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| PART I | | |
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| Item 1 | Business | 6 |
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| Item 1A | Risk Factors | 29 |
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| Item 1B | Unresolved Staff Comments | 73 |
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| Item 1C | Cybersecurity | 73 |
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| Item 2 | Properties | 74 |
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| Item 3 | Legal Proceedings | 74 |
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| Item 4 | Mine Safety Disclosures | 74 |
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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 | 74 |
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| Item 6 | Selected Financial Data | 74 |
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| Item 7 | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 75 |
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| Item 7A | Quantitative and Qualitative Disclosures About Market Risk | 82 |
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| Item 8 | Financial Statements and Supplementary Data | 83 |
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| Item 9 | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure | 105 |
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| Item 9A | Controls and Procedures | 105 |
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| Item 9B | Other Information | 105 |
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| Item 9C | Disclosure Regarding Foreign Jurisdictions that Prevent Inspections | 105 |
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| PART III | | |
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| Item 10 | Directors, Executive Officers, and Corporate Governance | 105 |
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| Item 11 | Executive Compensation | 105 |
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| Item 12 | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters | 106 |
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| Item 13 | Certain Relationships and Related Transactions and Director Independence | 106 |
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| Item 14 | Principal Accounting Fees and Services | 106 |
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| PART IV | | |
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| Item 15 | Exhibits, Financial Statement Schedules | 106 |
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| SIGNATURES | 110 | |
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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Annual Report contains forward-looking statements, including with respect to our plans, objectives and expectations for our business, operations and financial performance and condition. Any statements contained herein that are not statements of historical facts may be deemed to be forward-looking statements. The forward-looking statements are contained principally in the sections entitled “Business,” “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” but are also contained elsewhere in this Annual Report. In some cases, you can identify forward-looking statements by terminology such as “aim,” “anticipate,” “assume,” “believe,” “continue,” “could,” “due,” “estimate,” “expect,” “intend,” “may,” “objective,” “plan,” “predict,” “project,” “potential,” “positioned,” “seek,” “should,” “target,” “will,” “would” and other similar expressions that are predictions of or indicate future events and future trends, or the negative of these terms or similar language. Forward-looking statements include, but are not limited to, statements about:
| ● | our expectations regarding the timing, progress and results of preclinical studies and clinical trials for NC410, LNCB74 and any other product candidates we develop, including statements regarding the timing of initiation and completion of studies or trials and related preparatory work, the period during which the results of the trials will become available and our research and development programs; |
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| ● | the timing or likelihood of regulatory filings for NC410, LCNB74 and any other product candidates we develop and our ability to obtain and maintain regulatory approvals for such product candidates for any indication; |
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| ● | the identification, analysis and use of biomarkers and biomarker data; |
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| ● | the anticipated benefits of our recently announced prioritization and restructuring plan; |
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| ● | our drug product sourcing and manufacturing strategy, including the scalability of our methods and processes; |
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| ● | our expectations regarding the potential benefits, activity, effectiveness and safety of NC410, LNCB74 and any other product candidates we develop; |
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| ● | our intentions and ability to successfully commercialize, including through partnering, our product candidates; |
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| ● | our expectations regarding the nature of the biological pathways we are targeting; |
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| ● | our expectations regarding our ability to discover and advance product candidates using our technologies; |
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| ● | the potential benefits of and our ability to maintain our relationship with Yale University, LegoChem Biosciences, Inc. and other third parties; |
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| ● | our ability to retain key personnel; |
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| ● | our estimates regarding our expenses, future revenues, capital requirements, needs for or ability to obtain additional financing and the period over which we expect our current cash, cash equivalents and marketable securities to be sufficient to fund our operations; |
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| ● | our intended reliance on and the performance of third parties, including collaborators, contract research organizations and third-party manufacturers; |
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| ● | our ability to protect and enforce our intellectual property protection and the scope and duration of such protection; |
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| ● | developments and projections relating to our competitors and our industry, including competing therapies; and |
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| ● | the impact of current and future laws and regulations. |
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These statements, and other forward-looking statements, are based on management’s current expectations, estimates, forecasts and projections about our business and industry, are not guarantees of future performance and involve known and unknown risks, uncertainties and other factors that are in some cases beyond our control, and that may cause our actual results, levels of activity, performance or achievements to be materially different from those anticipated by the forward-looking statements. Forward-looking statements contained in this Annual Report should be considered in light of these factors and the factors set forth under “Risk Factor Summary” below and the factors described elsewhere in this Annual Report, including in the sections entitled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” These factors, and the other cautionary statements made in this Annual Report, are applicable to all related forward-looking statements wherever they appear in this Annual Report. If one or more of these factors materialize, or if any underlying assumptions prove incorrect, our actual results, levels of activity, performance, or achievements may vary materially from any future results, activity, performance, or achievements expressed or implied by these forward-looking statements.
We caution readers not to place undue reliance on any forward-looking statements made by us, which speak only as of the date of this Annual Report. We undertake no obligation to publicly update any forward-looking statements after the date of this Annual Report, whether as a result of new information, future events or otherwise, except as required by law. We qualify all of our forward-looking statements by the foregoing cautionary statements.
The following is a summary of the principal risk factors that make an investment in our common stock speculative or risky. Before you invest in our securities, you should read the following summary together with the more detailed description of material risks described under "Risk Factors" in Item 1A of this Annual Report and the other information contained in this Annual Report.
Risks Related to Our Financial Position and Need for Additional Capital
| ● | We have a limited operating history and no products approved for commercial sale. We have a history of significant losses, expect to continue to incur significant losses for the foreseeable future and may never achieve or maintain profitability. We have never generated revenue from product sales and may never be profitable. |
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| ● | We will require substantial additional financing to pursue our business objectives, which may not be available on acceptable terms, or at all. |
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Risks Related to the Discovery and Development of Our Product Candidates
| ● | Our business is dependent on our ability to advance our current and future product candidates through preclinical studies and clinical trials, marketing approval and ultimately commercialization, each of which is uncertain. |
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| ● | Regulatory approval processes are lengthy and inherently unpredictable. |
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| ● | Clinical development involves a lengthy and expensive process with uncertain outcomes, and as an organization we have limited experience designing and implementing clinical trials. Failure to adequately design a trial, or incorrect assumptions about the design of the trial, could result in delays in product development and in additional costs, delays or the inability to develop, obtain regulatory approval for or commercialize our products. |
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| ● | Preclinical development is uncertain. Our preclinical programs may experience delays or may never advance to clinical trials, which would adversely affect our ability to obtain regulatory approvals or commercialize these programs on a timely basis or at all. |
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| ● | Initial positive trial results and positive results from preclinical studies and early-stage clinical trials may not be predictive or indicative of results obtained when the trial is completed or in later stage trials. |
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| ● | We, or our collaborators, could encounter difficulties enrolling patients in our clinical trials due to pandemics or other factors. |
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| ● | Because the numbers of subjects in our Phase 1/2 and Phase 1 clinical trials are small, the results from each of these trials, once completed, may be less reliable than results achieved in larger clinical trials. |
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| ● | Our current or future product candidates may cause undesirable side effects or have other properties that could halt their clinical development, delay or prevent their regulatory approval, limit their commercial potential or result in significant negative consequences. |
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Risks Related to the Regulatory Approval and Commercialization of Product Candidates and Other Legal Compliance Matters
| ● | We may be unable to obtain regulatory approval of our product candidates. The denial or delay of any such approval would prevent or delay commercialization of our product candidates and harm our business. |
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| ● | Even if a current or future product candidate receives marketing approval, it may fail to achieve the degree of market acceptance by physicians, patients, third-party payors and others in the medical community necessary for commercial success, and the market opportunities for any such product candidate may be limited. |
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| ● | We are studying and developing product candidates in combination with other therapies, which exposes us to additional regulatory risks. |
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| ● | We depend on data and our information technology systems, and any failure of these systems or any related security breaches, loss of data, or other disruptions could harm our business. |
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Risks Related to Manufacturing
| ● | Given our limited operating history, our manufacturing experience, as an organization and with our manufacturing facility, is limited. |
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| ● | We may be unable to secure sufficient quantities of our product candidates economically, or at the necessary scale, whether through use of a third party, by scaling up our paused manufacturing operations, or by otherwise failing to source adequate supply of our product candidates which would delay or prevent us from developing and, if approved, commercializing our product candidates. |
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| ● | We are subject to multiple manufacturing risks, any of which could substantially increase our costs and limit supply of our product candidates. |
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| ● | We depend on third-party suppliers for key materials used in our manufacturing process, and the loss of these third-party suppliers, their inability to comply with applicable regulatory requirements, or their inability to supply us with adequate materials could harm our business. |
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Risks Related to Intellectual Property
| ● | We have filed patent applications for our product candidates, but we have to-date obtained only a small number of patents from these applications. If we are unable to obtain and maintain patent protection, or if the scope of the patent protection obtained is not sufficiently robust, our competitors could develop and commercialize products similar or identical to ours, and our ability to successfully commercialize our product candidates may be adversely affected. |
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| ● | We are party to a license agreement with Yale University under which we acquired rights to intellectual property related to certain of our product candidates. If we breach our obligations under this agreement, the agreement could be terminated, which would adversely affect our business and prospects. |
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| ● | Our intellectual property agreements with third parties may be subject to disagreements over contract interpretation, which could narrow the scope of our rights to the relevant intellectual property or technology or increase our financial or other obligations to our licensors. |
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| ● | We may not be able to protect our intellectual property rights throughout the world. |
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| ● | We may be subject to claims, or we may become involved in lawsuits to protect or enforce our intellectual property, which could be expensive, time-consuming and unsuccessful; our intellectual property could be found invalid or unenforceable. |
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Risks Related to Reliance on Third Parties
| ● | We rely on third parties to help conduct our ongoing and planned preclinical studies and clinical trials. If these third parties do not successfully carry out their contractual duties, comply with regulatory requirements or meet expected deadlines, we may not be able to obtain marketing approval for our product candidates. |
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| ● | We may depend on other third-party collaborators for the discovery, development and commercialization of certain of our current and future product candidates. If our collaborations are not successful, we may not be able to capitalize on the market potential of these product candidates. |
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| ● | We may seek to establish additional collaborations and, if we are not able to establish them on commercially reasonable terms, we may have to alter our development and commercialization plans. |
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Risks Related to Our Business
| ● | We are highly dependent on our key personnel, and if we are not successful in attracting, motivating and retaining highly qualified personnel, we may not be able to successfully implement our business strategy. |
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| ● | We face significant competition from other biotechnology and pharmaceutical companies, and our operating results will suffer if we fail to compete effectively. |
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| ● | In the future, we may need to grow the size of our organization, and we may experience difficulties in managing this growth. |
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| ● | If we are unable to establish marketing, sales and distribution capabilities for any product candidate that may receive regulatory approval, we may not be successful in commercializing those product candidates. |
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Risks Related to Our Common Stock
| ● | The price of our common stock has been and may in the future be volatile and fluctuate substantially. |
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| ● | We have been and may in the future be subject to securities litigation, which can be expensive and could divert management’s attention. |
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| ● | If securities analysts do not publish research or reports about our business or if they publish inaccurate or unfavorable research about our business, the price of our stock could decline. |
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| ● | Sales of a substantial number of shares of our common stock in the public market could cause our stock price to fall, even if our business is doing well. |
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