What changed in this filing

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Item 1A. Risk Factors

2020-11-09 compared with 2020-08-10 · 35 added, 84 removed, 24 unchanged (83% of the section changed)

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Other than as set forth below, there have been no material changes to the risk factors described in our Annual Report on Form 10-K for the year ended December 31, 2019 filed with the U.S.

Securities and Exchange Commission (“SEC”) on March 16, 2020.

Securities and Exchange Commission (“SEC”) on March 16, 2020, and in the Quarterly Report on Form 10-Q for the period ended June 30, 2020, filed with the SEC on August 10, 2020.

Our pursuit of a COVID-19 vaccine candidate is at an early stage.

We may be unable to produce a vaccine that successfully prevents infection from the virus in a timely manner, if at all, and preliminary data may not be indicative of future success.

In response to the global outbreak of coronavirus, in March 2020, we entered into a partnership with Duke-NUS Medical School in Singapore to develop a novel coronavirus (COVID-19) vaccine for Singapore.

In response to the global outbreak of coronavirus, in March 2020, we entered into a partnership with Duke-NUS Medical School in Singapore to develop a COVID-19 vaccine for Singapore.

Our development of the vaccine is in early stages, and we may be unable to produce a vaccine that successfully prevents infection from the virus in a timely manner, if at all.

We intend to commence a Phase 1/2 clinical trial in Singapore in August 2020, and in connection therewith, we will inject our LUNAR-COV19 vaccine candidate into human subjects for the first time, If any adverse events occur in the trial subjects, our development program could be delayed or halted altogether.

We commenced a Phase 1/2 clinical trial in Singapore in August 2020, and in connection therewith, we have injected our LUNAR-COV19 vaccine candidate into human subjects for the first time, If any adverse events occur in the trial subjects, or if preliminary data proves not to yield promising results, our development program could be delayed or halted altogether.

We are also committing financial resources and personnel to the development of a COVID-19 vaccine which may cause delays in or otherwise negatively impact our other development programs, despite uncertainties surrounding the longevity and extent of coronavirus as a global health concern.

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In addition, a substantial number of companies, individuals and institutions are working to develop a vaccine, many of which have substantially greater financial, scientific and other resources than us, and another party may be successful in producing a more efficacious vaccine or other treatment for COVID-19 which may also lead to the diversion of governmental and quasi-governmental funding away from us and toward other companies, and lead to demand being driven away from our product, even if developed.

Finally, even though we may report preliminary pre-clinical or other data that could appear to be positive, no assurance can be given that any product candidate will be safe in humans or prove to be effective once trials commence.

We will not be able to commercialize or market the product candidate unless and until we are able to demonstrate that our vaccine candidate is safe and effective in humans.

It is possible that one or more government entities may take actions that directly or indirectly have a negative effect on our opportunities.

If we were to develop a COVID-19 vaccine, the economic value of such a vaccine to us could be limited.

Various government entities, including the U.S.

government, are offering incentives, grants and contracts to encourage additional investment by commercial organizations into preventative and therapeutic agents against coronavirus, which may have the effect of increasing the number of competitors and/or providing advantages to known competitors.

Accordingly, there can be no assurance that we will be able to successfully establish a competitive market share for our COVID-19 vaccine, if any.

The recent coronavirus outbreak has caused interruptions or delays of our business plan and may have a significant adverse effect on our business.

In December 2019, a strain of coronavirus, COVID-19, was reported to have surfaced in Wuhan, China, and on March 12, 2020, the World Health Organization declared COVID-19 to be a pandemic.

In an effort to contain and mitigate the spread of COVID-19, many countries, including the United States, Canada and China, have imposed unprecedented restrictions on travel, quarantines, and other public health safety measures.

The extent to which the pandemic may impact our business will depend on future developments, which are highly uncertain and cannot be predicted, and the development of clinical supply materials could be delayed and enrollment of patients in our study for LUNAR-OTC and LUNAR-COV19 may be delayed or suspended, as hospitals and clinics in areas where we are conducting trials shift resources to cope with the COVID-19 pandemic and may limit access or close clinical facilities due to the COVID-19 pandemic.

Additionally, if our trial participants are unable to travel to our clinical study sites as a result of quarantines or other restrictions resulting from the COVID-19 pandemic, we may experience higher drop-out rates or delays in our clinical studies.

Government-imposed quarantines and restrictions may also require us to temporarily terminate our clinical sites.

Furthermore, if we determine that our trial pa rticipants may suffer from exposure to COVID-19 as a result of their participation in our clinical trials, we may voluntarily terminate certain clinical sites as a safety measure until we reasonably believe that the likelihood of exposure has subsided.

As a result, our expected development timelines for our product candidates may be negatively impacted.

We cannot predict the ultimate impact of the COVID-19 pandemic as consequences of such an event are highly uncertain and subject to change.

We do not yet kn ow the full extent of potential delays or impacts on our business, our clinical studies or as a whole;

however, the COVID-19 outbreak may materially disrupt or delay our business operations, further divert the attention and efforts of the medical community to coping with COVID-19, disrupt the marketplace in which we operate, and/or have a material adverse effect on our operations.

Moreover, the various precautionary measures taken by many governmental authorities around the world in order to limit the spread of the coronavirus has had and may continue to have an adverse effect on the global markets and global economy generally, including on the availability and pricing of employees, resources, materials, manufacturing and delivery efforts and other aspects of the global economy.

There have been business closures and a substantial reduction in economic activity in countries that have had significant outbreaks of COVID-19.

Significant uncertainty remains as to the potential impact of the COVID-19 pandemic on the global economy as a whole.

It is currently not possible to predict how long the pandemic will last or the time that it will take for economic activity to return to prior levels.

The COVID-19 pandemic could materially disrupt our business and operations, interrupt our sources of supply, hamper our ability to raise additional funds or sell or securities, continue to slow down the overall economy or curtail consumer spending.

We are currently conducting foreign clinical trials (“FCTs”) for our pending COVID-19 vaccine.

While costs of FCTs may be significantly lower than the costs of an equivalent trial in the United States, there are risks associated with FCTs which may ultimately inhibit FDA approval.

Costs associated with FCTs may be significantly lower than the costs of equivalent trials in the United States.

However, any clinical data from the FCT may not be adequate to support FDA approval without further preclinical studies, clinical trials, or both.

Other companies have in the past encountered various problems with FCTs.

The occurrence of any of these could have a material adverse effect on the ultimate path to FDA approval of any COVID-19 vaccine we may develop, which may negatively impact our financial condition and our business.

Currently we are only conducting FCTs for our pending COVID-19 vaccine and we have not yet submitted an investigational new drug application (IND) with the US FDA.

We cannot market our pending COVID-19 vaccine in the United States unless and until we seek and obtain approval from the US FDA.

Currently, we are only conducting FCTs for LUNAR-COV19.

We intend to prepare and submit to the FDA an IND for LUNAR-COV19.

As such, we will be required to conduct further preclinical studies, clinical trials, or both in order to obtain approval to sell LUNAR-COV19 in the United States.

If the FDA approves our IND for LUNAR-COV19, which cannot be assured, we would require significant additional financial resources to conduct clinical trials, which may not be available to us on attractive terms, if at all.

Furthermore, no assurance can be given that such trials will demonstrate that LUNAR-COV19 is safe or effective.

The inability to sell LUNAR-COV19 in the United States could have a material adverse effect on our financial condition and results of operations.

We are devoting significant resources to the scale-up and development of our LUNAR-COV19 vaccine candidate.

We are working toward the large scale technical development, manufacturing scale-up in several countries and larger scale deployment of this potential vaccine.

The number of doses of this potential vaccine that we are able to produce is dependent on our ability, and the ability of our contract manufacturers, to successfully and rapidly scale-up manufacturing capacity.

The number of doses that we will be able to produce is also dependent in large part on the dosage of the vaccine required to be administered to patients which will be determined in our clinical trials.

To support the scale-up, we will need to expend significant resources and capital.

Although we have previously raised capital to support our LUNAR-COV19 program, we will also need to seek and secure significant additional funding through a variety of potential contractual arrangements and collaborations with third parties.

We may be unable to enter such arrangements on favorable terms, or at all, which would adversely affect our ability to develop, manufacture and distribute a potential vaccine.

There is also a risk that our ability to manufacture a sufficient supply of drug substance and drug product for our LUNAR-COV19 vaccine candidate will be adversely affected by shortages of critical raw material, due to increased demand in the market or other contingencies beyond our control as a result of the numerous other companies working to develop a vaccine for COVID-19.

In addition, since the path to licensure of any vaccine against COVID-19 is unclear, our LUNAR-COV19 vaccine candidate could be in wide circulation in certain countries prior to our receipt of marketing approval.

Unexpected safety issues could lead to significant reputational damage for us and our technology platform going forward and other issues, including delays in our other programs, the need for re-design of our clinical trials and the need for significant additional financial resources.

Given the rapidity of both the onset of the COVID-19 pandemic and our development efforts with respect to LUNAR-COV19, as well as the complexity of

the economics of a pandemic vaccine, we are only in the early stages of consider ing how to price a potential vaccine and cannot provide assurance as to the ultimate impact of our LUNAR-COV19 program on our company.

The regulatory pathway for LUNAR-COV19 is continually evolving, and may result in unexpected or unforeseen challenges.

To date, LUNAR-COV19 has moved rapidly through the regulatory review and approval process.

The speed at which all parties are acting to create and test many therapeutics and vaccines for COVID-19 is unusual, and evolving or changing plans or priorities within the requisite regulatory bodies, including changes based on new knowledge of COVID-19 and how the disease affects the human body, may significantly affect the regulatory timeline for LUNAR-COV19.

Results from clinical testing may raise new questions and require us to redesign proposed clinical trials, including revising proposed endpoints or adding new clinical trial sites or cohorts of subjects.

Our internal computer systems and physical premises, or those of our strategic collaborators or other contractors or consultants, may fail or suffer security breaches, which could result in a material disruption of our product development programs and our manufacturing operations.

Our internal computer systems and those of our current and any future strategic collaborators, vendors, and other contractors or consultants are vulnerable to damage from computer viruses, unauthorized access, natural disasters, terrorism, cybersecurity threats, war, and telecommunication and electrical failures.

We may experience cyber-attacks on our information technology systems by threat actors of all types (including but not limited to nation states, organized crime, other criminal enterprises, individual actors and/or advanced persistent threat groups).

In addition, we may experience intrusions on our physical premises by any of these threat actors.

If any such cyber-attack or physical intrusion were to cause interruptions in our operations, such as a material disruption of our development programs or our manufacturing operations, whether due to a loss of our trade secrets or other proprietary information it would have a material and adverse effect on us.

For example, the loss of clinical trial data from one or more ongoing or completed or future clinical trials could result in delays in our regulatory approval efforts and significantly increase our costs to recover or reproduce the data.

In addition, if we were to run multiple clinical trials in parallel, any breach of our computer systems or physical premises could result in a loss of data or compromised data integrity across more than one of our programs in different stages of development.

Any such breach, loss, or compromise of clinical trial participant personal data may also subject us to civil fines and penalties or claims for damages, either under the General Data Protection Regulation (“GDPR”) and relevant member state law in the EU, other foreign laws, and the federal Health Insurance Portability and Accountability Act of 1996 (“HIPAA”), and other relevant state and federal privacy laws in the United States including the California Consumer Privacy Act (“CCPA”).

On May 13, 2020, the Federal Bureau of Investigation (“FBI”) and Cybersecurity and Infrastructure Security Agency (“CISA”) announced that the FBI is investigating the targeting and compromise of U.S.

organizations conducting COVID-19-related research by People’s Republic of China (“PRC”)-affiliated cyber actors.

To the extent that any disruption or security breach were to result in a loss of, or damage to, our data or applications, or inappropriate disclosure of confidential or proprietary information, including but not limited to information related to our LUNAR-COV19 vaccine candidate, we could incur liability, our competitive and reputational position could be harmed, and the further development and commercialization of our investigational medicines could be delayed.

The positive data from the preclinical trials of LUNAR-COV19, our COVID-19 vaccine candidate, may not be predictive of the results of our planned clinical trials, which is one of a number of factors that may delay or prevent us from receiving regulatory approval of our COVID-19 vaccine candidate.

We have yet to conduct our first in-human clinical trials for LUNAR-COV19.

Results from the proposed Phase 1/2 study or any interim results of any further Phase 2 or Phase 3 studies for LUNAR-COV19, if approved, could show diminished efficacy as compared to our preclinical study results.

The positive data from the preclinical trials of LUNAR-COV19 vaccine candidate, may not be predictive of the results of our planned clinical trials, which is one of a number of factors that may delay or prevent us from receiving regulatory approval of our COVID-19 vaccine candidate.

Results from the Phase 1/2 study or any interim results of any further Phase 2 or Phase 3 studies for LUNAR-COV19, if approved, could show diminished efficacy as compared to our preclinical study results.

We also may observe adverse events in subjects participating in these clinical studies.

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Any of these factors and others that we may not be able to identify at this time, could delay or prevent us from receiving regulatory approval of LUNAR-COV19 and there can be no assurance that LUNAR-COV19 will be approved in a timely manner, if at all.

Positive interim data from the ongoing Phase 1 study of our LUNAR-COV19 vaccine candidate may not be predictive of the results of later-stage clinical trials.

The interim data we have announced from the ongoing Phase 1/2 study of LUNAR-COV19 being developed in collaboration with Duke-NUS Medical School, are based on only interim analyses of the limited number of subjects.

Further results from the ongoing Phase 1/2 study or any interim results of our future studies could show diminished efficacy as compared to the interim Phase 1/2 study results and could impact the number of required doses for future studies and any approved product.

We also may observe more frequent or new adverse events in subjects participating in these ongoing clinical studies.

We are relying on advance purchase commitments of our LUNAR-COV19 vaccine candidate from certain foreign governmental agencies, including Singapore and the State of Israel.

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We may be unable to enter into such arrangements on favorable terms, or at all, which would adversely affect our ability to develop, manufacture and distribute a potential vaccine.

Our existing commitment from the State of Israel to purchase up to $275 million of the LUNAR-COV19 vaccine candidate is subject to the negotiation of a definitive supply agreement.

We may not be able to agree on the terms and conditions of a definitive supply agreement, in which case, we may not receive any funds from the State of Israel.

We have a limited number of shares of common stock available for future issuance which could adversely affect our ability

to raise capital or consummate acquisitions.

We will need to seek and secure significant funding through financings or from other sources to complete future Phase 2 and Phase 3 studies of our LUNAR-COV19 vaccine candidate.

As of September 30, 2020, we had approximately $307 million in cash, cash equivalents, and investments.

We expect that our existing cash, cash equivalents, and investments will be sufficient to fund our current operations through at least the next twelve months.

However, our operating plan may change as a result of many factors currently unknown to us, including with respect to the development, manufacturing and commercialization of our LUNAR-COV19 vaccine candidate, and we may need to seek additional funds sooner than planned, through public or private equity or debt financings, structured financings, government or other third-party funding, sales of assets, marketing and distribution arrangements, other collaborations and licensing arrangements, or a combination of these approaches.

In any event, we will require additional capital to obtain regulatory approval for, and to commercialize our LUNAR-COV19 vaccine candidate.

We may find it difficult to identify and enroll patients in our clinical studies given the limited number of patients who have the diseases for which certain of our product candidates are being studied.

Difficulty in enrolling patients could delay or prevent clinical studies of certain of our product candidates.

Identifying and qualifying patients to participate in clinical studies of our product candidates is critical to our success.

The timing of our clinical studies depends in part on the speed at which we can recruit patients to participate in testing our product candidates, and we may experience delays in our clinical studies if we encounter difficulties in enrollment.

Certain conditions for which we plan to evaluate our current product candidates are rare genetic diseases.

Accordingly, there are limited patient pools from which to draw for clinical studies.

For example, we estimate that approximately 8,000 patients in the developed world suffer from late-onset OTC deficiency, for which LUNAR-OTC is being studied.

In addition to the rarity of these diseases, the eligibility criteria of our clinical studies will further limit the pool of available study participants as we will require patients to have specific characteristics that we can measure or to assure their disease is either severe enough or not too advanced to include them in a study.

The process of finding and diagnosing patients may prove costly, especially since the rare diseases we are studying are commonly underdiagnosed.

We also may not be able to identify, recruit, and enroll a sufficient number of appropriate patients to complete our clinical studies because of demographic criteria for prospective patients, the perceived risks and benefits of the product candidate under study, the proximity and availability of clinical study sites for prospective patients, and the patient referral practices of physicians.

The availability and efficacy of competing therapies and clinical studies can also adversely impact enrollment.

If patients are unwilling to participate in our studies for any reason, the timeline for recruiting patients, conducting studies, and obtaining regulatory approval of potential products may be delayed, the commercial prospects of our product candidates will be harmed, and our ability to generate product revenue from any of these product candidates could be delayed or prevented.

Furthermore, many of the factors that cause, or lead to, a delay in the commencement or completion of clinical studies may also ultimately lead to the denial of regulatory approval of our product candidates.

Delays in completing our clinical studies will increase our costs, slow down our product candidate development and approval process, and jeopardize our ability to commence product sales and generate revenue.

Any of these occurrences may harm our business, financial condition, and prospects significantly.

We have a limited number of shares of common stock available for future issuance which could adversely affect o ur ability to raise capital or consummate acquisitions.

We are currently authorized to issue 30,000,000 shares of common stock under our Certificate of Incorporation.

As of August 5,

2020, we have issued 24,388,176 shares of common stock and have approximately 5,440,738 shares of common stock

committed for issuance giving effect to the assumed exercise of all outstanding warrants and options, resulting in approximately

171,086 authorized shares of common stock available for issuance.

Due to the limited number of authorized shares of common stock available for issuance, we may not be able to raise additional

equity capital or complete a merger, other business combination or partnership unless we increase the number of shares we are authorized to issue.

We would be required to seek stockholder approval to increase the number of our authorized shares of common

We can provide no assurance that we will succeed in amending our Certificate of Incorporation to increase the number of shares

of common stock we are authorized to issue.

As of September 29, 2020, we have issued 24,473,002 shares of common stock and have approximately 5,526,998 shares of common stock reserved for issuance, resulting in no authorized shares of common stock available for issuance.

Due to the limited number of authorized shares of common stock available for issuance, we may not be able to raise additional equity capital or complete a merger, other business combination or partnership unless we increase the number of shares we are authorized to issue.

We intend to seek stockholder approval to increase the number of our authorized shares of common stock at a special meeting to be held on November 10, 2020, but we can provide no assurance that we will succeed in amending our Certificate of Incorporation to increase the number of shares of common stock we are authorized to issue.

If we do not receive the requisite stockholder approval, our operations could be materially adversely impacted.

In addition, an

increase in the authorized number of shares of common stock and the subsequent issuance of such shares could have the effect of delaying or preventing a change in control of the Company without further action by our stockholders.

In addition, an increase in the authorized number of shares of common stock and the subsequent issuance of such shares could have the effect of delaying or preventing a change in control of the Company without further action by our stockholders.

Unregistered Sales of Equity Securities and Use of Proceeds.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1A. Risk Factors