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| PART I. FINANCIAL INFORMATION | 5 | |
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| Item 1. | Unaudited Financial Statements | 5 |
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| Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 16 |
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| Item 3. | Quantitative and Qualitative Disclosures About Market Risks | 20 |
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| Item 4. | Controls and Procedures | 20 |
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| PART II. OTHER INFORMATION | 20 | |
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| Item 1. | Legal Proceedings | 20 |
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| Item 1A | Risk Factors | 21 |
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| Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 58 |
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| Item 3. | Defaults Upon Senior Securities | 58 |
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| Item 4. | Mine Safety Disclosures | 58 |
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| Item 5. | Other Information | 59 |
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| Item 6. | Exhibits | 59 |
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| SIGNATURES | 61 | |
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SUMMARY OF RISK FACTORS
Our business is subject to risks of which you should be aware before making an investment decision. The risks described below are a summary of the principal risks associated with an investment in us and are not the only risks we face. You should carefully consider these risk factors, the risk factors described in Part II, Item 1A of this Quarterly Report on Form 10-Q (this “Form 10-Q”), and the other reports and documents that we have filed with the Securities and Exchange Commission.
Risks Related to our Finances and Capital Requirements
| ● | We have incurred significant losses since our inception and anticipate that we will incur continued losses for the foreseeable future. |
| ● | We may in the future need to raise additional funding, which may not be available on acceptable terms to us, or at all. Failure to obtain necessary capital when needed may force us to delay, limit or terminate our potential product candidates. |
| ● | We have not generated any revenue from our development stage products, and we do not know when, or if, we will generate any revenue. |
| ● | Our short operating history makes it difficult to evaluate our business and prospects. |
| ● | Our success is contingent on raising additional capital, and our efforts to do so may fail. Even if successful, our future capital raising activities may dilute our current stockholders, restrict our operations, or cause us to relinquish proprietary rights. |
Risks Pertaining to our Business Strategy, Structure and Organization
| ● | Our future growth and success depend on our ability to successfully develop, and, if approved, commercialize our product candidates, which we have yet to do. |
| ● | Our future success is highly dependent on the successful development of our chimeric antigen receptor engineered T cell (“CAR T”) technology and oncolytic virus product candidates. |
Risks Inherent in Drug Development and Commercialization
| ● | Preclinical and clinical development are both highly speculative and carry high failure risk. |
| ● | We may not receive the required regulatory approvals for any of our product candidates on our projected timelines, if at all, which may result in increased costs and delay our ability to generate revenue. |
| ● | We may not obtain the desired labeling claims or intended uses for product promotion, or favorable scheduling classifications, to successfully promote our product candidates, if approved. |
| ● | If a product candidate demonstrates adverse events, we may need to abandon or limit the development of such product candidate. |
| ● | Even if a product candidate is approved, it may be subject to various post-marketing requirements, including studies or clinical trials, and increased regulatory scrutiny. |
| ● | Our competitors may develop treatments for our product candidates’ target indications, which could limit our product candidates’ commercial opportunity and profitability, if approved. |
| ● | If our product candidates, if approved, are not broadly accepted by the healthcare community, the revenues from any such product will likely be limited. |
| ● | Any successful products’ liability claims related to any of our current or future product candidates may cause us to incur substantial liability and limit the commercialization of any such product candidates, if approved. |
Risks Related to Reliance on Third Parties
| ● | We rely, and expect to continue to rely, on third parties to conduct our preclinical studies and clinical trials, and those third parties may not perform satisfactorily, including failing to meet deadlines for the completion of such trials or complying with applicable regulatory requirements. |
| ● | We contract with third parties for the manufacture of our product candidates for preclinical and clinical testing and may also do so for commercialization, if and when our product candidates are approved. |
| ● | We rely on clinical data and results obtained by third parties, which may prove inaccurate or unreliable. |
| ● | We may need to license certain intellectual property from third parties, and such licenses may not be available or may not be available on commercially reasonable terms. |
Risks Relating to Legislation and Regulation Affecting the Biopharmaceutical and Other Industries
| ● | We operate in a heavily regulated industry, and we cannot predict the impact that any future legislation or administrative or executive action may have on our operations. |
| ● | We may be subject to anti-kickback, fraud and abuse, false claims, transparency, health information privacy and security and other healthcare laws and regulations, which could expose us to criminal sanctions, civil penalties, contractual damages, reputational harm, administrative burdens and diminished profits and future earnings. |
| ● | We are subject to numerous environmental, health and safety laws and regulations and could become subject to fines or penalties or incur costs that could harm our business. |
Risks Pertaining to Intellectual Property and Potential Disputes with Licensors Thereof
| ● | If we are unable to obtain and maintain sufficient patent protection for our technology and products, our competitors could develop and commercialize products similar or identical to ours and our ability to successfully commercialize our technology and products could therefore be impaired. |
| ● | We depend on our licensors to maintain and enforce the intellectual property rights covering certain of our product candidates. |
| ● | We or our licensors may be subject to costly and time-consuming litigation for infringement of third-party intellectual property rights or to enforce our or our licensors’ intellectual property rights against third-party infringers. |
| ● | Any dispute with our licensors may affect our ability to develop or commercialize our product candidates. |
Risks Relating to Our Control by Fortress Biotech, Inc. (“Fortress”)
| ● | Fortress controls a voting majority of our common stock and has the right to receive significant share grants annually, which will result in dilution of our other stockholders and could reduce the value of our common stock. |
| ● | We have entered into certain agreements with Fortress and may have received better terms from unaffiliated third parties. |
| ● | We share certain directors with Fortress, which could create conflicts of interest between us and Fortress. |
General Risks and Risks Associated with Ownership of Our Common Stock
| ● | We may become involved in securities class action litigation that could divert management’s attention and harm our business. |
| ● | The market price for our common stock has been volatile and may continue to fluctuate or may decline significantly in the future. |
| ● | The occurrence of a catastrophic disaster could damage our facilities beyond insurance limits, or we could lose key data which could cause us to curtail or cease operations. |
| ● | We rely on information technology, and any internet or internal computer system failures, inadequacies, interruptions or compromises of our systems or the security of confidential information could damage our reputation and harm our business. |
| ● | Our employees, consultants, or third-party partners may engage in misconduct or other improper activities, including but not necessarily limited to noncompliance with regulatory standards and requirements or internal procedures, policies or agreements to which such employees, consultants and partners are subject, any of which could have a material adverse effect on our business. |
| ● | We may not be able to manage our business effectively if we are unable to attract and retain key personnel. |
| ● | Our growth is subject to economic and geopolitical conditions. |
| ● | Our business could be adversely affected by the effects of health pandemics or epidemics, which could cause significant disruptions in our operations. |
| ● | Our business and operations would suffer in the event of computer system failures, cyber-attacks, or deficiencies in our or third parties’ cybersecurity. |
| ● | We are currently not in compliance with certain continued listing rules of The Nasdaq Stock Market LLC (“Nasdaq”), and if we are unable to meet the continued listing requirements and/or regain compliance with such rules, our common stock may be subject to delisting from the Nasdaq Capital Market. The delisting of our securities from Nasdaq may decrease the market liquidity and market price of our common stock. |
