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| PART I |
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| Item 1. Business | | 7 |
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| Item 1A. Risk Factors | | 49 |
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| Item 1B. Unresolved Staff Comments | | 102 |
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| Item 1C. Cybersecurity | | 102 |
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| Item 2. Properties | | 103 |
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| Item 3. Legal Proceedings | | 103 |
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| Item 4. Mine Safety Disclosures | | 103 |
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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 | | 104 |
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| Item 6. [Reserved] | | 105 |
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| Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations | | 106 |
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| Item 7A. Quantitative and Qualitative Disclosures About Market Risk | | 116 |
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| Item 8. Financial Statements and Supplementary Data | | 117 |
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| Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure | | 139 |
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| Item 9A. Controls and Procedures | | 139 |
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| Item 9B. Other Information | | 140 |
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| Item 9C. Disclosure Regarding Foreign Jurisdictions That Prevent Inspections | | 140 |
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| PART III |
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| Item 10. Directors, Executive Officers and Corporate Governance | | 141 |
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| Item 11. Executive Compensation | | 141 |
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| Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters | | 141 |
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| Item 13. Certain Relationships and Related Transactions, and Director Independence | | 141 |
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| Item 14. Principal Accounting Fees and Services | | 141 |
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| PART IV |
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| Item 15. Exhibits and Financial Statement Schedules | | 142 |
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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Annual Report on Form 10-K, or Annual Report, contains forward-looking statements concerning our business, operations and financial performance, as well as our plans, objectives and expectations for our business operations and financial performance and condition. All statements other than statements of historical or current facts included in this Annual Report are forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “aim,” “anticipate,” “assume,” “believe,” “contemplate,” “continue,” “could,” “design,” “due,” “estimate,” “expect,” “goal,” “intend,” “may,” “objective,” “plan,” “positioned,” “potential,” “predict,” “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 other comparable terminology. In addition, statements including “we believe” or similar phrases reflect our beliefs and opinions on the relevant subject. All forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those expressed in, or implied by these, forward-looking statements and therefore, you should not unduly rely on such statements. These risks and uncertainties include, but are not limited to:
| ● | our ability to raise additional capital to fund our operations and continue the development of our current and future product candidates; |
| ● | our estimates regarding expenses, future revenue, capital requirements and needs for additional financing; |
| ● | the clinical nature of our business and our ability to successfully and in a timely manner advance our current and future product candidates through our ongoing and future clinical trials, preclinical studies and development activities; |
| ● | our ability to generate revenue from future product sales and our ability to achieve and maintain profitability; |
| ● | the accuracy of our projections and estimates regarding our expenses, capital requirements, cash utilization, and need for additional financing; |
| ● | the expected uses of our existing cash and cash equivalents and the sufficiency of such resources to fund our planned operations; |
| ● | the extent to which health epidemics and other outbreaks of communicable diseases, including the COVID-19 pandemic, geopolitical turmoil, including the ongoing global and regional conflicts or increased trade restrictions between the United States, Russia, China, and other countries, social unrest, political instability, terrorism, or other acts of war could ultimately impact our business, including our ongoing and future clinical trials, preclinical studies and development activities; |
| ● | our dependence on the success of CT1812, our lead product candidate; |
| ● | the novelty of our approach to targeting the σ-2 (sigma-2) receptor (“S2R”) complex to treat age-related degenerative diseases and disorders, and the challenges we will face due to the novel nature of such approach; |
| ● | the success of competing therapies that are or become available; |
| ● | the initiation, progress, success, cost, and timing of our ongoing and future clinical trials, preclinical studies and development activities; |
| ● | our ability to obtain and maintain regulatory clearance of CT1812 for clinical trials under investigational new drug, or IND, applications and any future IND applications for any of our other product candidates; |
| ● | the timing, scope and likelihood of regulatory filings and approvals, including final regulatory approval of our product candidates; |
| ● | the performance of third parties in connection with the development of our product candidates, including third parties conducting our future clinical trials as well as third-party suppliers and manufacturers; |
| ● | our ability to attract and retain strategic collaborators with development, regulatory, and commercialization expertise; |
| ● | our ability to successfully commercialize our product candidates and develop sales and marketing capabilities, if our product candidates are approved; |
| ● | the size and growth of the potential markets for our product candidates and our ability to serve those markets; |
| ● | regulatory developments and approval pathways in the United States and foreign countries for our product candidates; |
| ● | the potential scope and value of our intellectual property and proprietary rights; |
| ● | our ability, and the ability of any future licensors, to obtain, maintain, defend, and enforce intellectual property and proprietary rights protecting our product candidates, and our ability to develop and commercialize our product candidates without infringing, misappropriating, or otherwise violating the intellectual property or proprietary rights of third parties; |
| ● | economic uncertainty resulting from actual or perceived inflation or banking stability; |
| ● | developments relating to our competitors and our industry; and |
| ● | other risk and uncertainties, including those described in Item 1A “Risk Factors” in this Annual Report. |
We have based these forward-looking statements largely on our current expectations, estimates, forecasts, and projections about future events and financial trends that we believe may affect our financial condition, results of operations, business strategy, and financial needs. In light of the significant uncertainties in these forward-looking statements, you should not rely upon forward-looking statements as predictions of future events. Although we believe that we have a reasonable basis for each forward-looking statement contained in this Annual Report, we cannot guarantee that the future results, levels of activity, performance, or events and circumstances reflected in the forward-looking statements will be achieved or occur at all. You should refer to the section titled “Risk Factors” set forth in Part I, Item 1A of this Annual Report for a discussion of important factors that may cause our actual results to differ materially from those expressed or implied by our forward-looking statements. Furthermore, if our forward-looking statements prove to be inaccurate, the inaccuracy may be material. Except as required by law, we undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise.
SUMMARY OF RISK FACTORS
The risk factors summarized below could materially harm our business, operating results and/or financial condition, impair our future prospects, and/or cause the price of our common stock to decline. These are not all the risks we face, and other factors not presently known to us or that we currently believe are immaterial may also affect our business if they occur. Additional detail about these risks is included in Part I, Item 1A “Risk Factors.”
Material risks that may affect our business, operating results and financial condition include, but are not necessarily limited to, those relating to:
Risks Related to Our Financial Position and Capital Needs; Discovery, Development and Regulatory Approval of Our Product Candidates; and Business and Industry
| ● | We will need substantial additional capital to meet our financial obligations in the future and to pursue our business objectives. If we are unable to raise capital when needed, we could be forced to curtail our planned operations and the pursuit of our growth strategy. |
| ● | We are a clinical-stage biopharmaceutical company with no products approved for commercial sale and have incurred significant losses since our inception in 2007. We expect to incur significant losses for the foreseeable future and may never achieve or maintain profitability. |
| ● | We are conducting Phase 2 clinical trials and have no history of commercializing products, which may make it difficult for an investor to evaluate the success of our business to date and to assess our future viability. |
| ● | To date, we have partially relied on non-dilutive grants to cover certain of our capital requirements for our clinical trials, and we may fail to continue to receive non-dilutive funding. |
| ● | Our business is heavily dependent on the successful development, regulatory approval and commercialization of CT1812 and any future product candidates that we may develop or acquire. |
| ● | We may not successfully expand our pipeline of product candidates, including by pursuing additional indications for CT1812 or by in-licensing or acquiring additional product candidates for other diseases. |
| ● | Preclinical and clinical development involves a lengthy and expensive process with an uncertain outcome, and the results of preclinical studies and early clinical trials are not necessarily predictive of future results. |
| ● | We have not tested any of our product candidates in pivotal clinical trials and our product candidates may not have favorable results in future clinical trials. |
Risks Related to Our Intellectual Property
| ● | If we are unable to obtain and maintain patent protection for our technology and product candidates including our lead product candidate, CT1812, or if the scope of the patent protection obtained is not sufficiently broad, we may not be able to compete effectively in our markets. |
| ● | We may not be able to protect our intellectual property rights throughout the world. |
| ● | Patent terms may be inadequate to protect our competitive position on our product candidates including our lead product candidate, CT1812, for an adequate amount of time. |
| ● | Third-party claims or litigation alleging infringement of patents or other proprietary rights, or seeking to invalidate patents or other proprietary rights, may delay or prevent the development and commercialization of any of our product candidates including our lead product candidate, CT1812. |
Risks Related to Commercialization, Manufacturing and Reliance on Third Parties
| ● | 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. |
| ● | The market opportunities for CT1812, if approved, may be smaller than we anticipate. |
| ● | We rely on third-party suppliers to manufacture our product candidates, and we intend to rely on third parties to produce commercial supplies of any approved product. The loss of these suppliers, or their failure to comply with applicable regulatory requirements or to provide us with sufficient quantities at acceptable quality levels or prices, or at all, would materially and adversely affect our business, financial condition, results of operations and prospects. |
| ● | 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 that is more efficient and cost-effective to commercialize our potential products, which may not be successful. |
| ● | We rely on third parties in the conduct of all our clinical trials. If these third parties do not successfully carry out their contractual duties, fail to comply with applicable regulatory requirements or meet expected deadlines, we may be unable to obtain regulatory approval for our product candidates. |
| ● | 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, more advanced or more effective than ours, which may negatively impact our ability to successfully market or commercialize any product candidates we may develop and for which we receive approval and ultimately harm our financial condition. |
Risks Relating to Government Regulation
| ● | Even if we obtain regulatory approval for a product candidate, our products will remain subject to regulatory scrutiny. |
| ● | Healthcare legislation, including potentially unfavorable pricing regulations or other healthcare reform initiatives, may increase the difficulty and cost for us to obtain marketing approval of and commercialize our product candidates, if approved. |
| ● | If we develop a small molecule product candidate that obtains regulatory approval, additional competitors could enter the market with generic versions of such drugs, which may result in a material decline in sales or affected products. |
Risks Relating to Our Common Stock
| ● | The market price and trading volume of our common stock have been and may continue to be volatile, which could result in rapid and substantial losses for our stockholders. |
| ● | Concentration of our capital stock ownership with our directors and their affiliated entities and our executive officers will limit stockholders’ abilities to influence certain corporate matters. |
| ● | Provisions of our charter documents and Delaware law may have anti-takeover effects that could discourage an acquisition of us by others, even if an acquisition would be beneficial to our stockholders, and may prevent attempts by our stockholders to replace or remove our current management. |
PART I
