Item 1A. Risk Factors
Item 1A . Risk Factors .
As a smaller reporting company as defined by Item 10 of Regulation S-K, we are not required to provide information required by this Item. However, in addition to our risk factors as set forth in our Form 10-K, filed with the SEC on January 9, 2020 and as amended on January 10, 2020, we have also identified the following additional risks to our company:
Risks related to the COVID-19 pandemic
Our business activities for fiscal 2020 are expected to be adversely affected by the global COVID-19 pandemic.
The COVID-19 pandemic has spread globally and the World Health Organization (WHO) has declared it a global pandemic. While still evolving, the COVID-19 pandemic has caused significant worldwide economic and financial turmoil, and has fueled concerns that it will lead to a global recession. On March 13, 2020, the United States declared a national emergency with respect to COVID-19 and the majority of states and U.S. territories, including the State of California, have since issued orders requiring the closure of non-essential businesses and/or requiring residents to stay at home. The Company is following the recommendations of local health authorities to minimize exposure risk for its team members and visitors, including requiring its employees to work from home. The continued and prolonged implementation of restrictions by federal, state and local authorities to slow the spread of COVID-19 have disrupted and, we expect, will continue to disrupt, our business and operations.
Specifically, the pandemic has caused shutdowns of the laboratories and other service providers that we rely on to develop our CAR-T and breast cancer vaccine programs, and those laboratories and service providers that have been operating or that have begun operating recently have been doing so with more limited capacity due to social distancing requirements. As a result, our progress has been slowed and there is no assurance that we will be able to meet our previously announced timelines regarding the IND filings for our CAR-T therapy for ovarian cancer and for our breast cancer vaccine.
Moreover, our plan to sell and/or license our Cchek technology to a strategic partner has been impacted by the pandemic even more significantly. We are currently performing a clinical validation study for Cchek to have a more robust data package for potential partners, but the pandemic has slowed our partnering discussions due to a dramatic decrease in the number of patients seeking treatment from their urologists, resulting in the substantial diminishment of our flow of blood samples for the study. Further, most potential partners have been focusing their attention on developing COVID-19 diagnostics and are not as focused on discussing or diverting resources to cancer diagnostics. Although we anticipate the sample flow returning to normal soon, there is no assurance as to how quickly sample flow will return or when a partnership will be completed, if ever.
The extent to which the COVID-19 pandemic impacts our business, operations and financial results will depend on numerous evolving factors that we may not be able to accurately predict, including: the duration and scope of the pandemic; governmental, business and individuals actions that have been and continue to be taken in response to the pandemic; the impact of the pandemic on economic activity and actions taken in response; our ability to continue daily operations, including as a result of travel restrictions and people working from home; and any closures of our and our business partners offices and facilities.
While the Company is currently implementing solutions designed to reduce the potential impact of COVID-19, there can be no assurance that our efforts will adequately mitigate the risks of business disruptions and interruptions. Further, events such as natural disasters and public health emergencies divert our attention away from normal operations and limited resources. Our inability to timely resume normal operations following the pandemic disruption could adversely affect our business, financial condition or results of operations in a material manner.
Any of these events could materially adversely affect our business, financial condition, results of operations and/or stock price.
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Risks related to our COVID-19 program
There is no guarantee that our collaboration with OntoChem will produce a successful anti-viral drug for COVID-19.
On April 14, 2020, the Company entered into a collaboration agreement with OntoChem for the purpose of discovering and ultimately developing anti-viral drug candidates for COVID-19. The parties have developed a research plan pursuant to which OntoChem will utilize advanced computational methods, machine learning and molecular modeling techniques to perform in silico screening of over 1.2 billion compounds in OntoChems chemistry and gene ontology database (including publicly available compounds and OntoChems proprietary libraries) to evaluate if any of these compounds could disrupt one of two key enzymes of COVID-19. While, to date, we have synthesized four potential COVID-19 compounds that will advance to biological assay testing, there is no guarantee that any of these compounds (or any other future compounds that we may identify), once synthesized and tested in biological assays, will demonstrate sufficient potency as predicted by the molecular modeling algorithms. Further, even if these compounds do demonstrate sufficient potency, there is no guarantee that the compounds will be effective in animal or human testing and that they will ultimately be effective anti-viral drugs for COVID-19.
We may not have sufficient resources to pursue animal and/or human trials for compounds that we identify that we believe demonstrate sufficient potency to combat COVID -19.
Clinical trials are time consuming and expensive. Even if we identify one or more compounds that demonstrate sufficient potency as predicted by the molecular modeling algorithms to pursue animal and ultimately human testing for a COVID-19 treatment, we may not have sufficient resources (cash or personnel) to pursue such testing. In such a case, we may pursue a partnership arrangement to have a third party fund our clinical testing, but there is no guarantee that we will be able to identify such a partnership or that a partnership will materialize in terms that are beneficial to the Company.
There is significant competition in the search for a treatment for COVID -19.
There is significant competition, including from other companies and governmental organizations, to find a treatment for COVID-19. Many of these entities have substantially greater resources (including capital and personnel) than we do and many of these entities are much further ahead in pursuit of a treatment than we are. Even if we are successful in identifying a compound that may act as an effective treatment for COVID-19, there is no guarantee that we will have the only effective treatment for COVID-19 or that we will be able to get our treatment to market prior to our competitors.
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Item 2 . Unregistered Sales of Equity Securities and Use of Proceeds . None.
Item 3. Defaults Upon Senior Securities . None.
Item 4 . Mine Safety Disclosures . Not Applicable.
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