Artelo Biosciences, Inc. (ARTL) 2024年年度報告「NASDAQ」.pdf

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1、 UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington,D.C.20549 FORM 10-K(Mark One)ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended December 31,2024 ORTRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1

2、934 For the transition period from _ to _ Commission file number 001-38951 Artelo Biosciences,Inc.(Exact name of registrant as specified in its charter)Nevada 33-1220924(State or other jurisdiction ofincorporation or organization)(I.R.S.EmployerIdentification No.)505 Lomas Santa Fe,Suite 160,Solana

3、Beach,CA USA 92075(Address of principal executive offices)(Zip Code)Registrants telephone number,including area code:(858)925-7049 Securities registered pursuant to Section 12(b)of the Act:Title of each classTrading Symbol(s)Name of each exchange on which registeredCommon Stock,$0.001 par value per

4、shareARTLThe Nasdaq Stock Market,LLC 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 the Securities Act.Yes No Indicate by check mark if the registrant is not required to file reports pursu

5、ant 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 12months(or for such shorter period that the registrant was required to fil

6、e 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 pre

7、ceding 12 months(or for such shorter period that the registrant was required to submit 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 an emerging growthcompany.See the definitio

8、ns of“large accelerated filer,”“accelerated filer,”“smaller reporting company,”and“emerging growth company”in Rule 12b-2 of the Exchange Act.Large accelerated filerAccelerated filerNon-accelerated FilerSmaller reporting company Emerging Growth Company If an emerging growth company,indicate by check

9、mark if the registrant has elected not to use the extended transition period for complying with any new or revised financialaccounting 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

10、s assessment of the effectiveness of its internal control over financialreporting 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.If securities are registered pursuant to Section 12(b)of the Act,indicate

11、by check mark whether the financial statements of the registrant included in the filing reflect thecorrection of an error to previously issued financial statements.Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based comp

12、ensation received by any of theregistrants executive officers during the relevant recovery period pursuant to 240.10D-1(b).Indicate by check mark whether the registrant is a shell company(as defined in Rule 12b-2 of the Act).Yes No The aggregate market value of Common Stock held by non-affiliates of

13、 the Registrant on June 30,2024,was$4,289,305 based on a$1.34 average bid and asked price of suchcommon equity,as of the last business day of the Registrants most recently completed second fiscal quarter.The Registrant had 3,281,032 shares of common stock issued and outstanding as of February 27,202

14、5.TABLE OF CONTENTS PART I ITEM 1.BUSINESS 5 ITEM 1A.RISK FACTORS 20 ITEM 1B.UNRESOLVED STAFF COMMENTS 50 ITEM 1C.CYBERSECURITY 50 ITEM 2.PROPERTIES 51 ITEM 3.LEGAL PROCEEDINGS 51 ITEM 4.MINE SAFETY DISCLOSURES 51 PART II ITEM 5.MARKET FOR REGISTRANTS COMMON EQUITY,RELATED STOCKHOLDER MATTERS AND IS

15、SUER PURCHASES OFEQUITY SECURITIES 52 ITEM 6.RESERVED 53 ITEM 7.MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 53 ITEM 7A.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 59 ITEM 8.FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA F-1 ITEM 9.CHANGES IN AND D

16、ISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE 60 ITEM 9A.CONTROLS AND PROCEDURES 60 ITEM 9B.OTHER INFORMATION 60 ITEM 9C.DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS 60 PART III ITEM 10.DIRECTORS,EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE 61 ITEM 11.EXE

17、CUTIVE COMPENSATION 70 ITEM 12.SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDERMATTERS 77 ITEM 13.CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS,AND DIRECTOR INDEPENDENCE 80 ITEM 14.PRINCIPAL ACCOUNTANT FEES AND SERVICES 81 PART IV ITEM 15.EXHIBITS AND FINANCIAL

18、 STATEMENT SCHEDULES 82 ITEM 16.FORM 10-K SUMMARY 82 SIGNATURES 83 2Table of contents FORWARD-LOOKING STATEMENTS This Annual Report on Form 10-K contains forward-looking statements that are based on managements beliefs and assumptions and on information currently available tomanagement.Some of the s

19、tatements in the sections captioned“Risk Factors,”“Managements Discussion and Analysis of Financial Condition and Results of Operations,”“Business,”and elsewhere contain forward-looking statements.In some cases,you can identify these statements by terms such as“anticipate,”“believe,”“could,”“estimat

20、e,”“expects,”“intend,”“may,”“plan,”“potential,”“predict,”“project,”“should,”“will,”“would”or the negative of these terms or other comparable expressions that conveyuncertainty of future events or outcomes,although not all forward-looking statements contain these terms.Unless otherwise noted,all amou

21、nts are expressed in United Statesdollars(“USD”)and“we”,“us”,“our”and the“Company”refer to Artelo Biosciences,Inc.,including its subsidiaries unless otherwise indicated.These statements involve risks,uncertainties and other factors that may cause actual results,levels of activity,performance or achi

22、evements to be materially different from theinformation expressed or implied by these forward-looking statements.Forward-looking statements include,but are not limited to,statements about:our plans to obtain funding for our operations,including funding necessary to complete our clinical trials,devel

23、op,manufacture and commercialize our productcandidates;our ability to raise any current or future funding to meet our capital requirements;the expected timing of the initiation and completion of our clinical studies for our product candidates;the size and growth of the markets for our product candid

24、ates;our commercialization,marketing,and manufacturing capabilities and strategies;geopolitical tensions,including tariffs and any war,regional conflict,or acts of terror,that can disrupt investment,supply chains and the economy generally;our ability to compete with companies currently producing alt

25、ernative treatment methods;the cost,timing and outcomes of any potential litigation involving our product candidates;regulatory developments in the U.S.and internationally;the development,regulatory approval,efficacy and commercialization of competing product candidates;our ability to attract and re

26、tain key scientific or management personnel;the scope of protection we are able to establish and maintain for intellectual property rights covering our products and technology;the terms and conditions of licenses granted to us and our ability to license additional intellectual property related to ou

27、r product candidates,as appropriate;potential claims related to our intellectual property;the accuracy of our estimates regarding expenses,future revenue,capital requirements and needs for additional financing;our ability to maintain compliance with Nasdaq listing requirements;our ability to develop

28、 and maintain our corporate infrastructure,including our internal controls;our ability to develop innovative new product candidates;and our financial performance.3Table of contents Forward-looking statements involve known and unknown risks,uncertainties,and other factors that may cause our actual re

29、sults,performance,or achievements to be materiallydifferent from any future results,performance,or achievements expressed or implied by the forward-looking statements.We discuss these risks in greater detail in Part I,Item1A.“Risk Factors”of this Annual Report on Form 10-K.Given these uncertainties,

30、you should not place undue reliance on these forward-looking statements as a representationor warranty by us or any other person that we will achieve our objectives and plans in any specified time frame,or at all.Also,forward-looking statements represent ourmanagements beliefs and assumptions only a

31、s of the date of this Annual Report on Form 10-K.We undertake no obligation to publicly update any forward-looking statements,whether as a result of new information,future events or otherwise,except as required by law.In addition,statements that include terms such as“we believe”and similar terms ref

32、lect our beliefs and opinions on the relevant subject.These statements are based uponinformation available to us as of the date of this filing,and while we believe such information forms a reasonable basis for such statements,such information may be limited orincomplete,and our statements should not

33、 be read to indicate that we have conducted an exhaustive inquiry into,or review of,all potentially available relevant information.These statements are inherently uncertain,and investors are cautioned not to unduly rely upon these statements.Our audited financial statements are stated in USD and are

34、 prepared in accordance with generally accepted accounting principles in the United States of America(“GAAP”).The following discussion should be read in conjunction with our financial statements and the related notes that appear elsewhere in this Annual Report on Form 10-K.Thefollowing discussion co

35、ntains forward-looking statements that reflect our plans,estimates and beliefs.Our actual results could differ materially from those discussed in theforward-looking statements.Factors that could cause or contribute to such differences include,but are not limited to,those discussed below and elsewher

36、e in this Annual Reporton Form 10-K.In this Annual Report on Form 10-K,unless otherwise specified,all dollar amounts are expressed in USD and all references to“Common Shares”refer to shares of ourcommon stock.As used in this Annual Report on Form 10-K,the terms“we”,“us”,“our”and the“company”mean Art

37、elo Biosciences,Inc.,and our wholly owned subsidiaries,Trinity ReliantVentures Limited,in Ireland,Artelo Biosciences Limited,in England and Wales,and Artelo Biosciences Corporation,in Canada,unless otherwise indicated.4Table of contents PART I ITEM 1.BUSINESS Corporate Overview We incorporated in th

38、e State of Nevada on May 2,2011,and are presently based in the County of San Diego,California.We are a clinical stage biopharmaceutical companyfocused on the development and commercialization of therapeutics that target lipid-signaling modulation pathways,including the endocannabinoid system(the“ECS

39、”),anetwork of receptors and neurotransmitters that form a biochemical communication system throughout the body.Our product candidate pipeline broadly leverages leading scientific methodologies and balances risk across mechanisms of action and stages of development.Our programsrepresent a comprehens

40、ive approach in utilizing the power and promise of lipid signaling to develop pharmaceuticals for patients with unmet healthcare needs.We are currentlydeveloping a dual cannabinoid(CB)agonist that targets both the CB1 and CB2 receptors.This synthetic small molecule program is a G protein-coupled rec

41、eptor(“GPCR”)designated ART27.13.We are developing ART27.13 as a potential treatment for cancer-related anorexia in a Phase 1b/2a trial,titled the Cancer Appetite Recovery Study(“CAReS”).Our second program,ART26.12 is a small molecule and the lead product candidate from our chemical library of inhib

42、itors of fatty acid binding proteins,notably Fatty AcidBinding Protein 5(“FABP5”).We received U.S.Food&Drug Administration(the“FDA”)clearance for our Investigational New Drug(“IND”)application for ART26.12 inJuly 2024 and has initiated a Phase 1 clinical trial for chemotherapy-induced peripheral neu

43、ropathy.In addition,ART26.12 may have broad applications as a cancertherapeutic,as a treatment for dermatologic conditions,such as psoriasis,as a treatment for pain and inflammation,and potential use in anxiety-related disorders,including post-traumatic stress disorder.We are also developing our own

44、 invention ART12.11(the“CBD cocrystal”).ART12.11 is our patented solid-state composition of cannabidiol(“CBD”)and tetramethylpyrazine(“TMP”).TMP serves as the coformer in the CBD cocrystal.ART12.11 may be considered by the regulatory authorities as a fixed drug combination instead of a new chemicale

45、ntity(“NCE”).We obtained two of our patent protected product candidates through our in-licensing activities.Our first in-licensed program,ART27.13,is being developed for cancer-relatedanorexia.ART27.13 is a peripherally-selective high-potency dual CB1 and CB2 full-receptor agonist,which was original

46、ly invented at AstraZeneca plc(“AstraZeneca”).Weexercised our option to exclusively license this product candidate through the NEOMED Institute(“NEOMED”),a Canadian not-for-profit corporation,renamed adMareBioinnovations(“adMare”)in June 2019,which had obtained rights to ART27.13 from AstraZeneca.In

47、 Phase 1,single dose studies in healthy volunteers and a multipleascending dose study in individuals with chronic low back pain conducted by AstraZeneca,ART27.13 exhibited an attractive pharmacokinetic and absorption,distribution,metabolism,and excretion profile and was well tolerated within the tar

48、get exposure range.It also exhibited dose-dependent and potentially clinically meaningful increases inbody weight.Importantly,the changes in body weight were not associated with fluid retention or other adverse effects and occurred at exposures without central nervous system(“CNS”)side effects.Discu

49、ssions with United Kingdom(“UK”),U.S.and Canadian regulators indicate there is a potential pathway for development of ART27.13 for thetreatment of cancer-related anorexia,which affects approximately 60%of advanced stage cancer patients.We commenced enrollment and dosed the first patient in CAReS,our

50、 Phase 1b/2a clinical study of cancer-related anorexia with ART27.13 in April 2021,and completedenrolling patients in the Phase 1b during the first quarter 2023.Data from the Phase 1b stage was used to determine the most effective and safe dose selected as the starting dosefor the Phase 2a portion o

51、f CAReS.We received approval from the regulatory authorities in the UK,Ireland and Norway to increase the daily dose from 650 micrograms to1,000 micrograms after 4 weeks and up to 1,300 micrograms initiated at 8 weeks in patients for whom intra-patient dose escalation is expected to be well tolerate

52、d.We alsoreceived approval from the regulatory authorities to enroll 40 evaluable patients to the Phase 2a stage with a 3:1 randomization of ART27.13 to placebo.We initiated the Phase2a portion of CAReS during April 2023 and expect up to 15 sites across five countries to participate in the Phase 2a.

53、As of February 2025,18 clinical sites are open and fullenrollment is projected during the first half of 2025.Our second in-licensed patented program is from our platform of small-molecule inhibitors of fatty acid binding proteins,notably FABP5.Fatty acid binding proteins(“FABPs”)are attractive thera

54、peutic targets,however,the high degree of sequence and structural similarities among family members have made the creation of drugs targetingspecific FABPs challenging.FABP5 is believed to specifically target and regulate one of the bodys endogenous cannabinoids,anandamide(“AEA”).While searching for

55、 aFABP5 inhibitor to regulate AEA,researchers at Stony Brook University(“SBU”)discovered the chemistry for creating a large library of compounds which we believe to behighly specific and potent small molecule inhibitors of FABP5 and other isoforms.SBU had received approximately$8.0 million in fundin

56、g from the National Institutes ofHealth to develop FABP5 inhibitor candidates including a$4.2 million grant in 2020 to advance research of FABP5 inhibition in prostate cancer.We licensed the rights toworld-wide intellectual property in all fields and certain know-how to these inhibitors from SBU.Our

57、 lead FABP5 inhibitor program is designated ART26.12.Based upon positive pre-clinical evidence from five separate studies showing promising activity and adifferentiated mechanism-of-action for the prevention and treatment of painful neuropathies,including diabetic neuropathy and Chemotherapy Induced

58、 Peripheral Neuropathy(“CIPN”),we have prioritized CIPN as the initial indication for development of our lead product candidate among our library of FABP5 inhibitor compounds,ART26.12.Treatment and/or prevention of CIPN is a significant unmet need,often resulting in anti-cancer treatment delays or d

59、iscontinuations,and there are currently no approvedtreatments for CIPN by the regulatory authorities in the U.S.,UK or EU.We submitted an IND application for ART26.12 to the FDA on 10th of June 2024 and received a studymay proceed notice from the FDA on the 8th of July 2024.First-in-human studies fo

60、r ART26.12 began in Q4 of 2024.In addition to its potential as a synthetic endocannabinoidmodulator with development targeting pain,inflammation,dermatologic conditions such as psoriasis,FABP5 is understood to play an important role in lipid signaling and isbelieved to be an attractive strategy for

61、drug development in oncology.Large amounts of human biomarker and animal model data support FABP5 as an oncology target,including triple negative breast cancer,ovarian cancer,cervical cancer,and castration-resistant prostate cancer.Through our sponsored research we have also subsequentlyidentified a

62、 potential role for FABP5 inhibition to treat anxiety disorders,such as Post Traumatic Stress Disorder(“PTSD”).We have been awarded a research grant in Canadato expand on our earlier research at the University of Western Ontario in this new development area.5Table of contents In addition to our in-l

63、icensed programs,we have internal discovery research initiatives which resulted in ART12.11,a proprietary cocrystal composition of CBD.The crystalstructure of CBD is known to exhibit solid polymorphism,or the ability to manifest in different forms.Polymorphism can adversely affect stability,dissolut

64、ion,andbioavailability of a drug product and thus may affect its quality,safety,and efficacy.Based upon our research,we believe our CBD cocrystal exists as a single crystal form andas such is anticipated to have advantages over other solid forms of CBD that exhibit polymorphism.Emerging data demonst

65、rates potential advantages of this single crystalstructure,including improved stability,solubility,and a more consistent absorption profile.We believe these features have contributed to a more consistent and improvedbioavailability profile and may ultimately lead to improved safety and efficacy in h

66、uman therapeutics,as already demonstrated in animal studies.Presently,we have two U.S.patents,one pending U.S.patent application,six foreign patents(Australia,Brazil,China,Mexico,Japan and Taiwan)and three pending foreignpatent applications(Canada,Europe,and South Korea)directed to our cocrystal com

67、position of CBD.Composition claims are generally known in the pharmaceutical industryas the most desired type of intellectual property and should provide for long lasting market exclusivity for our synthetic CBD cocrystal drug product candidate.In addition,dueto the reasons outlined above,we believe

68、 that our synthetic CBD cocrystal will continue to demonstrate a superior set of pharmaceutical properties compared to non-cocrystalCBD compositions.We plan to develop ART12.11 for multiple potential indications where CBD has shown activity of such anxiety disorders,including PTSD,depression,andothe

69、r possible uses such as epilepsy and insomnia.We are developing our product candidates in accordance with traditional regulated drug development standards and expect to make them available to patients via prescription orphysician orders only after obtaining marketing authorization from a countrys re

70、gulatory authority,such as the FDA.Our management team has experience developing,commercializing,and partnering ethical pharmaceutical products,including several first-in-class therapeutics.Based upon our current managements capabilities and the futuretalent we may attract,we plan to retain rights t

71、o internally develop and commercialize products;however,we may seek collaborations with partners in the biopharmaceuticalindustry when a partnering strategy serves to maximize value for our stockholders.Product Candidate Pipeline:Product CandidateTarget Indication(s)Development PhaseEstimated Global

72、 Market SizeART27.13 Synthetic Dual CannabinoidGPCR AgonistCancer-related anorexiaClinicalCancer anorexia cachexia syndrome:$2 billionART26.12 FABP5 inhibitor CIPN,prostate cancer and breast cancer,pain,dermatologic conditions,and anxiety disordersClinicalCIPN:$1 billionProstate cancer:approximately

73、$9billionBreast cancer:approximately$18billionPsoriasis:$12 billionPTSD:approximately$7 billionART12.11 Synthetic CBD Cocrystal Anxiety,depression,PTSD,and other potentialindicationsPre-clinicalAnxiety disorders:$11 billionPTSD:approximately$7 billion 6Table of contents Background Emerging science s

74、uggests that modulating lipid-signaling pathways can unlock novel therapeutic strategies for diseases and medical conditions for which there are no or limitedoptions.Lipids are critical to certain cell signaling pathways.Lipid-signaling modulation is the alteration of the signaling of lipid molecule

75、s to change biological activity orfunction within cellular communication pathways.Lipids contain various fatty acids as their building blocks and are the key components of lipid activity.Fatty Acid BindingProteins(FABPs)facilitate lipid-signaling by binding to fatty acids which control various cellu

76、lar functions.FABPs are essential mediators of normal cell signaling processesand under certain conditions can be associated with dysfunctional signaling.Inhibition of specific FABPs may correct abnormal lipid-signaling or improve the function of theECS,which holds promise as new treatment modalitie

77、s.Our Company is at the forefront of advancing the application of lipid-modulating therapeutics.The ECS is composed of cannabinoid receptors,endogenous receptor ligands(“endocannabinoids”)and their associated transporter mechanisms,as well as enzymesresponsible for the synthesis and degradation of e

78、ndocannabinoids and has emerged as a considerable target for pharmacotherapy approaches of numerous human diseases.As awidespread modulatory and lipid-signaling system,the ECS plays important roles in the CNS,development,synaptic plasticity,and the response to endogenous andenvironmental factors.The

79、 modulation of the ECS can be affected by using selective or non-selective agonists,partial agonists,inverse agonists,and antagonists of the cannabinoid receptors,CB1 andCB2.The CB1 receptor is distributed in brain areas associated with motor control,emotional responses,motivated behavior and energy

80、 homeostasis.In the periphery,CB1 isubiquitously expressed in the adipose tissue,pancreas,liver,gastrointestinal tract,skeletal muscles,heart and the reproductive system.The CB2 receptor is mainly expressed inthe immune system regulating its functions and is upregulated in response to tissue stress

81、or damage in most cell types.The ECS is therefore involved in pathophysiologicalconditions in both the central and peripheral tissues.The actions of endogenous ligands can be enhanced or attenuated by targeting mechanisms that are associated with their transport within the cellular and extra cellula

82、r matrix aswell as their synthesis and breakdown.Small molecule chemical modulators of the ECS can be derived from plants(phytocannabinoids),can be semi-synthetic derivatives ofphytocannabinoids or endocannabinoids,or can be completely synthetic new chemical entities.We plan to develop approaches wi

83、thin our portfolio that address receptor bindingand endocannabinoid transport modulation using only synthetic new chemical entities.Future approaches may also involve targeting synthesis or breakdown enzymes.ECS targeting cannabinoid-based medicines are already approved and used to treat numerous me

84、dical conditions.The ECS is further implicated in many disease states withinthe peer reviewed literature including conditions which involve the regulation of food intake,central nervous system,pain,cardiovascular,gastrointestinal,immune andinflammation,behavioral,antiproliferative and reproductive f

85、unctions.These areas of ECS pathophysiology are aligned with our therapeutic areas of focus:anxiety,pain,inflammation,anorexia,and cancer.Business Strategy Our objective is to develop and commercialize ethical pharmaceutical products that provide physicians access to the therapeutic potential of lip

86、id signaling modulation,including within the ECS.We intend to pursue technologies and compounds that offer promising therapeutic approaches to known and validated signaling pathways,specifically lipid-signaling which includes compounds that promote the effectiveness of the ECS.While several of our p

87、rograms are directed towards improving the lives ofpeople suffering with cancer and cancer treatments,our portfolio may ultimately be used to treat a wide range of diseases and conditions where lipid-signaling modulation isparticularly promising,including pain,inflammation,various neurological disea

88、ses,epilepsy,anxiety disorders,and dermatologic conditions.Intellectual Property We are a party to certain license agreements as described below and,going forward,we intend to license intellectual property from pharmaceutical and biotechnologycompanies and research institutions which would cover res

89、earch stage and clinical stage assets to build a pipeline of product candidates that are associated with lipid signaling.7Table of contents Patent Estate and Licenses Product CandidatePatent StatusLicenseART27.13 Synthetic GPCR CB1 and CB2Receptor Agonist Two(2)issued patents(U.S.)including composit

90、ion of matter,terms of 11/3/25and 5/31/28,eighteen(18)issued foreign patents,and one(1)Artelo-ownedcomposition application with eighteen(18)pending National Phase filings,two(2)pending applications(PCT and Taiwan)with composition claims,and one(1)pending provisional application in the U.S.for the tr

91、eatment of eye-disorders,including glaucoma.Worldwide exclusive licenseART26.12 FABP5 inhibitor and FABP5inhibitors platformSix(6)patents issued(U.S.)and nine(9)issued foreign patents.Covers the target,composition of matter,and utility claims.In addition,there are twenty-seven(27)pending application

92、s related to the ART26.12 program and related chemistries.Worldwide exclusive licenseART12.11 Synthetic CBD CocrystalIssued one(1)composition of matter patent(U.S.)and one(1)methods of usepatent(U.S.).Both with a term through 12/10/38.Issued four(4)foreign patentsand eight(8)pending applications(US&

93、Intl).N/A(wholly owned by Artelo)The NEOMED Relationship On December 20,2017,the Company entered into an agreement with NEOMED(the“NEOMED Agreement”),which provided the Company with up to twelve months fromthe date of receipt by the Company of the required materials to conduct certain non-clinical r

94、esearch studies,diligence and technical analyses with NEOMEDs proprietarytherapeutic compound NEO1940,now known as ART27.13(the“Compound”)and an option(the“NEOMED Option”)for an exclusive worldwide license to develop andcommercialize products comprising or containing the Compound.The NEOMED Agreemen

95、t has an effective date of January 2,2018(the“NEOMED Effective Date”).On theNEOMED Effective Date,the Company issued 15,000 shares of its common stock(on a pre-reverse stock split basis)to NEOMED.Pursuant to the terms of the NEOMEDAgreement,within 30 days after the NEOMED Effective Date,NEOMED,witho

96、ut additional consideration and at its sole cost,delivered to the Company certain technologytransfer materials and the quantity of the Compound substance specified in a research plan,both as set out under the NEOMED Agreement.On January 4,2019,the Company entered into the First Amendment to Material

97、 and Data Transfer,Option and License Agreement(the“First Amendment to NEOMEDAgreement”),pursuant to which the Company agreed to issue NEOMED shares of our common stock as consideration for the waiver by NEOMED of the cash payment of$100,000 that was due to NEOMED on October 1,2018.The Company issue

98、d 61,297 shares of common stock(on a pre-reverse stock split basis)to NEOMED in connectionwith the Companys exercise of the NEOMED Option.The Company also issued 11,363 shares of common stock(on a pre-reverse stock split basis)to NEOMED pursuant tothe terms of the First Amendment to NEOMED Agreement

99、.Pursuant to the NEOMED Agreement,in July 2019,the Company completed a payment of$1,500,000 toNEOMED for the exercise of the NEOMED Option.Upon exercise of the NEOMED Option,NEOMED provided the Company with an exclusive worldwide license under allof NEOMEDs intellectual property rights covering the

100、Compound(“Licensed IP Rights”)to research,develop,make,have made,use,offer for sale,sell,have sold and importproducts containing the Compound and otherwise exploit the Licensed IP Rights worldwide,in all fields.8Table of contents In connection with the NEOMED Agreement,additional potential payments

101、of up to$200.0 million will be due upon the achievement of certain regulatory,commercial,andsales milestones.Additionally,we will pay mid-to high-single digit royalties on annual net sales of any product successfully developed.In clinical development studies with NEOMEDs prior sponsor,ART27.13 was d

102、osed in over 200 subjects.From 2007 to 2008,ART27.13 was evaluated in five phase 1 clinicaltrials under its original sponsor,AstraZeneca.ART27.13 was administered orally in 205 patients and its safety,tolerability,pharmacokinetics and pharmacodynamics wereinvestigated.Four of these studies were sing

103、le dose or Single Ascending Dose(“SAD”)studies.An initial SAD study was conducted in the UK.The program was completedwith another study performed in a Japanese population.The two other single dose studies aimed at measuring a pharmacodynamics effect(Proof-of-Principle or POP studies)onanalgesia usin

104、g the capsaicin test in one case,and the third molar extraction model in the other case.The last phase 1 study was a Multiple Ascending Dose(“MAD”)study,where patients with chronic lower back pain received ART27.13 for a scheduled period of 12 days.Further details of the studies are found in Table 1

105、.Table 1 Clinical studies performed with ART27.13(formerly NEO1940)YearFull TitleSchedulePrimary EndpointSecondary Endpoints2007Phase 1,First Time in Man,Single-Centre,Randomised,Double-Blind(within panels),Placebo-Controlled Study to InvestigateSafety,Tolerability and Pharmacokinetics of NEO1940 af

106、terAdministration of Oral Single Ascending Doses in HealthyVolunteersSingle doseSafety and tolerabilityCNS effects;PK profile2007-2008A Phase 1,Single-Centre,Randomised,Double-Blind(withinpanels),Placebo-Controlled Study to Investigate Safety,Tolerability and Pharmacokinetics of NEO1940 afterAdminis

107、tration of Oral Single Ascending Doses in Japanese HealthyMale VolunteersSingle doseSafety and tolerabilityCNS effects;PK profile2007-2008A Phase 1,Single-centre,Randomised,Double-blind,Placebo-controlled Crossover Study in Healthy Volunteers to EvaluateEffects of a Single Oral Dose of NEO1940 on In

108、tradermal andTopical Capsaicin-evoked Pain SymptomsSingle doseEffects on intradermalcapsaicin injection-evokedpain response by assessment ofpain intensity(continuousVAS rating)and to evaluatethe effect on heat painthreshold in skin exposed totopicalOther pain parameters;safety andtolerability;CNS ef

109、fects;PK profile,PK/PD effects2008A Randomised,Double Blind,Placebo-Controlled Study toInvestigate the Analgesic Efficacy of a Single Dose of NEO1940,inPatients Undergoing Impacted Mandibular Third Molar ExtractionSingle doseTo investigate the analgesiceffect compared to placebo indental surgery pat

110、ientsfollowing impactedmandibular third molarextraction.Safety and tolerability;CNS effects;PKprofile,PK/PD effects2008A Phase 1,Multi-Centre,Randomised,Double-blind,Placebo-controlled Study to Investigate the Safety,Tolerability andPharmacokinetics of NEO1940,Including an Interaction Study,After Ad

111、ministration of Oral Multiple Ascending Doses in AdultSubjects with Chronic Low Back PainMultiple doseSafety and tolerabilityCNS effects;PK profile,CYP450induction_ ART27.13 demonstrated,in general,an acceptable safety and tolerability profile in the safety endpoints.The profile of the observed safe

112、ty effects was generally typical ofcannabinoids and the majority of the adverse events were of mild or moderate intensity.A maximum tolerated dose was defined by the frequency and severity of adverse events.A dose dependent increase in body weight was observed in the MAD study.In three out of the fi

113、ve phase 1 studies,analgesia in acute pain models was also measured as anendpoint;no convincing analgesic efficacy was seen in any of these studies.9Table of contents The Stony Brook University Relationship On January 18,2018,we entered into a license agreement(the“Stony Brook Agreement”)with the Re

114、search Foundation at Stony Brook University(the“Foundation”)whichbecame effective on that same date(the“SBU Effective Date”).The Stony Brook Agreement provides us with an exclusive license under certain licensed patents of theFoundation to develop,make,manufacture,have made,use,sell,have sold,import

115、,export,and offer for sale Patent Product(s)(as defined in the Stony Brook Agreement)andOther Product(s)(as defined in the Stony Brook Agreement)worldwide in all fields,including without limitation the field of human therapeutics.Pursuant to the Stony Brook Agreement,we paid an upfront fee and are p

116、aying to the Foundation annual license maintenance fees,beginning on the first anniversary of the SBUEffective Date and annually thereafter on each anniversary of the SBU Effective Date.We will also be required to pay a low-single digit royalty on net sales on any patent products(the“Royalties”).The

117、 Stony Brook Agreement provides for a reduction of theRoyalties in certain cases.We will also pay to the Foundation,beginning in the first calendar year of the first commercial sales,an annual minimum royalty fee(the“AnnualMinimum Royalty”).The Annual Minimum Royalty will be credited against the tot

118、al Royalties due for the calendar year in which the Annual Minimum Royalty is paid.We will also be required to make payments for the following milestones:Milestone MilestonePayment($US)Initiation of a Phase 2 Clinical Trial for the first Indication of each active pharmaceutical ingredient that resul

119、ts from the grant of rights in Section 2 toLicensed Subject Matter(as defined in the Stony Brook Agreement)$150,000 Initiation of a Phase 3 clinical trial for the first indication of each active pharmaceutical ingredient that results from the grant of rights in Section 2 toLicensed Subject Matter$25

120、0,000 Upon First Commercial Sale based upon FDA or European Medicines Agency(“EMA”)regulatory approval for the first Indication of each activepharmaceutical ingredient that results from the grant of rights in Section 2 to Licensed Subject Matter$1,500,000 Receiving FDA or EMA approval for the second

121、 and each subsequent Indication of each active pharmaceutical ingredient that results from the grant ofrights in Section 2 to Licensed Subject Matter$1,000,000 First time annual Net Sales(as defined in the Stony Brook Agreement)greater than$100,000,000$1,000,000 First time annual Net Sales greater t

122、han$500,000,000$5,000,000 The term of the Stony Brook Agreement commenced on the SBU Effective Date and will continue until the Stony Brook Agreement is terminated in accordance with its terms.Research&Development We intend to combine innovative science and accelerated clinical development to create

123、 and develop novel therapies using small molecule drug development strategies targetinglipid signaling pathways and the ECS.Our current research and development efforts have been limited to investigative work surrounding lipid signaling,including creating anddeveloping novel and synthetic formulatio

124、ns,and evaluating potential opportunities to license technologies from pharmaceutical companies and leading research institutions.Our principal research efforts to date have been with the Stony Brook University,New York,University of Western Ontario,Canada,Trinity College Dublin,Ireland and withvari

125、ous clinical research organizations(“CROs”)in the U.S.,China,Spain,and UK.Scientific Approach We intend to create,acquire,and develop a broad spectrum of therapeutics,each of which has the potential to modulate lipid signaling for human health.The principal scientificplatforms of our strategy are as

126、 follows:New Chemical Entities.We expect to license intellectual property rights for research stage platforms and new chemical entities developed within leadingacademic institutions under which we may develop programs that target lipid signaling pathways,including molecules that modulate the ECS.The

127、se programsmay involve the use of compounds which are neither plant-based nor synthetically derived cannabinoids and are instead small molecules that have been shown tohave promising potential in lipid signaling pathways.Our initiatives for this strategy led us to the license novel technology from S

128、tony Brook University,whichwe expect to be a core platform for the Company.This platform comprises multiple inhibitors to fatty acid binding proteins and the lead program is designatedART26.12.Novel Compounds.We also plan to acquire rights to intellectual property for research and clinical stage ass

129、ets developed within the pharmaceutical industry andleading research institutions for synthetic small molecules,new chemical entities or alternatives to plant-based cannabinoids.Our efforts to secure rights to syntheticnovel compounds led us to the NEOMED Agreement with NEOMED for the Compound,ART27

130、.13.10Table of contents Our Board and management have experience developing and commercializing ethical pharmaceutical products,including several first-in-class therapeutics.As we build ourpipeline and advance our research and clinical development programs,we will evaluate partnerships with large ph

131、armaceutical and biopharmaceutical companies whereapplicable.Based upon our managements current experience and the future talent we may attract,we plan to retain rights to develop and commercialize products on our own.However,we will seek to collaborate with biopharmaceutical partners should that st

132、rategy be believed to maximize the value for our stockholders.Two of our development programs were licensed from established and respected organizations that have already conducted pre-clinical research and,in some cases,clinicalresearch.Our science and regulatory teams are leveraging this research

133、to speed development and commercialization timelines across our portfolio.Our current pipelineencompasses multiple mechanisms associated with lipid signaling.The specific programs that are currently in development are set forth below.ART27.13 ART27.13 is our name for the synthetic GPCR CB1 and CB2 r

134、eceptor agonist compound formerly known as NEO1940 and AZD1940.Wedeveloped a synthetic oral formulation suitable for clinical evaluation for potential use in the treatment of anorexia/weight loss associated with cancer.ART27.13has been administered to 205 subjects in prior phase 1 studies and 24 can

135、cer patients in our Phase 1b stage of the Cancer Appetite Recovery Study(CAReS).CAReS is currently enrolling patients with anorexia associated with cancer in the Phase 2a stage,which randomizes patients to receive ART27.13 or placebo.ART26.12 Our lead FABP5 inhibitor program is intended for treatmen

136、t of chemotherapy-induced peripheral neuropathy,a painful condition caused by certainchemotherapies and a neuropathic pain condition with symptoms similar to diabetic neuropathy.Our near-term goal is to advance ART26.12 into clinicalresearch.While advancing our lead,additional compound(s)may be iden

137、tified,selected,and developed for potential cancer,dermatologic or anxiety indications.ART12.11 Our novel solid-state CBD composition co-formed with tetramethylpyrazine(“TMP”)is targeted for development in anxiety disorders andrare/orphan diseases.The anxiety strategy became a priority based upon re

138、sults comparing ART12.11 to CBD in a stress-induced model of anxiety,whereART12.11 showed a treatment effect in all nine evaluations and CBD alone failed all tests.Our rare/orphan disease strategy is supported by commercial approvaland sales of another companys product containing CBD.In addition,we

139、have data demonstrating a similar pharmacokinetic profile to CBD formulated as a liquidwith sesame seed oil,despite ART12.11s formulation being unoptimized and currently under development for administration as an oral solid.Competition The pharmaceutical and biotechnology industries are characterize

140、d by rapidly advancing technologies,intense competition and an emphasis on proprietary products.Anyproduct candidates that we successfully develop and commercialize may compete with existing therapies and new therapies that may become available in the future.We plan to compete in the segments of the

141、 pharmaceutical,biotechnological and other related markets with therapeutics that demonstrate clinical utility,have an acceptablesafety profile and target commercially attractive indications characterized by previously unmet medical need.11Table of contents Our potential competitors,which include ph

142、armaceutical and biopharmaceutical companies such as Novartis International AG,Helsinn Therapeutics(U.S.),Inc.,NGMBiopharmaceuticals Inc.,Jazz Pharmaceuticals Inc.,Skye Bioscience,Longboard Pharmaceuticals,and Pfizer Inc.may have significantly greater financial resources andexpertise in research and

143、 development,manufacturing,preclinical testing,conducting clinical trials,obtaining regulatory approvals and marketing approved medicines than wedo.These competitors also compete with us in recruiting and retaining qualified scientific and management personnel and establishing clinical trial sites a

144、nd patient registrationfor clinical trials,as well as in acquiring technologies complementary to,or necessary for,our programs.Our commercial opportunities could be reduced or eliminated if our competitors develop and commercialize medicines that are safer,more effective,have fewer or less severesid

145、e effects,are more convenient or are less expensive than any products that we may develop.Our competitors also may obtain approval from the FDA or other regulatoryagencies for their medicines more rapidly than we may obtain approval for ours,which could result in our competitors establishing a stron

146、g market position before we are ableto enter the market.Government Regulation United States Government authorities in the United States,at the federal,state and local levels,and in other countries and jurisdictions,including the European Union,extensively regulate,among other things,the research,dev

147、elopment,testing,manufacture,quality control,approval,packaging,storage,recordkeeping,labeling,advertising,promotion,distribution,marketing,post-approval monitoring and reporting,and import and export of pharmaceutical products.The processes for obtaining marketing approvals in the United States and

148、in foreign countries and jurisdictions,along with subsequent compliance with applicable statutes and regulations and other regulatory authorities,require the expenditure ofsubstantial time and financial resources.In the United States,the FDA approves and regulates drugs under the Federal Food,Drug,a

149、nd Cosmetic Act(the“FDCA”)and the implementing regulations promulgatedthereunder.The failure to comply with requirements under the FDCA and other applicable laws at any time during the product development process,approval process or afterapproval may subject an applicant and/or sponsor to a variety

150、of administrative or judicial sanctions,including refusal by the FDA to approve pending applications,withdrawalof an approval,imposition of a clinical hold,issuance of warning letters and other types of letters,product recalls,product seizures,total or partial suspension of production ordistribution

151、,injunctions,fines,refusals of government contracts,restitution,disgorgement of profits,or civil or criminal investigations and penalties brought by the FDA and theDepartment of Justice or other governmental entities.An applicant seeking approval to market and distribute a new drug product in the Un

152、ited States must typically undertake the following:completion of preclinical laboratory tests,animal studies and formulation studies in compliance with the FDAs Good Laboratory Practice regulations;submission to the FDA of an Investigational New Drug(“IND”)application,which must take effect before h

153、uman clinical trials may begin;approval by an institutional review board representing each clinical site before each clinical trial may be initiated;performance of adequate and well-controlled human clinical trials in accordance with good clinical practices(“GCPs”)to establish the safety and efficac

154、y of theproposed drug product for each indication;preparation and submission to the FDA of an NDA requesting marketing approval for one or more proposed indications,including the payment of application userfees;review by an FDA advisory committee,where appropriate or if applicable;satisfactory compl

155、etion of one or more FDA inspections of the manufacturing facility or facilities at which the product,or components thereof,are produced toassess compliance with current Good Manufacturing Practice(“cGMP”)requirements and to assure that the facilities,methods and controls are adequate topreserve the

156、 products identity,strength,quality and purity;satisfactory completion of FDA audits of one or more clinical trial sites to assure compliance with GCPs and the integrity of the clinical data;securing FDA approval of the NDA;and compliance with any post-approval requirements,including the potential r

157、equirement to implement a Risk Evaluation and Mitigation Strategy and the potentialrequirement to conduct post-approval studies.12Table of contents Prior to beginning the first clinical trial with a product candidate in the United States,we must submit an IND to the FDA.An IND is a request for autho

158、rization from the FDAto administer an investigational new drug product to humans.The central focus of an IND submission is on the general investigational plan and the protocol(s)for clinicalstudies.The IND also includes results of animal and in vitro studies assessing the toxicology,pharmacokinetics

159、,pharmacology,and pharmacodynamic characteristics of theproduct;chemistry,manufacturing,and controls information;and any available human data or literature to support the use of the investigational product.An IND must becomeeffective before human clinical trials may begin.The IND automatically becom

160、es effective 30 days after receipt by the FDA,unless the FDA,within the 30-day time period,raises safety concerns or questions about the proposed clinical trial.In such a case,the IND may be placed on clinical hold and the IND sponsor and the FDA must resolve anyoutstanding concerns or questions bef

161、ore the clinical trial can begin.Submission of an IND therefore may or may not result in FDA authorization to begin a clinical trial.Clinical trials involve the administration of the investigational product to human subjects under the supervision of qualified investigators in accordance with GCPs,wh

162、ichinclude the requirement that all research subjects provide their informed consent for their participation in any clinical study.Clinical trials are conducted under protocolsdetailing,among other things,the objectives of the study,the parameters to be used in monitoring safety and the effectivenes

163、s criteria to be evaluated.A separate submission tothe existing IND must be made for each successive clinical trial conducted during product development and for any subsequent protocol amendments.Furthermore,anindependent IRB for each site proposing to conduct the clinical trial must review and appr

164、ove the plan for any clinical trial and its informed consent form before the clinical trialbegins at that site and must monitor the study until completed.Regulatory authorities,the IRB or the sponsor may suspend a clinical trial at any time on various grounds,including a finding that the subjects ar

165、e being exposed to an unacceptable health risk or that the clinical trial is unlikely to meet its stated objectives.Some studies also includeoversight by an independent group of qualified experts organized by the clinical study sponsor,known as a data safety monitoring board,which may review data an

166、d endpointsat designated check points,make recommendations or halt the clinical trial if it determines that there is an unacceptable safety risk for subjects or other grounds,such as nodemonstration of efficacy.There are also requirements governing the reporting of ongoing clinical studies and clini

167、cal study results to public registries.Human clinical trials are typically conducted in three sequential phases that may overlap or be combined:Phase 1:The product candidate is initially introduced into healthy human subjects or patients with the target disease or condition.These studies are designe

168、d totest the safety,dosage tolerance,absorption,metabolism,and distribution of the investigational product in humans,the side effects associated with increasingdoses,and,if possible,to gain early evidence on effectiveness.In the case of some products for severe or life-threatening diseases,especiall

169、y when the productmay be too inherently toxic to ethically administer to healthy volunteers,the initial human testing is often conducted in patients.Phase 2:The product candidate is administered to a limited patient population with a specified disease or condition to evaluate the preliminary efficac

170、y,optimaldosages,and dosing schedule and to identify possible adverse side effects and safety risks.Multiple Phase 2 clinical trials may be conducted to obtain informationprior to beginning larger and more expensive Phase 3 clinical trials.Phase 3:The product candidate is administered to an expanded

171、 patient population to further evaluate dosage,to provide statistically significant evidence of clinicalefficacy and to further test for safety,generally at multiple geographically dispersed clinical trial sites.These clinical trials are intended to establish the overallrisk/benefit ratio of the inv

172、estigational product and to provide an adequate basis for product approval.Post-approval clinical trials,sometimes referred to as Phase 4 studies,may be conducted after initial marketing approval.These clinical trials are used to gain additionalexperience from the treatment of patients in the intend

173、ed therapeutic indication.In certain instances,the FDA may mandate the performance of Phase 4 clinical trials as acondition of approval of an NDA.The FDA or the sponsor may suspend a clinical trial at any time on various grounds,including a finding that the research subjects or patients are being ex

174、posed to anunacceptable health risk.Similarly,an IRB can suspend or terminate approval of a clinical trial at its institution if the clinical trial is not being conducted in accordance with theIRBs requirements or if the drug has been associated with unexpected serious harm to patients.In addition,s

175、ome clinical trials are overseen by an independent group ofqualified experts organized by the sponsor,known as a data safety monitoring board or committee.Depending on its charter,this group may determine whether a clinical trialmay move forward at designated check points based on access to certain

176、data from the clinical trial.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 endof Phase 2,and before an NDA is submitted.Meetings at other times may be requested.These meetings can

177、provide an opportunity for the sponsor to share information aboutthe data gathered to date,for the FDA to provide advice,and for the sponsor and the FDA to reach agreement on the next phase of development.Sponsors typically use themeetings at the end of the Phase 2 clinical trial to discuss Phase 2

178、clinical results and present plans for the pivotal Phase 3 clinical trials that they believe will support approvalof the new drug.Concurrent with clinical trials,companies usually complete additional animal studies and must also develop additional information about the chemistry andphysical characte

179、ristics of the drug and finalize a process for manufacturing the product in commercial quantities in accordance with cGMP requirements.The manufacturingprocess must be capable of consistently producing quality batches of the product candidate and,among other things,the manufacturer must develop meth

180、ods for testing theidentity,strength,quality,and purity of the final drug.In addition,appropriate packaging must be selected and tested,and stability studies must be conducted to demonstratethat the product candidate does not undergo unacceptable deterioration over its shelf life.While the IND is ac

181、tive and before approval,progress reports summarizing the results of the clinical trials and nonclinical studies performed since the last progress report mustbe submitted at least annually to the FDA,and written IND safety reports must be submitted to the FDA and investigators for serious and unexpe

182、cted suspected adverse events,findings from other studies suggesting a significant risk to humans exposed to the same or similar drugs,findings from animal or in vitro testing suggesting a significant risk tohumans,and any clinically important increased incidence of a serious suspected adverse react

183、ion compared to that listed in the protocol or investigator brochure.13Table of contents NDA Review and Approval Process Assuming successful completion of all required testing in accordance with all applicable regulatory requirements,the results of product development nonclinical and clinicaltrials,

184、along with descriptions of the manufacturing process,analytical tests conducted on the chemistry of the drug,proposed labeling and other relevant information aresubmitted to the FDA as part of an NDA requesting approval to market the product.The submission of an NDA is subject to the payment of subs

185、tantial user fees;a waiver ofsuch fees may be obtained under certain limited circumstances.Additionally,no user fees are assessed on NDAs for products designated as orphan drugs,unless the productalso includes a non-orphan indication.The FDA reviews an NDA to determine,among other things,whether a p

186、roduct is safe and effective for its intended use and whether its manufacturing is cGMP-compliant toassure and preserve the products identity,strength,quality,and purity.Under the Prescription Drug User Fee Act,or PDUFA,guidelines that are currently in effect,the FDAhas a goal of ten months from the

187、 date of“filing”of a standard NDA for a new molecular entity to review and act on the submission.This review typically takes 12 monthsfrom the date the NDA is submitted to FDA because the FDA has approximately two months to make a“filing”decision after the application is submitted.The FDA conducts a

188、preliminary review of all NDAs within the first 60 days after submission,before accepting them for filing,to determine whether they are sufficiently complete to permitsubstantive review The FDA may request additional information rather than accept an NDA for filing.In this event,the NDA must be resu

189、bmitted with the additionalinformation.The resubmitted application is also subject to review before the FDA accepts it for filing.The FDA may refer an application for a novel drug to an advisory committee.An advisory committee is a panel of independent experts,including clinicians and other scientif

190、icexperts,that reviews,evaluates and provides a recommendation as to whether the application should be approved and under what conditions.The FDA is not bound by therecommendations of an advisory committee,but it considers such recommendations carefully when making decisions.Before approving an NDA,

191、the FDA will typically inspect the facility or facilities where the product is manufactured.The FDA will not approve an application unless itdetermines that the manufacturing processes and facilities are in compliance with cGMP and adequate to assure consistent production of the product within requi

192、redspecifications.Additionally,before approving an NDA,the FDA will typically inspect one or more clinical sites to assure compliance with GCPs.If the FDA determines thatthe application,manufacturing process,or manufacturing facilities are not acceptable,it will outline the deficiencies in the submi

193、ssion and often will request additional testing orinformation.Notwithstanding the submission of any requested additional information,the FDA ultimately may decide that the application does not satisfy the regulatory criteriafor approval.After the FDA evaluates an NDA,it will issue an approval letter

194、 or a Complete Response Letter.An approval letter authorizes commercial marketing of the drug withprescribing information for specific indications.A Complete Response Letter indicates that the review cycle of the application is complete,and the application will not beapproved in its present form.A C

195、omplete Response Letter usually describes the specific deficiencies in the NDA identified by the FDA and may require additional clinical data,such as an additional pivotal Phase 3 clinical trial or other significant and time-consuming requirements related to clinical trials,nonclinical studies,or ma

196、nufacturing.If aComplete Response Letter is issued,the sponsor must resubmit the NDA,addressing all of the deficiencies identified in the letter,or withdraw the application.Even if such dataand information are submitted,the FDA may decide that the NDA does not satisfy the criteria for approval.If re

197、gulatory approval of a product is granted,such approval will be granted for particular indications and may entail limitations on the indicated uses for which such productmay be marketed.For example,the FDA may approve the NDA with a Risk Evaluation and Mitigation Strategy(“REMS”)to ensure the benefi

198、ts of the product outweigh itsrisks.A REMS is a safety strategy to manage a known or potential serious risk associated with a medicine and to enable patients to have continued access to such medicines bymanaging their safe use.It could include medication guides,physician communication plans,or eleme

199、nts to assure safe use,such as restricted distribution methods,patientregistries,and other risk minimization tools.The FDA also may offer conditional approval subject to,among other things,changes to proposed labeling or the development ofadequate controls and specifications.Once approved,the FDA ma

200、y withdraw the product approval if compliance with pre-and post-marketing requirements is not maintainedor if problems occur after the product reaches the marketplace.The FDA may also require one or more Phase 4 post-market studies and surveillance to further assess andmonitor the products safety an

201、d effectiveness after commercialization and may limit further marketing of the product based on the results of these post-marketing studies.Inaddition,new government requirements,including those resulting from new legislation,may be established,or the FDAs policies may change,which could impact the

202、timelinefor regulatory approval or otherwise impact ongoing development programs.Post-Approval Requirements Any products manufactured or distributed by us pursuant to FDA approvals are subject to pervasive and continuing regulation by the FDA,including,among other things,requirements relating to rec

203、ordkeeping,reporting of adverse experiences,periodic reporting,product sampling and distribution,and advertising and promotion of the product.After approval,most changes to the approved product,such as adding new indications or other labeling claims,are subject to prior FDA review and approval.There

204、 arecontinuing,annual program fees for any marketed products.Drug manufacturers and their subcontractors are required to register their establishments with the FDA and certainstate agencies and are subject to periodic unannounced inspections by the FDA and certain state agencies for compliance with

205、cGMP,which impose certain procedural anddocumentation requirements upon us and our third-party manufacturers.Changes to the manufacturing process are strictly regulated,and,depending on the significance of thechange,may require prior FDA approval before being implemented.FDA regulations also require

206、 investigation and correction of any deviations from cGMP and imposereporting requirements upon us and any third-party manufacturers that we may decide to use.Accordingly,manufacturers must continue to expend time,money,and effort inthe area of production and quality control to maintain compliance w

207、ith cGMP and other aspects of regulatory compliance.14Table of contents The FDA may withdraw approval if compliance with regulatory requirements and standards is not maintained or if problems occur after the product reaches the market.Laterdiscovery of previously unknown problems with a product,incl

208、uding adverse events of unanticipated severity or frequency,or with manufacturing processes,or failure tocomply with regulatory requirements,may result in revisions to the approved labeling to add new safety information;imposition of post-market studies or clinical studies toassess new safety risks;

209、or imposition of distribution restrictions or other restrictions under a REMS program.Other potential consequences include,among other things:restrictions on the marketing or manufacturing of the product,complete withdrawal of the product from the market or product recalls;fines,warning letters,or u

210、ntitled letters;clinical holds on post-approval or Phase IV clinical studies,if applicable;refusal of the FDA to approve pending applications or supplements to approved applications,or suspension or revocation of product license approvals;product seizure or detention,or refusal to permit the import

211、or export of products;consent decrees,corporate integrity agreements,debarment,or exclusion from federal healthcare programs;mandated modification of promotional materials and labeling and the issuance of corrective information;the issuance of safety alerts,Dear Healthcare Provider letters,press rel

212、eases,and other communications containing warnings or other safety information about theproduct;or injunctions or the imposition of civil or criminal penalties.The FDA closely regulates the marketing,labeling,advertising,and promotion of drug products.A company can make only those claims relating to

213、 safety and efficacy that areapproved by the FDA and in accordance with the provisions of the approved label.The FDA and other agencies actively enforce the laws and regulations prohibiting thepromotion of off-label uses.Failure to comply with these requirements can result in,among other things,adve

214、rse publicity,warning letters,corrective advertising,and potentialcivil and criminal penalties.Physicians may prescribe,in their independent professional medical judgment,legally available products for uses that are not described in theproducts labeling and that differ from those tested by us and ap

215、proved by the FDA.Physicians may believe that such off-label uses are the best treatment for many patients invaried circumstances.The FDA does not regulate the behavior of physicians in their choice of treatments.The FDA does,however,restrict manufacturers communications onthe subject of off-label u

216、se of their products.The federal government has levied large civil and criminal fines against companies for alleged improper promotion of off-label useand has enjoined companies from engaging in off-label promotion.The FDA and other regulatory agencies have also required that companies enter into co

217、nsent decrees orpermanent injunctions under which specified promotional conduct is changed or curtailed.However,companies may share truthful and not misleading information that isotherwise consistent with a products FDA-approved labelling.Marketing Exclusivity Market exclusivity provisions authorize

218、d under the FDCA can delay the submission and approval of certain marketing applications for products containing the same activeingredient.The FDCA permits patent term restoration of up to five years as compensation for a patent term lost during product development and FDA regulatory review processt

219、o the first applicant to obtain approval of an NDA for a new chemical entity in the United States.Patent-term restoration,however,cannot extend the remaining term of apatent beyond a total of 14 years from the products approval date.A drug is a new chemical entity if the FDA has not previously appro

220、ved any other new drug containing thesame active moiety,which is the molecule or ion responsible for the action of the drug substance.During the exclusivity period,the FDA may not approve or even accept forreview an abbreviated new drug application,or ANDA,or an NDA submitted under Section 505(b)(2)

221、(“505(b)(2)NDA”),submitted by another company for another drugbased on the same active moiety,regardless of whether the drug is intended for the same indication as the original innovative drug or for another indication,where the applicantdoes not own or have a legal right of reference to all the dat

222、a required for approval.However,an application may be submitted after four years if it contains a certification ofpatent invalidity or non-infringement to one of the patents listed with the FDA by the innovator NDA holder.The FDCA alternatively provides three years of marketing exclusivity for an ND

223、A,or supplement to an existing NDA if new clinical investigations,other than bioavailabilitystudies,that were conducted or sponsored by the applicant are deemed by the FDA to be essential to the approval of the application,for example new indications,dosages,orstrengths of an existing drug.This thre

224、e-year exclusivity covers only the modification for which the drug received approval on the basis of the new clinical investigations anddoes not prohibit the FDA from approving ANDAs or 505(b)(2)NDAs for drugs containing the active agent for the original indication or condition of use.Five-year and

225、three-year exclusivity will not delay the submission or approval of a full NDA.However,an applicant submitting a full NDA would be required to conduct or obtain a right ofreference to any nonclinical studies and adequate and well-controlled clinical trials necessary to demonstrate safety and effecti

226、veness.Pediatric exclusivity is another type of marketing exclusivity available in the United States.Pediatric exclusivity provides for an additional six months of marketing exclusivityattached to another period of exclusivity if a sponsor conducts clinical trials in children in response to a writte

227、n request from the FDA.The issuance of a written request does notrequire the sponsor to undertake the described clinical trials.In addition,orphan drug exclusivity,as described above,may offer a seven-year period of marketing exclusivity,except in certain circumstances.In response to the court decis

228、ion in Catalyst Pharms.,Inc.v.Becerra,14 F.4th 1299(11th Cir.2021),in January 2023,the FDA published a notice in the Federal Register toclarify that while the agency complies with the courts order in Catalyst,the FDA intends to continue to apply its longstanding interpretation of the regulations to

229、matters outsideof the scope of the Catalyst order that is,the agency will continue tying the scope of orphan-drug exclusivity to the uses or indications for which a drug is approved,whichpermits other sponsors to obtain approval of a drug for new uses or indications within the same orphan designated

230、 disease or condition that have not yet been approved.It isunclear how future litigation,legislation,agency decisions,and administrative actions will impact the scope of the orphan drug exclusivity.15Table of contents Foreign Jurisdictions In addition to regulations in the United States,a manufactur

231、er is subject to a variety of regulations in foreign jurisdictions to the extent they choose to sell any drug products inthose foreign countries.Even if a manufacturer obtains FDA approval of a product,it must still obtain the requisite approvals from regulatory authorities in foreign countriesprior

232、 to the commencement of clinical trials or marketing of the product in those countries.For other countries,outside of the European Union,the requirements governing theconduct of clinical trials,product licensing,pricing and reimbursement vary.In the European Union,marketing authorizations for medici

233、nal products may be obtained through different procedures founded on the same basic regulatory process.Thecentralized procedure provides for the grant of a single marketing authorization that is valid for all EU Member States.The centralized procedure is compulsory for medicinalproducts produced by

234、certain biotechnological processes,products designated as orphan medicinal products,and products with a new active substance indicated for thetreatment of certain diseases.On the other hand,a decentralized procedure provides for approval by one or more other concerned EU Member States of an assessme

235、nt of anapplication for marketing authorization conducted by one EU Member State,known as the reference EU Member State.In accordance with the mutual recognition procedure,the sponsor applies for national marketing authorization in one EU Member State.Upon receipt of this authorization the sponsor c

236、an then seek the recognition of thisauthorization by other EU Member States.The Foreign Corrupt Practices Act The Foreign Corrupt Practices Act(the“FCPA”)prohibits U.S.businesses and their representatives from offering to pay,paying,promising to pay or authorizing the paymentof money or anything of

237、value to a foreign official in order to influence any act or decision of the foreign official in his or her official capacity or to secure any other improperadvantage in order to obtain or retain business.The FCPA also obligates companies whose securities are listed in the U.S.to comply with account

238、ing provisions requiring us tomaintain books and records,which in reasonable detail,accurately and fairly reflect the transactions and dispositions of the assets of the corporation,including internationalsubsidiaries,if any,and to devise and maintain a system of internal accounting controls sufficie

239、nt to provide reasonable assurances regarding the reliability of financial reportingand the preparation of financial statements.United States governmental authorities that enforce the FCPA,including the Department of Justice,deem most health careprofessionals and other employees of foreign hospitals

240、,clinics,research facilities and medical schools in countries with public health care or public education systems to be“foreign officials”under the FCPA.Accordingly,when we interact with foreign health care professionals and researchers in testing and marketing our product candidatesabroad,we must h

241、ave policies and procedures in place sufficient to prevent us and agents acting on our behalf from providing any bribe,gift or gratuity,including excessive orlavish meals,travel or entertainment in connection with marketing our products and services or securing required permits and approvals such as

242、 those needed to initiate clinicaltrials in foreign jurisdictions.International Laws In Europe,and throughout the world,other countries have enacted anti-bribery laws and/or regulations similar to the FCPA.Violations of any of these anti-bribery laws,orallegations of such violations,could have a neg

243、ative impact on our business,results of operations and reputation.There are also international privacy laws that impose restrictions on the access,use,and disclosure of health information.All of these laws may impact our business.Our failureto comply with these privacy laws or significant changes in

244、 the laws restricting our ability to obtain required patient information could significantly impact our business and ourfuture business plans.16Table of contents Other Healthcare Laws Our business operations and current and future arrangements with healthcare professionals,consultants,customers and

245、patients,may expose us to broadly applicable state andfederal fraud and abuse and other healthcare laws and regulations.These laws constrain the business and financial arrangements and relationships through which we conductour operations,including how we research,market,sell and distribute our produ

246、cts.Such laws include:the U.S.federal Anti-Kickback Statute,which prohibits,among other things,persons and entities from knowingly and willfully soliciting,offering,receiving orproviding remuneration,directly or indirectly,in cash or in kind,to induce or reward,or in return for,either the referral o

247、f an individual for,or the purchase,orderor recommendation of,any good or service,for which payment may be made under a U.S.healthcare program such as Medicare and Medicaid.A person or entitydoes not need to have actual knowledge of the U.S.federal Anti-Kickback Statute or specific intent to violate

248、 it in order to have committed a violation.Inaddition,the government may assert that a claim including items or services resulting from a violation of the U.S.federal Anti-Kickback Statute constitutes a falseor fraudulent claim for purposes of the federal civil False Claims Act;U.S.federal civil and

249、 criminal false claims laws and civil monetary penalties laws,including the federal civil False Claims Act,which,among other things,imposecriminal and civil penalties,including through civil whistleblower or qui tam actions,against individuals or entities for knowingly presenting,or causing to bepre

250、sented,to the U.S.government,claims for payment or approval that are false or fraudulent,knowingly making,using or causing to be made or used,a falserecord or statement material to a false or fraudulent claim,or from knowingly making a false statement to avoid,decrease or conceal an obligation to pa

251、y moneyto the U.S.government.Persons and entities can be held liable under these laws if they are deemed to“cause”the submission of false or fraudulent claims by,forexample,providing inaccurate billing or coding information to customers or promoting a product off-label;the U.S.Health Insurance Porta

252、bility and Accountability Act of 1996(“HIPAA”),which imposes criminal and civil liability for,among other things,knowinglyand willfully executing,or attempting to execute,a scheme to defraud any healthcare benefit program,or knowingly and willfully falsifying,concealing orcovering up a material fact

253、 or making any materially false statement,in connection with the delivery of,or payment for,healthcare benefits,items or services.Similar to the U.S.federal Anti-Kickback Statute,a person or entity does not need to have actual knowledge of the health care fraud statute implemented underHIPAA or spec

254、ific intent to violate it in order to have committed a violation;in addition,HIPAA,as amended by the Health Information Technology for Economic and Clinical Health Act of 2009(“HITECH”),and its implementingregulations,imposes obligations,including mandatory contractual terms,with respect to safeguar

255、ding the privacy,security and transmission of individuallyidentifiable health information without appropriate authorization by covered entities subject to the rule,such as health plans,healthcare clearinghouses and certainhealthcare providers as well as their business associates that perform certain

256、 services for or on their behalf involving the use or disclosure of individuallyidentifiable health information;the U.S.Physician Payments Sunshine Act,which requires certain manufacturers of drugs,devices,biologics and medical supplies for which payment is availableunder Medicare,Medicaid or the Ch

257、ildrens Health Insurance Program(with certain exceptions)to report annually to the government information related topayments or other“transfers of value”made to physicians(defined to include doctors,dentists,optometrists,podiatrists and chiropractors),certain non-physicianhealthcare professionals,an

258、d teaching hospitals,and requires applicable manufacturers and group purchasing organizations to report annually to the governmentownership and investment interests held by the physicians described above and their immediate family members;andanalogous state and non-U.S.laws and regulations,such as s

259、tate anti-kickback and false claims laws,which may apply to our business practices,including,butnot limited to,research,distribution,sales and marketing arrangements and claims involving healthcare items or services reimbursed by non-governmental third-party payors,including private insurers,or by t

260、he patients themselves;state laws that require pharmaceutical and device companies to comply with the industrysvoluntary compliance guidelines and the relevant compliance guidance promulgated by the U.S.government,or otherwise restrict payments that may be made tohealthcare providers and other poten

261、tial referral sources;state laws and regulations that require manufacturers to report information related to payments and othertransfers of value to physicians and other healthcare providers or marketing expenditures and pricing information;and state and non-U.S.laws governing theprivacy and securit

262、y of health information in some circumstances,many of which differ from each other in significant ways and often are not preempted byHIPAA,thus complicating compliance efforts.17Table of contents Efforts to ensure that our current and future business arrangements with third parties will comply with

263、applicable healthcare laws and regulations may involve substantial costs.It is possible that governmental authorities may conclude that some of our business practices,including our promotional activities and interactions with our customers do notcomply with current or future statutes,regulations,age

264、ncy guidance or case law involving applicable healthcare laws.If our operations are found to be in violation of any ofthese or any other health regulatory laws that may apply to us,we may be subject to significant penalties,including the imposition of significant civil,criminal andadministrative pen

265、alties,damages,monetary fines,disgorgement,individual imprisonment,possible exclusion from participation in Medicare,Medicaid and other U.S.healthcare programs,additional integrity reporting and oversight obligations,contractual damages,reputational harm,diminished profits and future earnings,and cu

266、rtailment orrestructuring of our operations,any of which could adversely affect our ability to operate our business and our results of operations.Defending against any such actions can becostly,time-consuming and may require significant financial and personnel resources.Therefore,even if we are succ

267、essful in defending against any such actions that may bebrought against us,our business may be impaired.If any of the above occur,it could adversely affect our ability to operate our business and our results of operations.U.S.Healthcare Reform In the U.S.and some non-U.S.jurisdictions,there have bee

268、n,and we expect there will continue to be,a number of legislative and regulatory changes and proposed changesregarding the healthcare system that could,among other things,affect our ability to profitably sell any product candidates for which we obtain marketing approval.Among policy makers and payor

269、s in the U.S.and elsewhere,there is significant interest in promoting changes in healthcare systems with the stated goals of containinghealthcare costs,improving quality and/or expanding access.For example,in the U.S.,in March 2010,the Patient Protection and Affordable Care Act(the“ACA”),was passed,

270、which substantially changed the way healthcare is financed by both the government and private insurers.There have been judicial and Congressional challenges to certain aspects of the ACA,as well as recent efforts to repeal or replace certain aspects of the ACA and we expectsuch challenges and amendm

271、ents to continue.For example,in June 2021 the U.S.Supreme Court held that Texas and other challengers had no legal standing to challenge theACA,dismissing the case on procedural grounds without specifically ruling on the constitutionality of the ACA.Thus,the ACA will remain in effect in its current

272、form.It ispossible that the ACA will be subject to judicial or Congressional challenges in the future.It is unclear how any such challenges and healthcare measures promulgated by thegovernment will impact the ACA,our business,financial condition and results of operations.Complying with any new legis

273、lation or reversing changes implemented under theACA could be time-intensive and expensive,resulting in a material adverse effect on our business.In addition,other legislative changes have been proposed and adopted in the U.S.since the ACA was enacted.These changes include aggregate reductions to Me

274、dicarepayments to providers of up to 2%per fiscal year pursuant to the Budget Control Act of 2011,which began in 2013 and will remain in effect through 2032 unless additionalCongressional action is taken.Other legislative changes have been proposed and adopted in the United States since the ACA was

275、enacted.For example,the American Rescue Plan Act of 2021 eliminated thestatutory Medicaid drug rebate cap manufacturers pay to state Medicaid programs.Elimination of this cap may require pharmaceutical manufacturers to pay more in rebatesthan it receives on the sale of products,which could have a ma

276、terial impact on our business.Moreover,payment methodologies may be subject to changes in healthcarelegislation and regulatory initiatives.For example,the Centers for Medicare&Medicaid Services(“CMS”)may develop new payment and delivery models,such as bundledpayment models.Recently,there has been he

277、ightened governmental scrutiny over the manner in which manufacturers set prices for their products.Such scrutiny has resulted inseveral recent U.S.Congressional inquiries and proposed and enacted federal and state legislation designed to,among other things,bring more transparency to drug pricing,re

278、duce the cost of prescription drugs under Medicare,review the relationship between pricing and manufacturer patient programs,and reform government programreimbursement methodologies for drugs.In August 2022,Congress passed the Inflation Reduction Act of 2022,or IRA,which includes prescription drug p

279、rovisions that havesignificant implications for the pharmaceutical industry and Medicare beneficiaries,including allowing the federal government to negotiate a maximum fair price for certainhigh-priced single source Medicare drugs,imposing penalties and excise tax for manufacturers that fail to comp

280、ly with the drug price negotiation requirements,requiringinflation rebates for all Medicare Part B and Part D drugs,with limited exceptions,if their drug prices increase faster than inflation,and redesigning Medicare Part D to reduceout-of-pocket prescription drug costs for beneficiaries,among other

281、 changes.Various industry stakeholders,including certain pharmaceutical companies and the PharmaceuticalResearch and Manufacturers of America,have initiated lawsuits against the federal government asserting that the price negotiation provisions of the IRA are unconstitutional.The impact of these jud

282、icial challenges,legislative,executive,and administrative actions and any future healthcare measures and agency rules implemented by the governmenton us and the pharmaceutical industry as a whole is unclear.The implementation of cost containment measures or other healthcare reforms may prevent us fr

283、om being able togenerate revenue,attain profitability,or commercialize our product candidates if approved.18Table of contents In addition,individual states in the United States have also become increasingly active in implementing regulations designed to control pharmaceutical product pricing,includi

284、ng price or patient reimbursement constraints,discounts,restrictions on certain product access and marketing cost disclosure and transparency measures and,in somecases,mechanisms to encourage importation from other countries and bulk purchasing.A number of states are considering or have recently ena

285、cted state drug pricetransparency and reporting laws that could substantially increase our compliance burdens and expose us to greater liability under such state laws once we begincommercialization after obtaining regulatory approval for any of our products.Further,FDA recently authorized the state

286、of Florida to import certain prescription drugs fromCanada for a period of two years to help reduce drug costs,provided that Floridas Agency for Health Care Administration meets the requirements set forth by the FDA.Otherstates may follow Florida.Furthermore,there has been increased interest by thir

287、d party payors and governmental authorities in reference to pricing systems and publication ofdiscounts and list prices.The implementation of cost containment measures or other healthcare reforms may prevent us from being able to generate revenue,attain profitabilityor commercialize our product cand

288、idates.The IRA became law in August 2022.The IRA includes new provisions related to health care,and prescription drug pricing in particular,which is expected to have far-reaching,long-term,and adverse effects on the pharmaceutical and biotech industry and its stakeholders.The prescription drug prici

289、ng provisions have already altered andterminated some pharmaceutical drug research and development strategies and going forward may impact patent litigation and market entry opportunities for competitor drugs.Before the IRA became law,the Social Security Act prohibited the Secretary of Health and Hu

290、man Services(HHS)from negotiating with drug manufacturers.The IRA nowenables the Centers for Medicare&Medicaid Services(CMS)within HHS to negotiate a“maximum fair price”(MFP)for selected high-expenditure,single-source drugsannually.The price setting provisions of the IRA may also discourage further

291、development of drugs that have already been approved to treat one rare disease.A single-source small molecule drug generally qualifies for selection if at least seven years have passed since the date of approval from the FDA and there are no genericalternatives commercially available.Drug manufactur

292、ers are provided approximately 24 months advance notice for negotiation with CMS prior to the implementation of thenegotiated price therefore the pharmaceutical companies are afforded at least nine years before they are required sell their product under Medicare Part B and Part D,asapplicable,at the

293、 CMS-negotiated price.Pharmaceutical products covered by private insurance or paid for in cash by patients are not subject to the CMS price-negotiated MFP.The small-molecule drug development pipeline has been impacted as many large and small pharmaceutical and biotech companies have already shifted

294、their strategies toaccommodate slightly more favorable treatment of biologics.Under the IRA,biologics are afforded more time on the market before becoming eligible for price-reductionnegotiations.Specifically,compared to a small-molecules,biologics now have an extra four years to recoup investments

295、before being subjected to CMS-negotiated MFP.Consequently,investors may view biotech more favorably than small-molecule drug innovation.Because federal funding is one of many aspects CMS considers when negotiating the MFP under the IRA,a drug developed using government funding,such as from theNation

296、al Institute of Health(NIH),risks lower MFP due to that collaboration.This risk may also discourage investment in drug manufacturers who have accepted funding fromthe U.S.government.Since the IRA is ambiguous with respect to what constitutes“prior”financial support leads to further uncertainty for b

297、oth investors and innovators.As aconsequence of the IRA both pharmaceutical companies and their investors may be disincentivized from pursuing development of scientific innovations associated with NIHcollaboration.19Table of contents While the IRA has created many uncertainties and potentially broad

298、 applications in the industry,many believe that the governments new pricing scheme may also impactpatent infringement litigation.Patent litigation strategies may adjust for both the innovators and follow on manufacturers,depending on the timing,potential availability ofgeneric drugs or biosimilar co

299、mpetitors,and cost versus benefit analysis of litigation.While we endeavor to monitor developments with the IRA and its resultant risks andconsequences,especially with the companies with near-term impacts,we may not be able to anticipate all necessary alterations to our business strategies,actions b

300、y ourpotential competitors,or subsequent modifications of Congress.Employees and Human Capital As of December 31,2024,we had six(6)employees.None of our employees are represented by a labor union or covered under a collective bargaining agreement.We alsoengage multiple contractors,consultants and ad

301、visors who provide services on a part-time basis.Our employees,contractors and consultants conduct or oversee all day-to-dayoperations of the Company including technical development,research,and administration.We currently have no material retainers or minimum financial commitments with anyof our co

302、nsultants,contractors or service providers.We consider relations with our employees,consultants,and contractors to be satisfactory.Our human capital resources objectives include,as applicable,identifying,recruiting,retaining,incentivizing and integrating our existing and new employees,advisors andco

303、nsultants.The principal purposes of our equity and cash incentive plans are to attract,retain and reward personnel through the granting of stock-based and cash-basedcompensation awards,in order to increase stockholder value and the success of our company by motivating such individuals to perform to

304、the best of their abilities and achieveour objectives.Corporate and Available Information We were incorporated in Nevada in May 2011.Our principal executive offices are located at 505 Lomas Santa Fe,Suite 160,Solana Beach,CA 92075,and our telephonenumber is(858)925-7049.Our investor relations websit

305、e is located at .Information contained on the website is not incorporated by reference into this Form 10-K or any other filings we make with the SEC.We use our investor relations website to post important information for investors,including news releases,analyst presentations,and supplemental financ

306、ial information,and asa means of disclosing material non-public information and for complying with our disclosure obligations under Regulation FD.Accordingly,investors should monitor ourinvestor relations website,in addition to following press releases,SEC filings and public conference calls and web

307、casts.We also make available,free of charge,on our investorrelations website,our Annual Reports on Form 10-K,Quarterly Reports on Form 10-Q,Current Reports on Form 8-K and amendments to these reports as soon as reasonablypracticable after electronically filing or furnishing those reports to the SEC.

308、ITEM 1A.RISK FACTORS You should consider carefully the following information about the risks described below,together with the other information contained in this Annual Report on Form 10-Kand in our other public filings,in evaluating our business.If any of the following risks actually occur,our bus

309、iness,financial condition,results of operations,and future growthprospects would likely be materially and adversely affected.In these circumstances,the market price of our Common Stock would likely decline.The Company has organizedthe description of these risks into groupings in an effort to enhance

310、 readability,but many of the risks interrelate or could be grouped or ordered in other ways,so no specialsignificance should be attributed to the groupings or order below.20Table of contents Risk Factor Summary Risks Related to our Business and Product Candidates:We will need to raise additional fin

311、ancing to support our business objectives.We cannot be sure we will be able to obtain additional financing on terms favorableto us when needed,or at all.If we are unable to obtain additional financing to meet our needs,our operations may be adversely affected or terminated.We are currently receiving

312、 Research and Development,or R&D,tax credits from the UK in connection with our clinical trials being conducted in the UK.Witheffect for accounting periods starting on or after April 1,2024,expenditure on certain staffing costs in connection with activities which take place outside the UKas part of

313、our clinical trials,will not qualify for R&D tax credits unless restrictive conditions are met.If we fail to comply with our obligations under our patent licenses with third parties,we could lose license rights that are vital to our business.Changes in regulatory requirements or other unforeseen cir

314、cumstances may impact the timing of the initiation or completion of our clinical trials.We face many of the risks and difficulties frequently encountered by relatively new companies with respect to our operations.The Company has no mature product candidates and may not be successful in licensing any

315、.Even if the Company is successful in licensing lead product candidates,resource limitations may limit our ability to successfully develop them.Risks Related to our Intellectual Property:If we are unable to obtain and maintain patent protection for our products,our competitors could develop and comm

316、ercialize products and technology similar oridentical to our product candidates,and our ability to successfully commercialize any product candidates we may develop,and our science may be adverselyaffected.Obtaining and maintaining our patent protection depends on compliance with various procedural m

317、easures,document submissions,fee payments and otherrequirements imposed by government patent agencies,and our patent protection could be reduced or eliminated for non-compliance with these requirements.We may be subject to claims challenging the inventorship of our patents and other intellectual pro

318、perty.Intellectual property rights do not necessarily address all potential threats.Intellectual property litigation could cause us to spend substantial resources and distract our personnel from their normal responsibilities.21Table of contents Risks Related to our Securities:Our Common Stock may be

319、 delisted from The Nasdaq Capital Market if the Company cannot maintain compliance with Nasdaqs continued listing requirements.If we sell securities in future financings stockholders may experience immediate dilution and,as a result,our stock price may decline.The price of our securities may be vola

320、tile,and you could lose all or part of your investment.Further,we do not know whether an active,liquid and orderlytrading market will continue for our securities or what the market price of our securities will be and as a result it may be difficult for you to sell your shares of oursecurities.Shares

321、 of our Common Stock that have not been registered under federal securities laws are subject to resale restrictions imposed by Rule 144,including those setforth in Rule 144(i)which apply to a former“shell company.”Sales of our currently issued and outstanding stock may become freely tradable pursuan

322、t to Rule 144 and sales of such shares may have a depressive effect on theshare price of its Common Stock.RISKS RELATED TO OUR BUSINESS AND PRODUCT CANDIDATES Our financial condition raises substantial doubt as to our ability to continue as a going concern.As of December 31,2024,we had approximately

323、$2.3 million in cash and cash equivalents and restricted cash,and working capital of$785 thousand,and we have incurred andexpect to continue to incur significant costs in pursuit of our drug candidates.For the year ended December 31,2024,we recorded a net loss of approximately$9.8 million andused ca

324、sh in operations of approximately$8.4 million.Our financial statements for the year ended December 31,2024 have been prepared assuming that we will continue tooperate as a going concern,which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business.

325、To date,we have not generatedsubstantial product revenues from our activities and have incurred substantial operating losses.We expect that we will continue to generate substantial operating losses for theforeseeable future until we complete development and approval of one of our product candidates.

326、We expect to continue to fund our operations primarily through utilization ofour current financial resources and additional raises of capital.These conditions raise substantial doubt about our ability to continue as a going concern.The Company has evaluated the significance of the uncertainty regard

327、ing theCompanys financial condition in relation to its ability to meet its obligations,which has raised substantial doubt about the Companys ability to continue as a going concern.While it is very difficult to estimate the Companys future liquidity requirements,the Company believes if it is unable t

328、o obtain additional financing,existing cash resources willnot be sufficient to enable it to fund the anticipated level of operations through one year from the date the accompanying financial statements are issued.There can be noassurances that the Company will be able to secure additional financing

329、on acceptable terms.In the event the Company does not secure additional financing,the Company willbe forced to delay,reduce,or eliminate some or all of its discretionary spending,which could adversely affect the Companys business prospects,ability to meet long-termliquidity needs and the ability to

330、continue operations.The Company will need to raise additional financing to support our business objectives.The Company cannot be sure the Company will be able to obtain additionalfinancing on terms favorable to us when needed,or at all.If the Company is unable to obtain additional financing to meet

331、our needs,our operations may be adverselyaffected or terminated.Since our inception,the Company has used substantial amounts of cash to fund our research and operations and we expect our expenses to increase substantially in theforeseeable future as developing our product candidates and conducting a

332、nd completing clinical trials will require substantial amounts of capital.The Company will also requirea significant additional amount of capital to commercialize any products that may be approved in the future.The Company will need to raise additional funds in the near future in order to satisfy ou

333、r working capital and capital expenditure requirements.The Company may raiseadditional funds through public or private equity offerings,debt financings,strategic partnerships or alliances,receivables or royalty financings or corporate collaboration andlicensing arrangements.The Company cannot be certain that additional funding will be available on acceptable terms,or at all.To the extent that the