
adversely affected.
Our research and development
and drug candidates and future commercial manufacturing may involve
the use of hazardous materials and various chemicals. We currently
do not maintain a research laboratory, but we engage third-party
research organizations and manufacturers to conduct our preclinical
studies, clinical trials and manufacturing. These third-party
laboratories and manufacturers are subject to federal, state and
local laws and regulations governing the use, manufacture, storage,
handling and disposal of these hazardous materials. We must rely on
the third parties’ procedures for storing, handling and
disposing of these materials in their facilities to comply with the
relevant guidelines of the states in which they operate and the
Occupational Safety and Health Administration of the U.S.
Department of Labor. Although we believe that their safety
procedures for handling and disposing of these materials comply
with the standards mandated by applicable regulations, the risk of
accidental contamination or injury from these materials cannot be
eliminated. If an accident occurs, this could result in significant
delays in our development. We are also subject to numerous
environmental, health and workplace safety laws and regulations.
Although we maintain workers’ compensation insurance to cover
us for costs and expenses, we may incur due to injuries to our
employees, this insurance may not provide adequate coverage against
potential liabilities. Additional federal, state and local laws and
regulations affecting our operations may be adopted in the future.
We may incur substantial costs to comply with, and substantial
fines or penalties if we violate, any of these laws or
regulations.
We have limited the liability of and indemnified our directors and
officers.
Although our directors and
officers are accountable to us and must exercise good faith, good
business judgement, and integrity in handling our affairs, our
Second Amended and Restated Certificate of Incorporation (the
“Certificate of Incorporation”) and indemnification
agreements executed by all of our non-employee directors and
officers provides that our non-employee directors and officers will
be indemnified to the fullest extent permitted under Delaware law.
As a result, our stockholders may have fewer rights against our
non-employee directors and officers than they would have absent
such provisions in our Certificate of Incorporation and
indemnification agreements, and a stockholder’s ability to
seek and recover damages for a breach of fiduciary duties may be
reduced or restricted. Delaware law allows indemnification of our
non-employee directors and officer, if they (a) have acted in good
faith, in a manner the non-employee director or officer reasonably
believes to be in or not opposed to our best interests, and (b)
with respect to any criminal action or proceeding, if the
non-employee director or officer had no reasonable cause to believe
the conduct was unlawful.
Pursuant to the Certificate
of Incorporation and indemnification agreement, each non-employee
director and officer who is made a party to a legal proceeding
because he or she is or was a non-employee director or officer, is
indemnified by us from and against any and all liability, except
that we may not indemnify a non-employee director or officer: (a)
for any liability incurred in a proceeding in which such person is
adjudged liable to Monopar or is subjected to injunctive relief in
favor of Monopar; (b) for acts or omissions that involve
intentional misconduct or a knowing violation of law, fraud or
gross negligence; (c) for unlawful distributions; (d) for any
transaction for which such non-employee director or officer
received a personal benefit or as otherwise prohibited by or as may
be disallowed under Delaware law; or (e) with respect to any
dispute or proceeding between us and such non-employee director or
officer unless such indemnification has been approved by a
disinterested majority of the Board or by a majority in interest of
disinterested stockholders. We are required to pay or reimburse
attorney’s fees and expenses of a non-employee director or
officer seeking indemnification as they are incurred, provided the
non-employee director or officer executes an agreement to repay the
amount to be paid or reimbursed if there is a final determination
by a court of competent jurisdiction that such person is not
entitled to indemnification.
Future legislation or executive or private sector actions may
increase the difficulty and cost for us to commercialize our
products and adversely affect the prices obtained for such
products.
In the U.S., there have been
and continue to be a number of legislative initiatives to contain
healthcare costs. For example, in March 2010, the Affordable Care
Act (the “ACA”), was enacted, which substantially
changed the way healthcare is financed by both governmental and
private insurers, and significantly impacted the U.S.
pharmaceutical industry.
Since its enactment, there
have been numerous judicial, administrative, executive, and
legislative challenges to certain aspects of the ACA, and we expect
there will be additional challenges and amendments to the ACA in
the future. Various portions of the ACA are currently undergoing
legal and constitutional challenges in the US Supreme Court; the
Trump Administration signed various executive orders and other
directives that eliminated cost sharing subsidies and various
provisions that would impose a fiscal burden on states or a cost,
fee, tax, penalty or regulatory burden on individuals, healthcare
providers, health insurers, or manufacturers of pharmaceuticals or
medical devices; and Congress has introduced several pieces of
legislation aimed at significantly revising or repealing the ACA.
The US Supreme Court is expected to rule on a legal challenge to
the constitutionality of the ACA in 2021. The American Rescue Plan
Act of 2021 which was recently enacted into law includes provisions
which further the ACA, including expansion of marketplace subsidies
and credits to reduce or eliminate premiums in the federal exchange
for persons with certain income levels and providing subsidies for
state exchanges. The implementation of the ACA is ongoing, the law
appears likely to continue the downward pressure on pharmaceutical
pricing, especially under the Medicare program, and may also
increase regulatory burdens and operating costs. Litigation and
legislation related to the ACA are likely to continue, with
unpredictable and uncertain results. It is unclear whether the ACA
will be overturned, repealed, replaced, or further amended. We
cannot predict what affect further changes to the ACA would have on
our business.
In addition, government price
reporting and payment regulations are complex and we will be
required to continually assess the methods by which we plan to
calculate and report any future pricing in accordance with these
obligations. Our methodologies for calculations are inherently
subjective and may be subject to review and challenge by various
government agencies, which may disagree with our interpretation. If
the government disagrees with our reported calculations, we may
need to restate the previously reported data and could be subject
to additional financial and legal liability.
Further, the increasing cost
of healthcare as a percentage of GDP and the massive and increasing
deferred liabilities behind most governmental healthcare programs
(such as Medicare and Medicaid and state and local healthcare
programs especially for retirement benefits) continue to be an
economic challenge which threatens the overall economic health of
the U.S. High cost healthcare products and therapies that are early
in their life cycle are attractive targets for parties that believe
that the cost of healthcare must be better controlled and
significantly reduced. Pharmaceutical prices and healthcare reform
have been debated and acted upon by legislators for many years.
Future legislation or executive or private sector actions related
to healthcare reform could materially and adversely affect our
business by reducing our ability to generate revenue at prices
sufficient to reward for the risks and costs of pharmaceutical
development, to raise capital, and to market our
products.
There is no assurance that
federal or state healthcare reform will not adversely affect our
future business and financial results, and we cannot predict how
future federal or state legislative, judicial or administrative
changes relating to healthcare reform and third-party payers will
affect the pharmaceutical industry in general and our business in
particular.
Even if we are able to commercialize any drug candidate, such drug
candidate may become subject to unfavorable pricing regulations or
third-party coverage and reimbursement policies, which would harm
our business.
Our ability to commercialize
any products successfully will depend, in part, on the extent to
which coverage and adequate reimbursement for these products and
related treatments will be available from third-party payors, such
as government authorities, private healthcare insurers and health
maintenance organizations. Patients who are prescribed medications
for the treatment of their conditions generally rely on third-party
payors to reimburse all or part of the costs associated with their
prescription drugs. Coverage and adequate reimbursement from
government healthcare programs, such as Medicare and Medicaid, and
private healthcare insurers are critical to new product acceptance.
Patients are unlikely to use our future products, if any, unless
coverage is provided and reimbursement is adequate to cover a
significant portion of the cost.
Cost-containment is a
priority in the U.S. healthcare industry and elsewhere. As a
result, government authorities and other third-party payors have
attempted to control costs by limiting coverage and the amount of
reimbursement for particular medications. Increasingly, third-party
payors are requiring that drug companies provide them with
predetermined discounts from list prices and are challenging the
prices charged for medical products. Third-party payors also may
request additional clinical evidence beyond the data required to
obtain marketing approval, requiring a company to conduct expensive
pharmacoeconomic studies in order to demonstrate the medical
necessity and cost-effectiveness of its products. Commercial
third-party payors often rely upon Medicare coverage policy and
payment limitations in setting their reimbursement rates, but also
have their own methods and approval process apart from Medicare
determinations. Therefore, coverage and reimbursement for
pharmaceutical products in the U.S. can differ significantly from
payor to payor. We cannot be sure that coverage and adequate
reimbursement will be available for any product that we
commercialize and, if reimbursement is available, that the level of
reimbursement will be adequate. Coverage and reimbursement may
impact the demand for, or the price of, any drug candidate for
which we obtain marketing approval. If coverage and reimbursement
are not available or are available only at limited levels, we may
not be able to successfully commercialize any drug candidate for
which we obtain marketing approval.
Additionally, the regulations
that govern regulatory approvals, pricing and reimbursement for new
drugs and therapeutic biologics vary widely from country to
country. Some countries require approval of the sale price of a
drug or therapeutic biologic before it can be marketed. In many
countries, the pricing review period begins after marketing
approval is granted. In some foreign markets, prescription
pharmaceutical pricing remains subject to continuing governmental
control even after initial approval is granted. As a result, we
might obtain regulatory approval for a product in a particular
country, but then be subject to price regulations that delay our
commercial launch of the product, possibly for lengthy time
periods, and negatively impact the revenues we are able to generate
from the sale of the product in that country. Adverse pricing
limitations may hinder our ability to recoup our investment in one
or more drug candidates, even if our drug candidates obtain
regulatory approval.
Politically divided governmental actions and related political
actions outside of government can impact the FDA’s role in
the timely and effective review of new pharmaceutical products in
the U.S. and our business may be adversely impacted.
A relevant example of
dysfunctional government was the 35-day government shutdown that
ended February 15, 2019 which limited the FDA to activities
necessary to address imminent threats to human life and to
activities funded by carry-over user fees. Future government
shutdowns or other activities which limit the financial resources
available to the FDA (and in particular to the Center for Drug
Evaluation and Research) will delay the processing of new product
drug development submissions, reviews, and approvals and other
required regulatory actions. Such delays will adversely impact our
business and financial condition.
Effective collaboration with the FDA’s Center for Drug
Evaluation and Research (“CDER”) for the approval of
drug candidates is a highly demanding process which can result in
increased time and expense to gain approvals.
Our lead drug development
program, Validive, will be reviewed by CDER. Efficient and
professional collaboration with the FDA’s CDER is essential
for the timely clinical testing, test evaluations, analysis and
approval of our drug candidates. CDER has an outstanding record of
drug approvals and substantial funds to operate a highly
professional organization, but is also very demanding as to the
quality of clinical research and applications for marketing
approvals for drug candidates.
Our Company has in-house
expertise and experience in the management of drug approvals.
Qualified consultants and drug research organizations are also
available to aid in our drug approval process; however, there is a
meaningful risk that discussions and interactions inherent in the
drug approval process and future developments or new improvements
will result in delays, added expenses and new scientific/medical
requirements which will cause adverse financial results and will
likely impact the price of the Company’s stock.
Future tax reform measures may negatively impact our financial
position.
Tax reform measures are
unpredictable and can change as the U.S. Congress and executive
leadership changes. For example, on December 22, 2017, the Tax Cuts
and Jobs Act of 2017 was signed into law that significantly revised
the Internal Revenue Code of 1986, as amended (the
“Code”). It is difficult to predict what future tax
reform measures, if any, could be implemented and the extent to
which they will impact our financial condition and our
business.
Foreign currency exchange rates may adversely affect our
consolidated financial statements.
Sales and purchases in
currencies other than the U.S. Dollar expose us to fluctuations in
foreign currencies relative to the U.S. Dollar and may adversely
affect our consolidated financial statements. Increased strength of
the U.S. Dollar increases the effective price of our future drug
products sold in U.S. Dollars into other countries, which may
require us to lower our prices or adversely affect sales to the
extent we do not increase local currency prices. Decreased strength
of the U.S. Dollar could adversely affect the cost of materials,
products and services we purchase overseas. Sales and expenses of
our non-U.S. businesses are also translated into U.S. Dollars for
reporting purposes and the strengthening or weakening of the U.S.
Dollar could result in unfavorable foreign currency translation and
transaction effects. In addition, certain of our businesses may in
the future invoice customers in a currency other than the
business’ functional currency, and movements in the invoiced
currency relative to the functional currency could also result in
unfavorable foreign currency translation and transaction effects.
We also face exchange rate risk from our investments in
subsidiaries owned and operated in foreign countries.
Our anticipated operating expenses and capital expenditures over
the next year are based upon our management’s estimates of
possible future events. Actual amounts and the cost of new
conditions could differ materially from those estimated by our
management.
Development of
pharmaceuticals and cancer drugs is extremely risky and
unpredictable. We have estimated operating expenses and capital
expenditures over the next year based on certain assumptions. Any
change in the assumptions could cause the actual results to vary
substantially from the anticipated expenses and expenditures and
could result in material differences in actual versus forecasted
expenses or expenditures. Furthermore, all of the factors are
subject to the effect of unforeseeable future events. The estimates
of capital expenditures and operating expenses represent
forward-looking statements within the meaning of the federal
securities laws. Prospective investors are cautioned that any such
forward-looking statements are not guarantees of future performance
and involve risks and uncertainties. Actual events or results may
differ materially from those discussed in the forward-looking
statements as a result of various factors, including the risk
factors set forth under this “Risk Factors” section in
this Annual Report on Form 10-K.
The financial and operational projections that we may make from
time to time are subject to inherent risks.
The projections that we provide herein or our
management may provide from time to time (including, but not
limited to, our
success in raising strategic and substantial financial resources,
the cost and timing of our clinical trials, clinical and regulatory
timelines, production and supply matters, commercial launch dates,
and other financial or operational matters) reflect numerous
assumptions made by our management, including assumptions with
respect to our specific as well as general business, regulatory,
economic, market and financial conditions and other matters, all of
which are difficult to predict and many of which are beyond our
control. Accordingly, there is a risk that the assumptions made in
preparing the projections, or the projections themselves, will
prove inaccurate. There may be differences between actual and
projected results, and actual results may be materially different
from those contained in the projections. The inclusion of the
projections in this Annual Report on Form 10-K should not be
regarded as an indication that our management considered or
consider the projections to be a guaranteed prediction of future
events, and the projections should not be relied upon as such. See
“Cautionary Statement Concerning Forward-Looking
Statements.”
Our present and potential future international operations may
expose us to business, political, operational, and financial risks
associated with doing business outside of the United
States.
Our business is subject to
risks associated with conducting business internationally. Some of
our suppliers and clinical research organizations and clinical
trial sites are located outside of the U.S. Furthermore, if we or
any future collaborator succeeds in developing any products, we
anticipate marketing them in the EU, the United Kingdom and other
jurisdictions in addition to the U.S. If approved, we or our
collaborator may hire sales representatives and conduct physician
and patient association outreach activities outside of the U.S.
Doing business internationally involves a number of risks,
including but not limited to:
●
multiple, conflicting and changing laws and regulations such as
privacy regulations, tax laws, export and import restrictions,
employment laws, regulatory requirements, and other governmental
approvals, permits and licenses which can vary jurisdictions to
jurisdiction with different degrees of review and
enforcement;
●
failure by us to obtain and maintain regulatory approvals for the
use of our products in various countries;
●
rejection or qualification of foreign clinical trial data by the
competent authorities of other countries;
●
additional potentially relevant third-party patent and other
intellectual property rights that may be necessary to develop and
commercialize our products and drug candidates;
●
complexities and difficulties in obtaining, maintaining, enforcing
and defending our patent and other intellectual property
rights;
●
difficulties in staffing and managing foreign operations by a small
scale organization;
●
complexities associated with managing multiple payor reimbursement
regimes, government payors or patient self-pay
systems;
●
limits, as a U.S.-based company, in our ability to penetrate
international markets;
●
financial risks, such as longer payment cycles, difficulty
collecting accounts receivable, the impact of local and regional
financial crises on demand and payment for our products and
exposure to foreign currency exchange rate
fluctuations;
●
natural disasters, political and economic instability, including
wars, terrorism and political unrest, outbreak of disease,
boycotts, curtailment of trade and other business restrictions,
implementation of tariffs;
●
certain expenses including, among others, expenses for travel,
translation and insurance; and
●
regulatory and compliance risks that relate to anti-corruption
compliance and record-keeping that may fall within the purview of
the U.S. Foreign Corrupt Practices Act, its accounting provisions
or its anti-bribery provisions or provisions of anti-corruption or
anti-bribery laws in other countries.
Any of
these factors could harm our ongoing international clinical
operations and supply chain, as well as any future international
expansion and operations and, consequently, our business, financial
condition, prospects and results of operations.
We are subject to U.S. and foreign anti-corruption and anti-money
laundering laws with respect to our operations and non-compliance
with such laws can subject us to criminal or civil liability and
harm our business.
We are subject to the U.S.
Foreign Corrupt Practices Act of 1977, as amended (“the
FCPA”), the U.S. domestic bribery statute contained in 18
U.S.C. § 201, the U.S. Travel Act, the USA PATRIOT Act, and
possibly other state and national anti-bribery and anti-money
laundering laws in countries in which we conduct activities.
Anti-corruption laws are interpreted broadly and prohibit companies
and their employees, agents, third-party intermediaries, joint
venture partners and collaborators from authorizing, promising,
offering or providing, directly or indirectly, improper payments or
benefits to recipients in the public or private sector. We interact
with officials and employees of government agencies and
government-affiliated hospitals, universities and other
organizations. In addition, we may engage third-party
intermediaries to promote our clinical research activities abroad
or to obtain necessary permits, licenses and other regulatory
approvals. We can be held liable for the corrupt or other illegal
activities of these third-party intermediaries, our employees,
representatives, contractors, partners and agents, even if we do
not explicitly authorize or have actual knowledge of such
activities.
We have a Code of Business
Conduct and Ethics which mandates compliance with the FCPA and
other anti-corruption laws applicable to our business throughout
the world. However, we cannot assure you that our employees and
third-party intermediaries will comply with this code or such
anti-corruption laws. Noncompliance with anti-corruption and
anti-money laundering laws could subject us to whistleblower
complaints, investigations, sanctions, settlements, prosecution,
other enforcement actions, disgorgement of profits, significant
fines, damages, other civil and criminal penalties or injunctions,
suspension or debarment from contracting with certain persons, the
loss of export privileges, reputational harm, adverse media
coverage and other collateral consequences. If any subpoenas,
investigations or other enforcement actions are launched, or
governmental or other sanctions are imposed, or if we do not
prevail in any possible civil or criminal litigation, our business,
results of operations and financial condition could be materially
harmed. In addition, responding to any action will likely result in
a materially significant diversion of management’s attention
and resources and significant defense and compliance costs and
other professional fees. In certain cases, enforcement authorities
may even cause us to appoint an independent compliance monitor
which can result in added costs and administrative
burdens.
Risks Associated with our Common Stock
Existing and new investors will experience dilution as a result of
future sales or issuances of our common stock and future option
exercises under our 2016 Stock Incentive Plan and any amendments to
the plan.
Our non-employee directors,
employees, and certain of our consultants have been and will be
issued equity and/or granted options that vest with the passage of
time. Up to a total of 3,100,000 shares of our common stock may be
issued as stock options or restricted stock units under the Amended
and Restated Monopar Therapeutics Inc. 2016 Stock Incentive Plan,
and stock options for the purchase of up to 1,436,640 shares of our
common stock have already been granted (1,022,909 stock options are
exercisable) and are outstanding along with 154,423 restricted
stock units that have been granted to non-employee directors and
employees as of March 5, 2021. The issuance of such
equity upon vesting of restricted stock units and/or the exercise
of such options will dilute both our existing and our new
investors. As of March 5, 2021, 21,346 stock options have been
exercised.
Our existing and our new
investors will also experience substantial dilution resulting from
the issuance by us of equity securities in connection with certain
transactions, including without limitation, future offering of
shares in future fundraising efforts, intellectual property
licensing, acquisition, or commercialization
arrangements.
Holders of the shares of our common stock will have no control of
our operations or of decisions on major transactions.
Our business and affairs are
managed by or under the direction of our Board. Our stockholders
are entitled to vote only on actions that require a stockholder
vote under federal or state law. Stockholder approval requires the
consent and approval of holders of a majority or more of our
outstanding stock. Shares of stock do not have cumulative voting
rights and therefore, holders of a majority of the shares of our
outstanding stock will be able to elect all Board members.
TacticGem, LLC (“TacticGem”) owns 7,166,667 shares of
common stock (57%). The limited liability company agreement
requires TacticGem to pass through votes (including the vote for
the election of directors) to its members in proportion to their
membership percentages in TacticGem (57.367% owned by Tactic Pharma
and 42.633% owned by Gem). As a result, Tactic Pharma, our initial
investor, holds an approximately 34% beneficial interest in us and
together with Gem’s beneficial ownership of approximately
24%, the two entities control a majority of our stock and will be
able to elect all Board members and control our affairs. Some of
our Board members and executive officers own and control Tactic
Pharma. Although no single person has a controlling interest in
Tactic Pharma, acting together, they are able to control Tactic
Pharma and a large voting block of our common stock and together
with Gem can elect a majority of our Board.
Our failure to meet the continued listing requirements of The
Nasdaq Capital Market could result in a de-listing of our common
stock.
If we fail to satisfy the
continued listing requirements of The Nasdaq Capital Market, such
as the corporate governance requirements or the minimum closing bid
price requirement, the Nasdaq Stock Market (“Nasdaq”)
may take steps to de-list our common stock. Such a de-listing or
the announcement of such de-listing will have a negative effect on
the price of our common stock and would impair your ability to sell
or purchase our common stock when you wish to do so. In the event
of a de-listing, we would take actions to restore our compliance
with the Nasdaq listing requirements, but we can provide no
assurance that any such action taken by us would allow our common
stock to become listed again, stabilize the market price or improve
the liquidity of our common stock, prevent our common stock from
dropping below the Nasdaq minimum bid price requirement or prevent
future non-compliance with the Nasdaq listing
requirements.
The stock price of our common stock may be volatile or may decline
regardless of our operating performance.
The market prices for
securities of biotechnology and pharmaceutical companies have
historically been highly volatile, and the market has from time to
time experienced significant price and volume fluctuations that
appear to be unrelated to the operating performance of particular
companies. Our common stock has only been trading on the Nasdaq
Capital Market since December 19, 2019 and has experienced
significant volatility in market prices through March 5,
2021, ranging from a low of
$4.28 to a high of $48.00. Our small public float and relatively
low and inconsistent trading volumes exacerbate
volatility.
The
market price of our common stock is likely to remain highly
volatile and may fluctuate substantially due to many factors,
including:
●
announcements
concerning the progress and success of our clinical trials, our
ability to obtain regulatory approval for and commercialize our
product candidates, including any requests we receive from the FDA
for additional studies or data that result in delays in obtaining
regulatory approval or launching our product candidates, if
approved;
●
unstable
market conditions in the pharmaceutical and biotechnology sectors
or the economy as a whole;
●
price
and volume fluctuations in the overall stock market;
●
the
failure of our product candidates, if approved, to achieve
anticipated commercial success;
●
announcements
of the clinical success, NDA approval or introduction of new
products by us or our direct competitors;
●
announcements
of developments concerning product development results or
intellectual property rights of others;
●
litigation
or public concern about the safety and/or efficacy of our potential
or approved products;
●
actual
fluctuations in our quarterly or annual operating results, and
concerns by investors that such fluctuations may occur in the
future and are indicative of internal problems;
●
deviations
in our operating results from the estimates of securities analysts
or other analyst comments;
●
additions
or departures of key personnel;
●
healthcare
reform legislation, including measures directed at controlling the
pricing of pharmaceutical products, and third-party coverage and
reimbursement policies;
●
announcements
or publicity concerning current or future strategic
collaborations;
●
discussion
of our Company, our stock price or our potential future market
value by the financial and scientific press and online investor
communities; and
●
market
responses to the fluctuating conditions of the COVID-19
pandemic.
We may become involved in securities class action litigation that
could divert management’s attention and harm our
business.
The stock markets have from
time to time experienced significant price and volume fluctuations
that have affected the market prices for the common stock of
biotechnology and pharmaceutical companies. Our stock price has
experienced such fluctuations since our initial public offering.
These broad market fluctuations may cause the market price of our
stock to advance or decline. In the past, securities class action
litigation has often been brought against a company following a
decline in the market price of its securities. This risk is
especially relevant for us because biotechnology and
biopharmaceutical companies have experienced significant stock
price volatility in recent years. We may become involved in this
type of litigation in the future. Litigation often is expensive and
diverts management’s attention and resources, which could
adversely affect our business.
Substantial amounts of our outstanding shares may be sold into the
market. If there are substantial sales of shares of our common
stock, the price of our common stock could decline.
The price of our common stock
could decline if there are substantial sales of our common stock,
particularly sales by our non-employee directors, executive
officers and significant stockholders, or if there is a large
number of shares of our common stock available for sale and the
market perceives that sales will occur. We have 12,566,929
outstanding shares of our common stock as of March 5, 2021. A
majority of our outstanding shares of common stock are currently
held by non-employee directors, executive officers and other
affiliates and are subject to volume limitations under Rule 144
under the Securities Act of 1933, as amended (Securities
Act).
Our largest stockholders have
rights, subject to some conditions, to require us to file
registration statements covering their shares or to include their
shares in registration statements that we may file for ourselves or
our stockholders. We have also registered shares of common stock
that we have issued and may issue under our employee equity
incentive plans. These shares are able to be sold freely in the
public market upon issuance, subject to existing internal practices
which prohibit sales under certain circumstances. The market price
of the shares of our common stock could decline as a result of the
sale of a substantial number of our shares of common stock in the
public market or the perception in the market that the holders of a
large number of shares intend to sell their shares.
Our ability to use our net operating loss carry-forwards and
certain other tax attributes may be limited.
Under Section 382 of the
Code, if a corporation undergoes an “ownership change”
(generally defined as a greater than 50% change, by value, in its
equity ownership over a three-year period), the corporation’s
ability to use its pre-change net operating loss carry-forwards and
other pre-change tax attributes (such as research tax credits) to
offset its post-change income may be limited. We believe that
additional fundraising efforts in the next three years, may trigger
an “ownership change” limitation in the near future. As
a result, if we earn net taxable income, our ability to use our
pre-change net operating loss carry-forwards to offset U.S. federal
taxable income will be subject to limitations, which could result
in increased future tax liability to us had we not been
subject to such limitations.
If securities or industry analysts do not publish research or
publish inaccurate or unfavorable research about our business, our
stock price and trading volume could decline.
The trading market for our
common stock will depend in part on the research and reports that
securities or industry analysts publish about us or our business.
If one or more of the analysts who covers us downgrades our stock
or publishes inaccurate or unfavorable research about our business,
our stock price may decline. If one or more of these analysts
ceases coverage of our Company or fails to publish reports on us
regularly, demand for our stock could decrease, which might cause
our stock price and trading volume to decline.
We do not intend to pay dividends for the foreseeable future and,
as a result, your ability to achieve a return on your investment
will depend on appreciation in the price of our common
stock.
We have never declared or
paid any cash dividends on our capital stock and we do not intend
to pay any cash dividends in the foreseeable future. Any
determination to pay dividends in the future will be at the
discretion of our Board. Accordingly, investors must rely on sales
of their common stock after price appreciation, which may never
occur, as the only way to realize any future gains as a return on
their investments.
There can be no assurance that we will ever provide liquidity to
our investors through a sale of our Company.
While acquisitions of
pharmaceutical companies like ours are not uncommon, potential
investors are cautioned that no assurances can be given that any
form of merger, combination, or sale of our Company will take place
or that any merger, combination, or sale, even if consummated,
would provide liquidity or a profit for our investors. You should
not invest in our Company with the expectation that we will be able
to sell the business in order to provide liquidity or a profit for
our investors.
Delaware law and provisions in our amended and restated bylaws
could make a merger, tender offer or proxy contest difficult,
thereby depressing the potential trading price of our common
stock.
Anti-takeover provisions in
our charter documents and under Delaware law could make an
acquisition of us difficult, limit attempts by our stockholders to
replace or remove our current management or Board and adversely
affect our stock price.
Provisions
of our amended and restated bylaws may delay or discourage
transactions involving an actual or potential change in our control
or change in our management, including transactions in which
stockholders might otherwise receive a premium for their shares, or
transactions that our stockholders might otherwise deem to be in
their best interests. Therefore, these provisions could adversely
affect the price of our stock. Among other things, our amended and
restated bylaws:
●
provide that all vacancies on our Board may only be filled by our
Board and not by stockholders;
●
allow the holders of a plurality of the shares of common stock
entitled to vote in any election of directors to elect all of the
directors standing for election, if they should so choose;
and
●
provide that special meetings of our stockholders may be called
only by our Board.
In
addition, because we are incorporated in Delaware, we are governed
by the provisions of Section 203 of the Delaware General
Corporation Law, which generally prohibits a Delaware corporation
from engaging in any of a broad range of business combinations with
any “interested” stockholder for a period of three
years following the date on which the stockholder became an
“interested” stockholder.
We lease
approximately 1,202 square feet of space in the Village of
Wilmette, Illinois for our corporate offices. Our original two-year
lease ended on December 31, 2019, at which time we agreed to lease
the space on a month-to-month basis. In February 2019, also on a
month-to-month basis, we leased additional office space at our
corporate headquarters. We believe that we will lease additional
office space within the next 12 months as we begin to hire
additional personnel.
Item 3. Legal Proceedings
We are
currently not, and to date have never been, a party to any material
legal proceedings.
PART
II
Item 5. Market for Registrant’s Common Equity,
Related Stockholder Matters and Issuer Purchases of Equity
Securities
Market Information
Our common stock is listed
under the symbol “MNPR” on the Nasdaq Capital
Market.
Holders
As of March 5, 2021, there
were 12,566,929 shares of our common stock outstanding held by 32
holders of record and approximately 800 beneficial
stockholders.
Dividends
We have never paid cash
dividends on any of our capital stock and we currently intend to
retain our future earnings, if any, to fund the development and
growth of our business. We do not intend to pay cash dividends to
holders of our common stock in the foreseeable future.
Registration Rights
We are subject to an
agreement with TacticGem, LLC (“TacticGem”), our
largest stockholder, which obligates us to file a Form S-3 or other
appropriate form of registration statement covering the resale of
any of our common stock by TacticGem, or its members Gem
Pharmaceuticals, LLC, or Tactic Pharma, LLC, upon direction by
TacticGem. We are required to use our best efforts to have such
registration statement declared effective as soon as practical
after it is filed. In the event that such registration statement
for resale is not approved by the SEC, and TacticGem submits a
written request, we are required to prepare and file a registration
statement on Form S-1 registering such common stock for resale and
to use our best efforts to have such registration statement
declared effective as soon as practical thereafter. Additionally,
if we propose to register our common stock for sale for cash,
TacticGem and its members have the right to include some of their
shares in such registration After registration, pursuant to these
rights, these shares will become freely tradable without
restriction under the Securities Act other than pursuant to
restrictions on affiliates under Rule 144.
Recent
Sales of Unregistered Securities.
There were no securities
issuances that were not registered under the Securities Act during
the reporting period.
Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operations.
You should read the following
discussion and analysis of our financial condition and results of
operations together with our financial statements and related notes
appearing at the end of this Annual Report on Form 10-K. Some of
the information contained in this discussion and analysis or set
forth elsewhere in this Annual Report on Form 10-K, including
information with respect to our plans and strategy for our business
and related financing activities, includes forward-looking
statements that involve risks and uncertainties. You should read
the "Risk Factors" section of this Annual Report on Form 10-K, Item
1A, for a discussion of important factors that could cause actual
results to differ materially from the results described in or
implied by the forward-looking statements contained in the
following discussion and analysis.
Overview
We are a clinical stage
biopharmaceutical company primarily focused on developing
proprietary therapeutics designed to extend life or improve quality
of life for cancer patients. We are building a drug development
pipeline through the licensing and acquisition of therapeutics in
late preclinical and clinical development stages. We leverage our
scientific and clinical experience to help reduce the risk of and
accelerate the clinical development of our drug product
candidates.
In December 2019, we
completed our initial public offering (including the exercise of
the over-allotment by the underwriters) by selling 1,277,778 shares
of our common stock at a public offering price of $8.00 per share.
Net proceeds were approximately $9.4 million, after deducting
underwriting discounts and accrued, unpaid offering expenses. Our
common stock began trading on the Nasdaq Capital Market on December
19, 2019.
In January 2020, we entered
into a Capital on DemandTM Sales Agreement
with JonesTrading Institutional Services, LLC
(“JonesTrading”), as sales agent, pursuant to which we
offered and sold (at our discretion), from time to time, through or
to JonesTrading shares of our common stock, having an aggregate
offering price of up to $19.7 million. Pursuant to this agreement,
through December 31, 2020, we have sold 860,677 shares of our
common stock at an average gross price of $9.79 per share for net
proceeds of $8,175,290, after fees and commissions of $253,036.
From January 1, 2021 through February 11, 2021, we sold an
additional 1,104,047 shares of our common stock at an average gross
price of $10.20 per share for net proceeds of $10,925,311, after
fees and commissions of $338,153.
In June 2020, we entered into
a 50/50 collaboration development agreement with NorthStar Medical
Radioisotopes, LLC (“NorthStar”) to develop potential
Radio-Immuno-Therapeutics (“RITs”) to treat severe
COVID-19 (patients with SARS-CoV-2 infection). NorthStar is a
commercial producer and supplier of medical radioisotopes. This
collaboration combines NorthStar’s expertise in the
innovative production, supply, and distribution of important
medical radioisotopes with our expertise in therapeutic drug
development and our pre-IND stage humanized urokinase plasminogen
activator receptor (“uPAR”) targeted monoclonal
antibody known as MNPR-101, along with a proprietary portfolio of
related monoclonal antibodies that target uPAR or its ligand uPA.
uPAR seems to be selectively expressed on aberrantly activated
immune cells. In response to coronavirus infection, these rogue
immune cells produce pro-inflammatory cytokines that can cause
runaway inflammation throughout the body, commonly referred to as a
cytokine storm. It is this systemic hyper-inflammatory state that
is thought to be largely responsible for the severe lung injury and
multiple organ damage that contributes to poor outcomes and death
in patients with severe COVID-19.
In this collaboration, we
have coupled MNPR-101 to therapeutic radioisotopes supplied by
NorthStar. The resulting conjugates are designed to be a highly
selective agents that have the potential to kill aberrantly
activated cytokine-producing immune cells. By eradicating these
cells with a uPAR-targeted RIT (“uPRIT”), the goal is
to spare healthy cells while quickly reducing the cytokine storm
and its harmful systemic effects. Through March 5, 2021, we have
incurred immaterial amounts of expenses related to the NorthStar
collaboration, while partnering with several key companies and
institutions to further the collaboration’s development
efforts. These collaborators include: IsoTherapeutics Group, LLC,
which generated the uPRIT candidates; Aragen Bioscience Inc., which
screened the uPRIT candidates through preclinical biochemical
testing; and Texas Lung Injury Institute / University of Texas
Health Science Center at Tyler, which plans to perform preclinical
testing and, if successful, clinical testing.
In August 2020, we announced
a plan to develop a test to potentially triage COVID-19 patients
into those likely versus unlikely to progress to severe respiratory
failure. The test would use our proprietary monoclonal antibody,
ATN-658, to detect soluble urokinase plasminogen activator receptor
(“suPAR”) in COVID-19 patient plasma. A suPAR test for
COVID-19 patients, if successful, could identify those at high risk
for severe respiratory failure, facilitating earlier therapeutic
interventions and/or allowing for the staging of patients to an
optimal treatment based on their disease
characteristics.
In November 2020, we
announced a series of recently issued patents for our Phase 2b/3
clinical-stage lead product candidate, Validive (clonidine HCl
mucobuccal tablet). These patents, including U.S. Patent No.
10,675,271, provide claims covering “Clonidine and/or
clonidine derivatives for use in the prevention and/or treatment of
adverse side effects of chemotherapy”. These patents expand
the potential use of Validive in cancer patients, beyond the
earlier allowed claims for the prevention of oral mucositis in
patients receiving CRT. Specifically, they provide protection for
the potential ability of Validive to prevent or treat common
chemotherapy-associated side effects such as asthenia and fatigue
and would provide protection should we determine in the future to
conduct additional Validive development activities related to
adverse side effects of chemotherapy beyond oropharyngeal
cancer.
In December 2020, we
announced the issuance of a U.S. patent (US 10,450,340) covering
compositions of matter (2-pyrrilino camsirubicin) for a novel
family of camsirubicin analogs. This patent, which expands the
Company’s camsirubicin intellectual property portfolio, is
expected to expire in 2038 not including any patent term
extensions. The patent broadens our camsirubicin portfolio and
creates a pipeline that has been designed to retain the potentially
favorable non-cardiotoxic chemical backbone of camsirubicin and the
potent broad-spectrum antitumor activity of doxorubicin. Further,
preclinical evidence suggests that this new family of 2-pyrrilino
camsirubicin analogs could be active in doxorubicin-resistant tumor
cells which may enable use in cancer types beyond those possible
with camsirubicin.
In February 2021, we
announced the first patient dosed in our Phase 2b/3 VOICE trial of
Validive® for the
prevention of CRT-induced severe
oral
mucositis in patients with
oropharyngeal cancer
(“VOICE”).
Given the COVID-19 pandemic
and its effects on clinical trials, we have adjusted our clinical
development plans accordingly to fit what is feasible in the
current environment. We have simplified the design of the
previously planned Phase 3 clinical trial for our lead product
candidate, Validive, to a seamless design Phase 2b/3 clinical trial
(our VOICE trial) that will allow us to minimize touch points with
patients and sites. This seamless design will allow us to
immediately advance to the Phase 3 portion of the trial if
supported by the interim data at the end of the Phase 2b portion of
the trial. To complete the VOICE clinical program, including, if
required, completing a smaller second Phase 3 confirmatory clinical
trial, we will require additional funding in the millions or tens
of millions of dollars (depending on if we have consummated a
collaboration or partnership or neither for Validive), which we are
planning to pursue within the next 12 months.
Along with our VOICE trial,
we continue to prioritize supporting the camsirubicin Phase 2
clinical trial for which we signed a collaboration agreement in
June 2019 with Grupo Español de Investigación en Sarcomas
(“GEIS”), discussed in further detail below. We believe
we have funds sufficient to obtain topline results from the run-in
portion of the trial.
In February 2021, we also
announced the publication of a peer-reviewed study in the
European Journal of Cancer
which shows the potential utility of MNPR-101 conjugates as uPAR
imaging agents to improve surgical outcomes in bladder cancer and
for surveillance post-resection. This publication builds on
previous studies using conjugates of MNPR-101 and its mouse analog,
ATN-658, for the optical imaging of oral and colon
cancer.
Our Product Pipeline
Our Product Candidates
Validive (clonidine mucobuccal tablet; clonidine MBT)
Validive is a mucobuccal
tablet (MBT) formulation of clonidine. The MBT formulation was
developed to enhance the oral mucosal drug delivery and
significantly increase the salivary concentrations of the active
ingredient while minimizing systemic absorption. The Validive
tablet is tasteless and self-administered once daily by affixing it
to the outside of the patient’s upper gum where it dissolves
slowly over the period of several hours, resulting in the extended
release of clonidine into the oral cavity and oropharynx, the site
of SOM following chemoradiation treatment (“CRT”) for
OPC. Validive therapy is designed to begin on the first day of CRT
and continue daily through the last day of CRT.
SOM is a painful and
debilitating inflammation and ulceration of the mucous membranes
lining the oral cavity and oropharynx in response to chemoradiation
therapy. Patients receiving CRT to treat their OPC often develop
SOM, which remains one of the most common and devastating side
effects of treatment in this indication. We believe Validive has
the potential to address several critical elements that affect SOM
patients, including:
Reduction in the incidence of SOM. SOM
can increase the risk of acute and chronic comorbidities, including
dysphagia, trismus and lung complications, which are often
irreversible and lead to increased hospitalization and the need for
additional interventions. In a Phase 2 clinical trial, the OPC
patient cohort treated with Validive 100 µg demonstrated a
reduction in the absolute incidence of SOM compared to placebo of
26.3% (incidence rate of 65.2% in placebo, 45.0% in Validive 50
µg group, 38.9% in Validive 100 µg group). A reduced
incidence of SOM in OPC patients may lower the risk of acute and
chronic comorbidities and improve quality of life.
Delay in the time to onset of SOM. SOM
can cause cancer treatment delay and/or discontinuation, which may
impact overall survival outcomes. In the Phase 2 clinical trial,
OPC patients had a time to onset of SOM of 37 days in the placebo
cohort; 45-day time to onset of SOM in the Validive 50 µg
cohort; and median was not reached in the Validive 100 µg
group as fewer than half of the patients developed SOM. Prolonging
time to onset of SOM may lead to fewer missed CRT treatments,
resulting in improved overall survival outcomes.
Decrease in the duration of SOM. Longer
duration of SOM leads to a higher risk of the need for parenteral
nutrition and lower quality of life. SOM patients experience
difficulty or inability to drink and/or eat, and difficulty in
swallowing often results in malnourishment and feeding tube
intervention. The Phase 2 clinical trial data demonstrated a
15.5-day reduction (by 37.8%) in the duration of SOM for patients
treated with Validive 100 µg (41 day median duration with
placebo, 34 days with the Validive 50 µg group, and 25.5 days
for the Validive 100 µg group) in patients that developed SOM.
Median duration across all patients, inclusive of both those that
did and did not develop SOM, was 17 days in the placebo group and 0
days in each of the Validive 50 and 100 µg groups. Reduced
duration of SOM may result in lower risk of malnourishment and
feeding tube intervention, and fewer treatment
terminations/delays.
In September 2017, we
exercised an option to license Validive from Onxeo S.A., the
company that had developed Validive through its Phase 2 clinical
trial. In this completed Phase 2 clinical trial, Validive
demonstrated clinically meaningful and dose-dependent efficacy
signals within the 64-patient OPC population randomized to placebo.
Additionally, patients in the Validive cohorts in the Phase 2
clinical trial demonstrated a safety profile similar to that of
placebo. While not designed by us, Onxeo’s promising
preclinical studies and Phase 2 clinical trial have informed the
design and conduct of what we believe will be an effective Phase
2b/3 (VOICE) clinical trial.
SOM typically arises in the
immune tissue at the back of the tongue and throat, which comprise
the oropharynx, and consists of acute severe tissue damage and pain
that prevents patients from swallowing, eating and drinking.
Validive stimulates the alpha-2 adrenergic receptor (alpha-2AR) on
macrophages (white blood cells present in the immune tissues of the
oropharynx) suppressing pro-inflammatory cytokine expression.
Validive exerts its effects locally in the oral cavity and
oropharynx over a prolonged period of time through its unique MBT
formulation. Patients who develop SOM are also at increased risk of
developing late-onset toxicities, including trismus (jaw, neck, and
throat spasms), dysphagia, and lung complications, which are often
irreversible and lead to increased hospitalization and the need for
further interventions sometimes years after completion of CRT. We
believe that a reduction in the incidence and duration of SOM by
Validive will have the potential to reduce treatment
discontinuation and/or treatment delays potentially leading to
improved survival outcomes, and reducing or eliminating long-term
morbidities resulting from CRT.
The OPC target population for
Validive is the most rapidly growing segment of head and neck
cancer (“HNC”) patients, estimated to exceed 40,000 new
cases annually of OPC in the U.S alone. The growth in OPC is driven
by the increasing prevalence of oral human papilloma virus
(“HPV”) infections in the U.S. and around the world.
Despite the availability of a pediatric/adolescent HPV vaccine, the
rate of OPC incidence in adults is not anticipated to be materially
reduced for decades due to low adoption of the vaccine to date. As
a result, the incidence of HPV-driven OPC is projected to increase
for many years to come and will continue to support a clinical need
for Validive for the prevention of CRT-induced SOM in patients with
OPC since CRT is the standard of care treatment, and we do not
anticipate this changing for years to come.
A pre-Phase 3 meeting with
the FDA was held, and based on the meeting discussion a Phase 3
clinical protocol and accompanying statistical analysis plan
(“SAP”) was submitted to the FDA for review and
comments. We have also received protocol assistance and advice on
our Phase 3 protocol and SAP from the European Medicines Agency
Committee on Human Medicinal Products (EMA/CHMP/SAWP). Based on
comments and guidance provided by FDA and EMA, and our analysis of
the current COVID-19 pandemic and its effects on clinical trials,
we have modified our original adaptive design Phase 3 clinical
trial to be a seamless Phase 2b/3 (VOICE) clinical trial to better
fit the current clinical research environment. The primary
endpoint, absolute incidence of SOM, remains the same, but the
overall design of the trial has been simplified and the touch
points with the healthcare system have been minimized. We have now
initiated clinical trial sites and commenced dosing in the Phase 2b
portion of our VOICE trial. We anticipate the interim (completion
of Phase 2b portion of the VOICE trial) will be reached in the
first quarter of 2022, and the Phase 3 enrollment will be completed
in the fourth quarter of 2022. Initiating the Phase 3 portion of
the VOICE trial will be subject to the interim (Phase 2b) results.
We will need to raise additional funding or find a suitable
pharmaceutical partner to complete the VOICE clinical program
including, if required, completing a smaller second Phase 3
confirmatory clinical trial. Validive has been granted fast track
designation in the U.S., orphan drug designation in the EU, and has
global intellectual property patent protection through mid-2029 not
accounting for possible extensions.
Camsirubicin (5-imino-13-deoxydoxorubicin; formerly MNPR-201,
GPX-150)
Camsirubicin is a proprietary doxorubicin
analog that is selective for topoisomerase II-alpha. Doxorubicin is
widely used to treat adult and pediatric solid and blood
(hematologic) cancers, including soft tissue sarcomas, breast,
gastric, ovarian and bladder cancers, leukemias and lymphomas.
Despite clinical studies demonstrating the anti-cancer benefit of
higher cumulative doses of doxorubicin, the clinical efficacy of
doxorubicin has historically been limited by the risk of patients
developing irreversible, potentially life-threatening
cardiotoxicity. For example, several clinical studies completed in
the 1990s demonstrated that concurrent doxorubicin (60
mg/m2,
8 cycles) and paclitaxel gave a 94% overall response rate in
patients with metastatic breast cancer but led to 18% of these
patients developing congestive heart failure. Reduction of
doxorubicin to 4-6 cycles of treatment decreased the incidence of
congestive heart failure, but also reduced response rates to
45-55%. In a clinical study looking at dose response, sarcoma
patients on the high dose (75 mg/m2)
doxorubicin had a response rate of 37% compared to just 18% in the
low dose (45 mg/m2)
doxorubicin group. With the cumulative dose restriction on
doxorubicin, the median progression free survival for ASTS patients
is approximately 6 months, with median overall survival of 12-15
months. There is a significant unmet opportunity to develop a
replacement for doxorubicin that can be dosed higher and for
longer.
Camsirubicin has been
engineered specifically to retain the anticancer activity of
doxorubicin while minimizing the toxic effects on the heart.
Similar to doxorubicin, the antitumor effects of camsirubicin are
mediated through the stabilization of the topoisomerase II complex
after a DNA strand break and DNA intercalation leading to tumor
cell apoptosis (cell death). Inhibiting the topoisomerase II-alpha
isoform is desired for the anti-cancer effect, while inhibiting the
topoisomerase II-beta isoform has been demonstrated to mediate, at
least in part, the cardiotoxicity associated with doxorubicin.
Camsirubicin is more selective than doxorubicin for inhibiting
topoisomerase II-alpha versus topoisomerase II-beta. This
selectivity may at least partly explain the minimal cardiotoxicity
that has been observed for camsirubicin in preclinical and clinical
studies to date. We believe these attributes provide a strong
rationale to develop camsirubicin without restriction on cumulative
dose, in a broad spectrum of cancer types.
A Phase 2 clinical trial for
camsirubicin has been completed in patients with advanced (e.g.
unresectable or metastatic) soft tissue sarcoma
(“ASTS”). Median progression free survival for ASTS
patients is approximately 6 months and average life expectancy for
these patients is 12-15 months. In this study, 52.6% of patients
evaluable for tumor progression demonstrated clinical benefit
(partial response or stable disease), which was proportional to
dose and consistently observed at higher cumulative doses of
camsirubicin (>1000 mg/m2). Camsirubicin was very well tolerated
in this study and underscored the ability to potentially administer
camsirubicin without restriction of cumulative dose in patients
with ASTS. Although doxorubicin has been the standard of care
treatment for over 40 years for patients with ASTS, doxorubicin is
limited to a lifetime cumulative dose maximum of 450 mg/m2. This
means that even if a patient is responding, they are pulled off of
doxorubicin treatment once this cumulative dose has been reached.
Thus, there is a significant unmet opportunity to develop a
replacement for doxorubicin that retains anti-cancer activity while
reducing or eliminating the risk for irreversible heart
damage.
Based on encouraging clinical
results to date, we plan to continue the development of
camsirubicin as first-line treatment in patients with ASTS, where
the current first-line treatment is doxorubicin. The aim is to
administer camsirubicin without restricting cumulative dose,
thereby potentially improving efficacy beyond that of doxorubicin
by continuing to treat patients who are responding on treatment. In
June 2019, we entered into a clinical collaboration with GEIS. GEIS
will lead a multi-country, randomized, open-label Phase 2 clinical
trial evaluating camsirubicin head-to-head against doxorubicin in
patients with ASTS. GEIS is an internationally renowned non-profit
organization focused on the research, development and management of
clinical trials for sarcoma that has worked with many of the
leading biotech and global pharmaceutical companies. Enrollment of
the trial is currently anticipated to begin in the second quarter
of 2021, and to include approximately 170 ASTS patients, an interim
analysis, and take around two years to enroll. The trial will begin
with a dose escalation (“run-in”) prior to the
randomization portion of the trial. The primary endpoint of the
trial will be progression-free survival, with secondary endpoints
including overall survival, response rate and incidence of
treatment-emergent adverse events. Camsirubicin has been granted
orphan drug designation for the treatment of soft tissue sarcoma in
the U.S. and EU.
MNPR-101 (formerly huATN-658)
MNPR-101 is a novel,
preclinical stage drug candidate. It is a first-in-class humanized
monoclonal antibody to the urokinase plasminogen activator receptor
(“uPAR”), a well-credentialed cancer therapeutic
target. uPAR is a protein receptor that resides on the cell surface
and is overexpressed in many deadly cancers, but has little to no
expression in healthy tissue; several Phase 1 imaging studies in
human advanced cancer patients show that uPAR is detected
selectively in the tumor.
In normal cells, uPAR is
transiently expressed as part of a highly regulated process
required for the breakdown of the extracellular matrix during
normal tissue remodeling. In cancer, however, uPAR is
constitutively overexpressed by the tumor cell, and the uPAR
extracellular matrix degrading function is hijacked by the tumor to
support tissue invasion, metastasis, and angiogenesis. uPAR
expression is important to tumor cell survival, and uPAR expression
increases in high grade and metastatic disease.
MNPR-101 has demonstrated
significant antitumor activity in numerous preclinical models of
tumor growth, both as a monotherapy and in combination with other
therapeutics and is being advanced toward an IND. Based on the
selective expression of uPAR in numerous tumor types, we anticipate
MNPR-101 will be well-tolerated and amenable to a variety of
combination treatment approaches in the clinic.
uPRIT as a Potential Therapeutic for Severe COVID-19
MNPR-101 is also being
developed for the treatment of severe COVID-19 and other
respiratory diseases. We have entered into a collaboration
development agreement with NorthStar to develop potential uPRITs to
treat severe COVID-19. This collaboration combines
NorthStar’s expertise in the innovative production, supply,
and distribution of important medical radioisotopes with our
expertise in therapeutic drug development. NorthStar and we have
coupled MNPR-101 with a therapeutic radioisotope. uPAR seems to be
selectively expressed on aberrantly activated immune cells. In
response to coronavirus infection, these rogue immune cells produce
pro-inflammatory cytokines that can cause runaway inflammation
throughout the body, commonly referred to as a “cytokine
storm.” It is this systemic hyper-inflammatory state that is
thought to be largely responsible for the severe lung injury and
further multiple organ damage that contributes to poor outcomes and
death in patients with severe COVID-19.
In collaboration with NorthStar, we have filed a
provisional patent application entitled “Precision
Radioimmunotherapeutic Targeting of the Urokinase Plasminogen
Activator Receptor (uPAR) for Treatment of Severe COVID-19
Disease” with the U.S. Patent and Trademark Office
(“USPTO”). This application covers novel compositions
and uses of cytotoxic radioisotopes attached to antibodies that
bind to uPAR, thereby creating precision targeted
radiotherapeutics, also known as uPRITs, for the treatment of
severe COVID-19 and other respiratory diseases. Advanced COVID-19
patients frequently develop severe, life-threatening, pulmonary
inflammation as a result of a viral induced cytokine storm. The
development of this cytokine storm is associated with a high rate
of mortality in severe COVID-19 patients, even when oxygen support
and mechanical ventilation are utilized. uPRITs have been designed
with the goal of selectively eradicating the aberrantly activated
immune cells responsible for causing cytokine storm and its harmful
systemic effects. The co-inventors of the provisional patent
application are James Harvey, Chief Scientific Officer of
NorthStar, and Andrew P. Mazar, our Chief Scientific Officer. We
have also entered into collaborations with: IsoTherapeutics
Group, LLC, which generated the uPRIT candidates; Aragen Bioscience
Inc., which screened the uPRIT candidates through preclinical
biochemical testing; and Texas Lung Injury Institute / University
of Texas Health Science Center at Tyler, which plans to perform
preclinical testing and, if successful, clinical
testing.
ATN-658 as a Potential Diagnostic for Severe COVID-19
A prototype enzyme-linked
immunosorbent assay (“ELISA”) for measuring blood suPAR
levels using the non-humanized version of MNPR-101 (ATN-658) has
been developed, and we are in discussions with several parties to
further develop and commercialize a suPAR-based test in COVID-19
patients.
The use of suPAR for triaging
COVID-19 patients is supported by a growing body of recent studies.
Rovina et al. 2020 showed that patients with elevated levels of
suPAR at the time of hospital admission are 17 times more likely to
develop severe respiratory failure (p=.0000000012); Arnold et al.
2020 showed suPAR to have the best performance in predicting
outcome (such as intensive care unit admission and death) of all
the biomarkers examined; and Eugen-Olsen et al. 2020 showed that
low levels of suPAR are predictive of mild outcome in COVID-19
patients.
MNPR-101 as a Potential Imaging Agent
Using MNPR-101, a multimodal
imaging probe was developed and tested in vivo in human bladder cancer models.
A publication in the European
Journal of Cancer (Baart et al. 2021) reported that high
expression of uPAR in bladder cancer is localized at the tumor
periphery, suggesting that using a fluorescent-conjugated MNPR-101
probe might allow surgeons to better visualize the borders of the
tumor, potentially resulting in more complete tumor resection and
thereby minimizing relapse. Similar approaches have been utilized
successfully in the resection of other tumor types, such as breast
cancer.
Bladder cancer is often
treated with transurethral resection to remove cancerous tissue;
however, recurrence can occur in up to 78% of patients within 5
years. Up to 40% of recurrent cases develop muscle invasive
disease, which has a poor prognosis and requires complete removal
of the bladder. Many patients with muscle-invasive bladder cancer
go on to develop and succumb to metastatic disease.
Our Strategy
Our management team has
extensive experience in developing therapeutics through regulatory
approval and commercialization. In aggregate, companies they
co-founded have achieved four drug approvals in the U.S. and the
EU, successfully sold an asset developed by management which is
currently in Phase 3 clinical trials, and completed the sale of a
biopharmaceutical company for over $800 million in cash.
Understanding the preclinical, clinical, regulatory and commercial
development processes and hurdles are key factors in successful
drug development and the expertise demonstrated by our management
team across all of these areas increases the probability of success
in advancing the product candidates in our product pipeline. Our
strategic goal is to acquire, develop and commercialize promising
oncology product candidates that address important unmet medical
needs of cancer patients. The six key elements of our strategy to
achieve this goal are to:
●
Leverage data generated from the Phase 2
Validive clinical trial to position us effectively for a successful
VOICE clinical program for Validive for SOM in OPC. In the
Phase 2 clinical trial the absolute incidence of SOM in OPC
patients was reduced by 26.3%, the time to onset was delayed, and
the duration of disease in patients that developed SOM was
decreased by 15.5 days in the Validive 100 µg cohort versus
placebo. In addition to the data from the Phase 2 clinical trial,
we believe the guidance from our key opinion leaders
(“KOLs”) as well as from the FDA and EMA, and our own
internal clinical trial design expertise, position us well for an
effective VOICE clinical trial program.
●
Obtain FDA approval of Validive and maximize
the commercial potential of Validive in the U.S. and the EU,
seeking partnerships outside these markets. If the VOICE
clinical program of Validive is successful and FDA approval is
obtained, we currently intend to commercialize Validive in the U.S.
and the EU ourselves, which may include establishing our own
specialty sales force and seeking partnerships outside of these
territories for regulatory approval and drug sales and
distribution.
●
Advance the clinical development of
camsirubicin, by pursuing clinical indications where doxorubicin
has demonstrated efficacy. ASTS will be the first
indication, which will allow camsirubicin to go head-to-head
against doxorubicin, the current first-line treatment. In this
indication, camsirubicin previously demonstrated clinical benefit
(stable disease or partial response) in 52.6% of patients evaluable
for tumor progression in a single-arm Phase 2 study. Clinical
benefit was proportional to dose and consistently observed at
higher cumulative doses of camsirubicin (>1000 mg/m2). Camsirubicin was very well tolerated
in this Phase 2 study and underscored the ability to potentially
administer camsirubicin without restriction as to cumulative dose
(doxorubicin is limited to 450 mg/m2 cumulative dose due to heart
toxicity).
●
Continue the development of MNPR-101 and
related molecules as a therapeutic, a diagnostic and imaging
agents. We plan to continue the development of MNPR-101 for
diagnostic and therapeutic use in severe COVID-19 and in
cancer.
●
Expand our drug development pipeline through
advancing current assets, in-license and acquisition of oncology
product candidates. The 2-pyrrilino camsirubicin analogs
represent proprietary compositions of matter that retain the
non-cardiotoxic backbone of camsirubicin but may have features in
terms of antitumor activity and mechanism that distinguish this
family of compounds from camsirubicin. We plan to continue the
expansion of our drug development pipeline through acquiring or
in-licensing additional oncology product candidates, particularly
those that leverage existing scientific and clinical data that
helps reduce the risks of the next steps in clinical
development.
●
Utilize the expertise and prior experience of
our team in the areas of asset acquisition, drug development and
commercialization to establish ourselves as a leading
biopharmaceutical company. Our senior executive team has
relevant experience in biopharmaceutical in-licensing and
acquisitions as well as developing product candidates through
approval and commercialization. In aggregate, our team has
co-founded BioMarin Pharmaceutical (Nasdaq: BMRN), Raptor
Pharmaceuticals ($800 million sale to Horizon Pharma), and Tactic
Pharma, LLC (“Tactic Pharma”) (sale of lead asset,
choline tetrathiomolybdate, which was ultimately acquired by
Alexion in June 2018 for $764 million; Alexion is currently in the
process of being acquired by AstraZeneca).
Risks Associated with our Business
Our business is subject to
numerous risks and uncertainties, including those highlighted in
“Item 1A - Risk Factors”. These risks include, among
others, the following:
●
We are a clinical
stage biopharmaceutical company with a history of financial losses.
We expect to continue to incur significant losses for the
foreseeable future and may never achieve or maintain profitability,
which could result in a decline in the market value of our common
stock.
●
Funds raised
to-date are not sufficient to complete the VOICE clinical program,
including, if required, completing a smaller second Phase 3
confirmatory clinical trial, to support further development of
camsirubicin beyond Phase 2, or to support continued development of
MNPR-101 and related compounds. If we are unable to raise enough
funds in the next 12 months from the sale of our common stock or
other financing efforts, we may have to consider strategic options
such as out-licensing Validive or other product candidates,
entering into a clinical partnership, or terminating one or more
programs. There can be no assurance that we can find a suitable
partner on satisfactory terms.
●
We have a limited
operating history, no revenues from operations, and are dependent
upon raising capital to continue our drug development
programs.
●
We do not have and
may never have any approved products on the market. Our business is
highly dependent upon receiving approvals from various U.S. and
international governmental agencies and will be severely harmed if
we are not granted approval to manufacture and sell our product
candidates.
●
Our clinical trials
may not yield sufficiently conclusive results for regulatory
agencies to approve the use of our products.
●
If we experience
delays or difficulties in the enrollment of subjects in clinical
trials, our receipt of necessary regulatory approvals will be
delayed or prevented, which will materially delay our program
schedules and adversely affect our financial
condition.
●
We rely on third
parties to conduct our manufacturing, non-clinical studies, and our
clinical trials. If these third parties do not successfully carry
out their contractual duties or meet expected deadlines or
performance goals, the initiation or conduct of our clinical trials
may be delayed and we may be unable to obtain regulatory approval
for, or commercialize our, current product candidates or any future
products, and our financial condition will be adversely
affected.
●
We face significant
competition from other biotechnology and pharmaceutical companies,
and our operating results will suffer if we fail to compete
effectively. Competition and technological change may make our
product candidates obsolete or non-competitive.
●
The termination of
third-party licenses will adversely affect our rights to important
compounds or technologies.
●
If we and our
third-party licensors do not obtain and preserve protection for our
respective intellectual property rights, our competitors may be
able to take advantage of our development efforts to develop
competing drugs.
●
If we lose key
management leadership, and/or scientific personnel, and if we
cannot recruit qualified employees or other significant personnel,
we may experience program delays and increased compensation costs,
and our business will be materially disrupted.
●
The COVID-19
pandemic could have a substantial negative impact on our business,
financial condition, operating results, stock price and ability
raise additional funds.
Implications of Being an Emerging Growth Company
We qualify as an
“emerging growth company” as defined in the Jumpstart
Our Business Startups Act of 2012 (“JOBS Act”). An
emerging growth company may take advantage of specified reduced
reporting burdens that are otherwise applicable generally to public
companies. These provisions include, but are not limited
to:
●
inclusion of only
two years, as compared to three years, of audited financial
statements in addition to any required unaudited interim financial
statements with correspondingly reduced “Management’s
discussion and analysis of financial condition and results of
operations” disclosures;
●
an exemption from
the auditor attestation requirement in the assessment of our
internal control over financial reporting pursuant to the
Sarbanes-Oxley Act of 2002 (“Sarbanes-Oxley
Act”);
●
an exemption from
compliance with any new requirements adopted by the Public Company
Accounting Oversight Board (“PCAOB”) requiring
mandatory audit firm rotation;
●
reduced disclosure
about executive compensation arrangements; and
●
an exemption from
the requirement to seek non-binding advisory votes on executive
compensation or golden parachute arrangements.
We may take advantage of
these provisions until we are no longer an emerging growth company.
We will remain an emerging growth company until the earliest of (1)
the last day of the year (a) following the fifth anniversary of the
completion of our initial public offering, (b) in which we have
total annual gross revenue of at least $1.07 billion or (c) in
which we are deemed to be a large accelerated filer, which means
the market value of our common stock that is held by non-affiliates
exceeds $700 million as of the prior June 30th, and (2) the date on
which we have issued more than $1.0 billion in non-convertible debt
during the prior three-year period.
We have elected to take
advantage of certain of the reduced disclosure obligations in this
Annual Report on Form 10-K, and may elect to take advantage of
other reduced reporting requirements in future filings. As a
result, the information that we provide to our stockholders may be
reduced and /or less detailed than what you might find from other
public reporting companies.
The JOBS Act permits an
emerging growth company such as us to take advantage of an extended
transition period to comply with new or revised accounting
standards applicable to public companies until those standards
would otherwise apply to private companies. We have irrevocably
elected to opt out of this provision and, as a result, we will
comply with new or revised accounting standards when they are
required to be adopted by public companies that are not emerging
growth companies. In addition, we are also a “smaller
reporting company” as defined in Rule 12b-2 of the Exchange
Act and have elected to take advantage of certain of the scaled
disclosure requirements available to smaller reporting companies
such as avoiding the extensive narrative disclosure required of
other reporting companies, particularly in the description of
executive compensation.
Corporate Information
We were formed as a Delaware
limited liability company in December 2014, with the name Monopar
Therapeutics, LLC. In December 2015, we converted to a Delaware C
corporation. Our principal executive offices are located at 1000
Skokie Blvd, Suite 350, Wilmette, IL 60091. Our telephone number is
(847) 388-0349. Our corporate website is located at www.monopartx.com.
Any information contained in, or that can be accessed through our
website, is not incorporated by reference in this Annual Report on
Form 10-K.
Trademark notice
We have registered trademarks
with the U.S. Patent and Trademark Office (“USPTO”),
for the following trademarks: “Validive”,
“Baxefyn”, “Vidarys”,
“Cotilix”, “Arvita” and
“Clonidol”. All other trademarks, service marks and
trade names in this Annual Report on Form 10-K are the property of
their respective owners. We have omitted the ® and ™
designations, as applicable, for the trademarks used
herein.
Revenues
We are an emerging growth
company, have no approved drugs and have not generated any
revenues. To date, we have engaged in acquiring pharmaceutical drug
product candidates, licensing rights to drug product candidates,
entering into collaboration agreements for testing and clinical
development of our drug product candidates and providing the
infrastructure to support the clinical development of our drug
product candidates. We do not anticipate commercial revenues from
operations until we complete testing and development of one of our
drug product candidates and obtain marketing approval or we sell,
enter into a collaborative marketing arrangement, or out-license
one of our drug product candidates to another party. See
“Liquidity and Capital Resources”.
Recently
Issued and Adopted Accounting Pronouncements
A description of recently
issued accounting pronouncements that may potentially impact our
financial position and consolidated results of operations is
disclosed in Note 2 to our consolidated financial statements
appearing elsewhere in this Annual Report on Form
10-K.
Critical
Accounting Policies and Use of Estimates
While our significant
accounting policies are described in more detail in Note 2 of our
consolidated financial statements included elsewhere in this Annual
Report on Form 10-K, we believe the following accounting policies
to be critical to the judgments and estimates used in the
preparation of our consolidated financial statements.
Stock-Based
Compensation
We account for stock-based
compensation arrangements with employees, non-employee directors
and consultants using a fair value method, which requires the
recognition of compensation expense for costs related to all
stock-based awards, including stock option grants and restricted
stock units (“RSUs”). The fair value method requires us
to estimate the fair value of stock-based payment awards on the
date of grant using an option pricing model or the closing stock
price on the date of grant in the case of RSUs.
Stock-based compensation
costs for stock awards granted to our employees and non-employee
directors are based on the fair value of the underlying instruments
calculated using the Black-Scholes option-pricing model on the date
of grant for stock options and using the closing stock price on the
date of grant for RSUs and recognized as expense on a straight-line
basis over the requisite service period, which is the vesting
period. Determining the appropriate fair value model and related
assumptions requires judgment, including selecting methods for
estimating the Company’s future stock price volatility,
forfeiture rates and expected term. The expected volatility rates
are estimated based on the actual volatility of comparable public
companies over recent historical periods of the same length as the
expected term. We generally selected these companies based on
reasonably comparable characteristics, including market
capitalization, risk profiles, stage of corporate development and
with historical share price information sufficient to meet the
expected term of the stock-based awards. The expected term for
stock options granted during the years ended December 31, 2020 and
2019 was estimated using the simplified method. Forfeitures are
estimated at the time of grant and revised, if necessary, in
subsequent periods if actual forfeitures differ from those
estimates. We have not paid dividends and do not anticipate paying
a cash dividend in future vesting periods and, accordingly, use an
expected dividend yield of zero. The risk-free interest rate is
based on the rate of U.S. Treasury securities with maturities
consistent with the estimated expected term of the awards. Prior to
January 1, 2019, the measurement of consultant stock-based
compensation was subject to periodic adjustments as the underlying
equity instruments vest. Since January 1, 2019, consultant
stock-based compensation is valued on the grant date and is
recognized as an expense straight-line over the period during which
services are rendered.
Results
of Operations
Comparison of the Years Ended December 31, 2020 and December 31,
2019
The following table
summarizes the results of our operations for the years ended
December 31, 2020 and 2019:
|
|
|
(in
thousands)
|
|
|
|
Research and
development expenses
|
$4,065
|
$1,969
|
$
2,096
|
General and
administrative expenses
|
2,444
|
2,355
|
|
Total
operating expenses
|
6,509
|
4,324
|
|
Operating
loss
|
(6,509)
|
(4,324)
|
(2,185)
|
Other income from
PPP loan forgiveness
|
122
|
|
122
|
Interest
income
|
82
|
99
|
|
Net
loss
|
$(6,305)
|
$(4,225)
|
|
Research and Development Expenses
Research and Development
(“R&D”) expenses for the year ended December 31,
2020 were approximately $4,065,000, compared to approximately
$1,969,000 for the year ended December 31, 2019. This represents an
increase of approximately $2,096,000 primarily attributed to
increases in expenses of $1,144,000 for the planning of the GEIS
camsirubicin Phase 2 clinical trial including manufacturing,
$48,000 for increases in Validive
clinical trial planning and manufacturing costs, $924,000
for annual R&D personnel salary increases, annual (non-cash)
equity grants and salaries and benefits of three new R&D
personnel and a higher allocation of
the CEO's salary and benefits to R&D expenses due to the
start-up of clinical trial activities, partially offset by $20,000
for net decreases other R&D expenses.
General and Administrative Expenses
General and administrative
(“G&A”) expenses for the year ended December 31,
2020 were approximately $2,444,000, compared to approximately
$2,355,000 for the year ended December 31, 2019. This represents an increase of approximately
$89,000 primarily attributed to $430,000 for net increases in
stock-based compensation for annual (non-cash) equity grants and
increases in annual G&A personnel salary and benefits, $202,000
for increases in fees related to public company compliance,
including Nasdaq, legal and audit fees, $32,000 for increases in
Delaware franchise tax and Australian income tax, and $16,000 for
net increases in general costs of operations, partially offset by
$475,000 in CEO's salary and benefits allocated from G&A
expenses to R&D expenses, and $116,000 for decreases in
stock-based compensation for non-employee directors
(non-cash).
Other Income from PPP Loan Forgiveness
Other income from PPP loan
forgiveness of approximately $122,000 represents the PPP loan
granted by the Small Business Administration (“SBA”) in
May 2020, which repayment was forgiven by the SBA in December
2020.
Interest
Income
Interest income for the year
ended December 31, 2020 decreased by approximately $17,000 versus
the year ended December 31, 2019 due
to a significant decrease in bank interest rates partially offset
by an increase in bank balances resulting from our initial public
offering in December 2019 and funds raised in our Capital on
DemandTM Sales
Agreement with JonesTrading during 2020.
Liquidity
and Capital Resources
Sources of Liquidity
We have incurred losses and
cumulative negative cash flows from operations since our inception
in December 2014 resulting in an accumulated deficit of
approximately $32.2 million as of December 31, 2020. We anticipate
that we will continue to incur losses for the foreseeable future.
We expect that our research and development and general and
administrative expenses will increase to enable the execution of
our strategic plan. As a result, we anticipate that we will seek to
raise additional capital in 2021 to fund our future operations. We
will seek to obtain needed capital through a combination of equity
offerings, debt financings, strategic collaborations and grant
funding. To date, we have funded our operations through net
proceeds from the initial public offering of our common stock and
net proceeds from sales under our Capital on DemandTM Sales Agreement,
private placements of our preferred and common stock, and the net
receipt of funds related to the acquisition of camsirubicin as
discussed in our Annual Report on Form 10-K for the year ended
December 31, 2019 under Item 7 Management's Discussion and Analysis of
Financial Condition and Results of Operations, Liquidity and
Resources, filed with the SEC on March 27, 2020. We
anticipate that the currently available funds as of March 5, 2021,
will fund our planned operations at least through March 31,
2022.
We invest our cash
equivalents in a money market account.
Cash Flows
The following table provides
information regarding our cash flows for the years ended December
31, 2020 and 2019.
|
|
|
(in
thousands)
|
|
|
|
Net cash used in
operating activities
|
$(4,662)
|
$(3,018)
|
$
(1,644)
|
Net cash provided
by financing activities
|
8,182
|
9,347
|
(1,165)
|
Effect of exchange
rates on cash and cash equivalents
|
3
|
(8)
|
|
Net increase in
cash and cash equivalents
|
$3,523
|
$6,321
|
|
During the years ended
December 31, 2020 and 2019, we had net cash inflows of
approximately $3,523,000 and $6,321,000, respectively, a decrease
of approximately $2,798,000, due primarily to higher net cash used
in operating activities in 2020 and less cash raised in 2020
compared to 2019.
Cash
Flow Used in Operating Activities
The increase to cash flow
used in operating activities during the year ended December 31,
2020 compared to the year ended December 31, 2019 of
approximately $1,644,000 was
primarily a result of increased R&D and G&A cash operating
expenses.
Cash
Flow Used in Investing Activities
There was no cash flow
provided by or used in investing activities for the years ended
December 31, 2020 and 2019.
Cash
Flow Provided by Financing Activities
The decrease in cash flow
provided by financing activities during the year ended December 31,
2020 compared to the year ended December 31, 2019 of approximately
($1,165,000) was due to net proceeds from the initial public
offering of our common stock and the exercise of stock options
offset by deferred offering costs during the year ended December
31, 2019 being higher than the net sales of our common stock under
our Capital on DemandTM Sales Agreement
with JonesTrading and the receipt of the forgiven PPP loan during
the year ended December 31, 2020.
Future
Funding Requirements
To date, we have not
generated any revenue from product sales. We do not know when, or
if, we will generate any revenue from product sales. We do not
expect to generate any revenue from product sales unless and until
we obtain regulatory approval of and commercialize any of our
current or future drug product candidates or we out-license or sell
a drug product candidate to another party. At the same time, we
expect our expenses to increase in connection with our ongoing
development activities, particularly as we continue the research,
development, future preclinical studies and clinical trials of, and
seek regulatory approval for, our current and future drug product
candidates. If we obtain regulatory approval of any of our current
or future drug product candidates, we will need substantial
additional funding for commercialization requirements and our
continuing drug product development operations.
As a company, we have not
completed development through marketing approvals of any
therapeutic products. We expect to continue to incur significant
increases in expenses and increasing operating losses for the
foreseeable future. We anticipate that our expenses will increase
substantially as we:
● advance the
clinical development and execute the regulatory strategy for
Validive;
● continue
the clinical development and execute the regulatory strategy for
camsirubicin;
● continue
the preclinical activities and potentially enter clinical
development of MNPR-101 (and related compounds) for severe COVID-19
and/or other indications;
● acquire
and/or license additional pipeline drug product candidates and
pursue the future preclinical and/or clinical development of such
drug product candidates;
● seek
regulatory approvals for any of our current and future drug product
candidates that successfully complete registration clinical
trials;
● establish
or purchase the services of a sales, marketing and distribution
infrastructure to commercialize any products for which we may
obtain marketing approval;
● develop our
manufacturing/quality capabilities or establish a reliable, high
quality supply chain sufficient to support our clinical
requirements and to provide sufficient capacity to launch and grow
the sales of any product for which we obtain marketing approval;
and
● add or
contract for required operational, financial and management
information systems and capabilities and other specialized expert
personnel to support our drug product candidate development and
planned commercialization efforts.
We anticipate that the funds
available as of March 5, 2021, will fund our operations at least
through March 2022. We have based this estimate on assumptions that
may prove to be wrong, and we could use our available capital
resources sooner than we currently expect. Because of the numerous
risks and uncertainties associated with the development and
commercialization of our drug product candidates, and the extent to
which we enter into collaborations with third parties to
participate in the development and commercialization of our drug
product candidates, we are unable to accurately estimate with high
reliability the amounts and timing required for increased capital
outlays and operating expenditures associated with our current and
anticipated drug product candidate development programs. Our future
capital requirements will depend on many factors,
including:
● the
progress of regulatory interactions and clinical development of
Validive;
● the
progress of clinical development and regulatory outcomes of
camsirubicin;
● the
progress of preclinical and clinical development of MNPR-101 (and
related compounds) including through our collaboration with
NorthStar;
● the number
and characteristics of other drug product candidates that we may
license, acquire or otherwise pursue;
● the scope,
progress, timing, cost and results of research, preclinical
development and clinical trials of current and future drug product
candidates;
● the costs,
timing and outcomes of seeking and obtaining FDA and international
regulatory approvals;
● the costs
associated with manufacturing/quality requirements and establishing
sales, marketing and distribution capabilities;
● our ability
to maintain, expand and defend the scope of our intellectual
property portfolio, including the amount and timing of any payments
we may be required to make in connection with the licensing,
filing, defense and enforcement of any patents or other
intellectual property rights;
● our need
and ability to hire or contract for additional management,
administrative, scientific, medical, sales and marketing, and
manufacturing/quality and other specialized personnel or external
expertise;
● the effect
and timing of entry of competing products or new therapies that may
limit market penetration or prevent the introduction of our drug
product candidates or reduce the commercial potential of our
product portfolio;
● our need to
implement additional internal systems and infrastructure;
and
● the
economic and other terms, timing and success of our existing
collaboration and licensing arrangements and any collaboration,
licensing or other arrangements into which we may enter in the
future, including the timing of receipt of or payment to or from
others of any milestone or royalty payments under these
arrangements.
See Item 1A –
“Risk Factors”. Expenditures are expected to increase
in 2021 onward for:
●
clinical research
services and clinical site fees for our VOICE clinical program,
including, if required, completing a
smaller second Phase 3 confirmatory clinical
trial;
●
process
development, manufacturing costs and clinical database management
of camsirubicin in connection with the GEIS Phase 2 clinical
trial;
●
supporting the
NorthStar collaboration;
●
GEIS collaboration
milestone fees; and
●
employee
compensation and consulting fees to support our VOICE clinical
program.
We have activated clinical
trial sites and commenced dosing in our VOICE clinical trial. In
order to complete the VOICE clinical program, including, if
required, completing a smaller second Phase 3 confirmatory clinical
trial, we will require additional funding in the millions or tens
of millions of dollars (depending on if we have consummated a
collaboration or partnership or neither for Validive), or find a
suitable pharmaceutical partner, both of which we are planning to
pursue within the next 12 months. There can be no assurance that
any such events will occur. We intend to continue evaluating drug
product candidates for the purpose of growing our pipeline.
Identifying and securing high-quality compounds usually takes time
and related expenses; however, our spending could be significantly
accelerated in 2021 and onward if additional drug product
candidates are acquired and enter clinical development. In this
event, we may be required to expand our management team, and pay
higher contract manufacturing costs, contract research organization
fees, other clinical development costs and insurance costs that are
not currently projected. The anticipated operating cost increases
in 2021 and onward are expected to be primarily driven by the
funding of our VOICE clinical program, support of the GEIS Phase 2
clinical trial of camsirubicin and development of MNPR-101 and
related compounds. Beyond our need to raise additional funding in
the coming 12 months to complete the VOICE clinical program, we
will also need significant additional funding thereafter in order
to commercialize Validive if approved for marketing, support
further development of camsirubicin in and beyond the Phase 2
clinical trial, to support our collaboration with NorthStar, if
successful, support further development of MNPR-101 and related
compounds, and generally to support our current and any future
product candidates through completion of trials, approval processes
and, if applicable, commercialization.
Until we can generate a
sufficient amount of product revenue to finance our cash
requirements, we expect to finance our future cash needs primarily
through a combination of equity offerings, debt financings,
strategic collaborations and grant funding. To the extent that we
raise additional capital through the sale of equity or convertible
debt securities, the ownership interest of our current stockholders
will be diluted, and the terms of these securities may include
liquidation or other preferences that adversely affect our current
stockholders’ rights. See Item 1A - “Risk Factors
– Existing and new investors will experience dilution as a
result of our option plan and potential future stock sales.”
Debt 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 declaring dividends. If we raise additional funds
through marketing and distribution arrangements or other
collaborations, strategic alliances or licensing arrangements with
other parties, we may have to relinquish valuable rights to our
technologies, future revenue streams, research programs or drug
product candidates or grant licenses on terms that may not be
favorable to us, which will reduce our future returns and affect
our future operating flexibility. If we are unable to raise
additional funds through equity or debt financings when needed, we
may be required to delay, limit, reduce or terminate our pipeline
product development or commercialization efforts or grant rights to
others to develop and market drug product candidates that we would
otherwise prefer to develop and market ourselves.
Contractual Obligations and Commitments
License, Development
and Collaboration Agreements
Onxeo
S.A.
In June 2016, we executed an
agreement with Onxeo S.A., a French public company, which gave us
the exclusive option to license (on a world-wide exclusive basis)
Validive (clonidine mucobuccal tablet; clonidine MBT a mucoadhesive
tablet of clonidine based on the Lauriad mucoadhesive technology).
The agreement includes clinical, regulatory, developmental and
sales milestones that could reach up to $108 million if we achieve
all milestones, and escalating royalties from 5% to 10% on net
sales. In September 2017, we exercised the option to license
Validive from Onxeo for $1 million, but as of March 5, 2021, we
have not been required to pay Onxeo any other funds under the
agreement. We anticipate the need to raise significant funds to
support the completion of clinical development and marketing
approval of Validive.
Under the agreement, we are
required to pay royalties to Onxeo on a product-by-product and
country-by-country basis until the later of (1) the date when a
given product is no longer within the scope of a patent claim in
the country of sale or manufacture, (2) the expiry of any extended
exclusivity period in the relevant country (such as orphan drug
exclusivity, pediatric exclusivity, new chemical entity
exclusivity, or other exclusivity granted beyond the expiry of the
relevant patent), or (3) a specific time period after the first
commercial sale of the product in such country. In most countries,
including the U.S., the patent term is generally 20 years from the
earliest claimed filing date of a non-provisional patent
application in the applicable country, not taking into
consideration any potential patent term adjustment that may be
filed in the future or any regulatory extensions that may be
obtained. The royalty termination provision pursuant to (3)
described above is shorter than 20 years and is the least likely
cause of termination of royalty payments.
The Onxeo license agreement
does not have a pre-determined term, but expires on a
product-by-product and country-by-country basis; that is, the
agreement expires with respect to a given product in a given
country whenever our royalty payment obligations with respect to
such product have expired. The agreement may also be terminated
early for cause if either we or Onxeo materially breach the
agreement, or if either we or Onxeo become insolvent. We may also
choose to terminate the agreement, either in its entirety or as to
a certain product and a certain country, by providing Onxeo with
advance notice.
Grupo
Español de Investigación en Sarcomas
(“GEIS”)
In June 2019, we executed a
clinical collaboration with GEIS for the development of
camsirubicin in patients with advanced soft tissue sarcoma
(“ASTS”). GEIS is the study sponsor and will lead a
multi-country, randomized, open-label Phase 2 clinical trial to
evaluate camsirubicin head-to-head against doxorubicin in patients
with ASTS. Enrollment of the trial is anticipated to begin in the
second quarter of 2021 and will include approximately 170 ASTS
patients. We will provide study drug and supplemental financial
support for the clinical trial averaging approximately $2 million
to $3 million per year. During the
year ended December 31, 2020, we incurred $1.4 million in expenses
under the GEIS agreement and other clinical-related expenses
including clinical material manufacturing and database management
expenses in support of GEIS’s Phase 2 camsirubicin clinical
trial. During the year ended December 31, 2019, we incurred $0.2
million in expenses related to the GEIS collaboration. We
can terminate the agreement by providing GEIS with advance notice,
and without affecting the Company’s rights and ownership to
any intellectual property or clinical data.
XOMA
Ltd.
Pursuant to a non-exclusive
license agreement with XOMA Ltd. for the humanization technology
used in the development of MNPR-101, we are obligated to pay XOMA
Ltd. clinical, regulatory and sales milestones which could reach up
to $14.925 million if we achieve all milestones for MNPR-101. The
agreement does not require the payment of sales royalties. There
can be no assurance that we will achieve any milestones. As of
March 5, 2021, we had not reached any milestones and had not been
required to pay XOMA Ltd. any funds under this license
agreement.
Service
Providers
In the normal course of
business, we contract with service providers to assist in the
performance of research and development, financial strategy, audit,
tax and legal support. We can elect to discontinue the work under
these agreements at any time. We could also enter into
collaborative research and development, contract research,
manufacturing and supplier agreements in the future, which may
require upfront payments and/or long-term commitments of
cash.
Office
Lease
Effective January 1, 2018, we
leased office space in the Village of Wilmette, Illinois for $2,520
per month for 24 months. This office space houses our current
headquarters. On December 31, 2019, the office lease expired and we
continued to lease on a month-to-month basis. In February 2019, we
leased additional office spaces on a month-to month basis at our
headquarters and we anticipate that we will lease additional space
in the future as we hire additional personnel.
Legal
Contingencies
We are currently not, and to
date have never been, a party to any material legal
proceedings.
Indemnification
In the normal course of
business, we enter into contracts and agreements that contain a
variety of representations and warranties and provide for general
indemnification. Our exposure under these agreements is unknown
because it involves claims that may be made against us in the
future, but that have not yet been made. To date, we have not paid
any claims or been required to defend any action related to our
indemnification obligations. However, we may record charges in the
future as a result of these indemnification
obligations.
In accordance with our Second
Amended and Restated Certificate of Incorporation, Amended and
Restated Bylaws and the indemnification agreements entered into
with each officer and non-employee director, we have
indemnification obligations to our officers and non-employee
directors for certain events or occurrences, subject to certain
limits, while they are serving at our request in such capacity.
There have been no claims to date. See Item 1A - “Risk
Factors - We have limited the liability of and indemnified our
directors and officers.”
Off-Balance
Sheet Arrangements
To date, we have not had any
off-balance sheet arrangements, as defined under the SEC
rules.
Item 8. Financial Statements and Supplementary
Data
The information required to
be filed in this item appears on pages F-1 to F-19 of this Annual
Report on Form 10-K.
Item 9. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure
None.
Item 9A. Controls and Procedures
Our Chief Executive Officer
and Chief Financial Officer have provided certifications filed as
Exhibits 31.1 and 32.1, and 31.2, respectively. Such certifications
should be read in conjunction with the information contained in
this Item 9A for a more complete understanding of the matters
covered by those certifications.
(a)
Management’s Annual Report on Internal Control over Financial
Reporting
Our management is responsible
for establishing and maintaining adequate internal control over
financial reporting, as defined in Rule 13a15(f) of the Securities
Exchange Act of 1934 (the “Exchange Act”). Our internal
control over financial reporting is a process designed to provide
reasonable assurance regarding the reliability of the financial
reporting and the preparation of financial statements for external
purposes in accordance with U.S. generally accepted accounting
principles. This process includes those policies and procedures (i)
that pertain to the maintenance of records that, in reasonable
detail, accurately and fairly reflect the transactions and
dispositions of our assets, (ii) that receipts and expenditures are
being made only in accordance with authorizations of our management
and non-employee directors, (iii) that provide reasonable assurance
regarding prevention or timely detection of unauthorized
acquisition, use, or disposition of our assets that could have a
material effect on our financial statements, and (iv) that provide
reasonable assurance that transactions are recorded as necessary to
permit preparation of financial statements in accordance with GAAP.
Because of its inherent limitations, internal control over
financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of the internal control over
financial reporting to future periods are subject to risk that the
internal control may become inadequate because of changes in
conditions, or that the degree of compliance with policies or
procedures may deteriorate.
Our management has assessed
the effectiveness of our internal control over financial reporting
as of December 31, 2020. Management based this assessment on the
criteria set forth by the Committee of Sponsoring Organizations of
the Treadway Commission in Internal Control – Integrated
Framework (2013). Management’s assessment included an
evaluation of the design of our internal control over financial
reporting and testing of the operational effectiveness of our
internal control over financial reporting. Based on
management’s assessment, management has concluded that, as of
December 31, 2020, our internal control over financial reporting
was effective.
(b)
Disclosure Controls and Procedures
We carried out an evaluation,
under the supervision and with the participation of our management,
including our Chief Executive Officer and Chief Financial Officer,
of the effectiveness of our disclosure controls and procedures as
of December 31, 2020, pursuant to Rules 13a15(e) and 15d15(e) under
the Exchange Act. Based on that evaluation, our Chief Executive
Officer and Chief Financial Officer have concluded that our
disclosure controls and procedures, as of such date, were
effective.
(c)
Changes in Internal Control over Financial Reporting
We have concluded that the
consolidated financial statements and other financial information
included in this Annual Report on Form 10-K fairly present in all
material respects our financial condition, results of operations
and comprehensive loss and cash flows as of, and for, the periods
presented.
There have been no changes in
our internal control over financial reporting during the quarter
ended December 31, 2020 that have materially affected, or are
reasonably likely to materially affect, our internal control over
financial reporting.
PART
III
Item 10. Directors, Executive
Officers and Corporate Governance
The information required by
this Item regarding our directors, executive officers and corporate
governance is incorporated into this section by reference to the
sections captioned “Election of Directors” and
“Executive Officers” in the proxy statement for our
2021 annual meeting of stockholders, which will be filed with the
SEC pursuant to Regulation 14A not later than 120 days after
December 31, 2020.
Item 11. Executive
Compensation
The information required by
this Item regarding executive compensation is incorporated into
this section by reference to the section captioned “Executive
Compensation” in the proxy statement for our 2021 annual
meeting of stockholders, which will be filed with the SEC pursuant
to Regulation 14A not later than 120 days after December 31,
2020.
Item 12. Security Ownership of
Certain Beneficial Owners and Management and Related Stockholder
Matters
The information required by
this Item regarding security ownership of our beneficial owners,
management and related stockholder matters is incorporated into
this section by reference to the section captioned “Security
Ownership of Certain Beneficial Owners and Management” in the
proxy statement for our 2021 annual meeting of stockholders, which
will be filed with the SEC pursuant to Regulation 14A not later
than 120 days after December 31, 2020.
The information required by
this Item regarding the securities authorized for issuance under
our equity compensation plans is incorporated into this section by
reference to the section captioned “Equity Compensation Plan
Information” in the proxy statement for our 2021 annual
meeting of stockholders, which will be filed with the SEC pursuant
to Regulation 14A not later than 120 days after December 31,
2020.
Item 13. Certain Relationships and
Related Transactions and Director Independence
The information required by
this Item regarding certain relationships, related transactions and
director independence is incorporated into this section by
reference to the sections captioned “Transactions with
Related Persons, Promoters and Certain Control Persons,”
“Review, Approval and Ratification of Transactions with
Related Parties” and “Director Independence” in
the proxy statement for our 2021 annual meeting of stockholders,
which will be filed with the SEC pursuant to Regulation 14A not
later than 120 days after December 31, 2020.
Item 14. Principal Accounting Fees
and Services
The information required by
this Item regarding our principal accountant fees and services is
incorporated into this section by reference to the section
captioned “Independent Registered Public Accounting
Firm” in the proxy statement for our 2021 annual meeting of
stockholders, which will be filed with the SEC pursuant to
Regulation 14A not later than 120 days after December 31,
2020.
PART
IV
Item 15. Exhibits, Financial Statement
Schedule
1.
Financial Statements
INDEX
TO FINANCIAL STATEMENTS
|
Page
|
|
F-2
|
|
F-3
|
|
F-4
|
|
F-5
|
|
F-6
|
|
F-7 to
F-19
|
2.
Financial Statements Schedules
Other
financial statements schedules are not included because they are
not required, or the information is otherwise shown in the
Consolidated Financial Statements or notes
thereto.
The
following exhibits are filed as part of this Annual Report on Form
10-K.
|
Document
|
Incorporated
by Reference From:
|
3.1
|
|
Form 10-K filed on
March 26, 2018
|
3.2
|
|
Form 10-K filed on
March 26, 2018
|
4.1
|
|
|
10.1*
|
|
Form 10-K filed on
March 26, 2018
|
10.2*
|
|
Form 10-K filed on
March 26, 2018
|
10.3*
|
|
Form 10-K filed on
March 26, 2018
|
10.4
|
|
Form 10-K filed on
March 26, 2018
|
10.5
|
|
Form 10-K filed on
March 26, 2018
|
10.6
|
|
Form 10-K filed on
March 26, 2018
|
10.7
|
|
Form 10-K filed on
March 26, 2018
|
10.8
|
|
Form 10-K filed on
March 26, 2018
|
10.9
|
|
Form 10-K filed on
March 26, 2018
|
10.10
|
|
Form 10-K filed on
March 27, 2020
|
10.11
|
|
|
21.1
|
|
|
23.1
|
|
|
24.1
|
|
|
31.1
|
|
|
31.2
|
|
|
32.1
|
|
|
101.INS
|
XBRL
Taxonomy Extension Schema
|
|
101.SCH
|
XBRL
Taxonomy Extension Schema
|
|
101.CAL
|
XBRL
Taxonomy Extension Calculation Linkbase
|
|
101.DEF
|
XBRL
Taxonomy Extension Definition Linkbase
|
|
101.LAB
|
XBRL
Taxonomy Extension Label Linkbase
|
|
101.PRE
|
XBRL
Taxonomy Extension Presentation Linkbase
|
|
Confidential Information has
been omitted and filed separately with the SEC on exhibits marked
with (*). Confidential treatment has been approved with respect to
the omitted information, pursuant to an Order dated January 8,
2018.
Pursuant to the requirements
of Section 13 or 15(d) of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
|
|
MONOPAR THERAPEUTICS INC
|
|
|
|
Dated:
March 25, 2021
|
By:
|
/s/ Kim
R. Tsuchimoto
|
|
|
Name:
Kim Tsuchimoto
|
|
|
Title:
Chief Financial Officer
|
|
|
(Principal
Financial Officer)
|
KNOW ALL PERSONS BY THESE
PRESENTS, that each person whose signature appears below
constitutes and appoints Chandler Robinson and Kim Tsuchimoto, his
attorney-in-fact, with the power of substitution, for him in any
and all capacities, to sign any amendments to this Annual Report on
Form 10K and to file the same, with exhibits thereto and other
documents in connection therewith, with the Securities and Exchange
Commission, hereby ratifying and confirming all that each of said
attorneys-in-fact, or his substitute or substitutes, may do or
cause to be done by virtue hereof.
Pursuant to the requirements
of the Securities Exchange Act of 1934, this report has been signed
below by the following persons on behalf of the registrant and in
the capacities and on the dates indicated:
|
Signatures
|
|
Title
|
|
Date
|
|
/s/ Chandler D.
Robinson
|
|
|
|
March 25, 2021
|
|
Chandler Robinson
|
|
Chief Executive Officer and Director (Principal Executive
Officer)
|
|
|
|
/s/ Kim R.
Tsuchimoto
|
|
|
|
March 25, 2021
|
|
Kim Tsuchimoto
|
|
Chief Financial Officer (Principal Financial Officer and Principal
Accounting Officer)
|
|
|
|
/s/ Andrew P.
Mazar
|
|
|
|
March 25, 2021
|
|
Andrew Mazar
|
|
Chief Scientific Officer and Director
|
|
|
|
/s/ Christopher M.
Starr
|
|
|
|
March 25, 2021
|
|
Christopher Starr
|
|
Executive Chairman of the Board and Director
|
|
|
|
/s/ Raymond W.
Anderson
|
|
|
|
March 25, 2021
|
|
Raymond W. Anderson
|
|
Director
|
|
|
|
/s/ Michael J.
Brown
|
|
|
|
March 25, 2021
|
|
Michael Brown
|
|
Director
|
|
|
|
/s/ Arthur J.
Klausner
|
|
|
|
March 25, 2021
|
|
Arthur Klausner
|
|
Director
|
|
|
INDEX
TO FINANCIAL STATEMENTS
|
|
Report
of Independent Registered Public Accounting Firm
|
F-2
|
Consolidated
Balance Sheets as of December 31, 2020 and 2019
|
F-3
|
Consolidated
Statements of Operations and Comprehensive Loss for the Years Ended
December 31, 2020 and 2019
|
F-4
|
Consolidated
Statements of Stockholders’ Equity for the Years Ended
December 31, 2020 and 2019
|
F-5
|
Consolidated
Statements of Cash Flows for the Years Ended December 31, 2020 and
2019
|
F-6
|
Notes to
Consolidated Financial Statements
|
|
F-1
REPORT OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
To the
Stockholders and Board of Directors of Monopar Therapeutics
Inc.
Opinion
on the Consolidated Financial Statements
We have
audited the accompanying consolidated balance sheets of Monopar
Therapeutics Inc. and its subsidiaries (the "Company") as of
December 31, 2020 and 2019, the related consolidated statements of
operations and comprehensive loss, stockholders’ equity and
cash flows, for each of the two years in the period ended December
31, 2020, and the related notes (collectively referred to as the
"consolidated financial statements"). In our opinion, the
consolidated financial statements present fairly, in all material
respects, the financial position of the Company as of December 31,
2020 and 2019, and the results of its operations and its cash flows
for each of the two years in the period ended December 31, 2020, in
conformity with accounting principles generally accepted in the
United States of America.
Basis
for Opinion
These
consolidated financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion
on the Company's consolidated financial statements based on our
audits. We are a public accounting firm registered with the Public
Company Accounting Oversight Board (United States) ("PCAOB") and
are required to be independent with respect to the Company in
accordance with the U.S. federal securities laws and the applicable
rules and regulations of the Securities and Exchange Commission and
the PCAOB.
We
conducted our audits in accordance with the standards of the PCAOB.
Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the consolidated
financial statements are free of material misstatement, whether due
to error or fraud. The Company is not required to have, nor were we
engaged to perform, an audit of its internal control over financial
reporting. As part of our audits, we are required to obtain an
understanding of internal control over financial reporting but not
for the purpose of expressing an opinion on the effectiveness of
the Company's internal control over financial reporting.
Accordingly, we express no such opinion.
Our
audits included performing procedures to assess the risks of
material misstatement of the consolidated financial statements,
whether due to error or fraud, and performing procedures that
respond to those risks. Such procedures included examining, on a
test basis, evidence regarding the amounts and disclosures in the
consolidated financial statements. Our audits also included
evaluating the accounting principles used and significant estimates
made by management, as well as evaluating the overall presentation
of the consolidated financial statements. We believe that our
audits provide a reasonable basis for our opinion.
/s/ BPM
LLP
We have
served as the Company's auditor since 2015.
Walnut
Creek, California
March
24, 2021
F-2
Monopar
Therapeutics Inc.
Consolidated Balance Sheets
|
|
|
Assets
|
|
|
Current
assets:
|
|
|
Cash and cash
equivalents
|
$16,737,109
|
$13,213,929
|
Other current
assets
|
62,690
|
15,711
|
Total current
assets
|
16,799,799
|
13,229,640
|
|
|
|
Other non-current
assets
|
68,858
|
122,381
|
Total
assets
|
$16,868,657
|
$13,352,021
|
Liabilities
and Stockholders' Equity
|
|
|
Current
liabilities:
|
|
|
Accounts payable,
accrued expenses and other current liabilities
|
$1,176,666
|
$724,165
|
Total current
liabilities and total liabilities
|
1,176,666
|
724,165
|
Commitments and
contingencies (Note 6)
|
|
|
Stockholders’
equity:
|
|
|
Common stock, par
value of $0.001 per share, 40,000,000 shares authorized, 11,453,465
and 10,587,632 shares issued and outstanding
at December 31,
2020 and December 31, 2019, respectively
|
11,453
|
10,587
|
Additional paid-in
capital
|
47,873,570
|
38,508,825
|
Accumulated other
comprehensive loss
|
(7,873)
|
(10,970)
|
Accumulated
deficit
|
(32,185,159)
|
(25,880,586)
|
Total stockholders'
equity
|
15,691,991
|
12,627,856
|
Total liabilities
and stockholders' equity
|
$16,868,657
|
$13,352,021
|
The
accompanying notes are an integral part of these consolidated
financial statements.
F-3
Monopar
Therapeutics Inc.
Consolidated Statements of Operations and Comprehensive
Loss
|
For
the Years Ended December 31,
|
|
|
|
Operating
expenses:
|
|
|
Research and
development
|
$4,065,199
|
$1,968,518
|
General and
administrative
|
2,443,676
|
2,355,243
|
Total operating
expenses
|
6,508,875
|
4,323,761
|
Loss from
operations
|
(6,508,875)
|
(4,323,761)
|
Other
income:
|
|
|
Other income from
PPP loan forgiveness
|
122,400
|
—
|
Interest
income
|
81,902
|
98,887
|
Net
loss
|
(6,304,573)
|
(4,224,874)
|
Other comprehensive
income (loss)
|
|
|
Foreign currency
translation gain (loss)
|
3,097
|
(8,574)
|
Comprehensive
loss
|
$(6,301,476)
|
$(4,233,448)
|
Net loss per
share:
|
|
|
Basic and
diluted
|
$(0.58)
|
$(0.45)
|
Weighted average
shares outstanding:
|
|
|
Basic and
diluted
|
10,958,256
|
9,321,195
|
The
accompanying notes are an integral part of these consolidated
financial statements.
F-4
Monopar
Therapeutics Inc.
Consolidated Statements of Stockholders’
Equity
Years
Ended December 31, 2019 and 2020
|
|
|
|
|
|
|
|
|
Additional Paid-in Capital
|
Accumulated
Other Comprehensive Loss
|
|
Total
Stockholders' Equity
|
Balance at January
1, 2019
|
9,291,421
|
$9,291
|
$28,567,221
|
$(2,396)
|
$(21,655,712)
|
$6,918,404
|
Issuance of common
stock for cash, net of $1,400,492 offering costs
|
1,277,778
|
1,278
|
8,820,454
|
—
|
—
|
8,821,732
|
Issuance of common
stock upon exercise of stock options
|
18,433
|
18
|
109,980
|
—
|
—
|
109,998
|
Stock-based
compensation (non-cash)
|
—
|
—
|
1,011,170
|
—
|
—
|
1,011,170
|
Net
loss
|
—
|
—
|
—
|
—
|
(4,224,874)
|
(4,224,874)
|
Accumulated other
comprehensive loss
|
—
|
—
|
—
|
(8,574)
|
—
|
(8,574)
|
Balance at December
31, 2019
|
10,587,632
|
10,587
|
38,508,825
|
(10,970)
|
(25,880,586)
|
12,627,856
|
Issuance of common
stock under a Capital on DemandTM Sales Agreement
with JonesTrading Institutional Services LLC, net of commissions
and fees of $253,035
|
860,677
|
862
|
8,174,429
|
—
|
—
|
8,175,291
|
Issuance of common
stock to non-employee directors pursuant to vested restricted stock
units
|
5,156
|
4
|
(4)
|
—
|
—
|
—
|
Stock-based
compensation (non-cash)
|
—
|
—
|
1,320,890
|
—
|
—
|
1,320,890
|
Offering
costs
|
—
|
—
|
(130,570)
|
—
|
—
|
(130,570)
|
Net
loss
|
—
|
—
|
—
|
—
|
(6,304,573)
|
(6,304,573)
|
Accumulated other
comprehensive income
|
—
|
—
|
—
|
3,097
|
—
|
3,097
|
Balance at December
31, 2020
|
11,453,465
|
$11,453
|
$47,873,570
|
$(7,873)
|
$(32,185,159)
|
$15,691,991
|
The
accompanying notes are an integral part of these
consolidated financial statements.
F-5
Monopar
Therapeutics Inc.
Consolidated Statements of Cash Flows
|
For
the Years Ended December 31,
|
|
|
|
Cash
flows from operating activities:
|
|
|
Net
loss
|
$(6,304,573)
|
$(4,224,874)
|
Adjustments to
reconcile net loss to net cash used in operating
activities:
|
|
|
Stock-based
compensation expense (non-cash)
|
1,320,890
|
1,011,170
|
Other income from
PPP loan forgiveness
|
(122,400)
|
—
|
Changes
in operating assets and liabilities, net
|
|
|
Other current
assets
|
(3,789)
|
9,140
|
Other non-current
assets
|
—
|
(56,650)
|
Accounts payable,
accrued expenses and other current liabilities
|
447,598
|
243,534
|
Net cash used in
operating activities
|
(4,662,274)
|
(3,017,680)
|
Cash
flows from financing activities:
|
|
|
Proceeds from the
initial public offering of common stock
|
—
|
10,222,224
|
Offering costs
for the
initial public offering, net of deferred offering costs paid
in previous periods and accrued at year-end
|
—
|
(974,476)
|
Proceeds from the exercise of stock options
|
—
|
109,998
|
Cash proceeds from
the sales of common stock under a Capital on DemandTM Sales Agreement
with JonesTrading Institutional Services LLC,
net of commissions
and fees of $253,035
|
8,175,291
|
—
|
Offering
costs – Capital on
DemandTM
|
(115,571)
|
(10,335)
|
PPP forgivable bank
loan
|
122,400
|
|
Net cash provided
by financing activities
|
8,182,120
|
9,347,411
|
Effect of exchange
rates
|
3,334
|
(8,574)
|
Net increase in
cash and cash equivalents
|
3,523,180
|
6,321,157
|
Cash
and cash equivalents at beginning of period
|
13,213,929
|
6,892,772
|
Cash
and cash equivalents at end of period
|
$16,737,109
|
$13,213,929
|
|
|
|
Supplemental
disclosure of cash flow information:
|
|
|
Accrued but unpaid
issuance costs for the initial public offering
|
$—
|
$81,080
|
Income taxes paid,
net of (refunds)
|
$(11,099)
|
$53
|
The
accompanying notes are an integral part of these consolidated
financial statements.
F-6
MONOPAR THERAPEUTICS INC.
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS
December
31, 2020
Note
1 - Nature of Business and Liquidity
Nature of Business
Monopar Therapeutics Inc. (“Monopar”
or the “Company”) is a clinical-stage
biopharmaceutical company primarily focused on developing
proprietary therapeutics designed to extend life or improve quality
of life for cancer patients. Monopar currently has three compounds
in development: 1) Validive®
(clonidine mucobuccal tablet;
clonidine MBT), a Phase 2b/3 clinical stage, first-in-class
mucoadhesive buccal tablet for the prevention of radiation induced
severe oral mucositis (“SOM”) in oropharyngeal cancer
patients; 2) camsirubicin (generic name for MNPR-201, GPX-150;
5-imino-13-deoxydoxorubicin), a Phase 2 clinical stage
topoisomerase II-alpha selective novel analog of doxorubicin
engineered specifically to retain anticancer activity while
minimizing toxic effects on the heart; and 3) a preclinical stage
uPAR targeted antibody, MNPR-101, for advanced cancers and severe
COVID-19.
Liquidity
The
Company has incurred an accumulated deficit of approximately $32.2
million as of December 31, 2020. To date, the Company has primarily
funded its operations with the net proceeds from the
Company’s initial public offering of its common stock on
Nasdaq, sales of its common stock in the public market under a
Capital on DemandTM Sales Agreement,
private placements of convertible preferred stock and of common
stock and cash provided in the camsirubicin asset purchase
transaction. Management believes that currently available cash will
provide sufficient funds to enable the Company to meet its planned
obligations at least through March 2022. The Company’s
ability to fund its future operations, including the clinical
development of Validive and camsirubicin, is dependent upon its
ability to execute its business strategy, to obtain additional
funding and/or to execute collaborative research agreements. There
can be no certainty that future financing or collaborative research
agreements will occur at a time needed to maintain operations, if
at all.
In
December 2019, a novel strain of coronavirus
(“COVID-19”) surfaced in China and spread to
essentially all of the remaining world. By March 2020 COVID-19 was
designated a global pandemic, resulting in government-mandated
travel restrictions and temporary shutdowns or limitations of
non-essential businesses in many states in the United States. The
Company is able to remain open but has allowed its employees to
work from home, if required by local authorities. In response to the current COVID-19 pandemic and
its effects on clinical trials, Monopar has modified the original
adaptive design Phase 3 clinical trial for its lead product
candidate, Validive, to be a Phase 2b/3 clinical trial
(“VOICE”) to better fit the types of trials which can
enroll patients in the current environment. This
modification allowed the Company to activate the VOICE clinical
trial without requiring near-term financing. To complete the VOICE
clinical program, including, if
required, completing a smaller second Phase 3 confirmatory clinical
trial, Monopar will require additional funding in the
millions or tens of millions of dollars (depending on if the
Company has consummated a collaboration or partnership or neither
for Validive), which it is planning to pursue in the next 12
months. Due to many uncertainties, the Company is unable to
estimate the pandemic’s financial impact or duration at this
time, or its potential impact on the Company’s current
clinical trials including the pandemic’s effect on drug
candidate manufacturing, shipping, patient recruitment at clinical
sites and regulatory agencies around the globe.
Note
2 - Significant Accounting Policies
Basis of Presentation
These
consolidated financial statements include the financial results of
Monopar Therapeutics Inc., its wholly-owned French subsidiary,
Monopar Therapeutics, SARL, and its wholly-owned Australian
subsidiary, Monopar Therapeutics Australia Pty Ltd and have been
prepared in accordance with accounting principles generally
accepted in the United States (“GAAP”) and include all
disclosures required by GAAP for financial reporting. All
intercompany accounts have been eliminated. The principal
accounting policies applied in the preparation of these
consolidated financial statements are set out below and have been
consistently applied in all periods presented. The Company has been
primarily involved in performing research activities, developing
product candidates, and raising capital to support and expand these
activities.
The
accompanying consolidated financial statements contain all normal,
recurring adjustments necessary to present fairly the
Company’s consolidated financial position as of December 31,
2020 and 2019, the Company’s consolidated results of
operations and comprehensive loss and the Company’s
consolidated cash flows for the years ended December 31, 2020 and
2019 .
Functional Currency
The
Company's consolidated functional currency is the U.S. Dollar. The
Company's Australian subsidiary and French subsidiary use the
Australian Dollar and European Euro, respectively, as their
functional currency. At each quarter-end, each foreign subsidiary's
balance sheets are translated into U.S. Dollars based upon the
quarter-end exchange rate, while their statements of operations and
comprehensive loss and statements of cash flows are translated into
U.S. Dollars based upon an average exchange rate during the
period.
F-7
MONOPAR THERAPEUTICS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December
31, 2020
Comprehensive Loss
Comprehensive loss
represents net loss plus any gains or losses not reported in the
consolidated statements of operations and comprehensive loss, such
as foreign currency translations gains and losses that are
typically reflected on the Company’s consolidated statements
of stockholders’ equity.
Use of Estimates
The
preparation of financial statements in conformity with GAAP
requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities, disclosure of
contingent assets and liabilities, and reported amounts of expenses
in the consolidated financial statements and accompanying notes.
Actual results could differ from those estimates.
Going Concern Assessment
The
Company applies Accounting Standards Codification 205-40
(“ASC 205-40”), Disclosure of Uncertainties about an
Entity’s Ability to Continue as a Going Concern, which
the Financial Accounting Standards Board (“FASB”)
issued to provide guidance on determining when and how reporting
companies must disclose going concern uncertainties in their
financial statements. ASC 205-40 requires management to perform
interim and annual assessments of an entity’s ability to
continue as a going concern within one year of the date of issuance
of the entity’s financial statements (or within one year
after the date on which the financial statements are available to
be issued, when applicable). Further, a company must provide
certain disclosures if there is “substantial doubt about the
entity’s ability to continue as a going concern.” In
February 2021, the Company analyzed its cash requirements through
March 2022 and has determined that, based upon the Company’s
current available cash, the Company has no substantial doubt about
its ability to continue as a going concern.
Cash Equivalents
The
Company considers all highly liquid investments purchased with a
maturity of 90 days or less on the date of purchase to be cash
equivalents. Cash equivalents as of December 31, 2020 and 2019
consisted of one money market account.
Deferred Offering Costs
Deferred offering
costs represent legal, auditing, travel and filing fees related to
fundraising efforts that have not yet been concluded.
Prepaid Expenses
Prepayments are
expenditures for goods or services before the goods are used or the
services are received and are charged to operations as the benefits
are realized. Prepaid expenses include payments to development
collaborators in excess of actual expenses incurred by the
collaborator, measured at the end of each reporting period.
Prepayments also include insurance premiums and software costs of
$10,000 or more that are expensed monthly over the life of the
contract. Prepaid expenses are reflected on the Company’s
consolidated balance sheets as other current assets.
Bank Loans
In May
2020, the Company applied for and received a $122,400 bank loan
pursuant to the Paycheck Protection Program (“PPP”)
established pursuant to the Coronavirus Aid, Relief, and Economic
Security Act, as administered by the U.S. Small Business
Administration (“SBA”).
The
repayment of the PPP loan is forgivable by the SBA, if certain
conditions are met, namely the PPP loan must be used primarily for
payroll during the 24-week period following receipt of the loan,
without significant staffing reductions during that period. The
Company applied for and received the PPP loan forgiveness on
December 11, 2020, at which time the PPP loan amount was recorded
as other income on the Company’s consolidated statements of
operations and comprehensive loss.
Concentration of Credit Risk
Financial
instruments that potentially subject the Company to concentration
of credit risk consist of cash and cash equivalents. The Company
maintains cash and cash equivalents at two reputable financial
institutions. As of December 31, 2020, the balance at one financial
institution was in excess of the $250,000 Federal Deposit Insurance
Corporation (“FDIC”) insurable limit. The Company has
not experienced any losses on its deposits since inception and
management believes the Company is not exposed to significant risks
with respect to these financial institutions.
F-8
MONOPAR THERAPEUTICS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2020
Fair Value of Financial Instruments
For
financial instruments consisting of cash and cash equivalents,
accounts payable, accrued expenses, other current liabilities and
bank loans, the carrying amounts are reasonable estimates of fair
value due to their relatively short maturities.
The
Company adopted ASC 820, Fair
Value Measurements and Disclosures, as amended, which
addresses the measurement of the fair value of financial assets and
financial liabilities. Under this standard, fair value is defined
as the price that would be received to sell an asset or paid to
transfer a liability (i.e., the “exit price”) in an
orderly transaction between market participants at the measurement
date.
The
standard establishes a hierarchy for inputs used in measuring fair
value that maximizes the use of observable inputs and minimizes the
use of unobservable inputs by requiring that the most observable
inputs be used when available. Observable inputs reflect
assumptions market participants would use in pricing an asset or
liability based on market data obtained from independent sources.
Unobservable inputs reflect a reporting entity’s pricing an
asset or liability developed based on the best information
available under the circumstances. The fair value hierarchy
consists of the following three levels:
Level 1 - instrument valuations are
obtained from real-time quotes for transactions in active exchange
markets involving identical assets.
Level 2 - instrument valuations are
obtained from readily available pricing sources for comparable
instruments.
Level 3 - instrument valuations are
obtained without observable market values and require a high-level
of judgment to determine the fair value.
Determining which
category an asset or liability falls within the hierarchy requires
significant judgment. The Company evaluates its hierarchy
disclosures each reporting period. There were no transfers between
Level 1, 2 or 3 of the fair value hierarchy during the years ended
December 31, 2020 and 2019. The following table presents the assets
and liabilities recorded that are reported at fair value on our
consolidated balance sheets on a recurring basis. No values were
recorded in Level 2 or Level 3 at December 31, 2020 and
2019.
Assets and Liabilities Measured at Fair Value on a Recurring
Basis
December
31, 2020
|
|
|
Assets
|
|
|
Cash
equivalents(1)
|
$16,605,682
|
$16,605,682
|
Total
|
$16,605,682
|
$16,605,682
|
December
31, 2019
|
|
|
Assets
|
|
|
Cash
equivalents(1)
|
$13,083,536
|
$13,083,536
|
Total
|
$13,083,536
|
$13,083,536
|
(1) Cash
equivalents represent the fair value of the Company’s
investment in a money market account.
F-9
MONOPAR
THERAPEUTICS INC.
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
December
31, 2020
Net Loss per Share
Net
loss per share for the years ended December 31, 2020 and 2019 is
calculated by dividing net loss by the weighted-average shares of
common stock outstanding during the period. Diluted net loss per
share for the years ended December 31, 2020 and 2019 is calculated
by dividing net loss by the weighted-average shares of the sum of
a) weighted average common stock outstanding (10,958,256 shares for
the year ended December 31, 2020; 9,321,195 shares for the year
ended December 31, 2019) and b) potentially dilutive shares of
common stock (such as stock options and restricted stock units)
outstanding during the period. As of December 31, 2020 and 2019,
potentially dilutive securities included stock-based awards to
purchase up to 1,298,643 and 1,087,463 shares of the
Company’s common stock, respectively. For the years ended
December 31, 2020 and 2019, potentially dilutive securities are
excluded from the computation of fully diluted net loss per share
as their effect is anti-dilutive.
Research and Development Expenses
Research and
development (“R&D”) costs are expensed as incurred.
Major components of R&D expenses include salaries and benefits
paid to the Company’s R&D staff, fees paid to consultants
and to the entities that conduct certain R&D activities on the
Company’s behalf and materials and supplies which are used in
R&D activities during the reporting period.
The
Company accrues and expenses the costs for clinical trial
activities performed by third parties based upon estimates of the
percentage of work completed over the life of the individual study
in accordance with agreements established with contract research
organizations, service providers, and clinical trial sites. The
Company determines the estimates through discussions with internal
clinical personnel and external service providers as to progress or
stage of completion of trials or services and the agreed upon fee
to be paid for such services. Costs of setting up clinical trial
sites for participation in the trials are expensed immediately as
R&D expenses. Clinical trial site costs related to patient
screening and enrollment are accrued as patients are
screened/entered into the trial. In December 2020, the Company
activated clinical trial sites for its VOICE clinical trial but no
patients had been dosed; prior to that, no clinical trial site
costs had been incurred.
Collaborative Agreements
The
Company and its collaborative partners are active participants in
collaborative agreements and all parties would be exposed to
significant risks and rewards depending on the technical and
commercial success of the activities. Contractual payments to the
other parties in collaboration agreements and costs incurred by the
Company when the Company is deemed to be the principal participant
for a given transaction are recognized on a gross basis in R&D
expenses. Royalties and license payments are recorded as
earned.
During
the years ended December 31, 2020 and 2019, no milestones were met
and no royalties were earned, therefore, the Company did not pay or
accrue/expense any license or royalty payments.
Licensing Agreements
The
Company has various agreements licensing technology utilized in the
development of its product or technology programs. The licenses
contain success milestone obligations and royalties on future
sales. During the years ended December 31, 2020 and 2019, no
milestones were met and no royalties were earned, therefore, the
Company did not pay or accrue/expense any license or royalty
payments under any of its license agreements.
Patent Costs
The
Company expenses costs relating to issued patents and patent
applications, including costs relating to legal, renewal and
application fees, as a component of general and administrative
expenses in its consolidated statements of operations and
comprehensive loss.
F-10
MONOPAR THERAPEUTICS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2020
Income Taxes
On
December 16, 2015, the Company began using an asset and liability
approach for accounting for deferred income taxes, which requires
recognition of deferred income tax assets and liabilities for the
expected future tax consequences of events that have been
recognized in its financial statements but have not been reflected
in its taxable income. Estimates and judgments are required in the
calculation of certain tax liabilities and in the determination of
the recoverability of certain deferred income tax assets, which
arise from temporary differences and carryforwards. Deferred income
tax assets and liabilities are measured using the
currently enacted tax rates that apply to taxable income in
effect for the years in which those tax assets and liabilities are
expected to be realized or settled.
The
Company regularly assesses the likelihood that its deferred income
tax assets will be realized from recoverable income taxes or
recovered from future taxable income. To the extent that the
Company believes any amounts are not “more likely than
not” to be realized, the Company records a valuation
allowance to reduce the deferred income tax assets. In the event
the Company determines that all or part of the net deferred tax
assets are not realizable in the future, an adjustment to the
valuation allowance would be charged to earnings in the period such
determination is made. Similarly, if the Company subsequently
determines deferred income tax assets that were previously
determined to be unrealizable are now realizable, the respective
valuation allowance would be reversed, resulting in an adjustment
to earnings in the period such determination is made.
Internal
Revenue Code Sections 382 and 383 (“Sections 382 and
383”) limit the use of net operating loss (“NOL”)
carryforwards and R&D credits, after an ownership change. To
date, the Company has not conducted a Section 382 or 383 study,
however, because the Company will continue to raise significant
amounts of equity in the coming years, the Company expects that
Sections 382 and 383 will limit the Company’s usage of NOLs
and R&D credits in the future.
ASC 740, Income
Taxes, requires that the tax
benefit of net operating losses, temporary differences, and credit
carryforwards be recorded as an asset to the extent that management
assesses that realization is "more likely than not." Realization of
the future tax benefits is dependent on the Company's ability to
generate sufficient taxable income within the carryforward period.
The Company has reviewed the positive and negative evidence
relating to the realizability of the deferred tax assets and has
concluded that the deferred tax assets are not “more likely
than not” to be realized. As a result, the Company recorded a
full valuation allowance as of December 31, 2020 and 2019. U.S.
Federal R&D tax credits from 2016 to 2019 were utilized to
reduce payroll taxes in future periods and were recorded as other
current assets for amounts anticipated to be received within 12
months and other non-current assets for amounts anticipated to be
received beyond 12 months on the Company’s consolidated
balance sheets. The Company intends to maintain the valuation
allowance until sufficient evidence exists to support its reversal.
The Company regularly reviews its tax positions. For a tax benefit
to be recognized, the related tax position must be “more
likely than not” to be sustained upon examination. Any amount
recognized is generally the largest benefit that is “more
likely than not” to be realized upon settlement. The
Company’s policy is to recognize interest and penalties
related to income tax matters as an income tax expense. For the
years ended December 31, 2020 and 2019, the Company did not have
any interest or penalties associated with unrecognized tax
benefits.
The
Company is subject to U.S. Federal, Illinois and California income
taxes. In addition, the Company is subject to local tax laws of
France and Australia. Tax regulations within each jurisdiction are
subject to the interpretation of the related tax laws and
regulations and require significant judgment to apply. The Company
was incorporated on December 16, 2015 and is subject to U.S.
Federal, state and local tax examinations by tax authorities for
the tax years 2015 through 2020. The Company does not anticipate
significant changes to its current uncertain tax positions through
December 31, 2020. The Company plans on filing its U.S. Federal and
state tax returns for the year ended December 31, 2020 prior to the
extended filing deadlines in all jurisdictions.
F-11
MONOPAR
THERAPEUTICS INC.
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
December
31, 2020
Stock-Based Compensation
The
Company accounts for stock-based compensation arrangements with
employees, non-employee directors and consultants using a fair
value method, which requires the recognition of compensation
expense for costs related to all stock-based awards, including
stock option and restricted stock unit (“RSU”) grants.
The fair value method requires the Company to estimate the fair
value of stock-based payment awards on the date of grant using an
option pricing model or the closing stock price on the date of
grant in the case of RSUs.
Stock-based
compensation expense for awards granted to employees, non-employee
directors and consultants are based on the fair value of the
underlying instrument calculated using the Black-Scholes
option-pricing model on the date of grant for stock options and
using the closing stock price on the date of grant for RSUs and
recognized as expense on a straight-line basis over the requisite
service period, which is the vesting period. Determining the appropriate fair
value model and related assumptions requires judgment, including
estimating the future stock price volatility, forfeiture rates and
expected terms. The expected volatility rates are estimated based
on the actual volatility of comparable public companies over recent
historical periods of the same length as the expected term. The
Company selected these companies based on reasonably comparable
characteristics, including market capitalization, stage of
corporate development and with historical share price information
sufficient to meet the expected term (life) of the stock-based
awards. The expected term for options granted to date is estimated
using the simplified method. Forfeitures are estimated at the time
of grant and revised, if necessary, in subsequent periods if actual
forfeitures differ from those estimates. The Company has not paid
dividends and does not anticipate paying a cash dividend in the
future vesting period and, accordingly, uses an expected dividend
yield of zero. The risk-free interest rate is based on the rate of
U.S. Treasury securities with maturities consistent with the
estimated expected term of the awards. Prior to January 1, 2019,
the measurement of consultant stock-based compensation was subject
to periodic adjustments as the underlying equity instruments vested
and was recognized as an expense over the period in which services
were rendered.
Recent Accounting Pronouncements
In
August 2018, the FASB issued Accounting Standards Updates
(“ASU”) No. 2018-13,
Fair Value Measurement (Topic 820): Disclosure
Framework—Changes to the Disclosure Requirements for Fair
Value Measurement. The ASU modifies, and in certain cases
eliminates, the disclosure requirements on fair value measurements
in Topic 820. The amendments in ASU No. 2018-13 are effective for
all entities for fiscal years, and interim periods within those
fiscal years, beginning after December 15, 2019. The Company
adopted this ASU and has determined that it had no material effect
on its consolidated financial statements and footnote disclosures
for the year ended December 31, 2020.
F-12
MONOPAR
THERAPEUTICS INC.
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
December
31, 2020
Note
3 - Capital Stock
Holders
of the common stock are entitled to receive such dividends as may
be declared by the Board of Directors out of funds legally
available therefor. Upon dissolution and liquidation of the
Company, holders of the common stock are entitled to a ratable
share of the net assets of the Company remaining after payments to
creditors of the Company. The holders of shares of common stock are
entitled to one vote per share for the election of each director nominated to the board and one vote
per share on all other matters submitted to a vote of
stockholders.
The
Company’s amended and restated certificate of incorporation
authorizes the Company to issue 40,000,000 shares of common stock
with a par value of $0.001 per share.
Sales of Common Stock
On
December 23, 2019, the Company closed the initial public offering
of its common stock. The Company sold 1,277,778 shares of its
common stock at a public offering price of $8.00 per share pursuant
to an underwriting agreement with JonesTrading Institutional
Services, LLC (“JonesTrading”). The Company paid
JonesTrading a customary commission and reimbursement of a portion
of their legal fees incurred in connection with the offering, which
in aggregate totaled approximately $0.7 million. Net proceeds on a
cash basis were approximately $9.4 million, after deducting
underwriting discounts and accrued, unpaid offering expenses. The
Company had incurred and paid prior to the initial public offering
approximately $0.6 million of fundraising expenses which were
capitalized on the Company’s balance sheet as deferred
offering costs and were reclassified as offering expenses (a
contra-equity balance sheet account) upon the closing of the
Company’s initial public offering. After deducting previously paid offering expenses
of approximately $0.6 million, the accrual basis net proceeds were
$8.8 million as reported on the Company’s consolidated
statement of stockholders’ equity as of December 31, 2019
included in the Company’s Annual Report on Form 10-K filed
with the SEC on March 27, 2020. The Company’s common stock
began trading on the Nasdaq Capital Market on December 19,
2019.
On
January 13, 2020, the Company entered into a Capital on
Demand™ Sales Agreement with JonesTrading, as sales agent,
pursuant to which Monopar may offer and sell (at its discretion),
from time to time, through or to JonesTrading shares of
Monopar’s common stock, having an aggregate offering price of
up to $19.7 million. Pursuant to this agreement, as of December 31,
2020, the Company sold 860,677 shares of its common stock at an
average gross price per share of $9.79 for net proceeds of
$8,175,291, after commissions and fees of $253,035.
As of
December 31, 2020, the Company had 11,453,465 shares of common
stock issued and outstanding.
F-13
MONOPAR THERAPEUTICS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2020
Note
4 - Stock Incentive Plan
In
April 2016, the Company’s Board of Directors and stockholders
representing a majority of the Company’s outstanding stock at
that time, approved the Monopar Therapeutics Inc. 2016 Stock
Incentive Plan, as amended (the “Plan”), allowing the
Company to grant up to an aggregate 700,000 shares of stock-based
awards in the form of stock options, restricted stock units, stock
appreciation rights and other stock-based awards to employees,
non-employee directors and consultants. In October 2017, the
Company’s Board of Directors voted to increase the stock
award pool to 1,600,000 shares of common stock, which subsequently
was approved by the Company’s stockholders. In April 2020,
the Company’s Board of Directors voted to increase the stock
award pool to 3,100,000 (and increase of 1,500,000 shares of common
stock), which was approved by the Company’s stockholders in
June 2020.
During
the year ended December 31, 2020, the Company’s Plan
Administrator Committee (with regards to non-officer employees) and
the Company’s Compensation Committee, as ratified by the
Board of Directors (in the case of executive officers and
non-employee directors) granted to executive officers, non-officer
employees and non-employee directors aggregate stock options for
the purchase of 174,357 shares of the Company’s common stock
with exercise prices ranging from $4.93 to $17.75 which vest from
one year to four years. All stock option grants have a 10 year
term. In addition, an aggregate 45,722 restricted stock units were
granted to executive officers, non-officer employees and
non-employee directors which vest over one to four
years.
Under
the Plan, the per share exercise price for the shares to be issued
upon exercise of an option shall be determined by the Plan
Administrator, except that the per share exercise price shall be no
less than 100% of the fair market value per share on the grant
date. Fair market value is established by the Company’s Board
of Directors, using third party valuation reports, recent private
financings or the Company’s closing prices on Nasdaq since
the Company’s listing on December 19, 2019. Stock options
generally expire after 10 years.
Stock
option activity under the Plan was as follows:
|
|
|
Number
of Shares Subject to Options
|
Weighted-Average
Exercise Price
|
Balances
at January 1, 2019
|
1,105,896
|
$2.99
|
Exercised
|
(18,433)
|
5.97
|
Balances
at December 31, 2019
|
1,087,463
|
2.94
|
Granted(1)
|
174,357
|
14.13
|
Forfeited(2)
|
(3,243)
|
8.47
|
Balances
at December 31, 2020
|
1,258,577
|
4.47
|
(1)
174,357 options vest as follows: options to purchase 145,648 shares
of the Company’s common stock vest 6/48ths on the six-month
anniversary of grant date and 1/48th per month thereafter; options
to purchase 22,584 shares of the Company’s common stock vest
quarterly over one year; and options to purchase 6,125 shares of
the Company’s common stock vest monthly over one
year.
(2)
Forfeited options resulted from an employee termination.
|
F-14
MONOPAR THERAPEUTICS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2020
A
summary of options outstanding as of December 31, 2020 is shown
below:
|
Number
of Shares Subject to Options Outstanding
|
Weighted-Average
Remaining Contractual Term in Years
|
Number
of Shares Subject to Options Fully Vested and
Exercisable
|
Weighted-Average
Remaining Contractual Term in Years
|
$0.001-$5.00
|
557,420
|
5.72
years
|
543,940
|
5.70
years
|
$5.01-$10.00
|
538,956
|
7.50
years
|
373,373
|
7.41
years
|
$10.01-$15.00
|
147,076
|
9.07
years
|
64,403
|
9.04
years
|
$15.01-$20.00
|
15,125
|
9.05
years
|
8,188
|
9.07
years
|
|
1,258,577
|
|
989,904
|
|
Restricted stock
unit activity under the Plan was as follows:
|
|
Weighted-Average
Grant Date Fair Value per Unit
|
Unvested
balance at January 1, 2020
|
—
|
$—
|
Granted
|
45,722
|
12.93
|
Vested
|
(5,156)
|
12.93
|
Forfeited
|
(500)
|
12.93
|
Unvested
Balance at December 31, 2020
|
40,066
|
12.93
|
During
the years ended December 31, 2020 and 2019, the Company recognized
$845,367 and $653,997 of employee and non-employee director
stock-based compensation expense as general and administrative
expenses, respectively, and $405,271 and $274,345 as research and
development expenses, respectively. The stock-based compensation
expense is allocated on a departmental basis, based on the
classification of the stock-based award holder. No income tax
benefits have been recognized in the consolidated statements of
operations and comprehensive loss for stock-based compensation
arrangements.
The
Company recognizes as an expense the fair value of options granted
to persons (currently consultants) who are neither employees nor
non-employee directors. Stock-based compensation expense for
consultants which were recorded as research and development expense
for the years ended December 31, 2020 and 2019 was $70,251 and
$82,829, respectively.
The
fair value of options granted from inception to December 31, 2020
was based on the Black-Scholes option-pricing model assuming the
following factors: 4.7 to 6.2 years expected term, 55% to 85%
volatility, 0.4% to 2.9% risk free interest rate and zero
dividends. The expected term for options granted to date was
estimated using the simplified method. There were 174,357 stock
option granted during the year ended December 31, 2020. There were
no stock option grants during the year ended December 31, 2019. For
the year ended December 31, 2020, the weighted-average grant date
fair value was $9.03 per share. For the years ended December 31,
2020 and 2019 the fair value of shares vested was $1.2 million and
$0.8 million, respectively. At December 31, 2020, the aggregate
intrinsic value of outstanding stock options was approximately $3.5
million of which approximately $3.4 million was vested and
approximately $0.1 million is expected to vest (representing
options to purchase 268,673 shares of the Company’s common
stock), and the weighted-average exercise price in aggregate was
$4.47 which includes $3.34 for fully vested stock options and $8.62
for stock options expected to vest. At December 31, 2020,
unamortized unvested balance of stock-based compensation was $1.8
million, to be amortized over 2.6 years.
F-15
MONOPAR
THERAPEUTICS INC.
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
December
31, 2020
Note
5 - Related Party Transactions
In
December 2019, Tactic Pharma, LLC (“Tactic Pharma”),
purchased 125,000 shares of Monopar’s common stock in
Monopar’s initial public offering at $8 per share for an
aggregate $1 million, at which time its beneficial ownership in
Monopar was 41.6%. As of December 31, 2020, Tactic Pharma
beneficially owned 38.4% of Monopar’s common stock
and
during the year ended December 31, 2020, there were no transactions
between Tactic Pharma and Monopar.
During
the years ended December 31, 2020 and 2019, the Company was
governed by six members of its Board of Directors (“Related
Parties”). The Related Parties are also current common
stockholders (owning approximately an aggregate 3% of the common
stock outstanding as of December 31, 2020). None of the Related
Parties received compensation other than market-rate
salary, market-rate
stock-based compensation and benefits and performance-based bonus
or in the case of non-employee directors, market-rate Board fees
and market-rate stock-based compensation. Three of the Board members are also
Managing Members of Tactic Pharma as of December 31, 2020. Chandler
D. Robinson is the Company’s Co-Founder, Chief Executive
Officer, common stockholder, Managing Member of Tactic Pharma,
former Manager of the predecessor LLC, Manager of CDR Pharma, LLC
and Board member of Monopar as a C Corporation. Andrew P. Mazar is
the Company’s Co-Founder, Executive Vice President of
Research and Development, Chief Scientific Officer, common
stockholder, Managing Member of Tactic Pharma, former Manager of
the predecessor LLC and Board member of Monopar as a C Corporation.
Michael Brown is a Managing Member of Tactic Pharma (as of February
1, 2019 with no voting power as it relates to Monopar), a previous
managing member of Monopar as an LLC, common stockholder and Board
member of Monopar as a C Corporation. Christopher M. Starr is the
Company’s Co-Founder, Executive Chairman of the Board of
Monopar as a C Corporation, common stockholder, former Manager of
the predecessor LLC.
During
the quarter ended March 31, 2019, the Company paid or accrued
approximately $33,725 in legal fees to a large national law firm,
in which a family member of the Company’s Chief Executive
Officer was a law partner through January 31, 2019. The family
member personally billed a de
minimis amount of time on the Company’s legal
engagement with the law firm in this period.
Note
6 – Income Taxes
ASC 740
requires that the tax benefit of net operating losses, temporary
differences, and credit carryforwards be recorded as an asset to
the extent that management assesses that realization is "more
likely than not." Realization of the future tax benefits is
dependent on the Company's ability to generate sufficient taxable
income within the carryforward period. The Company has reviewed the
positive and negative evidence relating to the realizability of the
deferred tax assets and has concluded that the deferred tax assets
are not “more likely than not” to be realized. The
valuation allowance increased by approximately $2,652,000 and
$877,000 during the years ended December 31, 2020 and 2019,
respectively.
The
provision for income taxes for December 31, 2020 and 2019 consists
of the following:
|
|
|
|
|
Current:
|
|
|
Federal
|
$—
|
$—
|
State
|
—
|
—
|
Foreign
|
18,361
|
—
|
Total
current:
|
18,361
|
—
|
Deferred:
|
|
|
Federal
|
—
|
—
|
State
|
—
|
—
|
Foreign
|
—
|
—
|
Total
deferred:
|
—
|
—
|
Total
provision*
|
$18,361
|
$—
|
*Total
provision of foreign taxes is recorded in general and
administrative expenses on the Company’s consolidated
statements of operations and comprehensive loss as it is not
considered a material amount.
|
The
difference between the effective tax rate and the U.S. federal tax
rate is as follows:
|
|
Federal
income tax
|
21.00
|
State
income taxes, less federal benefit
|
21.18
|
Tax
credits
|
2.73
|
Permanent
differences
|
(1.56)
|
Change
in valuation allowances
|
(42.20)
|
Other
|
(1.45)
|
Effective
tax rate benefit (expense)
|
(0.30)
|
F-16
MONOPAR
THERAPEUTICS INC.
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
December
31, 2020
Deferred tax assets
and liabilities consist of the following:
|
|
|
|
|
Deferred tax assets:
|
|
|
Net operating
loss carryforwards
|
$1,951,673
|
$741,547
|
Tax credits
carryforwards
|
228,922
|
80,162
|
Stock-based
compensation
|
611,903
|
308,171
|
Intangible
asset basis differences
|
2,427,668
|
1,438,051
|
Gross deferred
tax assets
|
5,220,166
|
2,567,931
|
Valuation
allowance
|
(5,220,166)
|
(2,567,931)
|
Net deferred
tax assets
|
$—
|
$—
|
As of
December 31, 2020, Company had total federal net operating loss
carryforwards of approximately $6,835,000, which will begin to
expire in 2035. Losses generated after 2017 will be carried forward
indefinitely. At December 31, 2020, the Company had state net
operating loss carryforwards of approximately $6,879,000 which will
begin to expire in 2027.
As of December 31,
2020, the Company had federal and state R&D credits of $138,000
and $116,000, respectively. The federal credits expire
beginning after the year 2035 and the state credits expire
beginning after the year 2020. Federal R&D credits from
2016 to 2019 were used to offset future payroll taxes.
The Tax
Reform Act of 1986 limits the use of net operating carryforwards
and R&D credits in certain situations where changes occur in
the stock ownership of a company. In the event the Company has had
a change in ownership, utilization of the carryforwards and R&D
credits could be limited. The Company has not performed a net
operating loss or R&D credit utilization study to
date.
On
January 1, 2015, the Company adopted the provisions of ASC 740-10,
"Accounting for Uncertainty in
Income Taxes." ASC 740-10 prescribes a comprehensive model
for the recognition, measurement, presentation and disclosure in
financial statements of any uncertain tax positions that have been
taken or are expected to be taken on a tax return. The cumulative
effect of adopting ASC 740-10 resulted in no adjustment to retained
earnings as of December 31, 2020. It is Company's policy to include
penalties and interest expense related to income taxes as an income tax expense.
A
reconciliation of the beginning and ending amount of unrecognized
tax benefits is as follows:
|
|
|
Beginning uncertain tax
benefits
|
$—
|
$—
|
Current year -
increases
|
44,786
|
|
Prior year -
increases
|
18,476
|
|
Ending uncertain tax
benefits
|
$63,262
|
$—
|
Included in the
balance of uncertain tax benefits at December 31, 2020 are
$63,282 of tax benefits that, if recognized, would not impact the
effective tax rate as it would be offset by the reversal of related
deferred tax assets which are subject to a full valuation
allowance. The Company anticipates that no material amounts of
unrecognized tax benefits will be settled within 12 months of the
reporting date. As of December 31, 2020, the Company had no accrued
interest or penalties recorded related to uncertain tax
positions.
The
Company files U.S. federal, California and Illinois state tax
returns. Company is subject to California state minimum franchise
taxes. All tax returns will remain open for examination by the
federal and state taxing authorities for three and four years,
respectively, from the date of utilization of any net operating
loss carryforwards or R&D credits. In addition, due to the
operations in certain foreign countries, the Company became subject
to local tax laws of such countries. Nonetheless, as of December
31, 2020, due to the insignificant expenditures in such countries,
there was no material tax effect to the Company’s 2020
consolidated financial statements.
On
March 27, 2020, the Coronavirus Aid, Relief and Economic Security
(“CARES”) Act was enacted and signed into law and GAAP
requires recognition of the tax effects of new legislation during
the reporting period that includes the enactment date. The CARES
Act includes changes to the tax provisions that benefits business
entities, and makes certain technical corrections to the 2017 Tax
Cuts and Jobs Act. The tax relief measures for businesses in the
CARES Act include a five-year net operating loss carryback for
certain net operating losses, suspension of the annual deduction
limitation of 80% of taxable income for certain net operating
losses, changes in the deductibility of interest, acceleration of
alternative minimum tax credit refunds, payroll tax relief, and a
technical correction to allow accelerated deductions for qualified
improvement property. The CARES Act also provides other non-tax
benefits to assist those impacted by the pandemic. The Company
evaluated the impact of the CARES Act and determined that there is
no material impact to the income tax provision for the year ended
December 31, 2020.
The
Consolidated Appropriation Act (“CAA”) of 2021 was
signed into law by the President on December 27, 2020, containing
the most recent COVID-19 relief provisions as well as many tax
provisions including renewals of several popular tax extenders. The
Company evaluated the impact of the CAA and determined that there
is no material impact to the income tax provision for the year
ended December 31, 2020.
F-17
MONOPAR THERAPEUTICS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December
31, 2020
Note
7 – Commitments and Contingencies
License,
Development and Collaboration Agreements
Onxeo S.A.
In June
2016, the Company executed an option and license agreement with
Onxeo S.A. (“Onxeo”), a public French company, which
gave Monopar the exclusive option to license (on a world-wide
exclusive basis) Validive to pursue treating severe oral mucositis
in patients undergoing chemoradiation treatment for head and neck
cancers. The pre-negotiated Onxeo license agreement for Validive as
part of the option agreement includes clinical, regulatory,
developmental and sales milestones that could reach up to $108
million if the Company achieves all milestones, and escalating
royalties on net sales from 5% to 10%. On September 8, 2017, the
Company exercised the license option, and therefore paid Onxeo the
$1 million fee under the option and license agreement.
Under
the agreement, the Company is required to pay royalties to Onxeo on
a product-by-product and country-by-country basis until the later
of (1) the date when a given product is no longer within the scope
of a patent claim in the country of sale or manufacture, (2) the
expiry of any extended exclusivity period in the relevant country
(such as orphan drug exclusivity, pediatric exclusivity, new
chemical entity exclusivity, or other exclusivity granted beyond
the expiry of the relevant patent), or (3) a specific time period
after the first commercial sale of the product in such country. In
most countries, including the U.S., the patent term is generally 20
years from the earliest claimed filing date of a non-provisional
patent application in the applicable country, not taking into
consideration any potential patent term adjustment that may be
filed in the future or any regulatory extensions that may be
obtained. The royalty termination provision pursuant to (3)
described above is shorter than 20 years and is the least likely
cause of termination of royalty payments.
The
Onxeo license agreement does not have a pre-determined term, but
expires on a product-by-product and country-by-country basis; that
is, the agreement expires with respect to a given product in a
given country whenever the Company’s royalty payment
obligations with respect to such product have expired. The
agreement may also be terminated early for cause if either the
Company or Onxeo materially breach the agreement, or if either the
Company or Onxeo become insolvent. The Company may also choose to
terminate the agreement, either in its entirety or as to a certain
product and a certain country, by providing Onxeo with advance
notice.
The
Company is internally developing Validive and has activated
clinical sites for its VOICE clinical trial, which, if successful,
may allow the Company to apply for marketing approval within the
next several years. The Company will need to raise significant
funds or enter into a collaboration partnership to support the
further development, including potential commercialization of
Validive. As of December 31, 2020, the Company had not reached any
of the pre-specified milestones and has not been required to pay
Onxeo any funds under this license agreement other than the $1
million one-time license fee.
Grupo Español de Investigación en Sarcomas
(“GEIS”)
In
June 2019, the Company executed a clinical collaboration agreement
with GEIS for the development of camsirubicin in patients with
advanced soft tissue sarcoma (“ASTS”). GEIS is the
study sponsor and will lead a multi-country, randomized, open-label
Phase 2 clinical trial to evaluate camsirubicin head-to-head
against the current first-line treatment for ASTS, doxorubicin.
Enrollment of the trial is anticipated to begin in the second
quarter of 2021, and will include approximately 170 ASTS patients.
The Company will provide study drug and supplemental financial
support for the clinical trial averaging approximately $2 million
to $3 million per year. During the year ended December 31, 2020,
the Company incurred $1.4 million in expenses under the GEIS
agreement and other clinical-related expenses including clinical
material manufacturing and database management expenses in support
of GEIS’s Phase 2 camsirubicin clinical trial. During the
year ended December 31, 2019, the Company incurred $0.2 million in
expenses related to the GEIS collaboration. The Company can
terminate the agreement by providing GEIS with advance notice, and
without affecting the Company’s rights and ownership to any
intellectual property or clinical data.
XOMA
Ltd.
The
intellectual property rights contributed by Tactic Pharma to the
Company included the non-exclusive license agreement with XOMA Ltd.
for the humanization technology used in the development of
MNPR-101. Pursuant to such license agreement, the Company is
obligated to pay XOMA Ltd. clinical, regulatory and sales
milestones for MNPR-101 that could reach up to $14.925 million if
the Company achieves all milestones. The agreement does not require
the payment of sales royalties. There can be no assurance that the
Company will reach any milestones under the XOMA agreement. As of
December 31, 2020, the Company had not reached any milestones and
has not been required to pay XOMA Ltd. any funds under this license
agreement.
Operating Leases
Commencing
January 1, 2018, the Company entered into a lease for its executive
headquarters at 1000 Skokie Blvd., Suite 350, Wilmette, Illinois.
The lease term was January 1, 2018 through December 31, 2019, at
which time the lease was on a month-to-month basis. In addition,
effective February 2019, the Company leased additional office space
in the same building on a month-to-month basis.
During
the years ended December 31, 2020 and 2019, the Company recognized
operating lease expenses of $55,236 and $51,888,
respectively.
F-18
MONOPAR THERAPEUTICS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December
31, 2020
Legal Contingencies
The
Company may be subject to claims and assessments from time to time
in the ordinary course of business. No claims have been asserted to
date.
Indemnification
In
the normal course of business, the Company enters into contracts
and agreements that contain a variety of representations and
warranties and provide for general indemnification. The
Company’s exposure under these agreements is unknown because
it involves claims that may be made against the Company in the
future, but that have not yet been made. To date, the Company has
not paid any claims nor been required to defend any action related
to its indemnification obligations. However, the Company may record
charges in the future as a result of future claims against these
indemnification obligations.
In
accordance with its second amended and restated certificate of
incorporation, amended and restated bylaws and the indemnification
agreements entered into with each officer and non-employee
director, the Company has indemnification obligations to its
officers and non-employee directors for certain events or
occurrences, subject to certain limits, while they are serving at
the Company’s request in such capacities. There have been no
claims to date.
Note 8 – Subsequent Events
Pursuant to the
Capital on DemandTM Sales Agreement
with JonesTrading, from January 1 through February 11, 2021, the
Company sold 1,104,047 shares of its common stock at an average
gross price of $10.20 per share for net proceeds of $10.9 million,
after fees and commissions of $0.3 million.
From
January 1 through February 15, 2021, the Company's Plan
Administrator Committee (with regards to non-officer employees) and
the Company's Compensation Committee, as ratified by the full Board
(in the case of officers and non-employee directors) granted an
aggregate of 183,976 stock options with exercise prices ranging
from $6.12 to $9.67 for an aggregate grant date fair value of
approximately $0.9 million which will be expensed over the vesting
period. All stock options have a 10 year term and vest from 1 to 4
years. The Company also granted an aggregate 124,374 restricted
stock units on January 26, 2021 with an aggregate value of
approximately $0.8 million which vest from 1 to 4
years.
F-19