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Additional risks and uncertainties not presently known to us or that we currently believe to be immaterial may also adversely affect our business.
−Removed: In addition, many of the following risk factors could be exacerbated by the COVID-19 pandemic and any worsening of the global business and economic environment as a result.
+Added: In addition, many of the following risk factors could be exacerbated by any worsening of the global business and economic environment.
If any of the following risks actually occurs, our business, financial condition, results of operations and future prospects could be materially and adversely affected.
Risks Related to Our Business
−Removed: We have incurred significant losses since our inception and expect to continue to incur losses and may never generate profits from operations or maintain profitability.
+Added: We are a late-stage biopharmaceutical company with no products approved for commercial sale, and we have incurred significant losses since our inception and expect to continue to incur losses and may never generate profits from operations or maintain profitability.
Since inception, we have incurred significant operating losses.
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If we are unable to raise capital when needed, we could be forced to delay, reduce or eliminate our product development programs or commercialization efforts.
−Removed: We expect our research and development expenses to increase substantially in the future, particularly if we advance any drug candidates beyond Phase 2 clinical development or expand the number of drug candidates in clinical studies.
+Added: We expect our research and development expenses to increase substantially in the future, particularly for any drug candidates beyond Phase 2 clinical development or if we expand the number of drug candidates in clinical studies.
In addition, if we obtain marketing approval for any of our product candidates that are not then subject to licensing, collaboration or similar arrangements with third parties, we expect to incur significant commercialization expenses related to product sales, marketing, distribution and manufacturing.
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Accordingly, we may never be able to generate revenues through the license or sale of any of our product candidates.
+Added: Deterioration in general economic conditions in the United States, Canada and globally, including the effect of prolonged periods of inflation on our suppliers, third-party service providers and potential partners, could harm our business and results of operations.
+Added: Our business and results of operations could be adversely affected by changes in national or global economic conditions.
+Added: These conditions include but are not limited to inflation, rising interest rates, availability of capital markets, energy availability and costs, the negative impacts caused by pandemics and public health crises, negative impacts resulting from the military conflict between Russia and the Ukraine, and the effects of governmental initiatives to manage economic conditions.
+Added: Impacts of such conditions could be passed on to our business in the form of higher costs for labor and materials, higher investigator fees, possible reductions in pharmaceutical industry-wide spending on research and development and acquisitions and higher costs of capital.
Public health threats could have an adverse effect on our operations and financial results.
Public health threats, such as the novel coronavirus (Covid-19), influenza and other highly communicable diseases or viruses could adversely impact our operations and disrupt our ongoing or planned research and development activities.
−Removed: At present, the COVID-19 pandemic, and preventative measures taken to contain or mitigate this pandemic, are causing disruptions to almost every industry directly or indirectly.
−Removed: Governments in affected regions have implemented and may continue to implement safety precautions, including quarantines, travel restrictions and shelter in place orders, resulting in business closures, work stoppages, slowdowns and delays, cancellation of events and other measures.
−Removed: These measures may disrupt normal business operations and may have significant negative impacts on businesses and financial markets worldwide.
−Removed: We continue to monitor our operations and applicable government recommendations, and we have made modifications to our normal operations because of the COVID-19 pandemic, including limiting travel, working from home and implementing new procedures in the workplace.
−Removed: The risk of cyber-attacks or other data security incidents may be heightened as a result of our remote or hybrid working environment, which may be less secure and more susceptible to security breaches.
−Removed: Operating requirements may continually change due to the COVID-19 pandemic and we may experience unpredictability in our expenses.
−Removed: Since we rely on third-party CMOs to manufacture our drug candidates we may be more susceptible to supply chain disruptions than companies with in-house manufacturing.
−Removed: While we have not experienced significant shortages of raw materials to date, as a result of the pandemic and increased demand for production, CMOs have generally reported that supplies of raw materials and critical components necessary for our manufacturing processes have been more challenging and expensive to obtain, and longer lead times may be required for scheduling future production runs.
We cannot presently predict the scope and severity of any potential future business shutdowns or disruptions, but if we or any of the third parties with whom we engage, including the suppliers, clinical trial sites, regulators and other third parties with whom we conduct business, were to experience shutdowns or other business disruptions, our ability to conduct our business in the manner and on the timelines presently planned could be materially and negatively impacted.
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Any inability to manage growth could delay the execution of our business plans or disrupt our operations.
−Removed: We may expend our limited resources to pursue a particular product candidate and fail to capitalize on product candidates that may be more profitable or for which there is a greater likelihood of success.
−Removed: Because we have limited financial and managerial resources, we focus on specific product candidates.
−Removed: As a result, we may forego or delay pursuit of opportunities with other product candidates that later could prove to have greater commercial potential.
−Removed: Our resource allocation decisions may cause us to fail to capitalize on viable commercial products or profitable market opportunities.
−Removed: If we do not accurately evaluate the commercial potential or target market for a particular product candidate, our business may be negatively impacted.
−Removed: We may not be successful in our efforts to identify and acquire or in-license additional product candidates.
−Removed: Part of our strategy involves diversifying our product development risk by identifying and acquiring or in-licensing novel product candidates.
−Removed: We may fail to identify and acquire or in-license promising product candidates.
−Removed: The competition to acquire or in-license promising product candidates is fierce, especially from large multinational companies that have greater resources and experience than we have.
−Removed: If we are unable to identify and acquire or in- license suitable product candidates, we will be unable to diversify our product risk.
−Removed: We believe that any such failure could have a significant negative impact on our prospects because the risk of failure of any particular development program in the pharmaceutical field is high.
Our future success depends on our ability to retain key executives and to attract, retain and motivate qualified personnel.
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dollars, changes in currency exchange rates have had and could have in the future a significant effect on our operating results when our operating results are translated into U.S.
−Removed: We are subject to anti-corruption laws, as well as export control laws, customs laws, sanctions laws and other laws governing our operations.
+Added: We are subject to anti-corruption laws, as well as export control laws, customs laws, sanctions laws, privacy laws and other laws governing our operations.
If we fail to comply with these laws, it could be subject to civil or criminal penalties, other remedial measures and legal expenses, which could adversely affect our business, results of operations and financial condition.
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Foreign Corrupt Practices Act, or the FCPA, and other anti-corruption laws that apply in countries where we do business and may do business in the future.
−Removed: We are also subject to other laws and regulations governing our international operations, including regulations administered by the government of the United States and authorities in the European Union, including applicable export control regulations, economic sanctions on countries and persons, customs requirements and currency exchange regulations, collectively referred to as the Trade Control laws.
+Added: We are also subject to other laws and regulations governing our international operations, including regulations administered by the government of the United States and authorities in the European Union, including applicable export control regulations, economic sanctions on countries and persons, customs requirements and currency exchange regulations.
There is no assurance that we will be completely effective in ensuring our compliance with all applicable anti- corruption laws.
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or other authorities could also have an adverse impact on our reputation, our business, results of operations and financial condition.
+Added: Similarly, compliance with global privacy and data security requirements could result in additional costs and liabilities to us or inhibit our ability to collect and process data globally, and our failure to comply with data protection laws and regulations could lead to government enforcement actions, which would cause our business and reputation to suffer.
Our employees, principal investigators, consultants and commercial partners may engage in misconduct or other improper activities, including noncompliance with regulatory standards and requirements and insider trading, which could cause significant liability for us and harm our reputation.
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It is not always possible to identify and deter misconduct, and the precautions we take to detect and prevent this activity may not be effective in controlling unknown or unmanaged risks or losses or in protecting us from governmental investigations or other actions or lawsuits stemming from a failure to be in compliance with such laws, standards or regulations.
−Removed: If any such actions are instituted against us, and we are not successful in defending ourselves or asserting our rights, those actions could have a significant impact on our business and results of operations, including the imposition of significant fines or other sanctions.
+Added: Such actions could have a significant impact on our business and results of operations, including the imposition of significant fines or other sanctions.
We rely significantly on information technology and any failure, inadequacy, interruption or security lapse of that technology, including any cyber security incidents, could harm our ability to operate our business effectively.
−Removed: Despite the implementation of security measures, our internal computer systems and those of third parties with which we contract are vulnerable to damage, including damage from cyber attacks, ransomware attacks, computer viruses, unauthorized access, human error and technological errors, natural disasters and telecommunication and electrical failures.
+Added: Despite the implementation of security measures, our computer systems and those of third parties with which we contract are vulnerable to damage, including damage from cyber attacks, ransomware attacks, computer viruses, unauthorized access, human error and technological errors, natural disasters and telecommunication and electrical failures.
System failures, accidents or security breaches could cause interruptions in our operations, and could result in a material disruption of our clinical and commercialization activities and business operations, in addition to possibly requiring substantial expenditures of resources to remedy.
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delays in obtaining regulatory agreement for the conduct of the clinical trials;
−Removed: lower than anticipated enrollment and retention rate of subjects in clinical trials for a variety of reasons, including size of patient population, nature of trial protocol, the availability of approved effective treatments for the relevant disease and competition from other clinical trial programs for similar indications;
+Added: lower than anticipated enrollment and retention rate of subjects in clinical trials;
serious and unexpected drug-related side effects experienced by patients in clinical trials;
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If the regulatory agencies determine that more data and information are needed, it could delay and/or negatively impact our ability to obtain regulatory approval to market and sell a particular product candidate.
−Removed: If the commercial opportunity in chronic ACD or COVID-19-induced ARDS is smaller than we anticipate, our future revenue from EB01 or EB05, as applicable, will be adversely affected and our business will suffer.
−Removed: It is critical to our ability to grow and become profitable that we successfully identify patients with chronic ACD or COVID-19-induced ARDS.
+Added: If the commercial opportunity in chronic ACD or ARDS is smaller than we anticipate, our future revenue from EB01 or EB05, as applicable, will be adversely affected and our business will suffer.
+Added: It is critical to our ability to grow and become profitable that we successfully identify patients with chronic ACD or ARDS.
Our estimates of the number of people who have these conditions as well as the subset who have the potential to benefit from treatment with EB01 or EB05, are based on a variety of sources, including third-party estimates and analyses in the scientific literature, and may prove to be incorrect.
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Many of our competitors have significantly greater financial resources and expertise than we do.
−Removed: Our commercial opportunities could be reduced or eliminated if our competitors develop and commercialize products that are more effective, safer, have fewer or less severe side effects, are approved for broader indications or patient populations, or are more convenient or less expensive than any products that we develop and commercializes.
+Added: Our commercial opportunities could be reduced or eliminated if our competitors develop and commercialize products that are more effective, safer, have fewer or less severe side effects, are approved for broader indications or patient populations, or are more convenient or less expensive than any products that we develop and commercialize.
Our competitors may also obtain marketing approval for their products more rapidly than we may obtain approval for our products, which could result in our competitors establishing a strong market position before we are able to enter the market.
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We may not qualify for or ultimately benefit from various expedited regulatory review programs or designations.
−Removed: In the event that our Phase 2/3 study of EB05 in hospitalized COVID-19 patients is successful, we intend to apply for various regulatory incentives in the United States, such as breakthrough therapy designation, fast track designation, accelerated approval and priority review, where available, that provide for expedited review and/or other benefits, and we may also seek similar designations elsewhere in the world.
+Added: If we believe we meet eligibility requirements, we intend to apply for various regulatory incentives in the United States, such as breakthrough therapy designation, fast track designation, accelerated approval and priority review, where available, that provide for expedited review and/or other benefits, and we may also seek similar designations elsewhere in the world.
Often, regulatory agencies have broad discretion in determining whether or not product candidates qualify for such regulatory incentives and benefits and we cannot guarantee we would be successful in obtaining beneficial regulatory designations by FDA or other regulatory agencies.
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If we are unsuccessful in obtaining an EUA, or if any granted EUA is revoked after a short period of time, it could have a material adverse effect on our future business, financial condition and operating results.
−Removed: Our relationships with customers, healthcare providers and professionals and third-party payors will be subject to applicable anti-kickback, fraud and abuse and other healthcare laws and regulations, which could expose us to criminal sanctions, civil penalties, contractual damages, reputational harm and diminished profits and future earnings.
−Removed: Healthcare providers, physicians and third-party payors play a primary role in the recommendation and prescription of any product candidate for which we may obtain marketing approval.
−Removed: Our future arrangements with customers, healthcare providers and professionals, and third-party payors may expose us to broadly applicable federal anti-kickback, federal and state fraud and abuse and other healthcare laws and regulations that may constrain the business or financial arrangements and relationships through which we market, sell and distribute any product candidate for which we obtain marketing approval.
−Removed: Efforts to ensure that our business arrangements with third parties will comply with applicable healthcare laws and regulations will involve substantial costs.
−Removed: Violation of certain of these laws could also result in exclusion, suspension and debarment from government funded healthcare programs.
−Removed: Exclusion, suspension or debarment would significantly impact our ability to commercialize, sell or distribute any product candidate for which we obtain regulatory approval.
Use of social media platforms presents new risks.
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In April 2020, we entered into an exclusive license agreement with NovImmune SA to obtain exclusive rights throughout the world to certain know-how, patents and data relating to the monoclonal antibodies targeting TLR4 and CXCL10.
−Removed: We are using these rights to develop EB05 as a potential treatment for ARDS resulting from COVID-19.
−Removed: If we default or fail to perform any of the terms, covenants, provisions or our obligations under the License Agreement, NovImmune has the option to terminate the License Agreement, subject to advance notice to cure such default.
+Added: We are using these rights to develop EB05 as a potential treatment for ARDS and other disease indications.
+Added: If we default or fail to perform any of the terms, covenants, provisions or our obligations under the License Agreement, including milestone payments, NovImmune has the option to terminate the License Agreement, subject to advance notice to cure such default.
Any termination of this license agreement would have a materially adverse impact on our business and results from operations.
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Such litigation, if instituted, could result in substantial costs and diversion of management attention and resources, which could significantly harm our profitability and reputation.
−Removed: If we fail to meet all applicable Nasdaq Capital Market requirements and Nasdaq determines to delist our common shares, the delisting could adversely affect the market liquidity of our common shares and the market price of our common shares could decrease.
+Added: If we fail to meet all applicable Nasdaq Capital Market requirements and Nasdaq determines to delist our common shares, the delisting could adversely affect the market liquidity of our common shares and the market price of our common shares could decrease and our ability to access the capital markets could be negatively impacted.
Our common shares are listed on The Nasdaq Capital Market.
−Removed: To maintain our listing, we must meet minimum financial, operating and other requirements, including requirements for a minimum amount of capital, a minimum price per share, and active operations.
−Removed: If we are unable to comply with Nasdaq’s listing standards, Nasdaq may determine to delist our common shares.
−Removed: If our common shares are delisted for any reason, it could reduce the value of our common shares and their liquidity.
−Removed: Delisting could also adversely affect our ability to obtain financing for the continuation of our operations, or to use our common shares in acquisitions.
−Removed: Delisting may also result in the loss of confidence by suppliers, investors and employees.
+Added: There can be no assurance that we will be able to continue to maintain compliance with the Nasdaq continued listing requirements, and if we are unable to maintain compliance with the continued listing requirements, including the $1.00 Minimum Bid Price Requirement set forth in Nasdaq Listing Rule 5550(a)(2), our securities may be delisted from Nasdaq, which could reduce the liquidity of our common shares materially and result in a corresponding material reduction in the price of our common shares.
+Added: In addition, delisting could harm our ability to raise capital through alternative financing sources on terms acceptable to us, or at all, and may result in the potential loss of confidence by investors, employees, suppliers and business development opportunities.
+Added: Such a delisting likely would impair your ability to sell or purchase our common shares when you wish to do so.
+Added: Further, if we were to be delisted from Nasdaq, our common shares may no longer be recognized as a “covered security” and we would be subject to regulation in each state in which we offer our securities.
+Added: Thus, delisting from Nasdaq could adversely affect our ability to raise additional financing through the public or private sale of equity securities, would significantly impact the ability of investors to trade our securities and would negatively impact the value and liquidity of our common shares.
Raising additional capital may cause dilution to our investors, restrict our operations or require us to relinquish rights to our technologies or product candidates
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If we are unable to raise additional funds through equity or debt financings or other arrangements when needed, we may be required to delay, limit, reduce or terminate our product development or future commercialization efforts or grant rights to develop and market product candidates that we would otherwise prefer to develop and market ourselves.
+Added: We do not currently intend to pay dividends on our common shares in the foreseeable future, and consequently, any gains from an investment in our common shares will likely depend on appreciation in the price of our common shares.
+Added: We have never declared or paid cash dividends on our common shares and do not anticipate paying any cash dividends to holders of our common shares in the foreseeable future.
+Added: Consequently, investors must rely on sales of their common shares and warrants after price appreciation, which may never occur, as the only way to realize any future gains on their investments.
+Added: There is no guarantee that our common shares will appreciate in value or even maintain the price at which the shareholders have purchased their shares.
+Added: A sale of a substantial number of our common shares in the public market could cause the market price of our common shares to drop significantly, even if our business is doing well.
+Added: The price of our common shares could decline as a result of sales of a large number of our common shares or the perception that these sales could occur.
+Added: These sales, or the possibility that these sales may occur, also might make it more difficult for us to sell equity securities in the future at a time and at a price that we deem appropriate.
+Added: In addition, in the future, we may issue additional common shares, warrants or other equity or debt securities convertible into common shares in connection with a financing, acquisition, litigation settlement, employee arrangements or otherwise.
+Added: Any such issuance could result in substantial dilution to our existing shareholders and could cause the price of our common shares to decline.
+Added: If equity research analysts do not publish research or reports about our business or if they issue unfavorable commentary or downgrade our common shares, the price of our common shares could decline.
+Added: The trading market for our common shares relies in part on the research and reports that equity research analysts publish about us and our business.
+Added: We do not control these analysts.
+Added: The price of our common shares could decline if one or more equity analysts downgrade our common shares or if analysts issue other unfavorable commentary or cease publishing reports about us or our business.
+Added: Our Articles allow for our board of directors to create new series of preferred shares without further approval by the shareholders, which could adversely affect the rights of the holders of our common shares.
+Added: As previously approved by our shareholders, our board of directors has the authority to authorize up to an unlimited number of a new series of our preferred shares and to fix and determine the special rights and restrictions of that series without further shareholder approval, subject to the terms set out in the Articles and unless otherwise required by the Business Corporations Act (British Columbia).
+Added: As a result, our board of directors could authorize the creation of a series of our preferred shares that would grant to holders of the preferred shares a right to our assets upon liquidation before a distribution to the holders of our common shares.
+Added: In addition, our board of directors could authorize the creation of a new series of our preferred shares that is convertible into our common shares, which could result in dilution to existing shareholders.
Failure to maintain effective internal control over financial reporting in accordance with Section 404 of the Sarbanes- Oxley Act of 2002 could have a material adverse effect on our share price.
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We currently lease approximately 2,800 square feet of office space in Markham, Ontario, from a related company under a lease that expires in December 2022, with an option to renew for another two-year term.
+Added: We anticipate extending the lease through December 2024.
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.