Item 1. Business
Item 1. Business.
Overview
We are a biotech innovation
company with a mission of prolonging life and enhancing its quality by improving the health of the immune system.
We are developing biotechnologies
specifically focused on improving the health of the immune system through immune mapping and reprogramming. Our immune mapping technologies
are designed to provide a personalized comprehensive profile of the immune system and we plan to utilize them in our upcoming reprogramming
clinical trials to monitor subjects’ immune response before, during and after drug administration. Our immune reprogramming technologies
are designed to retrain the immune system to induce tolerance with the objectives of addressing rejection of transplanted organs as well
as ameliorate autoimmune diseases and allergies. These programs are currently in the pre-clinical stage with one product candidate slated
for GMP manufacturing (clinical grade material) and toxicology studies in preparation for clinical trials.
Immune Reprogramming – Immune Modulation
The discovery of immunosuppressive
(anti-rejection and monoclonal) drugs over 40 years ago has made possible life-saving organ transplantation procedures and blocking of
unwanted immune responses in autoimmune diseases. However, immune suppression leads to significant undesirable side effects, such as increased
susceptibility to life-threatening infections and cancers, because it indiscriminately and broadly suppresses immune function throughout
the body. While the use of these drugs has been justifiable because they prevent or delay organ rejection, their use for treatment of
autoimmune diseases and allergies may not be acceptable because of the above-mentioned side effects. Furthermore, transplanted organs
often ultimately fail despite the use of immune suppression, and about 40% of transplanted organs survive no more than 5 years.
New, focused therapeutic approaches
are needed that modulate only the small portion of immune cells that are involved in rejection of the transplanted organ, as this approach
can be safer for patients than indiscriminate immune suppression. Such approaches are referred to as immune tolerance, and when therapeutically
induced, may be safer for patients and also potentially allow long-term survival of transplanted tissues and organs.
In the late 1990s, academic
research on these approaches was conducted at the Transplant Center at Loma Linda University in connection with a project that secured
initial grant funding from the U.S. Department of Defense. The focus of that project was for skin grafting for burn victims. Twenty
years of research at LLU and an affiliated incubator led to a series of discoveries that have been translated into a large patent portfolio
of therapeutic approaches that may be applied to the modulation of the immune system in order to induce tolerance to self and transplanted
organs.
We have an exclusive worldwide
license from LLU for commercializing this nucleic acid-based technology (which is currently at the pre-clinical stage), called Apoptotic
DNA Immunotherapy™ (ADI™), which utilizes a novel approach that mimics the way our bodies naturally induce tolerance to our
own tissues (“therapeutically induced immune tolerance”). While immune suppression requires continuous administration to prevent
rejection of a transplanted organ, induction of tolerance has the potential to retrain the immune system to accept the organ for longer
periods of time. Thus, ADI™ may allow patients to live with transplanted organs with significantly reduced immune suppression. ADI™
is a technology platform, which we believe can be engineered to address a wide variety of indications.
We are developing ADI™
product candidates for organ transplantation including skin grafting, autoimmune diseases including psoriasis and type 1 diabetes (T1D),
and allergies, with an initial focus on psoriasis, T1D, and skin allografting., To submit a Biologics License Application (“BLA”)
for a biopharmaceutical product, clinical safety and efficacy must be demonstrated in a series of clinical studies conducted with human
subjects. For products in our class of drugs, the first-in-human trials will be a combination of Phase I (safety/tolerability) and Phase
II (efficacy) in affected subjects. To obtain approval to initiate the Phase I/II studies, an Investigational New Drug (IND) Application
will be submitted compiling non-clinical efficacy data as well as manufacturing and pre-clinical or clinical toxicology data. To date,
we have conducted non-clinical studies in a stringent model of skin transplantation using genetically mismatched donor and recipient animals
demonstrating a 3-fold increase in the survival of the skin graft in animals that were tolerized with ADI™ compared to animals that
receive immune suppression alone. Prolongation of graft life was observed despite discontinuation of immune suppression after the first
5 weeks. Additionally, in an induced non-clinical model for psoriasis, ADI™ treatment resulted in a 69% reduction in skin thickness
and a 38% decrease in skin flaking (two clinical parameters for assessment of psoriasis skin lesions). The Phase I/II studies in psoriasis
will evaluate the safety/tolerability of ADI™ in patients diagnosed with psoriasis. Since the drug will be administered in subjects
diagnosed with psoriasis, effectiveness of the drug to improve psoriatic lesions will also be evaluated. In another Phase I/II study,
patients requiring skin allografts will receive weekly intra-dermal injections of ADI™ in combination with standard immune suppression
to assess safety/tolerability and possibility of reducing levels of immunosuppressive drugs as well as prolongation of graft life.
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ADI™ Advantages
ADI™ is a nucleic acid-based
technology ( e.g. , DNA-based) which we believe selectively suppresses only those immune cells involved in the rejection of tissues
and transplanted organs. It does so by tapping into the body’s natural process of cell death (apoptosis) to reprogram the immune
system to stop unwanted attacks on self or transplanted tissues. Apoptosis is a natural process used by the body to clear dying cells
and to allow recognition and tolerance to self-tissues. ADI™ triggers this process enabling the cells of the immune system to recognize
the targeted tissues as “self”. Conceptually, it is designed to retrain the immune system to become accepting of the organ
similar to how natural apoptosis reminds our immune system to be tolerant to our own “self” tissues.
While efforts have been made
by various groups to promote tolerance through cell therapies and ex vivo manipulation of patient cells (takes place
outside the body typically requiring hospitalization), to our knowledge, we will be unique in our approach of using in-body induction
of apoptosis to promote tolerance to specific tissues. In addition, ADI™ treatment itself will not require additional hospitalization,
only an injection of minute amounts of the therapeutic drug into the skin.
Reduce Chronic Rejection
While immunosuppressants control
acute rejection during the early time-period after receiving an organ, chronic rejection of the organ that occurs one or more years after
the transplant procedure continues to pose a major challenge for organ recipients.
Chronic rejection has been
likened to autoimmunity (a misdirected immune response that occurs when the immune system goes awry), where specific tissues in the transplanted
organ are attacked by the immune system. In other words, chronic rejection may not be caused just by differences between the donor
and the recipient, but rather by an immune response by the recipient to specific tissues in the organ. Our pre-clinical studies suggest
that ADI™ has the ability to tolerize to specific tissues in a transplanted organ, and conceivably, reducing incidences of chronic
rejection.
Moreover, preclinical studies
have demonstrated that ADI™ treatment significantly and substantially prolongs graft survival, in addition to successfully “reversing”
other established immune-mediated inflammatory processes.
Reduce immune suppression
Studies in animal models have
shown that conditioning/desensitizing the animals to receive the transplant, prolongs the survival of the transplanted tissue or organ. These
studies have used repeated exposure to low doses of protein components in specific organs to reduce immunologic recognition and attack
on the transplanted organ.
Based on some of our data,
we believe that with ADI™ treatment, recipients can be conditioned/desensitized ahead of transplantation, thereby retraining the
immune system to more readily accept the organ and also reduce the levels of immunosuppressive drugs needed post-transplantation.
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Preformed Antibodies
Studies have shown that presence
of preformed antibodies prior to transplantation procedures increases the rate of organ rejection. Preformed antibodies can develop in
previously transplanted patients, patients who have given birth, and patients who have previously received blood transfusions. With more
than 113,000 patients on transplant waiting lists in the U.S. alone, patients with pre-existing antibodies have much lower chances at
qualifying to receive organs due to their increased risk of rejection – even with immune suppression.
Sadly, transplanted patients
have a probability of needing re-transplantation at some point due to eventual chronic rejection of their transplanted organ, with the
possible exception of some newborn recipients. With increased incidence of preformed antibodies, these patients may never have the opportunity
to receive another organ. Based on experimental data, we believe that ADI™ may have the potential to address this issue providing
these individuals better opportunities at receiving an organ transplantation.
ADI™ Key Differentiators
Ease of Delivery
Therapeutic products are typically
administered systemically (i.e., by mouth in pill form or injected intramuscularly/intravenously). This requires repeated large doses
of the drug to allow sufficient concentrations to reach the affected sites. ADI™ is a DNA-based product that can be injected directly
into the skin where the target cells of the immune system reside, thereby significantly simplifying the delivery of the product and reducing
the amount of product needed.
Repeat Dosing
DNA-based products are less
likely to result in formation of neutralizing antibodies, which lend themselves to repeat dosing as may be required by ADI™ products.
Cost of Goods Advantage
ADI™ products are DNA-based
and cost-effective to manufacture. Furthermore, DNA-based products are very stable and do not require adherence to cold chain (temperature-controlled)
protocols for shipping. This also makes the product ideal for global distribution.
Simplified Therapy Delivery System
We believe that tolerance induction
using ADI™ may potentially obviate the need for hospitalization because it can simply be injected into the skin. This approach reduces
treatment costs and complexities in treatment delivery. The anticipated administration of ADI™ will include an initial priming
regimen that will require injections administered once a week for several weeks. Thereafter, booster or maintenance doses will be
provided on an individual basis as determined by immune and inflammation testing. ADI™ treatments will be significantly more
convenient and comfortable for patients because they do not require removal of patient cells for ex vivo manipulation.
ADI™ Technology Platform
ADI™ utilizes a novel
approach that mimics the way our bodies naturally induce tolerance to our own tissues. It is a technology platform which we believe
can be engineered to address a wide variety of indications. ADI™ includes two DNA molecules which are designed to deliver signals
to induce tolerance. The first DNA molecule encodes a pro-apoptotic protein, which induces ‘programmed’ cell death. This
is a core component of the technology because it is intended to greatly increase the recruitment of dendritic cells, which are implicated
in regulating the immune system. The second DNA molecule encodes the protein of interest (guiding antigen), which is modified to
promote a path of tolerance. The guiding antigen is intended to result in tolerance induction specific to the tissue where the protein
is found.
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ADI™ has shown efficacy
in several preclinical models (skin grafting, psoriasis, type 1 diabetes, alopecia areata and multiple sclerosis) and its efficacy can
be attributed to multiple factors:
1. ADI™
does not rely on a single mechanistic approach. It has multiple components (interchangeable target antigen, apoptosis, methylated
plasmid DNA) that affect different arms of the immune system, which can be manipulated.
2. ADI™
activates key immune cells known to maintain tolerance in test animals and humans.
3. ADI™
has been successfully applied to a stringent transplantation model.
4. ADI™
lends itself to repeat dosing, which may be required to achieve its full potential therapeutic effect.
Proof of Concept: Skin Grafting
Results shown are 5 weeks
post-transplantation
The proof-of-concept experiment
performed in transplantation was a skin allograft transplantation procedure in which the donor skin was obtained from white BALB/c mice
and transplanted to black C57BL/6 mice. The experiment was designed to address a more challenging scenario where the donor tissue was
obtained from a donor which is genetically mismatched with the recipient. This is unlike clinical scenarios where the donor and recipient
are genetically matched as much as possible. While these experiments were repeated in several separate experiments, the results shown
here were obtained from a study conducted with 14 mice in the ADI™ treatment group and 7 mice in the control group. Prior to submission
of an Investigational New Drug Application, additional non-clinical studies will be conducted in a pig model to establish the precise
protocol (e.g. timing of vaccine administration, dosing, and appropriate immunosuppressive agents that will be used in combination with
ADI™) that will be used in the clinical trials. In addition, IND-enabling safety/toxicology studies will be conducted by a GLP lab
to ensure product safety for clinical testing.
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Proof of Concept: Psoriasis
● Psoriasis
causes increased skin thickness and scaling in an established 10-day psoriasis model
● ADI™
treatment resulted in a 69% reduction in skin thickening and 38% reduction in scaling over the 10-day study period
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Proof of Concept: Type 1 Diabetes
90% of female NOD mice developed
spontaneous autoimmune diabetes. Disease progression may be different for individual animals.
ADI™ was administered
once a week for 8 weeks after each animal developed hyperglycemia. All animals responded with 80% showing durable response for the entire
40-week study period.
● Type
1 or autoimmune diabetes is a condition where the body’s immune system mistakenly attacks cells in the pancreas resulting in diminished
production of insulin
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● ADI™
incorporates an antigen (GAD) expressed in the pancreas
● Administration
of ADI™ using GAD as the antigen over an 8-week period in animals with T1D restores insulin production and reverses hyperglycemia
License
Agreement with Loma Linda University –
On March 8, 2018, we entered
into an Assignment Agreement (the “Assignment Agreement”) with Sekris Biomedical, Inc. (“Sekris”). Sekris was
a party to a License Agreement with Loma Linda University (“LLU”), entered into and made effective on May 25, 2011, and amended
on June 24, 2011, July 16, 2012 and December 27, 2012 (the “Original Agreement,” and together with the Assignment Agreement,
the “Sekris Agreements”). Pursuant to the Assignment Agreement, Sekris transferred and assigned all of its rights and obligations
in and to liabilities under the Original Agreement, of whatever kind or nature, to us. In exchange, on March 8, 2018, we issued a warrant
to Sekris to purchase up to 500,000 shares of our common stock (the “Sekris Warrant”). The warrant was immediately exercisable
and has an exercise price of $4.00 per share. The expiration date of the warrant is March 8, 2023. On March 15, 2018, as amended on July
1, 2020, we entered into a LLU License Agreement directly with Loma Linda University, which amends and restates the Sekris Agreements.
Pursuant to the LLU License
Agreement, we obtained the exclusive royalty-bearing worldwide license in and to all intellectual property, including patents, technical
information, trade secrets, proprietary rights, technology, know-how, data, formulas, drawings, and specifications, owned or controlled
by LLU and/or any of its affiliates (the “LLU Patent and Technology Rights”) and related to therapy for immune-mediated inflammatory
diseases (the ADI™ technology). In consideration for the LLU License Agreement, we issued 25,000 shares of common stock to LLU.
Pursuant to the LLU License
Agreement, we are required to pay an annual license fee to LLU. Also, we paid LLU $455,000 in July 2020 for outstanding milestone payments
and license fees. We are also required to pay to LLU milestone payments in connection with certain development milestones. Specifically,
we are required to make the following milestone payments: $175,000 on March 31, 2022; $100,000 on March 31, 2024; $500,000 on March 31,
2026; and $500,000 on March 31, 2027. Additionally, as consideration for prior expenses incurred by LLU to prosecute, maintain and defend
the LLU Patent and Technology Rights, we made the following payments to LLU: $70,000 due at the end of December 2018, and a final
payment of $60,000 due at the end of March 2019. We are required to defend the LLU Patent and Technology Rights during the term of the
LLU License Agreement. Additionally, we will owe royalty payments of (i) 1.5% of Net Product Sales and Net Service Sales on any Licensed
Products (defined as any finished pharmaceutical products which utilizes the LLU Patent and Technology Rights in its development, manufacture
or supply), and (ii) 0.75% of Net Product Sales and Net Service Sales for Licensed Products and Licensed Services not covered by a valid
patent claim for technology rights and know-how for a three (3) year period beyond the expiration of all valid patent claims. We also
are required to produce a written progress report to LLU, discussing our development and commercialization efforts, within 45 days following
the end of each year. All intellectual property rights in and to LLU Patent and Technology Rights shall remain with LLU (other than improvements
developed by or on our behalf).
The LLU License Agreement shall
terminate on the last day that a patent granted to us by LLU is valid and enforceable or the day that the last patent application licensed
to us is abandoned. The LLU License Agreement may be terminated by mutual agreement or by us upon 90 days written notice to LLU. LLU may
terminate the LLU License Agreement in the event of (i) non-payments or late payments of royalty, milestone and license maintenance fees
not cured within 90 days after delivery of written notice by LLU, (ii) a breach of any non-payment provision (including the provision
that requires us to meet certain deadlines for milestone events (each, a “Milestone Deadline”)) not cured within 90 days after
delivery of written notice by LLU and (iii) LLU delivers notice to us of three or more actual breaches of the LLU License Agreement by
us in any 12-month period. Additional Milestone Deadlines include: (i) submission of an IND/clinical trial application to initiate first-in-human
clinical trials on or before March 31, 2022, (ii) the completion of first-in-human (phase I/II) clinical trials by March 31, 2024, (iii)
the completion of Phase III clinical trials by March 31, 2026 and (iv) biologic licensing approval by the FDA by March 31, 2027.
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Pre-clinical and Clinical Plans
The resources and efforts used
for the IND-enabling work summarized below supports both the psoriasis and TID clinical programs
High-level objectives for psoriasis
clinical program:
● Completion
of IND-enabling work. Aditxt has initiated GMP manufacturing of clinical grade material that will be used for the first-in-human studies
in subjects with psoriatic lesions. Included in the manufacturing program is stability studies; the regulatory agency requires
one month of stability data for the GMP material for submission of the clinical trial application (CTA). Stability data will
continue to be gathered while the clinical trials are ongoing and up to 24 months. Aditxt has also completed the in-life portion
of the toxicology studies. Safety data have been recorded and Aditxt is now awaiting immunotoxicology data, which are forthcoming.
● Upon completion of GMP manufacturing and toxicology studies, a CTA will be submitted in Q4 2022 to initiate the Phase I/II FIH clinical
trials.
The FIH clinical studies will
combine Phase I (designed to test clinical safety) and Phase IIa (designed to obtain proof of effectiveness in human subjects), in subjects
with psoriatic skin lesions. We have selected this indication for several reasons, including:
1.
Our existing preclinical data have shown promising results in reducing scaling and skin thickness in the mouse model;
2.
The relative ease of visualization of healing of psoriatic lesions; and
3.
The need for therapies that suitable and justifiable in individuals with mild to moderate psoriasis (current biologic therapies are primarily used in moderate to severe cases).
We have identified a contract
research organization with capabilities to conduct a multi-center study and ability to recruit the needed number of subjects to complete
the clinical trials. Upon approval by the regulatory agency clinical trials will be initiated.
High-level objectives for type
1 diabetes (T1D) clinical program:
●
Completion of IND-enabling work. Aditxt has initiated GMP manufacturing of clinical grade material that will be used for the first-in-human studies in subjects with psoriatic lesions. Included in the manufacturing program is stability studies; the regulatory agency requires one month of stability data for the GMP material for submission of the clinical trial application (CTA). Stability data will continue to be gathered while the clinical trials are ongoing and up to 24 months. Aditxt has also completed the in-life portion of the toxicology studies. Safety data have been recorded and Aditxt is now awaiting immunotoxicology data, which are forthcoming.
●
Clinical Phase I/II Study to demonstrate safety and clinical proof-of-concept in T1D
Our clinical studies will combine
Phase I (designed to test clinical safety) and Phase II (designed to obtain proof of effectiveness in human subjects), in T1D patients.
We have selected this indication for several reasons, including:
1.
Our existing preclinical data have shown promising results using ADI™ to reverse hyperglycemia in the mouse model; and
2.
There is currently no treatment for T1D and the only option for patients suffering from T1D is insulin replacement therapy.
We will be identifying clinical
trial centers with adequate patients. Upon approval by the FDA and/or the applicable regulatory agency clinical trials will be initiated.
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High-level objectives for skin
allograft clinical program:
●
Completion of preclinical studies to identify
the appropriate protocol for dosing and combination of ADI™ with immune suppression protocols.
●
Completion
of IND-enabling work including GMP manufacturing and toxicology studies.
●
Clinical Phase I/II Study to demonstrate safety and clinical proof-of-concept in patients requiring skin allografts.
Our clinical studies will combine
Phase I (designed to test clinical safety) and Phase II (designed to obtain proof of effectiveness in human subjects), in patients requiring
skin allografts. We have selected this indication for several reasons, including:
1.
Our existing preclinical data have shown promising results using ADI™ to prolong skin allograft survival in mismatched mouse model; and
2.
The relative ease of visualization of graft quality without the need for biopsies.
We will be identifying clinical
trial centers with adequate patients. Upon approval by the FDA and/or the applicable regulatory agency clinical trials will be initiated.
We are developing our immune
monitoring platforms with the objective of utilizing them as clinical assays in pre-clinical and clinical studies. The multiplex technologies
could potentially allow evaluation of more analytes with less tissue samples.
Drug Approval Process
In the United States, FDA approval
is required before any new drugs can be introduced to the market. We currently have a product candidate for our first-in-human studies,
but as of the date of report, we have not submitted an application to the regulatory agencies for approval.
We are working with a contract
manufacturer who has the know-how, product ingredients including plasmid DNA molecules, and our patent-pending bacterial strain. Several
batch runs have been successfully completed to demonstrate our ability to produce the DNA plasmids in a GMP facility. Based on validation
studies, we are reasonably confident in our ability to produce clinical grade product candidates at larger scales. The contract manufacturer
has provided a proposal for manufacturing of our clinical grade material, which will be signed and accepted once we are ready to initiate
GMP manufacturing. We are not currently party to an agreement with this contract manufacturer.
The product candidate selected
for clinical trials must be subjected to pre-clinical safety/toxicology studies by an independent GLP (Good Laboratory Practice) laboratory
to demonstrate its suitability for clinical testing in human patients. Upon completion of manufacturing and safety/toxicology testing,
an Investigational New Drug (IND) application will be prepared for submission to the regulatory agencies.
Upon receipt of clearance to
initiate clinical testing, the ADI™ product can be tested in human patients. Our product will be tested in clinical trials,
one in patients with psoriasis and one in patients who require skin allografting. Therefore, our first-in-human studies will be combined
Phase I/Phase II studies in which safety and efficacy data will be obtained. We plan to start with in skin indications (psoriasis
and skin allografting) because we believe these indications will be most efficient in providing safety and efficacy data in clinical trials. In
parallel, we will continue to develop additional product formulations for other indications.
We are developing our immune
monitoring platforms with the objective of utilizing them as clinical assays in pre-clinical and clinical studies. The multiplex technologies
could potentially allow evaluation of more analytes with less tissue samples. In the U.S., FDA approval is required before any In
Vitro Diagnostic (“IVD”) device can be introduced to the market for clinical use (excluding research purposes). This
process does not require clinical trials, but it does require validation data demonstrating accuracy of the device.
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Target Market
Psoriasis affects close to
100 million people worldwide and presents a large market estimated at over $20 billion annually. Treatments range include topical and
systemic therapeutics including vitamin D analogs, steroids, retinoids, immunosuppressants and biologics (i.e. monoclonal antibodies).
While in more recent years, several classes of biologics have entered the market, most are primarily used for patients suffering from
moderate to severe psoriasis because of their impairment of systemic immune responsiveness to infections and cancers. Aditxt believes
that products based on the ADI™ platform will not be associated with similar side effects and can be targeted for use in mild to
moderate cases.
T1D is one of the most common
chronic disorders in children and affects nearly 2 million Americans, and has an incidence and prevalence increasing at alarming rates
in industrialized countries. Current treatment consists of daily delivery of insulin as replacement therapy, but administration of the
hormone can induce life-threatening hypoglycemia and does not completely prevent morbidity and mortality associated with the disease.
Aditxt is leveraging the ADI™ technology to develop a new class of immunotherapy designed to arrest the autoimmune destruction of
the insulin producing beta cells of the pancreas. This will be the first therapy to accomplish that long sought after goal, thus increasing
life span and quality of life for up to 40,000 of US citizens and about 300,000 people around the world who develop T1D each year, with
a 3-5% increase in yearly incidence.
In the U.S. alone, there are
over 36,000 patients who receive organ transplantations each year, with more than 113,000 on transplant waiting lists.
The field of organ transplantation
has been made possible and continues to rely on broad-acting immunosuppressive drugs, high levels of which can result in a compromised
immune system that renders organ recipients susceptible to cancer and potentially life-threatening infections including re-activation
of latent viruses.
In addition, immunosuppressants
control acute rejection during the early time-period after receiving an organ but chronic rejection of the organ remains an unmet challenge
for surgeons and transplant recipients.
While efforts have been made
by various groups to promote tolerance through cell therapies and ex vivo manipulation of patient cells, these procedures
take place outside the body and typically require hospitalization.
Moreover, transplanted patients
will need re-transplantation at some point, with the possible exception of some newborn recipients. With increased incidence of preformed
antibodies, these patients may never have the opportunity to receive another organ. Preformed antibodies can develop in previously transplanted
patients, patients who have given birth, and patients who have previously received blood transfusions. These patients have much lower
chances at qualifying to receive organs due to their increased risk of rejection – even with immune suppression. The potential
to reduce formation of preformed antibodies in these patients will provide better opportunities for them to receive another transplanted
organ.
There are gaps between current
approaches and what the market needs. We believe that ADI™ addresses these gaps. ADI™ is easy to administer (does
not require ex-vivo treatment of patient cells), it does not appear to suppress the immune system, it may allow patients
to live with transplanted organs with significantly reduced immune suppression, it may provide for long-term survival of transplanted
tissues and organs, may be more effective because it does not rely on a single immune pathway/mechanism, and potentially provides patients
with pre-existing antibodies a chance to qualify to receive organs.
While these advantages present
opportunities for unmet medical needs in the field of organ transplantation, the industry in which we operate is highly competitive. A
small company such as us will meet significant challenges including regulatory requirements for approval of a new class of therapeutic
agents, challenges in large scale manufacturing and marketing, cost of developing a novel therapeutic agent, which may require co-development
partners who may or may not be willing to work with us, and the willingness of transplant surgeons to adopt our therapeutic vaccines in
their existing immune suppression protocols. These challenges pose risks that we may not be able to overcome.
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Immune Mapping - Immune Monitoring
We believe that understanding
the dynamic status of an individual’s immune system is key to developing and administering precision immunotherapies such as ADI™.
We have secured an exclusive worldwide license for commercializing a technology platform which provides a personalized comprehensive profile
of the immune system. It is intended to be informative for individual immune responses to viruses, bacterial antigens, peptides, drugs,
bone marrow and solid organ transplants, and cancer. It has broad applicability to many other agents of clinical interest impacting the
immune system, including those not yet identified such as future infectious agents. We plan to brand this technology, and other future
licensed and/or in-house developed monitoring technologies collectively as AditxtScore™.
AditxtScore™ is being
designed to allow individuals to understand, manage and monitor their immune profiles in order to be informed about attacks on or by their
immune system. We believe AditxtScore™ can also assist the medical community in anticipating possible immune responses and reactions
to viruses, bacteria, allergens and transplanted organs. It can be useful in anticipating attacks on the body by having the ability to
determine its potential response and for developing a plan to deal with an undesirable reaction by the immune system. Its advantages include
the ability to provide a simple, rapid, accurate, high throughput, single platform assay that can be multiplexed to determine the immune
status with respect to several factors simultaneously, in 3-16 hours, as well as detect antigen and antibody in a single test (i.e. infectious,
recovered, immune). In addition, it can determine and differentiate between various types of cellular and humoral immune responses (T
and B cells). It also provides for simultaneous monitoring of cell activation and levels of cytokine release (i.e., cytokine storms).
We plan to utilize AditxtScore™
in our upcoming clinical trials to monitor subjects’ immune response before, during and after ADI™ drug administration. We
are working with regulatory consultants with the objective to obtain FDA approval for AditxtScore™ as a clinical assay. We are currently
securing marketing and distribution partnerships for application of AditxtScore™ in the infectious diseases market. To obtain FDA
approval to use AditxtScore™ as a clinical assay, we are performing validation studies to demonstrate AditxtScore™’s
utility to evaluate various components of the immune system reproducibly. We believe that these data will show AditxtScore™’s
ability to measure various components of the immune system (e.g. humoral and cell-mediated immune responses) to provide a broader view
of the immune system and its status in health and disease. Our plan is to submit a 510(K) application to the FDA after compilation of
these data. Beyond infectious diseases, we plan to develop AditxtScore™ for applications in additional markets such as organ rejection,
allergies, drug/vaccine response, and disease susceptibility. The following are further descriptions of the applications of AditxtScore TM :
(1) Organ Rejection
Typically, by the time a transplanted
or a native organ shows signs of failure, the damage is already done, and reversal of the tissue injury becomes challenging. Access to
early warning signs of damage would be invaluable to reverse or even prevent the damage. There are currently no practical, efficient assays
available to measure cellular immune responses and available tools do not provide timely information for patients. AditxtScore™
can be used to provide a sensitive and rapid tool to determine T cell response and to differentiate between various types of cellular
immune responses. It can be multiplexed providing information about the number of cells responding as well as quantifying the amounts
of various cytokines released by the cells in a single assay. Determination of cellular response has valuable applications for prediction,
monitoring, early detection, and treatment of disease, including organ failure/rejection, as well as treatment efficacy. It can also reveal
dysfunction of the immune system potentially contributing to more severe disease.
(2) Allergies
Our immune system protects
us by acting as a barrier against foreign substances and by eliminating them when they penetrate our bodies. Once the initial exposure
has occurred, memory cells develop to prepare the body against a future exposure. This process is called immunity. In certain situations,
however, instead of immunity, the immune system develops memory cells that result in a more severe reaction during a future exposure to
the same substance. This type of response is called a hypersensitivity response, commonly known as an allergic response. AditxtScore™
can be used to develop multiplex assays each designed to test and monitor immune response to allergens. Based on the ability of this technology
to run multiple tests in a single assay, 100 or more substances can potentially be tested for simultaneously.
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(3) Drug/Vaccine Response
There are currently no effective
assays to predict and easily assess responses to vaccination. To determine whether an individual has responded to a particular vaccine,
antibody titers are measured. This process may take several days. Furthermore, for vaccines that require a series of injections, titers
are not measured between injections and may not be known for months. AditxtScore™ can be used to determine whether a patient is
a responder or non-responder. It can provide an effective and rapid tool for potentially determining beneficial responses to a vaccine
and can be used to monitor titer development post vaccination. It can allow evaluation of multiple vaccines in a single test (for memory
B cell detection). This application can be useful for vaccines, cancer therapeutics anti-rejection drugs, anti-viral drugs, among others.
(4) Disease Susceptibility
Disease susceptibility can
vary from one individual to another, and it can be a function of various factors, including genetic variability and differences in human
leukocyte antigens (HLA) encoded by major histocompatibility complex (MHC) and responsible for regulation of the immune system in humans.
People with certain HLA types may have higher or lower susceptibility to diseases. AditxtScore™ can be used to develop assays to
evaluate differences in HLA types in individuals to help elucidate the relationship between certain HLA types and susceptibility to various
diseases.
(5) Infectious Diseases
Infectious diseases can cause
a major predicament for scientific and medical professionals, epidemiologists, and infectious disease specialists, among others, who need
to determine how to treat patients in real time while efficacious therapies are still being developed. Proper decision making requires
understanding why some affected individuals show minor or no symptoms, some recover, and others die. This is fundamental to creating effective
targeted therapeutics which may differ depending on the underlying profile of the individual at risk for, or with, disease. The immune
system plays a major role in how any given individual responds to the infectious agent. This response can be inadequate or too robust
or appropriately effective. Regardless, the kinetics of the response by the cellular and humoral (antibody) immune systems to the infectious
agent are often unknown. A basic critical question, then, is what do the dynamics of the immune response look like from exposure to and
through the disease period and during convalescence for those who survive and those who don’t; and how might vaccines and therapies
alter these profiles such that predictions of vaccine/drug efficacy could be inferred prior to vaccination/treatment and/or disease severity
or progression be prognosticated. AditxtScore™ can be used to help address these questions with multiplex assays each designed to
test and monitor the immune response to infectious agents. Based on the ability to run multiple tests in a single assay, 100 or more agents
can potentially be tested for simultaneously.
License Agreement with Leland Stanford Junior
University (“Stanford”)
On February 3, 2020, we entered
into an exclusive license agreement (the “February 2020 License Agreement”) with Stanford with regard to a patent concerning
a method for detection and measurement of specific cellular responses. Pursuant to the February 2020 License Agreement, other than as
described below, we received an exclusive worldwide license to Stanford’s patent with regard to use, import, offer, and sale of
Licensed Products (as defined in the agreement). The license to the patented technology is exclusive, including the right to sublicense,
beginning on the effective date of the agreement and ending when the patent expires. Under the exclusivity agreement, we acknowledged
that Stanford had already granted a non-exclusive license in the Nonexclusive Field of Use, under the Licensed Patents in the Licensed
Field of Use in the Licensed Territory (as those terms are defined in the February 2020 License Agreement”). However, Stanford
agreed to not grant further licenses under the Licensed Patents in the Licensed Field of Use in the Licensed Territory. On December 29,
2021, we entered into an amendment to the February 2020 License Agreement which extended our exclusive right to license the technology
deployed in AditxtScore TM and securing worldwide exclusivity in all fields of use of the licensed technology.
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We were obligated to pay and
paid a fee of $25,000 to Stanford within 60 days of February 3, 2020. We also issued 18,750 shares of the Company’s common stock
to Stanford. An annual licensing maintenance fee is payable by us on the first anniversary of the February 2020 License Agreement in the
amount of $40,000 for 2021 through 2024 and $60,000 starting in 2025 until the license expires upon the expiration of the patent. The
Company is required to pay and has paid $25,000 for the issuances of certain patents. The Company will pay milestone fees of $50,000 on
the first commercial sales of a licensed product and $25,000 at the beginning of any clinical study for regulatory clearance of an in
vitro diagnostic product developed and a potential licensed product. We are also required to: (i) provide a listing of the management
team or a schedule for the recruitment of key management positions by March 31, 2020 (which has been completed), (ii) provide a business
plan covering projected product development, markets and sales forecasts, manufacturing and operations, and financial forecasts until
at least $10,000,000 in revenue by June 30, 2020 (which has been completed), (iii) conduct validation studies by September 30, 2020 (which
has been completed), (iv) hold a pre-submission meeting with the FDA by September 30, 2020 (which has been completed), (v) submit a 510(k)
application to the FDA, Emergency Use Authorization (“EUA”), or a Laboratory Developed Test (“LDT”) by March 31,
2021, (which has been completed), (vi) develop a prototype assay for human profiling by December 31, 2021 (which has been completed),
(vii) execute at least one partnership for use of the technology for transplant, autoimmunity, or infectious disease purposes by March
31, 2022and (viii) will provide further development and commercialization milestones for specific fields of use in writing by December
31, 2022.
In addition to the annual license
maintenance fees outlined above, we will pay Stanford royalties on Net Sales (as such term is defined in the February 2020 License Agreement)
during the of the term of the agreement as follows: 4% when Net Sales are below or equal to $5 million annually or 6% when Net Sales are
above $5 million annually. The February 2020 License Agreement may be terminated upon our election on at least 30 days advance notice
to Stanford, or by Stanford if we: (i) are delinquent on any report or payment; (ii) are not diligently developing and commercializing
Licensed Product; (iii) miss certain performance milestones; (iv) are in breach of any provision of the February 2020 License Agreement;
or (v) provide any false report to Stanford. Should any events in the preceding sentence occur, we have a thirty (30) day cure period
to remedy such violation.
Plan of Operations – Immune Monitoring
As previously announced on
August 6, 2020, the initial application of the platform will be AditxtScore™ for COVID-19 which has been designed to provide a more
complete assessment of an individual’s infection and immunity status with respect to the SARS-CoV-2 virus. Infection status will
be determined by evaluating the presence or absence of the virus, and immunity status by measuring levels of antibodies against viral
antigens and their ability to neutralize the virus. We will soon be expanding the panel to measure other components of the immune response
such as cellular immunity.
In
August 2020, we filed for an Emergency Use Authorization (EUA) with the FDA with the ultimate objective of filing a 510(K) application.
On January 14, 2022, we submitted requests to obtain two EUAs for our antibody and neutralizing tests following an on November 15, 2021
by the Department of Health and Human Services that COVID-19 related tests will require FDA review and FDA’s position that COVID-19 tests
that have been in use prior to the announcement must submit applications for EUAs but can continue to operate unless informed otherwise.
In the meantime, we are providing AditxtScore™ as a service as a Laboratory Developed Test (LDT) to assess immunity status to COVID-19.
In early 2021, we established
our AditxtScore™ Immune Monitoring Center in Richmond, Virginia (the “Center”). The Center operates as a Clinical Laboratory
Improvement Amendments (CLIA) certified facility for the processing of our AditxtScore™ for COVID-19 Lab Developed Test (LDT) for
our prospective channel partners, including labs and hospitals.
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Intellectual Property (IP)
We strive to protect and enhance
the proprietary technology, inventions, and improvements that are commercially important to our business, including seeking, maintaining
and defending patent rights, whether developed internally or licensed from third parties. Our policy is to seek to protect our proprietary
position by, among other methods, filing patent applications in the United States and in jurisdictions outside of the United States, to
protect our proprietary technology, inventions, improvements and product candidates that are important to the development and implementation
of our business. We also rely on trade secrets and know-how relating to our proprietary technology and product candidates, continuing
innovation, and in-licensing opportunities to develop, strengthen and maintain our proprietary position in the field of immuno-therapy.
We also plan to rely on data exclusivity, market exclusivity, and patent term extensions when available. Our commercial success will depend
in part on our ability to obtain and maintain patent and other proprietary protection for our technology, inventions, and improvements;
to preserve the confidentiality of our trade secrets; to obtain and maintain licenses to use intellectual property owned by third parties;
to defend and enforce our proprietary rights, including any patents that we may own in the future; and to operate without infringing on
the valid and enforceable patents and other proprietary rights of third parties.
The ADi™ technology
falls in two main categories, the AditxtReprogramming™ therapeutic program (which includes Apoptotic DNA Immunotherapy™
also known as ADi™) and the AditxtScore™ diagnostic technology. Both categories are protected by multiple families of patents
and patent applications, including several issued U.S. and non-U.S. patents.
The projected expiration dates
for the AditxtReprogramming™ patents and patents issuing from pending applications extend until 2043 for some patents. As of the
date of this report, our patent portfolio for AditxtReprogramming™ includes both patents and patent applications licensed from LLU
or Stanford and patent applications owned solely by Aditxt, including 7 U.S. patents, 6 U.S. applications, 88 foreign patents, and 13
foreign applications. These patents and patent applications cover three different technical aspects of AditxtReprogramming™, treatment
of autoimmune diseases and type 1 diabetes, treatment of organ transplantation, and development of a new class of immunotherapeutics for
various indications. The patents and patent applications cover both methods of treatment for these indications as well as a compositions
of matter including plasmids that are able to induce tolerance of antigens or immune attack on antigens, depending on the indication,
along with methods of producing such plasmids.
The AditxtScore™ technology
is also protected by protected by multiple families of patents and patent applications, including several issued U.S. and non-U.S. patents.
The projected expiration dates for these AditxtScore™ patents and patents issuing from pending applications ranges from 2037 to
2043. As of the date of this report, our patent portfolio for AditxtScore™ includes both patents and patent applications licensed
from Stanford and patent applications owned solely by Aditxt, including 2 U.S. patents, 4 U.S. applications, and 2 foreign applications.
These patents and patent applications encompass methods, systems and kits for detection and measurement of specific immune responses.
We also possess and/or in-license
substantial know-how and trade secrets relating to the development and commercialization of our product candidates, including related
manufacturing processes and technology. We plan to continue expanding and strengthening our IP portfolio with additional patent applications
in the future.
In March 2021, Aditxt signed
an agreement with a regulatory consultant based in Munich, Germany, which will play a central role in navigating the first AditxtReprogramming™ therapeutic
program through the clinical trial and regulatory process. The firm will work with the Aditxt’s AditxtReprogramming™ team to
submit a clinical trial application to the regulatory agency in Germany. Psoriasis is the first indication being targeted for clinical
trial in the AditxtReprogramming™ therapeutics pipeline. Other candidates that are advancing toward clinical trials include
ADi™ for type 1 diabetes and skin allografting.
Employees
We have fifty-eight (58) full
time employees. We consider the relations with our employees to be good.
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