FORM 10-K
INDEX
| Page |
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| PART I |
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| Item 1. | Business | 6 |
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| Item 1A. | Risk Factors | 33 |
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| Item 1B. | Unresolved Staff Comments | 77 |
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| Item 1C. | Cybersecurity | 77 |
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| Item 2. | Properties | 77 |
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| Item 3. | Legal Proceedings | 77 |
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| Item 4. | Mine Safety Disclosures | 79 |
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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 | 79 |
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| Item 6. | [Reserved] | 80 |
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| Item 7. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 81 |
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| Item 7A. | Quantitative and Qualitative Disclosures About Market Risk | 89 |
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| Item 8. | Consolidated Financial Statements and Supplementary Data | 89 |
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| Item 9. | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure | 110 |
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| Item 9A. | Controls and Procedures | 111 |
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| Item 9B. | Other Information | 113 |
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| Item 9C. | Disclosure Regarding Foreign Jurisdiction that Prevent Inspection | 113 |
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| PART III |
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| Item 10. | Directors and Executive Officers and Corporate Governance | 113 |
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| Item 11. | Executive Compensation | 115 |
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| Item 12. | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters | 115 |
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| Item 13. | Certain Relationships and Related Transactions, and Director Independence | 116 |
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| Item 14. | Principal Accountant Fees and Services | 116 |
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| PART IV |
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| Item 15. | Exhibits and Consolidated Financial Statement Schedules | 116 |
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| Signatures | | 119 |
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Part I
FORWARD-LOOKING STATEMENTS AND NOTICES
This Annual Report on Form 10-K, including the portions of our definitive Proxy Statement incorporated by reference herein, contains “forward-looking statements” within the meaning of the Private Securities Reform Act of 1995. We intend that such forward-looking statements be protected by the safe harbor created thereby. All statements other than statements of present or historical facts contained in this Annual Report, including statements anticipating or otherwise relating to our future results of operations and financial position, future results of ongoing clinical trials, business strategy, plans and objectives for future operations, and anticipated events or trends, are forward-looking statements. In some cases, forward-looking statements are identified by terms such as “aim,” “anticipate,” “believe,” “could,” “drive,” “estimate,” “expect,” “forecast,” “future,” “goal,” “intend,” “may,” “objective,” “plan,” “potential,” “project,” “seek,” “should,” “strategy,” “will” and “would” or the negatives of these terms or other comparable terminology.
Examples of forward-looking statements include, but are not limited to, statements about:
| ● | the expected safety profile or treatment benefits, if any, of simufilam for people with Alzheimer’s disease in our on-going Phase 3 studies; |
| ● | our reliance on third-party contractors to conduct all of our clinical and non-clinical trials and to make drug supply on a large-scale for our Phase 3 clinical program, or their ability to do so on-time or on-budget; |
| ● | limitations around data interpretation from results of any of the three clinical phases of our 2-year safety study of simufilam in patients with Alzheimer’s disease, as compared to clinical results from randomized controlled trials; |
| ● | the ability of clinical scales to assess cognition or health in our trials of Alzheimer’s disease; |
| ● | any significant changes we may make, or anticipate making, to the design of any of our on-going Phase 3 studies of simufilam in patients with Alzheimer’s disease; |
| ● | our ability to initiate, conduct or analyze additional clinical and non-clinical studies with our product candidates targeted at Alzheimer’s disease and other neurodegenerative diseases; |
| ● | the impact of pre-clinical findings on our ability to develop our product candidates; |
| ● | the interpretation of results from our pre-clinical or early clinical studies, such as Phase 1 and Phase 2 studies; |
| ● | our plans to further develop SavaDx, our investigational blood-based diagnostic product candidate; |
| ● | our ability or willingness to expand therapeutic indications for simufilam outside of Alzheimer’s disease; |
| ● | the safety, efficacy, or potential therapeutic benefits of our product candidates; |
| ● | our use of exploratory ‘research use only’ non-safety related biomarkers in our clinical studies; |
| ● | our ability to file for and obtain regulatory approval of our product candidates; |
| ● | our strategy and ability to establish an infrastructure to commercialize any product candidates, if approved; |
| ● | the potential future revenues of our product candidates, if approved and commercialized; |
| ● | the market acceptance of our product candidates, if approved and commercialized; |
| ● | the pricing and reimbursement of our product candidates, if approved and commercialized; |
| ● | the utility of protection, or the sufficiency, of our intellectual property; |
| ● | our potential competitors or competitive products for the treatment of Alzheimer’s disease; |
| ● | our need to raise new capital from time to time to continue our operations or to expand our operations; |
| ● | our use of multiple third-party vendors and collaborators, including a Clinical Research Organization (CRO), to conduct clinical and non-clinical studies of our lead product candidate; |
| ● | expectations regarding trade secrets, technological innovations, licensing agreements and outsourcing of certain business functions; |
| ● | our expenses or incurred costs increasing by material amounts in excess of budgeted amounts due to unexpected cost overruns, inflation, imperfect forecasting, increased scope of activities or other causes; |
| ● | fluctuations in our financial or operating results; |
| ● | our operating losses, anticipated operating and capital expenditures and legal expenses; |
| ● | expectations regarding the issuance of shares of common stock, options or other equity to employees or directors pursuant to equity compensation awards, net of employment taxes; |
| ● | expectations regarding the issuance of shares of common stock to holders of outstanding warrants that are exercised for cash; |
| ● | the development and maintenance of our internal information systems and infrastructure; |
| ● | our ability to minimize the likelihood and impact of adverse cybersecurity incidents in our information systems and infrastructure; |
| ● | our need to hire additional personnel and our ability to attract and retain such personnel; |
| ● | existing or emerging regulations and regulatory developments in the United States and other jurisdictions in which we operate; |
| ● | our plans to expand the size and scope of our operations; |
| ● | the sufficiency of our cash resources to continue to fund our operations; |
| ● | potential future agreements with third parties in connection with the commercialization of our product candidates; |
| ● | the accuracy of our estimates regarding expenses, capital requirements, and needs for additional financing; |
| ● | assumptions and estimates used for our disclosures regarding stock-based compensation; |
| ● | the expense, timing and outcome of pending or future litigation or other legal proceedings and claims, including U.S. government inquiries; and |
| ● | litigation, claims or other uncertainties that may arise from allegations made against us or our collaborators. |
The forward-looking statements in this Annual Report are based on our beliefs, assumptions and expectations of our future performance, events and developments, based on currently available information and plans. Forward-looking statements involve risks and uncertainties, and our actual results and the timing of events may differ materially from those discussed in the forward-looking statements. Such forward-looking statements include, but are not limited to, those described in “Item 1A. Risk Factors”, and investors should consider such risks before investing in our Company. Accordingly, you should not place undue reliance upon any forward-looking statements.
We cannot assure you that we will realize the results or developments we expect or anticipate or, even if substantially realized, that they will affect us or our operations in the way we expect.
The forward-looking statements included in this Annual Report on Form 10-K are made only as of the date hereof. We undertake no obligation to publicly update or revise any forward-looking statement as a result of new information, future events or otherwise, except as required by law.
In addition, statements that “we believe” or similar statements reflecting our beliefs, views, and opinions on the relevant subject are based upon information available to us as of the date of this Annual Report. While we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not 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 involve a number of assumptions and limitations, and you are cautioned not to unduly rely upon these statements.
Our research programs in neurodegeneration have historically benefited from scientific and financial support from the National Institutes of Health (NIH). The contents of this Annual Report are solely our responsibility and do not represent any views of NIH, the Department of Health and Human Services, or any other agency of the United States government, or any of our vendors, collaborators or unrelated third-parties*.*
All our pharmaceutical assets under development are investigational product candidates. These have not been approved for use in any medical indication by any regulatory authority in any jurisdiction and their safety, efficacy or other desirable attributes, if any, have not been established in any patient population. Consequently, none of our product candidates are approved or available for sale anywhere in the world.
Our clinical results from earlier-stage clinical trials may not be indicative of future results from later-stage or larger scale clinical trials and do not ensure regulatory approval. You should not place undue reliance on these statements or any scientific data we present or publish.
All of our earlier-stage clinical trials, i.e., all studies that are not in Phase 3 stage of development, involve a relatively small number of patients and limited data. Information and results generated from our early-stage studies do not constitute, and should not be interpreted as, evidence of safety or efficacy for simufilam in Alzheimer’s disease. Rigorous evidence for drug safety and efficacy is required for regulatory approval and is derived from one or more large, randomized, placebo-controlled Phase 3 studies. The design and limited size of our early-stage studies may introduce clinical or statistical bias or may generate results that may not fully distinguish between drug effects, if any, placebo effects and random variation. Different methods of statistical analysis on clinical data from the same study may lead to objectively different numerical results. These and other statistical and clinical features of our early-stage clinical studies add complexity or limitations to the scope of data interpretation. In addition, ‘top-line results’ is a summary of the clinical data prior to the completion of a full and final audit or quality-control of the clinical database. We generally communicate top-line results so that our stakeholders have timely access to a summary of a study’s findings prior to us receiving the final dataset. Final data may change from initial top-line data.
Unless otherwise noted, all clinical data in this Annual Report is statistically non-significant at a standard probability level of p<0.05. In addition, from time to time, our scientific research may include the use of exploratory biomarkers, typically labelled ‘research use only.’ They are understood to mean non-safety-related, investigational diagnostic products that are in the research phase of development and have not been approved by any regulatory agency to be effective, sensitive, specific, accurate, predictive or linked to a specific diagnosis or indication. At present there is no sufficiently reliable evidence that any observed treatment effect on such biomarkers is reasonably likely to predict clinical benefit.
National Clinical Trial (“NCT”) is an eight-digit identification number that http://www.ClinicalTrials.gov assigns a clinical study when it is registered with the National Library of Medicine, which is operated by the United States government.
