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| PART I | | |
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| Item 1. Business | | 7 |
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| Item 1A. Risk Factors | | 46 |
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| Item 1B. Unresolved Staff Comments | | 97 |
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| Item 1C. Cybersecurity | | 97 |
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| Item 2. Properties | | 98 |
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| Item 3. Legal Proceedings | | 98 |
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| Item 4. Mine Safety Disclosures | | 98 |
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| PART II | | |
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| Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities | | 98 |
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| Item 6. Reserved | | 101 |
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| Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations | | 102 |
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| Item 7A. Quantitative and Qualitative Disclosures About Market Risk | | 110 |
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| Item 8. Financial Statements and Supplementary Data | | F-1 |
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| Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure | | 100 |
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| Item 9A. Controls and Procedures | | 100 |
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| Item 9B. Other Information | | 101 |
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| Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections | | 102 |
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| PART III | | |
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| Item 10. Directors, Executive Officers and Corporate Governance | | 102 |
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| Item 11. Executive Compensation | | 102 |
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| Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters | | 102 |
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| Item 13. Certain Relationships and Related Transactions, and Director Independence | | 102 |
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| Item 14. Principal Accounting Fees and Services | | 103 |
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| PART IV | | |
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| Item 15. Exhibits and Financial Statement Schedules | | 103 |
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| Signatures | | 110 |
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| Index to Consolidated Financial Statements | | F-1 |
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SUMMARY OF THE MATERIAL AND OTHER RISKS ASSOCIATED WITH OUR BUSINESS
Our business is subject to numerous material and other risks and uncertainties that you should be aware of in evaluating our business. These risks are described more fully in Item 1A – “Risk Factors” and include, but are not limited to, the following:
Risks Related to the Development of Our Product Candidates
| ● | Our product candidates are still in the early stages of development and there is significant uncertainty that any such products will be approved. |
| ● | We have concentrated a portion of our research and development efforts on the treatment of Alzheimer’s Disease, a field that has seen very limited success in drug development. |
| ● | Our business is heavily dependent on the successful development, regulatory approval and commercialization of PMN310 and any future product candidates that we may develop or acquire, including PMN442 and PMN267. |
| ● | Clinical and nonclinical drug development involves a lengthy, expensive and uncertain process. The results of nonclinical studies and early clinical trials are not always predictive of future results. PMN310 or any other product candidate that we advance into clinical trials may not achieve favorable results in later clinical trials, if any, or receive marketing approval. |
| ● | Interim, “top-line” and preliminary results from our clinical trials that we announce or publish from time to time may change as more data become available and is subject to audit and verification procedures that could result in material changes in the final data. |
| ● | We cannot be certain that PMN310, PMN442, PMN267 or any of our future product candidates will receive regulatory approval, and without regulatory approval we will not be able to market our product candidates. |
Risks Related to Our Financial Position and Capital Needs
| ● | We have incurred losses since inception, we anticipate that we will incur continued losses for the foreseeable future and will require additional financing to achieve our goals, and a failure to obtain this necessary capital when needed on acceptable terms, or at all, could force us to delay, limit, reduce or terminate our development programs, commercialization efforts or other operations. |
| ● | We have no product candidates approved for commercial sale, we have never generated any revenue from product sales and we may never be profitable. |
Risks Related to the Commercialization of Our Product Candidates
| ● | The market opportunities for PMN310, PMN442, PMN267, and future product candidates, if approved, may be smaller than we anticipate. |
| ● | Even if our current or future product candidates obtain regulatory approval, they may fail to achieve the broad degree of adoption and use by physicians, patients, hospitals, healthcare payors and others in the medical community necessary for commercial success. |
| ● | Our product candidates have never been manufactured on a commercial scale, and there are risks associated with scaling up manufacturing to commercial scale. In particular, we will need to develop a larger scale manufacturing process to commercialize our potential products, which may not be successful. |
Risks Related to Our Dependence on Third Parties
| ● | We will rely on third parties to supply components, research, develop, test, and manufacture our product candidates and market, if approved. The loss of any of these third-party relationships or the failure of any of them to meet their obligations to us could affect our ability to develop and obtain approval of our product candidates in a timely manner. |
| ● | If any of our third-party manufacturers encounter difficulties in production of PMN310, PMN267, PMN442 or any future product candidate we develop, or fail to meet rigorously enforced regulatory standards, our ability to provide supply of our product candidates for clinical trials or, if approved, for commercial sale could be delayed or stopped, or we may be unable to maintain a commercially viable cost structure. |
Risks Related to Our Intellectual Property
| ● | If we are unable to obtain and maintain sufficient intellectual property protection for our product candidates, and other proprietary technologies we develop, or if the scope of the intellectual property protection obtained is not sufficiently broad, our competitors could develop and commercialize products similar or identical to ours, and our ability to successfully commercialize our product candidates, and other proprietary technologies if approved, may be adversely affected. |
| ● | If we fail to comply with our obligations in the agreements under which we license intellectual property rights from third parties, or otherwise experience disruptions to our business relationships with our licensors, we could lose license rights that are important to our business. |
| ● | We may not be successful in obtaining or maintaining necessary rights to product components and processes for our development pipeline through in-licenses. |
Risks Related to Legal and Regulatory Compliance Matters
| ● | If we are not able to obtain, or if there are delays in obtaining, required regulatory approvals, we will not be able to commercialize future product candidates, and our ability to generate revenue be materially impaired. |
| ● | Even if we obtain regulatory approval for PMN310, PMN442, PMN267 or any future product candidates, they will remain subject to ongoing regulatory oversight, which may result in significant additional expense. |
Risks Related to Our Business and Industry
| ● | We face significant competition in an environment of rapid technological and scientific change, and there is a possibility that our competitors may achieve regulatory approval before us or develop therapies that are safer or more effective than ours. |
| ● | If we fail to attract and retain senior management and key scientific personnel, our business may be materially and adversely affected. |
Risks Related to Ownership of Our Common Shares and Our Status as a U.S. Public Company
| ● | Investment in our Common Shares is speculative, involves risk, and there is no guarantee of a return. |
| ● | The price of our Common Shares may be volatile. |
| ● | Our issuance of additional capital stock in connection with financings, acquisitions, investments, our stock incentive plans or otherwise will dilute all other shareholders. |
| ● | There is no active market for our warrants and pre-funded warrants. |
General Risk Factors
| ● | The elimination of monetary liability against our directors, officers, and employees under Canadian law and the existence of indemnification rights for our obligations to our directors, officers, and employees may result in substantial expenditures by us and may discourage lawsuits against our directors, officers, and employees. |
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Annual Report on Form 10-K, or Annual Report includes statements that express ProMIS’ opinions, expectations, beliefs, plans, objectives, assumptions, or projections regarding future events or future results and therefore are, or may be deemed to be, “forward-looking statements.” These forward-looking statements can generally be identified by the use of forward-looking terminology, including the terms “believes,” “estimates,” “anticipates,” “expects,” “seeks,” “projects,” “intends,” “plans,” “may,” “will,” or “should” or, in each case, their negative or other variations or comparable terminology. These forward-looking statements include all matters that are not historical facts. They appear in a number of places throughout this Annual Report and include statements regarding our intentions, beliefs or current expectations concerning, among other things, results of operations, financial condition, liquidity, our ability to continue as a going concern, patent term expiration dates, prospects, growth, strategies and the markets in which ProMIS operates. Such forward-looking statements are based on available current market material and management’s expectations, beliefs and forecasts concerning future events impacting ProMIS. Factors that may impact such forward- looking statements include:
| ● | the anticipated amount, timing and accounting of contingent, milestone, royalty and other payments under licensing or collaboration agreements; |
| ● | tax positions and contingencies; research and development costs; compensation and other selling, general and administrative expense; |
| ● | foreign currency exchange risk; |
| ● | estimated fair value of assets and liabilities; |
| ● | the potential impact of increased competition in the markets in which we compete; |
| ● | patent terms, patent term extensions, patent office actions and expected availability and period of regulatory exclusivity; |
| ● | our plans and investments in our portfolio as well as implementation of our corporate strategy; |
| ● | the risk that we will maintain enough liquidity to execute our business plan and our ability to continue as a going concern; |
| ● | our expected use of proceeds from sales of our common shares or common share equivalents in offerings or “at-the-market” offerings and the period over which such proceeds, together with existing cash, will be sufficient to meet our operating needs; |
| ● | the drivers for growing our business, including our plans and intention to commit resources relating to discovery, research and development programs and business development opportunities as well as the potential benefits and results of, and the anticipated completion of, certain business development transactions; |
| ● | the expectations, development plans and anticipated timelines, including costs and timing of clinical trials, filings and approvals, of our products candidates and pipeline programs, including collaborations with third-parties, as well as the potential therapeutic scope of the development and commercialization of our and our collaborators’ pipeline product candidates, if approved; |
| ● | the timing, outcome and impact of administrative, regulatory, legal and other proceedings related to our patents and other proprietary and intellectual property rights, tax audits, assessments and settlements, pricing matters, sales and promotional practices, product liability and other matters; |
| ● | our ability to finance our operations and business initiatives and obtain funding for such activities; |
| ● | the direct and indirect impact of health crises on our business and operations, including expenses, the supply chain, manufacturing, cyber-attacks or other privacy or data security incidents, research and development costs, clinical trials and employees; |
| ● | the impact of global financial, economic, political and health events, such as rising inflation, market volatility, fluctuating interest rates, capital markets disruptions, legislative action, possible government shutdowns and international tariffs; |
| ● | the potential impact of healthcare reform in the United States and measures being taken worldwide designed to reduce healthcare costs and limit the overall level of government expenditures, including the impact of pricing actions and reduced reimbursement for our product candidates, if approved; |
| ● | the impact of the continued uncertainty of the credit and economic conditions in certain countries and our collection of accounts receivable in such countries; |
| ● | the risk that we become characterized as a passive foreign investment company; |
| ● | our ability to prevent and successfully remediate any significant deficiencies or material weaknesses in internal controls over financial reporting; |
| ● | lease commitments, purchase obligations and the timing and satisfaction of other contractual obligations; and |
| ● | the impact of new laws (including tax and tariff policies), executive orders, regulatory requirements, judicial decisions and accounting standards. |
The forward-looking statements contained in this Annual Report on Form 10-K are based on ProMIS’ current expectations and beliefs concerning future developments and their potential effects on ProMIS. There can be no assurance that future developments affecting ProMIS will be those that ProMIS has anticipated. These forward-looking statements involve a number of risks, uncertainties, some of which are beyond ProMIS’ control, or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements. These risks and uncertainties include, but are not limited to, those factors described under the heading “Risk Factors.” Should one or more of these risks or uncertainties materialize, or should any of the assumptions prove incorrect, actual results may vary in material respects from those projected in these forward-looking statements. Moreover, the occurrence of the events described in the “Risk Factors” section and elsewhere in this Annual Report on Form 10-K may adversely affect ProMIS. ProMIS will not undertake any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.
