What changed in this filing

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Item 1A. Risk Factors

2021-05-10 compared with 2020-11-09 · 23 added, 54 removed, 5 unchanged (94% of the section changed)

1 unchanged sentence

Our business is subject to various risks, including those described in Item 1A of our Annual Report on Form 10-K for the fiscal year ended December 31, 2020, which we strongly encourage you to review.

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, 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 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 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.

Our business could be negatively impacted by our allocation of significant resources to a global health threat that is unpredictable and could rapidly dissipate or against which our vaccine, if developed, may not be partially or fully effective.

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.

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.

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.

In addition, the interpretation of the data from our clinical trials of LUNAR-COV19 by regulatory agencies may differ from our interpretation of such data and such regulatory agencies may require that we conduct additional studies or analyses.

Further, the assays being used to measure and analyze the effectiveness of vaccines being developed to treat COVID-19 have only recently been developed and are continuing to evolve.

The validity and standardization of these assays has not yet been established, and the results obtained in clinical studies of LUNAR-COV19 with subsequent versions of these assays may be less positive than the pre-clinical results we have obtained to date.

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.

Although we have previously raised capital to support the development and manufacture of our LUNAR-COV19 vaccine, we must also secure additional funding through contractual arrangements with third parties, including the governments of Singapore and the State of Israel.

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.

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 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.

Unregistered Sales of Equity Securities and Use of Proceeds.

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, 2020 filed with the SEC on March 1, 2021.

Our competitors, which have substantially greater financial, scientific and other resources than us have completed the development of and sold hundreds of millions of doses of their COVID-19 vaccine candidates, making it more difficult for us to establish ARCT-021 as a viable candidate.

A large number of vaccine manufacturers, academic institutions and other organizations currently have programs to develop COVID-19 vaccine candidates and are further along in development of their vaccine candidates.

Moderna, AstraZeneca and Johnson & Johnson, and several other companies, have received emergency use authorization from the FDA or other government authorities for their COVID-19 vaccines and are already commercializing them and have vaccinated hundreds of millions of people.

As more people in the United States and globally are vaccinated by COVID-19 vaccines developed by our competitors, the demand for ARCT-021 will decline.

As our development may be delayed, the number of vaccinated individuals will increase and the need for our vaccine, if developed, may decline further.

We are planning a Phase 3 clinical trial for our COVID-19 vaccine candidate, ARCT-021.

If we are unable to initiate the trial or generate successful results, or experience significant delays in doing so, we may be unable to market and sell a COVID-19 vaccine.

We commenced a Phase 2 trial of ARCT-021 and are in discussions with multiple regulatory authorities in different parts of the world regarding a Phase 3 trial.

We anticipate that a Phase 3 trial would continue through 2021, and that we would continue to monitor subjects in the Phase 3 trial into 2022 (whether or not we receive emergency use authorization for ARCT-021 during 2021).

We will need to identify additional funding sources to complete any Phase 3 trial that is commenced.

The data received to date, although providing sufficient information to allow us to proceed further is not complete enough to provide conclusive evidence with respect to safety and potential efficacy of ARCT-021.

In December 2020, our CTA application to proceed with our Phase 2 clinical study was accepted by the HSA and the IND for the same trial received a “safe to proceed” from the FDA.

Clinical trial results are inherently uncertain, and a significant portion of our success and business prospects depend on the progress of this program.

Our failure to demonstrate safety or obtain positive clinical trial results, inability to meet the expected timeline for release of data for this trial, or failure to successfully develop a single-dose vaccine could have an adverse effect on our business operations and financial condition.

Furthermore, we will not have a detailed understanding of the efficacy of ARCT-021 until infection of a sufficient number of subjects in a Phase 3 trial, enrollment for which may be delayed or prevented by rollout of competing vaccines for COVID-19, competing clinical trials and the refusal of certain countries’ regulatory authorities to allow placebo-controlled trials for COVID-19 vaccine candidates.

We cannot be certain if we will receive approval to proceed with a Phase 3 study, when we will begin enrollment, or the nature of the protocols that may eventually be approved.

If our data is not positive or is inconclusive, we may not be able to continue our studies or identify additional funding to continue the studies.

No assurance can be given that the results of the trials will produce adequate results to allow us to commence or continue expected trials or that that adequate efficacy will be demonstrated such that ARCT-021 will be a viable commercial product.

If government bodies in the United States or elsewhere implement a waiver on patents on COVID-19 vaccines, there could be a significant adverse effect on our business.

On May 5, 2021, the Biden Administration announced that it supports a waiver for patents on vaccines protecting against the coronavirus.

Any action by governments of the United States or other countries, or by global governmental authorities, that limit the ability of companies to enforce their patents or other technology could limit the value of the Company’s intellectual property and revenue potential for the Company’s product candidates.

Unregistered Sales of Equi ty Securities and Use of Proceeds.

Defaults Upon Senior Securities.

2 unchanged sentences

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What changed 10-Q

Item 1A. Risk Factors