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Item 1A. Risk Factors

2024-03-29 compared with 2023-03-29 · 86 added, 151 removed, 916 unchanged (21% of the section changed)

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These factors include, without limitation, the risk factors listed below, and other factors presented throughout this Annual Report and any other documents filed by us with the SEC and the Canadian securities regulators on SEDAR.

Risk Factors Summary

The following is a summary of the principal risks that could adversely affect our business, operations, and financial results.

A more thorough discussion of these and other risks follows this summary.

Risks Related to Our Business

● We have a history of significant losses and have generated limited revenue from the sale of products since our inception.

● We may be required to conduct additional clinical trials for PEDMARK ® , which would be costly and time-consuming to complete.

● We may require additional financing to obtain regulatory approval for and commercialize PEDMARK ® , and a failure to obtain this capital when needed on acceptable terms, or at all, could force us to delay, limit, reduce, or terminate further product development, other operations, or commercialization efforts.

● We are currently and may in the future be the target of securities litigation, which may be costly and time-consuming to defend.

● We have only recently transitioned from a development stage biopharmaceutical company to a commercial stage biopharmaceutical company, which may make it difficult for you to evaluate the success of our business to date and to assess our future viability.

● Our business may be adversely affected by the ongoing COVID-19 pandemic.

● Our business involves environmental risks and potential exposure to environmental liabilities.

Risks Related to Marketing Approval of Our Product Candidate

● PEDMARK ® has received marketing approval from the FDA, but not from any comparable foreign authorities.

These approval processes are costly, time-consuming, and inherently unpredictable, and it is possible that our applications for marketing approval will be denied.

Risks Related to Commercialization of Our Product Candidate

● Our success depends on our ability to successfully commercialize PEDMARK ® .

We are a single product company with only limited commercial experience, which makes it difficult to evaluate our current business, predict our future prospects and forecast our financial performance and growth.

● If we are unable to successfully commercialize PEDMARK ® , our business, results of operations and financial condition may be materially adversely affected.

● Our business is subject to substantial competition.

● Our business may require additional capital.

● The obligations incident to being a public company place significant demands on our management.

● We are highly dependent on our small number of key personnel and advisors.

● The ongoing COVID-19 pandemic and the worldwide attempts to contain it could harm our business and results of operations and financial condition and we could be adversely impacted by it.

● We face a risk of product liability claims and may not be able to obtain adequate insurance.

● Business or economic disruptions or global health concerns could seriously harm our development efforts and increase our costs and expenses.

● Now that we have received regulatory approvals for PEDMARK ® , it will still be subject to continued regulatory review and could be subject to labeling and other restrictions.

● Sales of PEDMARK ® will depend on reimbursement by payers and these payers are subject to pressures to contain costs.

In addition, coverage and reimbursement for PEDMARK ® may be limited or unavailable in certain market segments.

● PEDMARK ® targets diseases with small patient populations and we may not be effective at identifying patients.

● We may not be able to gain or maintain market acceptance of PEDMARK ® among the medical community, patients, or payers.

● If we fail to comply with applicable healthcare laws and regulations, we may be subject to investigations and civil or criminal penalties and could lose any regulatory approvals that we obtain for PEDMARK ® .

● Changes in healthcare laws and regulations, as well as changes in healthcare policy, could adversely affect our business.

Risks Related to Third Parties

● We rely on third parties to supply raw materials, to conduct clinical trials, and to manufacture PEDMARK ® .

If these third parties fail to satisfactorily perform for us, or if they fail to comply with applicable legal and regulatory requirements, it could have a material adverse effect on our business.

Risks Related to Government Regulation

● • The regulatory approval process is lengthy, and we may not be able to obtain all of the regulatory approvals required to manufacture and commercialize PEDMARK ® in all areas in which we are licensed to supply it.

● • We may face significant delays in our clinical studies and trials due to an inability to recruit patients for our clinical studies and trials or to retain patients in the clinical studies and trials we may perform.

● • If our third-party suppliers or contract manufacturers do not maintain appropriate standards of manufacturing in accordance with cGMP and other manufacturing regulations, our development and commercialization activities could suffer significant interruptions or delays.

● • PEDMARK ® is subject to ongoing regulatory review.

If we fail to comply with continuing United States and applicable foreign regulations, we could lose those approvals, and our business would be severely harmed.

● • Enacted and future legislation or judicial action may increase the difficulty and cost for us to commercialize PEDMARK ® or any other drug candidates we may acquire or license and affect the prices we may obtain.

● • If we fail to obtain or subsequently maintain orphan drug exclusivity or regulatory exclusivity for PEDMARK ® and any other orphan drug candidates we may acquire or license, our competitors may sell products to treat the same conditions at greatly reduced prices, and our revenues would be significantly adversely affected.

● • Changes to the Orphan Drug Act or successful legal challenges to the FDA’s interpretation of the Orphan Drug Act may affect our ability to obtain or subsequently maintain orphan drug exclusivity or may affect the scope orphan drug exclusivity for our product.

● • Our operations and relationships with healthcare providers, healthcare organizations, customers and third-party payors are subject to applicable anti-bribery, anti-kickback, fraud and abuse, transparency and other healthcare laws and regulations, which could expose us to, among other things, enforcement actions, criminal

sanctions, civil penalties, contractual damages, reputational harm, administrative burdens and diminished profits and future earnings.

● Risks Related to Our Intellectual Property

● We are dependent on our relationships and license agreements, and we rely upon the patent rights granted to us pursuant to the license agreements.

● Our success will depend significantly on our ability to operate without infringing the patents and other proprietary rights of third parties.

● We may incur substantial costs as a result of litigation or other proceedings relating to patent and other intellectual property rights.

● If we cannot obtain new patents, maintain our existing patents, and protect our trade secrets and other intellectual property, our business and competitive position may be harmed.

● Patent protection for PEDMARK ® may expire before we are able to fully realize its commercial value.

● We are currently and may in the future be the target of patent litigation, which may be costly and time-consuming to defend.

● Changes in United States patent law could diminish the value of patents in general, thereby impairing our ability to protect PEDMARK ® .

● If we are found to be infringing third-party patents, we may be forced to pay damages and/or obtain a license.

If we cannot obtain a license, we may be prevented from the manufacture and sale of PEDMARK ® .

● It is possible that we could lose market exclusivity for PEDMARK ® earlier than expected.

Risks Related to Our Industry

● Drug development involves a lengthy and expensive process with an uncertain outcome, and results of earlier studies and trials may not be predictive of future trial results.

● The biotechnology and pharmaceutical industry, and in particular the field of cancer therapeutics where we are focused, is highly competitive.

We face significant competition from other pharmaceutical, biopharmaceutical, and biotechnology companies, many of which have significantly greater financial, technical, and human resources than we do and may be better equipped to develop, manufacture, and market products.

There are also general risk factors relating to us that you should consider that relate to our business and to our common stock.

Risks Related to Our Business

We have a history of significant losses and have had limited revenues to date through the sale of our product.

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At December 31, 2023, we had an accumulated deficit of approximately $219.2 million.

We anticipate incurring substantial additional losses due to the need to spend substantial amounts on activities required for commercialization of PEDMARK ® in the U.S.

and regulatory approval of PEDMARK ® outside of the U.S., as well as commercial launch preparation of PEDMARK ® outside of the U.S., anticipated research and development activities, and

general and administrative expenses, among other factors.

We anticipate

incurring substantial additional losses due to the need to spend substantial amounts on activities required for commercialization of PEDMARK ® in the U.S.

and regulatory approval of PEDMARK ® outside of the U.S., as well as commercial launch preparation of PEDMARK ® outside of the U.S., anticipated research and development activities, and general and administrative expenses, among other factors.

We may never achieve or sustain profitability on an ongoing basis.

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● receive adequate levels of coverage and reimbursement for PEDMARK ® from commercial health plans and governmental health programs;

• generate positive experience with our FennecHears program in helping patients obtain access to PEDMARK ® at an acceptable patient out-of-pocket cost;

● generate positive experience with our Fennec HEARS ® program in helping patients obtain access to PEDMARK ® at an acceptable patient out-of-pocket cost;

● maintain quality relationships with patient advocacy groups;

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Since we conduct a significant portion of our research and development through collaborations, our success may depend significantly on the performance of such collaborators, as well as any future collaborators.

Collaborators might not commit

sufficient resources to the research and development or commercialization of our product candidate.

Collaborators might not commit sufficient resources to the research and development or commercialization of our product candidate.

Economic or technological advantages of products being developed by others, among other factors, could lead our collaborators to pursue other products or technologies in preference to those being developed in collaboration with us.

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Any of these negative impacts on our current or future collaborations could have a material adverse effect on our business and results of operations.

Regulatory approval of our product is time-consuming, expensive and uncertain, and could result in unexpectedly high expenses and delay our ability to sell our product outside of the United States.

Regulatory approval of our product is time-consuming, expensive and uncertain, and could result in unexpectedly high expenses and delay our ability to sell our product in the U.S.

Development, manufacture and marketing of our product is subject to extensive regulation by governmental authorities in the United States and other countries.

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Further, manufacturing facilities, which we outsource to third parties, must be approved by the FDA before they can be used to manufacture our product, and they are subject to additional FDA inspection.

The CRL that we received from the FDA in August, 2020 and in November, 2021 as a result of deficiencies in the third-party manufacturing facility that manufactures PEDMARK ® on our behalf is a specific example of the risks associated with our third-party manufacturers.

The CRL that we received

from the FDA in August 2020 and in November 2021 as a result of deficiencies in the third-party manufacturing facility that manufactures PEDMARK ® on our behalf is a specific example of the risks associated with our third-party manufacturers.

If we fail to comply with any of the FDA’s continuing regulations, or any other regulations under which we may be required to comply outside of the United States, we could be subject to reputational harm and sanctions, including:

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Further, any of our patents, once issued, may be declared by a court to be invalid or unenforceable.

PEDMARK ® is currently protected by methods of use patent that we exclusively licensed from OHSU that expires in the United States in 2038 and two patents owned by us that expires in 2039.

PEDMARK ® is currently protected by three patents owned by us that expires in 2039.

Further, patents are currently pending in the United States and other territories.

In addition, periods of marketing exclusivity for PEDMARK ® may also be possible in the United States under orphan drug status and in Europe under PUMA.

In addition, periods of marketing exclusivity for PEDMARK ® have been granted in the United States under orphan drug exclusivity and in Europe under PUMA.

We may be required to obtain licenses under patents or other proprietary rights of third parties, but the extent to which we may wish or need to do so is unknown.

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Litigation may also be necessary to enforce or defend patents issued or licensed to us or our collaborators or to determine the scope and validity of a third party’s proprietary rights.

By example we have outstanding lititagation against CIPLA.

By example we have outstanding litigation against CIPLA.

We could incur substantial costs if litigation is required to defend ourselves in patent suits brought by third parties, if we participate in patent suits brought against or initiated by our collaborators, or if we initiate such suits.

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In addition, others may independently develop or obtain similar technology and may be able to market competing products and obtain regulatory approval through a showing of equivalency to our product that has obtained regulatory approvals, without being required to undertake the same lengthy and expensive clinical studies that we would have already completed.

The vulnerability to off-label use or sale of our product that are covered only by “method of use” patents may cause downward pricing pressure on the product and may make it more difficult for us to enter into collaboration or partnering arrangements for the marketing of this product in the United States and abroad.

PEDMARK ® is currently covered by “method of use” patent and “composition of matter” patent.

“Method of use” patents cover the use of certain compounds to treat specific conditions and “composition of matter” patents cover the chemical composition of the compound.

Method of use patents provide less protection than composition of matter patents because of the possibility of off-label competition if other companies develop or market the compound for other uses.

If another company markets a drug that we expect to market under the protection of a method of use patent, physicians may prescribe the other company’s drug for use in the indication for which we obtain approval and have a patent, even if the other company’s drug is not approved for such an indication.

Off-label use and sales could limit our sales and exert pricing pressure on any product we develop covered only by method of use patents.

Also, it may be more difficult to find a collaborator to license or support the marketing of our product that is only covered by method of use patents.

If our third-party manufacturers breach or terminate their agreements with us, or if we are unable to secure arrangements with third party manufacturers on acceptable terms as needed in the future, we may suffer significant production delays and additional costs.

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We intend to maintain a second source for back-up commercial manufacturing, wherever feasible.

However, if a replacement to our future internal or contract manufacturers were required, the ability to establish second-sourcing or find a replacement manufacturer may be difficult due to the lead times generally required to manufacture drugs and the need for FDA compliance inspections and approvals of any replacement manufacturer, all of which factors could result in production delays and additional commercialization costs.

delays and additional commercialization costs.

Such lead times would vary based on the situation but might be twelve months or longer.

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Finally, even after approval can be obtained, we may be required to recall or withdraw a product as a result of newly discovered safety or efficacy concerns, either of which would have a materially adverse effect on our business and results of operations.

We are currently and may in the future be the target of securities litigation, which may be costly and time-consuming to defend.

We have been in the past and may in the future be the target of securities litigation, which may be costly and time-consuming to defend.

Following periods of market volatility in the price of a company’s securities or the reporting of unfavorable news, security purchasers have often instituted class action litigation.

This risk is especially relevant for us because pharmaceutical companies like us have experienced significant stock price volatility in recent years.

Specifically, we were named in putative securities class action complaints as a result of the decline in our stock price following the August 10, 2020 announcement that we had received a CRL from the FDA regarding our NDA for PEDMARK ® and as result of the decline in our stock price following the November 29, 2021 announcement that we expected to receive another CRL from the FDA regarding our NDA for PEDMARK ® .

Regardless of the outcome of this or future litigation, we could incur substantial legal costs and our management’s attention could be diverted from the operation of our business, causing our business to suffer.

FDA regarding our NDA for PEDMARK ® .

Both of these cases have been dismissed and closed.

Our insurance coverage may be insufficient to cover all legal fees, judgments or settlements.

If the outcome of any

such litigation is unfavorable, it could result in us paying significant damages or settlement payments, which could have a material adverse effect on our financial condition.

If the outcome of any such litigation is unfavorable, it could result in us paying significant damages or settlement payments, which could have a material adverse effect on our financial condition.

We have only recently transitioned from a development stage biopharmaceutical company to a commercial stage biopharmaceutical company, which may make it difficult for you to evaluate the success of our business to date and to assess our future viability.

Other than the FDA approval for PEDMARK ® received in the United States in September 2022, we have no other product candidates in the development stage.

Other than the FDA approval for PEDMARK ® received in the United States in September 2022 and in the European Commission in June 2023 of PEDMARQSI ® , we have no other product candidates in the development stage.

We have only recently demonstrated our ability, or our ability to arrange for a third party, to manufacture a commercial scale medicine and conduct the sales and marketing activities necessary to commercialize a product.

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Our board of directors has concluded that the benefit to stockholders of improved corporate governance outweighs any possible adverse effects on stockholders of reducing the exposure of directors to liability and broadened indemnification rights.

Our business and operations could be adversely affected by the effects of health epidemics, including the ongoing COVID-19 pandemic.

The COVID-19 pandemic is affecting the operations of government entities, such as the FDA, as well as contract research organizations, third-party manufacturers, and other third-parties upon whom we rely.

The extent of the impact on our operations depends in part on the time these restrictions remain in place, and whether restrictions are reinstated as a result of a rising surge in COVID-19 cases.

These and similar disruptions in our operations could negatively impact our business,

operating results and financial condition.

Our business and operations could be adversely affected by the effects of health epidemics, like the recent COVID-19 pandemic.

Future health epidemics may affect the operations of government entities, such as the FDA, as well as contract research organizations, third-party manufacturers, and other third-parties upon whom we rely.

The extent of the impact on our operations depends in part on the time these restrictions remain in place, and whether restrictions are reinstated as a result

of rising cases.

These and similar disruptions in our operations could negatively impact our business, operating results and financial condition.

Possible effects may include, but are not limited to, disruption to our product launch outside the United States, which includes the ability of sales reps to communicate with oncologists, absenteeism in our labor workforce, unavailability of products and supplies used in operations, and a decline in value of our assets, including inventories, property and equipment, and marketable securities.

The spread of COVID-19 has also led to disruption and volatility in the global capital markets, which increases the cost of, and adversely impacts access to capital and increases economic uncertainty.

To the extent the COVID-19 pandemic adversely affects our business, financial results and value of our common shares, it may also affect our ability to access capital and obtain financing, which could in the future negatively affect our liquidity and ability to continue as a going concern.

The global pandemic of COVID-19 continues to evolve rapidly, and the ultimate impact of the COVID-19 pandemic or a similar health epidemic is highly uncertain and subject to change.

The global pandemic of COVID-19, and the ultimate impact of the COVID-19 pandemic or a similar health epidemic is highly uncertain and subject to change.

We do not yet know the full impact of potential delays or effects on our business, our clinical trials, our ability to access the capital markets, or supply chains or on the global economy as a whole.

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Our business exposes us to potential liability risks that may arise from the clinical testing, manufacture, and/or sale of our drug products.

Patients have received substantial damage awards in some jurisdictions against pharmaceutical companies based on claims for injuries allegedly caused by the use of drug products used in clinical trials or after FDA approval.Liability claims may be expensive to defend and may result in large judgments against us.

Liability claims may be expensive to defend and may result in large judgments against us.

We currently carry liability insurance that we believe to be adequate.

Our insurance may not reimburse us for certain claims or the coverage

may not be sufficient to cover claims made against us.

Our insurance may not reimburse us for certain claims or the coverage may not be sufficient to cover claims made against us.

We cannot predict all of the possible harms or side effects that may result from the use of our current drug candidates, or any potential future products we may acquire and use in clinical trials or after FDA approval and, therefore, the amount of insurance coverage we currently hold may not be adequate to cover all liabilities we might incur.

If we are sued for any injury allegedly caused by our product, our liability could exceed our ability to pay the liability.

Whether or not we are ultimately successful in any adverse litigation, such litigation could consume substantial amounts of our financial and managerial resources, all of which could have a material adverse effect on our business, financial condition, results of operations, prospects and stock price.

Whether or not we are ultimately successful in any adverse litigation, such litigation could

consume substantial amounts of our financial and managerial resources, all of which could have a material adverse effect on our business, financial condition, results of operations, prospects and stock price.

Business or economic disruptions or global health concerns could seriously harm our development efforts and increase our costs and expenses.

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The marketing approval processes of foreign authorities are lengthy, time-consuming and inherently unpredictable, and if we are ultimately unable to obtain marketing approval for our product abroad, our business will be substantially harmed.

Our current product has gained marketing approval for sale in the United States but no other country, and we cannot guarantee that we will ever have regulatory approval outside the United States.

Our current product has gained marketing approval for sale in the United States and in the European Commission, and we cannot guarantee that we will ever have regulatory approval outside the United States and European Commission.

Our business is substantially dependent on our ability to complete the development of, obtain marketing approval for, and successfully commercialize our product candidate in abroad a timely manner.

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The FDA and the Competent Authorities of the Member States of the European Economic Area, or EEA, and comparable foreign regulatory authorities, may also inspect our clinical trial sites and audit clinical study data to ensure that our studies are properly conducted in accordance with the IND regulations, human subject protection regulations, cGCP.

In June 2023, we obtained approval for PEDMARQSI ® in the European Union.

Regulatory authorities outside of the United States, such as in Europe and Japan and in emerging markets, also have requirements for approval of drugs for commercial sale with which we must comply prior to marketing in those areas.

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In particular, a product may not be promoted for uses that are not approved by the FDA or comparable foreign regulatory authorities as reflected in the product’s approved labeling, known as “off-label” use, nor may it be promoted prior to obtaining marketing approval.

If we receive marketing approval for our product candidate for our proposed indications, physicians may nevertheless use our product for their patients in a manner that is inconsistent with the approved label if the physicians personally believe in their professional medical judgment it could be used in such manner.

If we receive marketing approval for our product for our proposed indications, physicians may nevertheless use our product for their patients in a manner that is inconsistent with the approved label if the physicians personally believe in their professional medical judgment it could be used in such manner.

Although physicians may prescribe legally available drugs for off-label uses, manufacturers may not market or promote such off-label uses.

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Generally, unless we perform clinical trials meeting that standard comparing our product

candidate to competitive products and these claims are approved in our product labeling, we will not be able promote our product as superior to other products.

to competitive products and these claims are approved in our product labeling, we will not be able promote our product as superior to other products.

If we are found to have made such claims, we may become subject to significant liability.

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● HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act of 2009, or HITECH, and its implementing regulations, which impose obligations on covered entities, including healthcare providers, health plans, and healthcare clearinghouses, as well as their respective business associates that create, receive, maintain or transmit individually identifiable health information for or on behalf of a covered entity, with respect to safeguarding the privacy, security and transmission of individually identifiable health information;

● the federal Open Payments program, created under Section 6002 of the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act, or the Affordable Care Act, and its implementing regulations, which imposed annual reporting requirements for manufacturers of drugs, devices, biologicals and medical supplies for certain payments and “transfers of value” provided to physicians and teaching hospitals, as well as ownership and investment interests held by physicians and their immediate family members, where failure to submit timely, accurately and completely the required information for all covered payments, transfers of value and ownership or investment interests may result in civil monetary penalties;

implementing regulations, which imposed annual reporting requirements for manufacturers of drugs, devices, biologicals and medical supplies for certain payments and “transfers of value” provided to physicians and teaching hospitals, as well as ownership and investment interests held by physicians and their immediate family members, where failure to submit timely, accurately and completely the required information for all covered payments, transfers of value and ownership or investment interests may result in civil monetary penalties;

● analogous state and foreign laws, such as state anti-kickback and false claims laws, which may apply to sales or marketing arrangements and claims involving healthcare items or services reimbursed by non-governmental third-party payors, including private insurers;

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Any reduction in reimbursement from Medicare or other government programs may result in a similar reduction in payments from private payors.

implementation of cost containment measures or other healthcare reforms may prevent us from being able to generate revenue or commercialize our drugs.

The implementation of cost containment measures or other healthcare reforms may prevent us from being able to generate revenue or commercialize our drugs.

It is likely that federal and state legislatures within the United States and foreign governments will continue to consider changes to existing healthcare legislation.

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Risks Related to Commercialization of Our Product

After regulatory approvals in the United States and other territories, the commercial success of our product will depend on market awareness and acceptance of our product.

After regulatory approvals in the United States, European Union and other territories, the commercial success of our product will depend on market awareness and acceptance of our product.

After obtaining marketing approval for PEDMARK ® , it may not gain market acceptance among physicians, key opinion leaders, healthcare payors, patients and the medical community.

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Our projections of both the number of people who are administered cisplatin, as well as the subset of people who have the potential to benefit from treatment with our product, and our assumptions relating to pricing are based on estimates.

Given the small number of patients that we are targeting, our eligible patient population and pricing estimates may differ significantly from the actual market addressable by our product candidate.

Given the small number of patients that we are targeting, our eligible patient population and pricing estimates may differ significantly from the actual market addressable by our product.

Coverage and reimbursement may be limited or unavailable in certain market segments for our product, which could make it difficult for us to sell our product profitably.

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Market acceptance and sales of our product will depend significantly on the availability of coverage and adequate reimbursement from third-party payors and may be affected by existing and future healthcare reform measures.

Patients who are prescribed treatments for their conditions and providers performing the prescribed services generally rely on third-party payors to reimburse all or part of the associated healthcare costs.

Patients who are prescribed treatments for their conditions and providers performing the prescribed services generally rely on third-

party payors to reimburse all or part of the associated healthcare costs.

Government authorities and third-party payors, such as private health insurers, health maintenance organizations, and government payors like Medicare and Medicaid, decide which drugs they will pay for and establish reimbursement levels.

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Established companies may also invest heavily to accelerate discovery and development of compounds that could make our product obsolete.

As a result of all of these factors, maintaining orphan drug designation for our product candidate is essential to our viability since our competitors may, among other things:

As a result of all of these factors, maintaining orphan drug designation for our product is essential to our viability since our competitors may, among other things:

● have greater name and brand recognition, financial, manufacturing, marketing, development, technical and human resources;

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However, our insurance may not reimburse us for certain claims or the coverage may not be sufficient to cover claims made against us.

We cannot predict all of the possible harms or side effects that may result from the use of our drug and, therefore, the amount of insurance coverage we currently hold

may not be adequate to cover all liabilities we might incur.

We cannot predict all of the possible harms or side effects that may result from the use of our drug and, therefore, the amount of insurance coverage we currently hold may not be adequate to cover all liabilities we might incur.

If we are sued for any injury allegedly caused by our product, our liability could exceed our ability to pay the liability.

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The subsequent discovery of previously unknown problems with us, the manufacturing facilities or our product may result in restrictions on us, the manufacturing facilities or our product, including withdrawal of our product from the market.

If we fail to comply with applicable continuing regulatory requirements, we may be subject to fines, suspension, or withdrawal of regulatory approval, product recalls and seizures, operating restrictions, and criminal prosecutions.

If we fail to comply with applicable continuing regulatory requirements, we may be subject to fines,

suspension, or withdrawal of regulatory approval, product recalls and seizures, operating restrictions, and criminal prosecutions.

Our product promotion and advertising are also subject to regulatory requirements and continuing regulatory review.

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The orphan drug exclusivity contained in the Orphan Drug Act has been the subject of recent scrutiny from the press, from some members of Congress and from some in the medical community.

There can be no assurance that the exclusivity granted in the Orphan Drug Act to orphan drugs approved by the FDA will not be modified in the future, and as to how any such change might affect our product, if approved.

Changes to the Orphan Drug Act or successful legal challenges to the FDA’s interpretation of the Orphan Drug Act may affect our ability to obtain or subsequently maintain orphan drug exclusivity or affect the scope of orphan drug exclusivity for our product.

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We lack the resources and the capability to manufacture our product on a clinical or commercial scale.

Instead, we rely on, and expect to continue to rely on, third parties for the supply of raw materials and manufacture of drug supplies necessary to

conduct our preclinical studies and clinical trials.

Instead, we rely on, and expect to continue to rely on, third parties for the supply of raw materials and manufacture of drug supplies necessary to conduct our preclinical studies and clinical trials.

Our reliance on third parties may expose us to more risk than if we were to manufacture our current product or other products ourselves.

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however, we remain responsible for ensuring that each of our clinical trials is conducted in accordance with our investigational plan and protocol.

Moreover, the other foreign regulatory authorities require us to comply with IND and human subject protection regulations and cGCP standards, for conducting, monitoring, recording, and reporting the results of clinical trials to ensure that the data and results are scientifically credible and accurate and that the trial subjects are adequately informed of the potential risks of participating in clinical trials.

results are scientifically credible and accurate and that the trial subjects are adequately informed of the potential risks of participating in clinical trials.

Our reliance on third parties does not relieve us of these responsibilities and requirements.

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We or the third parties we rely on may encounter problems in clinical trials that may cause us or the foreign regulatory agencies to delay, suspend or terminate our clinical trials at any phase.

These problems could include the possibility that we may not be able to manufacture sufficient quantities of materials for use in our clinical trials, conduct clinical trials at our preferred sites, enroll a sufficient number of patients for our clinical trials at one or more sites, or begin or successfully

complete clinical trials in a timely fashion, if at all.

Furthermore, we or foreign regulatory agencies may suspend clinical trials of our product at any time if we or they believe the subjects participating in the trials are being exposed to unacceptable health risks, whether as a result of adverse events occurring in our trials or otherwise, or if we or they find deficiencies in the clinical trial process or conduct of the investigation.

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Risks Related to Our Intellectual Property

We are dependent on our relationships and license agreements, and we rely upon the patent rights granted to us pursuant to the license agreements.

Our commercial success will rely upon the strength of our patents to exclude competition.

Our commercial success will depend in large part on our ability to use patents and regulatory exclusivity to exclude others from competing with our product.

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While we are not currently aware of any third-party patents which we may infringe, there can be no assurance that we do not or will not infringe on patents held by third parties or that third parties will not claim that we have infringed on their patents.

In the event that our technologies infringe or violate the patent or other proprietary rights of third parties, we may be prevented from pursuing product development, manufacturing or commercialization of our product that utilize such technologies.

In the event that our product infringe or violate the patent or other proprietary rights of third parties, we may be prevented from pursuing product development, manufacturing or commercialization of our product.

There may be patents held by others of which we are unaware that contain claims that our product or operations infringe.

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The outcome of intellectual property litigation is subject to substantial uncertainties and may, for example, turn on the interpretation of claim language by the court, which may not be to our advantage, or on the testimony of experts as to technical facts upon which experts may reasonably disagree.

As discussed above under the heading Legal Proceedings “Business – Overview – Product,” on October 29, 2021, Hope Medical Enterprises, Inc.

(“Hope”) filed two petitions for inter partes review (“IPR”) with the Patent Trial and Appeal Board (“PTAB”) of the USPTO.

In its petitions, Hope seeks to invalidate our U.S.

10,596,190 (“US ‘190”), which is exclusively in-licensed from Oregon Health & Science University (“OHSU”) and relates to a method of using PEDMARK ® , and our U.S.

10,792,363 (“US ’363”), which relates to an anhydrous form of STS, which is the active pharmaceutical ingredient in our PEDMARK ® product.

US ‘190 was issued on March 24, 2020.

US ‘363 was issued on October 6, 2020.

We filed preliminary responses to the petitions in February 2022, and thereafter, the PTAB has three months to decide whether to institute IPR proceedings.

If the PTAB institutes one or both reviews, the final written decision(s) will be due about one year after the PTAB’s decision to institute IPR proceedings, and following additional submissions by the parties.

Any appeals of a PTAB decision would delay any final outcome.

As discussed above under the section entitled “Item 3.

Business– Intellectual Property,” we received a letter dated November 30, 2022, notifying us that CIPLA submitted to the FDA an ANDA (ANDA No.

218028) for a generic version of PEDMARK ® (sodium thiosulfate solution) that contains Paragraph IV Certifications on two of our patents covering PEDMARK ® :

the OHSU licensed 190 patent, expiration date January 2038;

and the 728 patent, expiration date July 2039.

We received a letter dated January 5, 2023, notifying us that CIPLA submitted to the FDA a Paragraph IV Certification on the 984 patent.

These patents are listed in the FDA’s Orange Book for PEDMARK ® .

The certifications allege these patents are invalid or will not be infringed by the manufacture, use, or sale of CIPLA’s sodium thiosulfate solution.

We plan to vigorously defend our intellectual property rights related to PEDMARK ® .

However, we are unable to predict the outcome of these petitions, and an invalidation of one or both of these patents may have a material adverse effect on our ability to protect our rights in PEDMARK ® beyond the market exclusivity granted from Orphan Drug Designation and PUMA.

On January 11, 2022, our licensor OHSU filed a Request for Supplemental Examination of US ‘190 requesting the consideration by the USPTO of certain prior art references, including references cited by Hope in its Petition for IPR that are relevant to the granted claim of the patent.

On January 28, 2022, the USPTO found that the cited references constitute a substantial new question of patentability and ordered an ex parte reexamination of the single US ‘190 claim of pursuant to 35 U.S.C.

We are unable to predict the outcome of the ex parte reexamination.

If the USPTO does not uphold the ‘190 claim as granted or in amended form, our ability to protect our PEDMARK ® product beyond the market exclusivity granted from Orphan Drug Designation and PUMA may be adversely affected.

Further, on October 29, 2021, Hope filed a petition for inter partes review (IPR2022-00123) with the PTAB to invalidate the 190 patent, which is exclusively in-licensed from OHSU and relates to a method of using PEDMARK ® .

The 190 patent was issued on March 24, 2020.

On December 5, 2022, we filed a Motion to Amend the single claim of the 190 patent focusing on the treatment of medulloblastoma.

On April 18, 2023, the PTAB invalidated the only claim of the 190 patent.

The final written decision became effective June 20, 2023.

The 190 patent was listed in the Orange Book, but in light of PTAB’s final written decision on the invalidity of the 190 patent, we requested that the FDA remove the 190 patent from the Orange Book.

patent applications claiming priority through the 190 patent remain pending at the USPTO.

Under our license agreements, we have the right to bring legal action against any alleged infringers of the patents we license.

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Moreover, regardless of the outcome, intellectual property litigation against or by us could significantly disrupt our development and commercialization efforts, divert our management’s attention and quickly consume our financial resources.

In addition, if third parties file patent applications or issue patents claiming technology that is also claimed by us in pending applications, we may be required to participate in interference proceedings with the USPTO or in other proceedings outside

the United States, including oppositions, to determine priority of invention or patentability.

Even if we are successful in these proceedings, we may incur substantial costs, and the time and attention of our management and scientific personnel will be diverted from product development or other more productive matters.

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The legal systems of certain countries do not favor the enforcement of patents and other intellectual property protection, which could make it difficult for us to stop the infringement of our patents generally.

Proceedings to enforce our patent rights in foreign jurisdictions could result in substantial costs and divert our efforts and attention from other aspects of our business, could put our patents at risk of being invalidated or interpreted narrowly and our patent applications at risk of not issuing and could provoke third parties to assert claims against us.

Proceedings to enforce our patent rights in foreign jurisdictions could result in substantial costs and divert our efforts and attention from other

aspects of our business, could put our patents at risk of being invalidated or interpreted narrowly and our patent applications at risk of not issuing and could provoke third parties to assert claims against us.

We may not prevail in any lawsuits that we initiate and the damages or other remedies awarded, if any, may not be commercially meaningful.

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While an inadvertent lapse may sometimes be cured by payment of a late fee or by other means in accordance with the applicable rules, there are many situations in which noncompliance can result in abandonment or lapse of the patent or patent application, resulting in partial or complete loss of patent rights in the relevant jurisdiction.

If we fail to maintain the patents and patent applications directed to our product, our competitors might be able to enter the market earlier than should otherwise have been the case, which would have a material adverse effect on our business.

If we fail to maintain the patents and patent applications

directed to our product, our competitors might be able to enter the market earlier than should otherwise have been the case, which would have a material adverse effect on our business.

We may become involved in lawsuits to protect our patents or other intellectual property rights, which could be expensive, time-consuming and ultimately unsuccessful.

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We may not be able to prevent, alone or with our licensors, misappropriation of our proprietary rights, particularly in countries where the laws may not protect those rights as fully as in the United States.

In addition, potential infringers of our intellectual property rights may have

substantially more resources than we do to defend their position, which could adversely affect the outcome of any such dispute.

In addition, potential infringers of our intellectual property rights may have substantially more resources than we do to defend their position, which could adversely affect the outcome of any such dispute.

Furthermore, because of the substantial amount of discovery required in connection with intellectual property litigation, there is a risk that some of our confidential and proprietary information could be compromised by disclosure during this type of litigation.

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The AIA includes a number of significant changes to United States patent law, including provisions that affect the way patent applications will be prosecuted, reviewed after issuance, and may also affect patent litigation.

The USPTO is currently developing regulations and procedures to govern administration of the AIA, and many of the substantive changes to patent law associated with the AIA.

The USPTO is currently developing regulations and procedures to govern administration of the

AIA, and many of the substantive changes to patent law associated with the AIA.

It is not clear what other, if any, impact the AIA will have on the operation of our business.

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This applies to all United States patents, even those issued before March 16, 2013.

Because of a lower evidentiary standard in USPTO proceedings compared to the evidentiary standard in United States federal court necessary to invalidate a patent claim, a third party could potentially provide evidence in a USPTO proceeding sufficient for the USPTO to hold a claim invalid as unpatentable even though the same evidence may be insufficient to invalidate the claim if first presented in a district court

Accordingly, a third party may attempt to use the USPTO procedures to invalidate patent rights that would not have been invalidated if first challenged by the third party as a defendant in a district court action.

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These agreements typically limit the rights of the third parties to use or disclose our confidential information, including our trade secrets.

Despite the contractual provisions employed when working with third parties, the need to share trade secrets and other confidential information increases the risk that such trade secrets become known by our competitors, are inadvertently incorporated into the technology of others, or are disclosed or used in violation of these agreements.

Despite the contractual provisions employed when working with third parties, the need to share

trade secrets and other confidential information increases the risk that such trade secrets become known by our competitors, are inadvertently incorporated into the technology of others, or are disclosed or used in violation of these agreements.

Given that our proprietary position is based, in part, on our know-how and trade secrets, a competitor’s discovery of our trade secrets or other unauthorized use or disclosure would impair our competitive position and may have a material adverse effect on our business.

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Sonic Fund II, LP, owns approximately 2.4 million shares, or approximately 8.91% of our issued and outstanding common shares;

and Avaro Capital Advisors, owns approximately 1.7 million shares, or approximately 6.34% of our issued and outstanding common shares.

Southpoint Capital, Essetifin SpA, Sonic Fund II, LP, Avaro Capital Advisors, and our other significant shareholders, and other insiders, acting alone or together, might be able to influence the outcomes of matters that require the approval of our shareholders, including but not limited to certain equity transactions (such as a financing), an acquisition or merger with another company, a sale of substantially all of our assets, the election and removal of directors, or amendments to our incorporating documents.

and Solas Capital Management, owns approximately 1.4 million shares, or approximately 5.1% of our issued and outstanding common shares;

and Southpoint Capital, Essetifin SpA, Sonic Fund II, LP, Solas Capital Management, and our other significant shareholders, and other insiders, acting alone or together, might be able to influence the outcomes of matters that require the approval of our shareholders, including but not limited to certain equity transactions (such as a financing), an acquisition or merger with another company, a sale of substantially all of our assets, the election and removal of directors, or amendments to our incorporating documents.

These shareholders might make decisions that are adverse to your interests.

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At March 25, 2024, we had outstanding warrants to purchase approximately 0.2 million shares of our common shares at an exercise price of $11.00 per common share.

In addition, at March 29, 2023, there were approximately 4.5 million common shares issuable upon the exercise of outstanding stock options with a weighted average exercise price of $5.43 per common share.

In addition, as of March 25, 2024, there were approximately 4.8 million common shares issuable upon

the exercise of outstanding stock options with a weighted average exercise price of $6.27 per common share.

We may also issue further warrants as part of any future financings in addition to the additional 2.1 million options to acquire our common shares currently remaining and available for future awards under our stock option plan.

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Any transaction involving the issue of common shares, or securities convertible or exercisable into common shares, could result in immediate and substantial dilution to present and prospective holders of our common shares.

Alternatively, we may rely on debt financing and assume debt obligations that require us to make

substantial interest and capital payments and to pledge some or all of our assets as collateral to secure such debt obligations.

Alternatively, we may rely on debt financing and assume debt obligations that require us to make substantial interest and capital payments and to pledge some or all of our assets as collateral to secure such debt obligations.

Failure to meet out debt obligations could result in an acceleration of the debt and enforcement against our assets pledged as collateral, either of which would have an adverse effect on our operations and prospects.

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If we are a PFIC for any taxable year, we intend to provide to a U.S.

Holder such information as the Internal Revenue Service (“IRS”) may require, including a PFIC annual information statement, in order to enable the U.S.

Holder such information as the Internal Revenue Service (“IRS”) may require, including a PFIC annual information

statement, in order to enable the U.S.

Holder to make and maintain a “qualified electing fund” election.

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However, if we fail to maintain an effective system of disclosure controls or internal controls over financial reporting, we may discover material weaknesses that we would then be required to disclose.

Any material weaknesses identified in our internal controls could have an adverse effect on

our business.

Any material weaknesses identified in our internal controls could have an adverse effect on our business.

We may not be able to accurately or timely report on our financial results, and we might be subject to investigation by regulatory authorities.

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It is also possible that the overall scope of Section 404 may be revised in the future, thereby causing ourselves to review, revise or reevaluate our internal control processes, which may result in the expenditure of additional human and financial resources.

Unresolved Staff Comments

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-K

Item 1A. Risk Factors