Item 1. Business
Item
1. Business
Our
Strategy
Our
objective is to develop and commercialize our product candidates to treat diseases where the innate immune system is not functioning
normally and contributing to the patient’s disease. This can be in cancer where Natural Killer (“NK”) cells
are inactive and contribute to a tumor’s evasion of the immune system and/or disease progression while expression of MUC4
and cells of the tumor microenvironment such as Myeloid Derived Suppressor Cells (“MDSC”) proliferate to protect the
tumor from attack by the patient’s immune system or this can be other diseases such as neurologic and metabolic diseases
where chronic inflammation results in innate immune system dysfunction and disease progression or infectious disease where cytokine
storm causes a hypermetabolic state that causes the need to seek medical attention. Our initial focus will be the treatment of
cancer, treatment of Alzheimer’s Disease (“AD”), treatment of Treatment Resistant Depression (“TRD”),
treatment of immune mediated complications due to COVID-19 and non-alcoholic steatohepatitis (“NASH”). In cancer,
we plan to pursue two parallel development programs: (1) with INKmune we will initially focus on treating resistant disease women
with relapse refractory ovarian carcinoma and patients with high-risk myelodysplastic syndrome (high risk MDS); (2) with INB03,
we will treat patients with advanced cancers with elevated biomarkers of inflammation in their blood and evidence of disease that
is resistant to immunotherapy including women with MUC4 expressing HER2+ breast cancer. Our third drug candidate XPro1595, targets
Alzheimer’s Disease and TRD. XPro1595 for AD is progressing through Phase I trials and is being prepared for Phase II trials.
XPro1595 for TRD is being prepared for Phase II trials. Our fourth drug candidate, LIVNate, will be used to treat patients with
NASH. Our final drug, Quellor is in Phase II trials for the treatment of pulmonary complications due to COVID-19 infection. The
principal components of our strategy to achieve this objective are to:
●
pursue
development strategies and regulatory approval pathways that allow the treatment of oncology patients with our lead product
candidates, INKmune and INB03;
●
pursue development
strategies and regulatory approval pathways that allow the treatment of neurodegenerative diseases in patients with our lead
product candidates, XPro1595;
●
pursue development
strategies and regulatory approval pathways that allow the treatment of pulmonary complications from COVID-19 infection patients
with our lead product candidate, Quellor;
●
pursue
development strategies and regulatory approval pathways that allow the treatment of NASH in patients with our lead product candidates,
LIVNate;
●
adopt
a product development strategy that solidifies our existing intellectual property (“IP”) to prevent competition
and expand our IP suite into related immunotherapeutic areas;
●
provide
clear value propositions to third-party payers, such as managed care companies or government programs like Medicare, to merit
reimbursement for our product candidates; and
●
Collaborate
with other pharmaceutical companies with respect to, among other things, our INKmune and the DN-TNF platform that includes
INB03, XPro1595, Quellor and LIVNate product candidates and other products that will benefit from development or marketing
beyond our current resources.
Pursue
development and regulatory approval pathways. We believe Quellor, INKmune, INB03 and XPro1595 may be approvable under pathways
that are potentially shorter than those typically available for drug products based on novel active ingredients, including as
an orphan drug under the Orphan Drug Act and approval under the Food and Drug Administration (the “FDA”) Accelerated
Approval Program (see “Government Regulation”). We have not yet had a discussion with the Medicines and Healthcare
Products Regulatory Agency (“MHRA”) and/or FDA regarding such designation, but plan to do so in the future. We believe
both our INB03 HER2+ metastatic breast cancer program, high risk MDS and ovarian carcinoma treatment programs and our program
Quellor to treat respiratory complications due to COVID19 infection fit the criteria used by the FDA to grant these regulatory
designations. We believe that it would take a minimum of six months to receive Orphan Drug status once we submit an application
and a minimum of 12 months to receive a designation once we submit an application. We might never have these discussions, submit
applications under the Orphan Drug Act as the FDA Accelerated Approval Program or have these applications approved if we do.
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Adopt
a two-pronged patent strategy. We are pursuing a two-pronged product development strategy that will seek to solidify our existing
IP to prevent competition and expand our IP suite into related therapeutic areas. We are confident that our core in-licensed IP
(see “Intellectual Property”) will allow us both freedom-to-operate and provide robust protection from outside competition.
We will continue to invest in expanding our patent suite. We will also seek to further to strengthen our IP position by looking
to in-license IP related to our focus on the innate immune system.
Provide
clear value propositions to third-party payors to merit reimbursement for our product candidates . We are designing our clinical
development programs to demonstrate compelling, competitive advantages to patients and prescribers, and to demonstrate value propositions
to third-party payors. We believe the use of INKmune and/or INB03 in patients with a high risk of tumor progression and death
from tumor should prolong survival, improve the patient’s quality of life and decrease the total cost of care for patients
with these lethal malignancies. For example, ovarian cancer patients relapse frequently. Each relapse requires an expensive, hospital-based
treatment regimen that has decreasing benefits. Treatment with INKmune as an out-patient may provide a more durable remission
and limit the need for treatment-associated hospitalizations. At the patient level, we believe INKmune and INB03 therapy, once
approved, should improve survival and quality of life. At the payor level, we believe INKmune, once approved, should provide more
predictable costs and outcomes. Therapies for Alzheimer’s disease are needed for medical, social and economic reasons. The
cost of Alzheimer’s disease to the government is large and growing. The cost to families and care givers is real and burdensome.
We believe treatment of patients with dementia, including Alzheimer’s disease, may provide a strategy to alter the costly
dynamic of this disease in society today. NASH, a silent epidemic in the US due to the high incidence of obesity, is expected
to be the most common cause of liver transplant 2030. There are no approved therapies for the NASH at this time. We believe treatment
of patients requiring hospitalization due to medical complications of COVID-19 infection may alter the arc of the pandemic. If
effective, Quellor should allow patients to be discharged from the hospital more quickly and decrease the risk of respiratory
failure requiring mechanical ventilation.
Collaborate
to maximize the value of our technology . We believe there are two reasons for us to enter collaborations with other companies.
The first is the further development of INKmune, INB03, Quellor, LIVNate and XPro1595 by either providing additional innovations
to the product, including combination therapy strategies, and/or providing resources to improve the speed and breadth of the development
process. The second is to optimize the commercialization of our products either globally or regionally. The ideal partner will
benefit us in both ways.
We
continue to look for ways to utilize our unique capabilities to optimize clinical application of cell therapies. We believe that
we have identified a way to manufacture human mesenchymal stem cells for the medical research and biotech community that offers
large volumes of high-quality, low passage human umbilical cord mesenchymal stem cells with minimal batch-to-batch variability.
We believe this may solve the problem associated with supplying an adequate supply of human mesenchymal stem cells for clinical
applications. The process to produce pooled, human umbilical cord mesenchymal stem cells was developed at University College London.
We have established a reliable supply of human umbilical cords based on our agreement with the Anthony Nolan Cord Blood Bank in
the United Kingdom. We have developed a validated manufacturing process that reliably produces contract manufacturer of the clinical
grade (“cGMP”) quality mesenchymal stem cells. The manufacturing process can be performed at a contract manufacturing
site under the direction of Mark Lowdell, the Company’s CSO. We have negotiated an exclusive 10-year license to the manufacturing
process from University College London Business, the licensing organization of University College London. We will seek academic
laboratories and biopharma companies who need a reliable source of high quality pooled human umbilical cord mesenchymal stem cells
for research of and development of clinical products. Once identified, we plan to act as a cGMP for the development of therapeutic
products by utilizing contract manufacturers. Because the production of the product is not continuous, we do not expect to engage
a contract manufacturer until we have a customer identified. We have identified several contract manufacturers in the UK that
have the capability to produce cGMP stem cells. We expect the commercial arrangement with academic laboratories or biopharma companies
to be a combination of fee-for-service and licensing that does not require additional investment by us. We will be opportunistic
in pursuing therapeutic opportunities for our own portfolio with this platform in the future if resources become available. The
regulatory path for therapeutic applications of the mesenchymal stem cell products is well established and similar to the regulatory
approval process for other cell therapies. We will only be responsible for regulatory compliance related to manufacturing of the
mesenchymal stem cells when the product is being developed by a third party. When developing a therapeutic product for the Company’s
commercial portfolio, the Company will be responsible for all aspects of the regulatory process.
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Overview
of Immunotherapy for Cancer
The
immune system has two parts, innate and adaptive. The innate immune system is the body’s first line of defense against an
infection, providing immediate, non-specific responses to eliminate harmful cells in the body. Components of the innate immune
system include cytokines, chemokines, macrophages, neutrophils and NK cells, among others.
The
adaptive immune system is often initially triggered by the innate immune system, mounts a delayed response against diseased cells
and plays a role protecting against re-infection. An adaptive immune response is highly specific to a pathogen or antigen and
is developed or learned from prior exposure. Key components of the adaptive immune system include antibodies which bind to antigens
and mark them for destruction by other immune cells, B-cells which produce these antibodies upon exposure to antigens, and T-cells
which attack and eliminate the diseased cells.
The
biopharmaceutical industry has made significant advances in harnessing specific components of innate and adaptive immune systems
for therapeutic use. Some of these approaches are summarized below.
Cytokines.
One of the early applications of immunotherapy is the use of cytokines, including interferons and interleukin-2 (“IL-2”).
Interferons are molecules that inhibit the growth and replication of diseased cells and stimulate innate immune cells to attack
them. They have been used as standard of care for hepatitis B and C and multiple sclerosis, and to a lesser extent, as treatment
for certain cancers, including chronic myeloid leukemia, cutaneous T-cell lymphoma, myeloma and non-Hodgkin’s lymphoma.
However, the use of interferons has generally decreased over the years due to serious adverse events ( e.g. , flu-like symptoms
and dramatic weight loss) and introduction of new therapies with higher efficacy, better safety profiles and more convenient administration
although Alpha-interferon remains the treatment of choice for some hematological conditions such as polycythemia. IL-2 activates
T-cells and NK cells to attack diseased cells. IL-2 has been used to treat select cancers, but due to its relatively poor safety
profile, physicians often only resort to this therapy for the most advanced settings. Tumor Necrosis Factor alpha (“TNF”)
is the focus of INB03. TNF biology has four elements that include two cytokines, soluble TNF and trans-membrane TNF (“sTNF”
and “tmTNF,” respectively), and two receptors, TNF Receptor 1 and 2 (“TNFR1” and “TNFR2”).
The biology of TNF ligation of TNFR varies dramatically based on what elements of the TNF system that are used. sTNF binding to
TNFR1 is responsible for inflammation and cell death while sTNF binding to TNFR2 promotes proliferation of regulatory T cells
(“Treg”). In patients with advanced cancers, increased sTNF is not favorable to long-term survival because it promotes
epithelial-mesenchymal transformation and metastasis while making the tumor microenvironment more immunosuppressive promoting
resistance to therapy. In the CNS, sTNF promotes neuronal cell death, demyelination and synaptic pruning while tmTNF promotes
nerve cell survival, improves synaptic function and stimulates remyelination. In brief, sTNF is the “bad” TNF and
tmTNF is the “good” TNF. In patients with cancer, infection or neurologic disease, blockade of tmTNF function has
negative consequences such as immunosuppression, increased infection, synaptic dysfunction and demyelination.
Antibody
therapy. Antibodies exist in three formats: monoclonals (“mAbs”), oligo/polyclonal and antibody-drug conjugates.
mAbs represent an effective therapeutic modality and are important to the treatment paradigm of various diseases. Drug manufacturers
have leveraged mAbs’ ability to induce an antibody-dependent cell-mediated cytotoxicity, or ADCC effect to develop better
treatments that prolong survival and quality of life of patients. In addition, mAbs designed to inhibit specific checkpoints in
the immune system have overcome in vivo immune suppression and the resulting immune responses have led to profound therapeutic
benefit in some patients. However, the degree of efficacy of these therapies is heavily reliant on the immune system of patients,
many of whom are severely immuno-compromised. For example, despite over $1.0 billion of sales generated by recently launched PD-1
and PDL1 checkpoint inhibitors, they are reported to be generally only effective in approximately 10% to 25% of the addressable
patient population. In addition, mAbs are manufactured through a complex process that requires purification of cell products created
from a cell line. Polyspecific antibodies, for example bi-specific antibodies, are able to target more than one antigen. These
are often used to bring and effector T cell in contact with a target cell. Antibody drug conjugates are mAbs attached to a toxin,
chemotherapy or radio therapy that delivers the cancer killing payload directly to the cancer.
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Dendritic
Cell Therapies. This approach is designed to indirectly stimulate a patient’s T-cells by leveraging the role of
dendritic cells in presenting antigens to T-cells. Cancer vaccines are the most common application of dendritic cells. The only
FDA-approved dendritic cell therapy is PROVENGE, which entails collecting monocytes from the patient, maturing them into dendritic
cells, “loading” ex vivo with the patient’s cancer antigens, and then re-infusing in the patient. Currently,
this process is cumbersome and expensive, and again, relies on an intact and effective immune system of the patient. There are
additional ongoing preclinical studies and clinical trials being conducted by our competitors aimed at addressing certain of the
limitations associated with this approach. To date, current clinical results of dendritic cell therapies have been mixed.
CAR-T
and TCR Therapies. T-cells recognize diseased cells by receptors engaging with antigens that are present on or inside
the diseased cells. CAR-T therapy entails genetically engineering T-cells to express synthetic CARs that direct T-cells to antigens
on the surface of cancer cells. TCR therapy modifies T-cells to express high-affinity tumor specific TCRs that recognize intra-cellular
antigens that must be presented on the surface of target cells. In early clinical trials, CAR-T and TCR therapies have demonstrated
impressive anti-tumor activity in a narrow spectrum of hematologic cancers and garnered significant attention by research institutions
and biopharmaceutical companies. We believe a key limitation of adaptive autologous immunotherapy is the need to retrieve non-compromised
immune cells from a cancer patient which requires a complex and costly manufacturing process to develop the therapy. The complexity
of this personalized process is reflected in the price of the two approved therapies. CAR-T therapies - tisagenlecleucel and axicabtagene
ciloleucel for advanced leukemia and lymphoma respectively. The cost of a single therapy is many hundreds of thousands of dollars.
As a consequence of this need to harvest active T-cells, current Phase I clinical trials for autologous CAR-T cell therapy in
large part enroll patients from highly selected, often relatively early-stage disease in a narrow spectrum of cancers, including
bulky hematological cancers. In addition, Phase I clinical trials of CAR-T cell immunotherapy have reported severe adverse toxicities
of cytokine release syndrome and neurotoxicity, requiring hospitalization, pre-conditioning and, in some instances, intensive
care unit admission following side effects associated with cytokine release syndrome. As a result, though our competitors continue
to develop their CAR-T and TCR product candidates with the goal of addressing certain of the limitations associated with these
approaches, we believe these serious challenges may limit their potential and use in a variety of indications, including solid
tumors.
Checkpoint
Inhibitors. Immune cells express proteins that are immune checkpoints that control and down-regulate the immune response.
These are best defined in T lymphocytes and include PD-1, CTLA-4, TIM-3 and LAG3. Tumor cells express the ligands to these receptors.
When T cells bind the ligand to these proteins on the tumor cells, the T cell is turned off and does not attempt to attack the
tumor cell. Thus, checkpoint inhibitors (“CPI”) are part of the complex strategy used by the tumor to evade the patient’s
immune system and are responsible for resistance to immunotherapy. Biopharmaceutical companies have successfully developed CPI
that block the receptor/ligand interaction to promote the adaptive immune response to the tumor. Six CPI are currently approved,
pembrolizumab, nivolumab, atezolizumab, avelumab, durvalumab, and ipilimumab for a wide variety of solid tumors including melanoma,
lung, bladder, gastric cancers and others. More CPI are in development and more tumor types will be added to the list of sensitive
tumors over the next years. CPI have become the backbone of cancer therapy and are expected to be the best -selling class of drugs
by 2027.
NK
Cells. NK cells typically represent approximately 2% to 13% of circulating lymphocytes and are a critical component of
the immune system responsible for innate immunity. Unlike adaptive immune cells, they are ever present and ready to attack, having
the inherent ability to detect and eliminate diseased cells without the need for antigen presentation, which is why they are called
“natural killers.”
NK
cells bind to stress ligands expressed by the diseased cells and directly eliminate them. This binding induces NK cells to release
cytokines, including, interferons and GM-CSF, which are integral in recruiting additional innate and adaptive immune responses
by the host. NK cells also represent a critical effector cell for ADCC, whereby target cells bound with human antibodies, whether
made by the patient’s body or administered, are selectively destroyed by the NK cells.
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MDSC
Cells: MDSC are present in very low quantities in healthy patients. MDSC develop and proliferate in patients with chronic
infection and with cancer. In cancer, MDSC are a unique and well-defined cell population that home to the cancer and secrete immunosuppressive
cytokines that provide a protective, immunosuppressive shield to the tumor. This protective immunosuppressive shield prevents
the patient’s immune system from attacking the tumor. The presence of MDSC in the tumor microenvironment and/or circulating
in the patient’s blood predict for more advanced disease, resistance to immunotherapy and a worse patient survival.
Our
Innate Immune Dominant-Negative TNF product candidate
We
renamed XPro1595, which we license from Xencor, to INB03 when it is used for cancer related indications. We will continue
to call the drug XPro1595 when used for treatment of neuropsychiatric diseases, including Alzheimer’s disease and TRD discussed
below. We call the drug Quellor and LIVNate respectively for treatment of pulmonary complications of COVID-19 and NASH respectively.
Quellor, LIVNate, INB03 and XPro1595 are the same drug with different names for marketing purposes. INB03 is a novel innate immune
system check-point inhibitor that we believe decreases expression of MUC4 by the tumor, an important resistance mechanism to immunotherapy,
decreases proliferation of MDSC and decreases the secretion of immunosuppressive cytokines that protect the tumor from the patient’s
immunologic attack and help make the tumor resistant to immunotherapy. INB03, by inhibiting soluble TNF without inhibiting trans-membrane
TNF or TNF receptors (“tmTNF” and “TNFR” respectively), decreases expression of MUC4, alters the immunoregulatory
cell and cytokine profile of the tumor microenvironment to decrease the population of MDSC, decrease immunosuppressive cytokines
and increase immunoregulatory cytokines that changes the patient’s immune response to their tumor with improved NK/DC crosstalk
that causes expansion of the immune response including recruitment of the adaptive immune system with an increase in effector
and cytotoxic T cells that attack the cancer allowing for decreased resistance to immunotherapy including immune checkpoint inhibitors
(CPR), anti-HER2 immunotherapy such as Herceptin and kinase inhibitors such as lapatinib. By using INB03 as part of combination
therapy for cancer, we believe the patient’s dysregulated immune response, a hallmark of cancer progression and resistance
to therapy, to be converted to a coordinated immune response that can overcome resistance mechanisms to immunotherapy. These immune
responses have been studied in two animal models. In a murine model of an inflammatory cancer, where 3-methylcholanthrese is given
to mice in a subcutaneous injection that causes the development of multiple cutaneous fibrosarcoma. This model was developed by
Y Akamatsu in 1967 while working at the National Cancer Institute of the NIH. In research published by Professor Nikola Vujanovic
in Cancer Immunology Research in 2016, treatment with INB03 resulted in smaller and fewer cancers with increased
survival. INB03 is an engineered PEGylated protein that neutralizes human soluble TNF, a human inflammatory cytokine that is increased
in patients with advanced cancer. By specifically neutralizing the cytokine, there is decreased phosphorylation of STAT3, an essential
step required for the proliferation of the MDSC population, and secretion of the immunosuppressive cytokines. The combination
of decreased MDSC proliferation and decreased immunosuppressive cytokines allows the immune system to respond to the tumor. This
data was published in an article entitled Inhibition of Soluble Tumor Necrosis Factor Prevents Chemically Induced Carcinogenesis
in Mice in Cancer Immunology Research in Cancer Immunology Research 2016. In summary, INB03 functions as an innate
immune system checkpoint inhibitor by eliminating the population of MDSC that provides an immunosuppressive shield protecting
the tumor, the patient’s immune system is able to function normally to the benefit of the patient – it can attack
the tumor. TNF plays an important role in breast cancer (Schillaci R, Front. Oncol., 22 April 2020 | https://doi.org/10.3389/fonc.2020.00584 ).
In a murine model of trastuzumab resistant breast cancer using JMIT-1 cells, a human cell line of HER2 positive breast cancer
resistant to trastuzumab placed into immunocompromised mice, INB03 downregulates MUC4 from the surface of the JMIT-1 HER2+ breast
cancer cells to allow the trastuzumab resistant cells to become trastuzumab sensitive (Figure A from Bruni, NYAS 2020) to decrease
tumor growth (from Schillaci SABCS 2018, Figure B). JMIT-1 cells are also resistant to lapatinib, a TKI inhibitor used as a second
line therapy in women with trastuzumab resistant HER2+ breast cancer. The addition of INB03 to lapatinib in the animal model reverses
lapatinib resistance in part by decreasing expression of MUC4 (from Bruni NYAS 2020, Figure C). In addition to decreasing resistance
to trastuzumab by decreasing MUC4 expression, INB03 decreases the immunosuppressive tumor microenvironment (Schillaci SABCS 2018,
Bruni NYAS 2020). These data are relevant to all tumors that express HER2 and MUC4 including upper gastrointestinal malignancies
such as gastric and pancreatic cancer.
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6
Because
INB03 targets the patient’s immune system and not the tumor, we believe INB03 is an immunotherapy that can be used to treat
many types of hematologic malignancies and solid tumors as part of combination therapy. The decision to use INB03 in a patient
will be based on biomarkers that should predict that a patient will benefit from treatment with the drug. MDSC rarely exist in
patients without cancer or chronic inflammation. Because MDSC can be measured in the tumor and/or blood of patients with immune
dysregulation and chronic inflammation caused by their cancer, MDSC blood levels i) have prognostic value predicting cancer stage
and risk of dying from cancer; ii) may be used as a biomarker to target patients who will benefit from INB03 therapy and iii)
should be biomarkers demonstrating a pharmacodynamic effect of INB03. Other biomarkers of inflammation may be useful in predicting
if a patient will benefit from therapy with INB03 such as Our Phase I clinical trial focused on using INB03 as monotherapy. This
is a typical Phase I clinical trial design for first-in-man trials in cancer. We expect to use INB03 as part of combination therapy
with approved cancer therapies as part of Phase II development. We do not expect to need to modify INB03 therapy to treat each
different type of cancer, because INB03 therapy targets the immune system, not the cancer. We do expect to develop the INB03 beyond
Phase II to target a specific type of cancer to meet the current system of regulatory approval. For instance, INB03 may be approved
to treat patients with elevated MDSC who have lung cancer. To get subsequent approval for the treatment of patients with renal
cell cancer who have increased MDSC, we will need to perform a pivotal trial in patients with renal cancer. Likewise, if we want
to get approval of treatment of women with HER2 positive breast cancer who express MUC4, we will need to perform a trial in those
patients and the results of that trial may be independent of MDSC levels. After the first regulatory approval, if and when achieved,
we believe the difficulty and cost of achieving these labels extensions will decline with each successive approval. At this time,
we cannot predict if patients without biomarkers of inflammation, elevated MDSC or cytokines, or increased expression of MUC4
will benefit from treatment with INB03. Those studies may be performed in the future, but they are not a priority.
XPro1595
neutralizes soluble TNF in the brain in exactly the same way INB03 neutralizes soluble TNF in the tumor microenvironment but the
effects of soluble TNF neutralization in the brain are different. The cause of the destructive neuroinflammation in the brain
are microglial and astroglial cells. The glial cell are two of four cells in the neural unit that also includes oligodentrocytes
and nerve cells. Activated microglial cells are considered the resident macrophages of the brain. The primary role of microglial
cells is to protect the neural unit from infection. When innate immune dysfunction causes chronic inflammation, activated microglial
cells produce soluble TNF that activates astrocytes. Activated glial cells cause nerve cell and oligodrocyte dysfunction that
results in synaptic pruning, nerve cell death and demyelination of neurons. These pathologies contribute, in part, to neurodegenerative
diseases such as AD, Parkinson’s disease, ALS, MS, Huntington’s disease, glaucoma and TBI (traumatic brain injury)
may contribute to neuropsychiatric diseases such as depression, bi-polar disease, sleep disorders, autism, schizophrenia and PTSD.
In the setting of AD, microglial activation causes dendritic pruning, synaptic dysfunction and nerve cell death that contributes
to cognitive decline and the behavioral manifestations of AD including depression, aggressiveness, sleep disorders, hallucinations
and anhedonia. Elimination of microglial activation should reverse these symptoms. Because soluble TNF is the apex cytokine in
the inflammatory cytokine cascade, neutralization of soluble TNF with XPro1595 should prevent glial activation and normalizes
function of the neural unit.
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The
Company has an on-going Phase I trial using XPro1595 to reverse neuroinflammation in patients with Alzheimer’s disease.
The trial is being performed in Australia and is partially funded by a $1M USD Part-the-Cloud Award from the Alzheimer’s
Association. The clinical trial is the first in the Company’s development program for the treatment of dementia. The open
label, dose escalation trial in patients with Alzheimer’s disease with biomarkers of peripheral inflammation (one of CRP>1.5mg/L,
HgbA1c>6.0, ESR>10sec or have ApoE4) treats the patients with XPro1595 as a once-a-week subcutaneous injection for 3 months.
Patients have multiple biomarkers of neuroinflammation tested before and during therapy including soluble biomarkers in blood
and cerebral spinal fluid, volatile biomarkers in breath, behavioral biomarkers (neuropsychiatric symptoms of AD) and neuroimaging
biomarkers using MRI. The primary goal of this short, open label study is to demonstrate that treatment with XPro1595 decreases
neuroinflammation safely and to define the dose of XPro1595 to use in the Phase II trial. Studies of cognitive function are performed
on the patients but are not expected to show significant change because of the short duration of the trial and the wide range
of disability in patients enrolled in the clinical trial (MMSE range: 24-12). The goal of the planned Phase II trial will be to
demonstrate the prolonged control of neuroinflammation in patients with dementia will help control cognitive decline. Although
the trial has not been designed, we expect the trial be of a longer duration than the Phase I trial.
The
trial continues to enroll patients. More than half of the expected 18 patients have been enrolled. Preliminary data was presented
in a webinar on 13 July 2020. Neuroimaging data from six patients were presented in the figure below. In summary, treatment with
XPro1595 at either 0.3 or 1.0mg/kg once-a-week as a subcutaneous injection (low and high dose respectively) decreased white matter
free water (WMFW) as measured by MRI. WMFW is a validated biomarker of neuroinflammation. Although the number of patients is low,
there was a dose response with a greater decrease in WMFW in the high dose compared to the low dose group. An analysis of inflammation
in white matter tracts demonstrated a significant decrease in WMFW (40%; range 20-52%) in the arcute fasciculus, a white matter
tract important in the control of language and short-term memory (Figure D). These data suggest XPro1595 is decreasing neuroinflammation
in patients with Alzheimer’s disease who have biomarkers of peripheral inflammation.
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Additional
data was presented on January 21, 2021. The goal of the January 21 data release was to show a correlation between the white matter
free water, a novel biomarker of inflammation with cerebral spinal fluid (“CSF”) cytokines and chemokine levels, a
traditional measure neuroinflammation. CSF cytokine/chemokines were measure in 9 patients before and after 12 weeks of weekly
therapy with XPro1595 using a panel from OLINK Target 48 Cytokine ( https://www.olink.com/products/olink-target-48-cytokine/ ),
that measures 45 (Figure AD1).
In
the 6 patients in the 1mg/kg per week dose, only one cytokine and chemokine, interferon gamma (INFg) did not change in the CSF
of patients, the remainder all decreased on average of 15%. Using data from all patients treated for 12 weeks (3 low dose, 6 high
dose), a high correlation (R 2 =.7561) between the white matter free water safe mase and the inflammation composite score
is shown in figure AD2. The data analyzed provides evidence that XPro1595 decreases neuroinflammation in patients with Alzheimer’s
disease.
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We believe these data
support the use of XPro1595 to treat other diseases where neuroinflammation is a part of the pathophysiology of the disease. The
company studied the consequences of decreasing neuroinflammation in the 6 patients from high dose group (XPro1595 1mg/kg for 12
weeks) be looking at the CSF proteome using technology for Proteome Sciences using their TMT Calibrator™ platform ( https://www.proteomics.com/services/tmtcalibrator-workflow ).
A large data set of proteins were identified. Early analysis of the data focusing on 26 AD related proteins demonstrated changes
in inflammation, neuronal and synaptic proteins caused by decreasing neuroinflammation after treatment with XPro1595 (Figure AD3).
The proteome also demonstrated a clear dose response with a greater number of proteins being affected by the high dose compared
to low dose XPro1595 therapy (0.3 vs 1.0 mg/kg/week for 12 weeks) (Figure AD4). The CSF proteome data is only partially analyzed.
Additional data may result from these ongoing analytics. In summary, these data allow the Company to commit to initiating a blinded
randomized Phase II trial in Alzheimer’s disease patients with peripheral biomarkers of inflammation in the second half of
2021. The design of the trial has not been finalized nor has the Company had discussions with the FDA. Hence the precise start
date depends on gaining regulatory approval for trial initiation by the FDA and resolution of the COVID19 pandemic.
COVID-19
infection causes a cytokine storm in many patients. The cytokine storm includes elevated levels of TNF, IL6, IL1 and other pro-inflammatory
cytokines in the patient’s blood. The cytokine storm correlates with symptoms of COVID19 of one or more organ systems -
neurologic, gastrointestinal, pulmonary, cardiovascular and renal. In 20% of patients, the cytokine storm causes severe enough
symptoms to require hospitalization. Targeting soluble TNF may have benefit in hospitalized patients with cytokine storm for two
reasons. TNF may be the “master cytokine”. Up-regulation of TNF is required for expression of IL6 and IL1, the two
other prominent cytokines of the cytokine storm. TNF activates endothelial cells to upregulate Tissue Factor that cause the formation
of blood clots. Aberant blood clots contribute to the pathology in patients with COVID-19 infection.
The
Company initiated a blinded randomized trial using Quellor to treat hospitalized patients with respiratory symptoms due to a COVID-19
infection. The 366-patient trial is being perform under an FDA IND#151,834 in multiple centers in the US. The trial includes a
Go/NoGo decision by the Data Safety Monitoring Board (“DSMB”) after the first 100 patients. No data will be released
by the DSMB other than the trial should continue or be closed. The trial enrolls patients admitted to the hospital who are considered
high risk for developing the need for mechanical respiratory support. Patients are randomized to receive a single dose of Quellor,
1mg/kg as a subcutaneous injection or placebo. If patients remain in the hospital for one week, they may get a second dose of
the investigational product. The primary end-point is the need for mechanical ventilation or death by 28 days. The final safety
visit is at or about day 40. Quellor is identical to XPro1595, INB03 and LIVNate. The trial is listed on www.clinicaltrials.gov .
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Effective
therapy for TRD is a large unmet need. Twenty percent of patients with a Major Depressive Disorder have TRD. Once third of TRD
patients have peripheral biomarkers to inflammation (elevated CRP). This is a large patient population. The role of TNF and anti-TNF
therapeutics was explored in a small open label clinical trial by Prof. Andrew Miller, MD of Emory University demonstrated the
patients have elevated TNF levels and treatment with infliximab treated their depression (Miller, 2011).
The Company received
a $2.9M USD award from the National Institute of Mental Health (“NIMH”) to treat TRD with XPro1595. The blinded, randomized
Phase II trial will use a biomarkers of peripheral inflammation to select patients with TRD for enrollment. Patients will be treated
for 6 weeks. Primary end-points include both clinical and neuroimaging measures. The final trial design is ongoing and discussions
with the FDA are not complete. The Company anticipates receiving authorization to initiate the clinical trial in the second half
of 2021.
LIVNate
neutralizes soluble TNF in the treatment of NASH the same way that INB03 and XPro1595 neutralize soluble TNF for the treatment
of cancer and neurodegenerative diseases respectively. NASH is a complex disease with inflammatory, metabolic and fibrotic components
that contribute to disease progression. The effects of LIVNate on NASH are diverse. Based on murine data, we believe there are
3 major pathologic cycles that contribute to NASH. The peripheral pathologic cycle is metabolic with obesity and insulin resistance
contributing to the inflammatory and metabolic process that drives NASH. The regional pathologic cycle includes intestinal inflammation
with resulting leaky gut that drives the development mesenteric fat. All three elements contribute to a highly inflammatory mileau
delivered directly to the liver via the portal vein. The local pathologic loop includes lipotoxicity and innate immune dysfunction
caused by activated hepatic stellate cell, natural killer cells and hepatocytes. These pathologic cycles cause hepatocyte death,
inflammation and fibrosis – the pathologic hallmarks of NASH. In murine models of NASH, LIVNate has effects on each pathologic
cycle decreasing insulin resistance, intestinal inflammation and leak, hepatic inflammation, hepatocyte death and fibrosis. These
results must be confirmed in humans.
INB03,
XPro1595, Quellor and LIVNate, are delivered as a subcutaneous injection, similar to an insulin treatment, given one to three
times per week. Because this is a simple subcutaneous injection similar to an insulin injection (the therapy patients give themselves
for treatment of Type 1 diabetes mellitus), we expect patients to administer the therapy to themselves and not require expensive
or logistically challenging clinic visits to receive the therapy.
Three
step process to preparation for INB03, XPro1595, Quellor and LIVNate for human clinical trials:
Release
of INB03, XPro1595, Quellor and LIVNate drug supply
GMP
DN-TNF product (INB03, XPro1595, Quellor and LIVNate) are available for clinical development after completion of release testing.
The annual process for release testing was completed in February 2018, January 2019, December 2019 and November 2020. The supply
of DN-TNF product is limited, but enough to complete the planned Phase I study in Alzheimer’s disease and Phase II studies
in hospitalized patients with COVID-19. The re-release dossier has been submitted to the regulatory authorities in Australia and
the US (the FDA). We received notification on May 2018 that the INB03 can be used for oncology clinical trials and in May 2019
that XPro1595 can be used in Alzheimer’s disease clinical trials in AUS and in August 2020 that Quellor can be used for
the COVID-19 clinical trial in the US. For future trials, new batches of INB03, XPro1595, Quellor and LIVNate will need to be
produced. We plan to use a two-step approach to production of the new drug supply. We hope to improve the yield of the drug product
using the existing E.coli based system. Once the new process is validated and functional, we will perform a manufacturing
campaign drug for future clinical trials. This process has started at our manufacturing vendor KBI. The company expects the first
batches of new drug to be available 4Q21 assuming that manufacturing materials remain available and are not consumed by COVID-19
vaccine manufacturers. We expect the existing drug supply to support clinical development program until mid-2021. New drug supply
may not be available before the existing drug supply has been exhausted.
11
Interaction
with Regulatory Authorities Regarding INB03, XPro1595 and LIVNate Development
We have completed a
Phase I trial with INB03 in oncology. We are enrolling patients in a Phase I trial with XPro1595 in patients with Alzheimer’s
disease and a Phase II trial with Quellor to treat hospitalized patients with respiratory complications from COVID-19. The Phase
II program with Alzheimer’s disease will start after completion of the on-going Phase I program. The Phase I trial with XPro1595
in patients with Alzheimer’s disease is performed in Australia under the regulatory authority of the TGA using the Clinical
Trials Exemption (“CTX”) scheme. Our first interaction with the regulatory body occurred in March 2018. The Company
received approval to initiate the Phase I trial with INB03 in patients with advanced solid tumors on May 21, 2018. The second
interaction with the regulatory body occurred in March 2019. The Company received approval to initiate the Phase I trial with
XPro1595 in patients with Alzheimer’s disease in May 2019. Our first interaction with the FDA occurred in July 2020.
We received authorization to begin enrolling patients in the COVID19 trial late August 2020. We plan to discuss the Phase II Alzheimer’s
disease and Phase II TRD clinical trials with the FDA during the first half of 2021.
INB03
Product Development Path: Proposed Phase II Studies in patients with cancer
Phase
I open label study in patients with advance solid tumors has been completed. All future studies cancer will use INB03 as part
of combination therapy. Based on the results of the Phase I study and work performed and reported by Prof. Roxana Schillaci, we
are planning a study of INB03 in combination with currently approved second line therapy for treatment of tumors that express
MUC4. This may include a study in women with trastuzumab resistant HER2+ metastatic breast cancer where primary or secondary resistance
to trastuzumab is common and may include women with brain metastasis. Alternatively, a combination therapy trial in MUC4 expressing
tumors of the upper gastrointestinal tract such as gastric or pancreatic cancer may be performed. These trials will not be initiated
until the COVID-19 pandemic has run its course. We do not expect to treat patients in a Phase II trial with INB03 before 2022.
INB03
Registration Studies and/or Partnering
We
plan to pursue an efficient registration strategy using INB03 to improve the lives of patients with cancer and biomarkers of inflammation.
We believe that this strategy has use across many types of solid tumors including patients who have failed CPI, tyrosine kinase
inhibitors (“TKI”) and anti-cancer antibody therapy We have an active partnering position as it relates to INB03 development
in cancer, although no partnering discussion are underway at this time. We do not expect partnering discussions to begin until
Phase II data demonstrating efficacy of INB03 as part of combination therapy for cancer are available.
Our
INB03 platform can be used in cancer patients in many ways. The Phase I trial suggests the drug should not be used alone to treat
cancer but used in combination with, but not limited to, other cancer therapies including cytotoxic chemotherapy, immunotherapy,
radiation and surgery. We believe that INB03 can also be used to treat many types of hematologic and epithelial cancers.
INB03,
XPro1595, Quellor and LIVNate Regulatory Strategy
Drugs
from the DN-TNF platform will be developed using adequately powered, well designed studies with the goal to demonstrate a meaningful
clinical benefit to patients. In general, these will be blinded, randomized clinical trials using validated end-points that have
been authorized by a regulatory authority – the FDA, TGA, MHRA, EMA, etc. Currently, all planned studies will be performed
in North America, AUS and/or the UK. Studies will be expanded to Europe and beyond as resources permit and development needs expand.
Because there are no therapies similar to INB03, XPro1595, Quellor or LIVNate approved in any market and no therapies approved
for the treatment of the diseases we are pursuing, we plan to take advantage of the regulatory opportunities afforded to therapies
that treat markets with a high unmet need. In the U.S., this includes Orphan Drug Designation and expedited programs for approval
including Accelerated Approval, Breakthrough Therapy Designation, Fast Track Designation, and priority review (see “Government
Regulation”), and in the setting of COVID-19, Emergency Use Authorization. We cannot predict which, if any, of these programs
we will benefit from without further discussions with the FDA. Similar programs exist in the EU with the EMA. We will engage the
EMA once we have initiated Phase II trials in the United States and Australia.
12
Immunotherapy
for Treatment of Alzheimer’s Disease
XPro1595
is being developed for the treatment of Alzheimer’s disease. XPro1595 is identical to INB03, Quellor and LIVNate in every
way but name. The name XPro1595 will be used as the drug name in the Alzheimer’s disease development program. Microglial
activation and neuroinflammation are important causes of the synaptic dysfunction and nerve cell death that causes cognitive decline
in patient with dementia and Alzheimer’s disease. The relationship between β amyloid plaques and tau neurofibrillary
tangles, the traditional targets in AD drug development and neuroinflammation is complex. We believe targeting plaques and tangles
is not an effective treatment strategy, but that targeting neuroinflammation, the final common pathway of synaptic dysfunction
and nerve cell death is. Substantial direct pre-clinical data supports the use of XPro1595 in murine models of AD. Substantial
indirect data supports use of XPro1595 in humans including a decreased risk of AD in patients treated with non-selective TNF inhibitors
for rheumatoid arthritis and treatment using direct injection into paraspinous venous plexus. Because of different mechanism of
action of XPro1595 compared to the non-selective TNF inhibitors, we expect a lower risk of immunosuppression and demyelinating
diseases such as MS. The Company reported preliminary data on July 13, 2020 and January 21, 2021 supporting the use of XPro1595
to decrease neuroinflammation in patients with Alzheimer’s disease and biomarkers of peripheral inflammation (see above)
We
continue to enroll patients into an open label, biomarker directed, Phase I clinical trial in AUS that approaches AD as an immunologic
disease. Patients with dementia who have the diagnosis of AD with biomarkers of chronic inflammation that includes at least one
of a hs-CRP>1.5 mg/L, a ESR>10 mm/h, a HbgA1C>6.0% or are ApoE4 positive will be treated with XPro1595 for 12 weeks.
Three dosing cohorts were planned – 0.3, 1.0 and 3 mg per week as a subcutaneous injection. Patients will have 5 groups
of inflammatory biomarkers test before therapy, at 6 weeks and at 12 weeks. Biomarkers will be tested in blood and cerebral spinal
fluid, white matter free water will be determined by MRI and a “breath test” measuring exhaled volatile organ compounds
will be used to determine a signature of inflammation in AD patients. Finally, behavioral biomarkers of fatigue, depression aggression,
anhedonia and sleep disorders, behaviors that are very sensitive to neuroinflammation, will be cataloged using validated scales
to determine if these behaviors improve as neuroinflammation is brought under control. The first patient was enrolled in the low
dose 0.3mg/kg/week cohort in the last week of November 2019. The Safety Review Committee met by teleconference on January 7, 2020
to review the course of the patients in the first cohort and voted to open the second cohort, 1.0mg/kg/week, to enrollment. The
first patients were enrolled in the cohort the second week of February 2020. Based on preliminary data released on July 13, 2020
and January 21, 2021, we are confident that the clinical trial will be closed after completion of a 0.6mg/kg treatment group.
We have canceled plans to treat patients with 3.0mg/kg. If safety is confirmed, the data from the Phase I trial will allow the
Company to choose a dose to bring forward into the Phase II trial and select biomarkers for that trial. We plan to meet with the
FDA to present our plans for the Phase II study in patients with AD in the first half of 2021. If those meetings and subsequent
regulatory filings are successful, we plan to start treating patients in the Phase II trial in the second half of 2021.
XPro1595
Registration Studies and/or Partnering
We
plan to aggressively pursue an efficient registration strategy using XPro1595 to improve the lives of patients with AD with biomarkers
of inflammation. We believe AD is not the only indication for XPro1595 in neurodegenerative and neuropsychiatric diseases. We
plan to pursue other indications in neurodegenerative diseases as resources become available. We have received NIMH funding to
support a Phase II TRD program that hopes to start patient enrollment in the second half of 2021. We have an active partnering
position as it relates to XPro1595 development in neurodegenerative and neuropshyciatric diseases, although no partnering discussion
are underway at this time. There are two partnering opportunities with this novel immunotherapy for the treatment of neurologic
and psychiatric diseases. The first is a traditional partnership focused on the developing the drug for all neurodegenerative
and neuropsychiatric applications. The second is a more focused partnership developing XPro1595 as part of a combination therapy
for a company’s existing therapy. After completion of proof-of-concept Phase II studies, we will decide what the most efficient
registration strategy is available to the company with XPro1595. We may to have biopharma partners participate in this decision
making. We may also seek to be acquired at this stage.
13
Immunotherapy
for the treatment of NASH
LIVNate
is being developed for the treatment of NASH. LIVNate is identical to INB03, Quellor and XPro1595 in every way but name. The name
LIVNate will be used as the drug name in the NASH development program. NASH is a pleiotropic disease with elements of metabolic,
immunologic and fibrotic pathophysiology contributing to disease development and progression. The Company believes targeting the
metabolic and immunologic pathology is the best way to treat NASH. Furthermore, we believe there are three pathologic drivers
of NASH, two which originate beyond the liver (refer to Figure 7 below). The peripheral pathologic loop includes obesity and insulin
resistance. The regional pathologic loop includes intestinal inflammation, intestinal leak and mesenteric fat, a source of inflammatory
factors that are concentrated in portal blood. Finally, the local pathologic loop is caused by lipotoxicity and innate immune
activation in the liver that results in hepatocyte death, hepatitis and fibrosis, the hallmarks of NASH. In murine studies of
NASH, LIVNate reverses insulin resistance, intestinal inflammation and decreases the NAS (“NAFLD Activity Score”)
and Fibrosis score suggesting that LIVNate may be an effective therapy for the treatment of NASH.
We
are planning an open label Phase II study of patients with NASH. The study is planned as a proof-of-concept study in patients
with F3/F3 disease defined by non-invasive laboratory and imaging studies. Patients will be treated with LIVNate for 6 months
by once a week subcutaneous injection. We do not plan to perform liver biopsies as any part of the study. If the study is positive,
further development of LIVNate in NASH will be considered. Further development may include additional clinical trials alone or
with a partner or divesting the program. This clinical trial has been delayed due to the COVID-19 pandemic. We do not expect to
enroll patients into a NASH Phase II clinical trial until 2022 at the earliest.
LIVNate
Registration Studies and/or Partnering Programs
Because
NASH is an exceptionally dynamic area of drug development, the Company will decide on a development and/or partnering program
after the completion of the Phase II study. At this time, it is impossible to predict the development and commercial landscape
or to know if LIVNate can be used to treat NASH as a stand-alone drug or as part of combination therapy. Finally, the market for
treatments of metabolic and inflammatory liver diseases may expand to include non-alcoholic fatty liver disease (“NAFLD”)
in the near future. This market expansion may impact the Company’s development plans for LIVNate.
INKmune:
Our NK cell Directed Product Candidate
INKmune
is our lead product candidate that converts resting NK cells into primed NK cells, an essential step in them becoming activated
cancer-killing NK cells. We have shown this works ex vivo in human tissue cell cultures, and we believe that this will work in
vivo which is the purpose of our planned clinical trials.
●
Cancers
grow and relapse because they evade the immune system. NK cells are the most important cell for the elimination of residual
disease that causes cancer relapse. NK cells target cells based on a series of complex antigens on the cancer cell surface
that signal the NK cells to activate and kill the cancer cell. We call these cancer antigens “priming signals”
and “triggering signals” respectively. An NK cell must receive a series of multiple signals through a network
of cell surface receptors constituting of both priming and triggering signals. Crucially, we have shown that the priming signals
can be delivered independent of the triggering such that one cell, such as INKmune, may deliver priming signals and the patient
cancer cell deliver the second set and induce killing. Cancer cells defective in priming signals evade NK killing so the cancer
cell survives and grows. Both priming and triggering signals are not a single surface molecule on the NK cell, but a complex
combination of signals from multiple cell surface ligands which lead to NK priming and triggering respectively. Cancer cells
also express molecules which can inhibit NK cell priming and triggering and the final outcome of the NK-cancer cell conjugation
is a balance of all of these signals. In summary, INKmune shifts that balance of stimulating and inhibitory signals to enhance
the ability of resting NK cells to kill a wide range of patient cancers. [Sabry Lowdell Frontiers, North et al JI and Sabry
et al JI and Tsirogianni et al AmJ Hematol]. This concept is shown in the schematic form in Figure 1 below.
14
●
The
main “job” of a cancer cell is to survive and grow. Unfortunately, the “successful” cancer cell ultimately
kills the host. The first priority for survival is to evade NK cell killing. The vast majority, >98%, of cancer cells do
this by downregulating expression of priming ligands. When an NK cell interrogates a cancer cell lacking sufficient priming
signals the NK cell is unable to trigger lysis. This allows the cancer to evade NK cell killing to grow, and, we believe,
is one of the causes of cancer relapse.
●
We
have described the functional biology underlying the interaction of NK cells and cancer cells. We believe that we have learned
to counteract the loss of the priming signals by artificially providing these signaling ligands to the resting NK cell by
exposure to a proprietary tumor cell line which constitutively expresses them. We call this product candidate INKmune. When
we deliver INKmune to a resting NK cell, it provides priming signals to convert the resting NK cell into a tumor primed NK
cell (“TpNK”). TpNK are poised to kill any cancer cell that expresses adequate triggering ligands. Based on our
extensive pre-clinical testing, we believe this covers a large and heterogenous array of primary human cancers including hematologic
malignancies such as acute myelogenous leukemia, multiple myeloma, lymphoma, and solid tumors such as breast, prostate, renal,
lung, and ovarian cancer. The TpNK binds to the cancer cell, becomes an activated NK cell that will kill the cancer cell that
was previously resistant to NK cell killing. Based on the pre-clinical data, we believe INKmune will convert the patient’s
resting NK cells to primed NK cells will allow the patient’s NK cells to kill their tumor.
●
We
believe there are advantages of NK cells primed with INKmune (“TpNK”) compared to cytokine primed NK cells (“LAK”)
or monoclonal antibody targeted NK cells (“MabNK”). Both LAK and MabNK require the priming/targeting agent to
be present at all times for the NK cell to be a cancer killing cell. As soon as the cytokine or Mab are removed, the NK cell
becomes a resting NK cell that cannot kill the cancer cell. INKmune provides a sustained “on” switch even after
the INKmune reagent has been removed. Once INKmune causes the resting NK cell to become a TpNK, the NK cell remains primed
and ready to kill until its lytic capacity has been exhausted by lysis of tumor cells. The second advantage is that TpNK can
prime resting NK cells by contact-dependent activation and thus enhance the initial INKmune-mediated priming. Third, TpNK
do not require a specific target compared to MabNK. Trastuzumab (Herceptin™), a Mab targeting HER2 on breast cancer
is an illustrative example. Women with HER2 positive breast cancer, 20% of all women with breast cancer, can be treated with
and benefit from Herceptin immunotherapy. Unfortunately, the other 80% who are HER2 negative, have a worse survival rate because
they can not avail themselves to Trastuzumab immunotherapy. INKmune may benefit the women with HER2 negative breast cancer.
We believe the pre-clinical and clinical data using tumor primed NK cells indicates that signals delivered by cancer cells
are adequate to provide priming and activation of NK cells to kill the cancer and possibly eliminate the need for MabNK.
15
●
We
have demonstrated TpNK killing of many tumor types in laboratory studies. Tumor priming is effective regardless of the source
of the NK cells and in many types of tumors – both cell lines and primary tumors from patients. The principle of TpNK
killing has also been demonstrated in two Phase I trials in patient with acute myelogenous leukemia (“AML”). These
trials were not supported by us and used a first-generation personalized cell therapy product. In these trials, haplo-identical
NK cells obtained from a first degree relative by leukapheresis were primed ex-vivo using a lysate of the parent cell line
from which we derived INB16 - INKmune. Once the TpNK therapy has been produced and passed quality testing, the patient received
conditioning therapy with chemotherapy (cyclophosphamide and fludarabine), the primed haplo-identical NK cells were given
to patients by intravenous infusion. Two Phase I clinical trials have been performed using the first-generation treatment
strategy. An investigator initiated trial performed at the Royal Free Hospital in London 2009 was funded by a UK charity.
Fifteen patients with relapsed, high-risk AML were enrolled in the trial. Because of drop-out due to disease progression,
delays in product production and complications of conditioning therapy, only 7 of the fifteen patients were treated with the
TpNK cell product. Four of seven patients showed clear benefit from the treatment with the TpNK product with prolonged relapse
free remission and, in one patient, conversion of a partial remission to full remission. None of the remissions were durable;
all patients ultimately died from disease progression. The safety of the product was found to be a combination of toxicity
from the chemotherapy conditioning regimen and the TpNK therapy. In general, the complications were well tolerated although
did require medical intervention including prolonged periods of aplasia in two heavily pretreated patients that resolved with
supportive care. The results of this study have been published in a medical journal (PLoS One. 2015 Jun 10;10(6):e0123416.
doi: 10.1371/journal.pone.0123416. eCollection 2015). In 2013, a second open label, multi-center trial was performed in the
US using virtually the same product and procedures but targeting a slightly different patient population. In the second trial,
12 patients in first remission with AML were treated with the haplo-identical TpNK product produced using the first generation
ex-vivo priming process. After conditioning with chemotherapy, the patients received TpNK in three dosing cohorts –
3x10^5, 1x10^6 or 3x10^6 TpNK per kilogram. Patients were followed for safety and relapse free survival. This trial confirmed
the safety of the TpNK treatment in patients with AML and reinforced many of the efficacy findings seen in the first trial
with none of the previously experienced side effects. Patients benefited from haplo-identical TpNK therapy with prolonged
relapse free survival including two patients that remain in remission more than 42 months after treatment. This trial has
been published. (Biol Blood Marrow Transplant. 2018 Mar 26. pii: S1083-8791(18)30132-0. doi: 10.1016/j.bbmt.2018.03.019.)
The results of the laboratory and Phase I studies provide evidence that our strategy for treating residual disease is sensible
but unproven.
●
Because INKmune
primes NK cells to target naturally occurring antigens, we believe INKmune can be used in to treat a wide variety of cancers
including hematologic malignancy (AML, MM, CML, high risk MDS) and solid tumors (renal, prostate, breast, ovarian, pancreas
and lung). We expect the list of INKmune sensitive tumors to continue to expand.
●
The primary role
for INKmune will be an immunotherapy targeting residual disease in patients after debulking cancer therapies such as cytotoxic
chemotherapy and surgery. At this time, we plan to give INKmune as monotherapy. We do not rule out the possibility of using
INKmune as part of combination therapy in the future. We do not expect to need to modify INKmune to treat these additional
types of cancer, because we believe INKmune is a universal cancer therapy where “one size fits all”. We believe
for INKmune to receive regulatory approval for each cancer indication, clinical trials will need to be performed which demonstrate
its safety and effectiveness as a treatment for each such cancer. We believe the difficulty and cost of achieving these labels
extensions will decline with each successive approval, if and when achieved. For example, if INKmune is proven to be effective
therapy in patients with ovarian cancer and high-risk MDS, we will need to perform separate pivotal trials for approval in
lung, prostate or renal cancer.
16
Three
step process to preparation for INKmune human clinical trials:
INKmune
GMP scale-up for Phase I/II clinical material
The
working cell banks and individual INKmune product to be used in the patients for the clinical trial have been produced at the
Royal Free Hospital in the CCGTT to full cGMP (MHRA MIA(IMP)11149). All manufacturing has been under the direction of Professor
Mark Lowdell. The Company can produce enough INKmune to complete both Phase I clinical trials in women with ovarian cancer and
in patients with high-risk MDS. We have validated storage of INKmune for up to 12 months in vapor phase nitrogen and have a fully
scalable, closed system manufacturing process which can produce up to 6 patient doses per week during phase I and II trials. At
intermediate scale we can manufacture 40 doses per week in a single 80 liter bioreactor. Importantly, we have validated the storage
of INKmune at -80oC for up to three months which greatly facilitates the delivery and local storage of the drug for clinical trials
and post commercialization. In contrast, as far as we know all other NK cell therapies and T cell therapies require complex shipping
of drug products in vapor phase nitrogen below -150 o C and specialized arrangements for ongoing storage at the clinical
sites. We may need additional INKmune for future clinical trials.
INKmune
Biomarker Development Program
We
have discovered two biomarker strategies that we believe can be used to demonstrate: i) who should receive INKmune therapy; ii)
if the INKmune therapy is working; and iii) when INKmune therapy should be repeated. For the initial Phase I/II trials in patients
with ovarian cancer and high-risk MDS, we expect the biomarker testing will be performed in a single laboratory under our direction.
In the near future, we will develop assay systems with standard operating procedures to ensure uniform testing of the biomarker
across clinical sites. This will facilitate expansion of the clinical programs to multiple sites. We anticipate that, in the future,
the biomarker program may be a surrogate marker for both clinical effectiveness and marketing purposes.
Interaction
with Regulatory Authorities Regarding INKmune Development
The
INKmune Phase I studies in high-risk MDS and ovarian cancer will be performed in the UK. We met with the Medicines and Healthcare
Products Regulatory Agency (“MHRA”), the UK version of the FDA as part of a Scientific Advice Meetings in preparation
for submitting the CTA for each program. The purpose of the meeting was to explain to the MHRA our manufacturing process and clinical
plan for the development of INKmune in a Phase I relapse/refractory ovarian cancer and high risk MDS respectively.
INKmune
Product Development Path Proposed Phase I Study in patients with ovarian cancer
Pending
the evolution of the COVID-19 pandemic in 2021, we plan to initiate an open label Phase I cancer study in patients with ovarian
carcinoma. Patients will be enrolled who have a low burden of relapse refractory disease and have peripheral blood or ascites
NK cells which can respond to INKmune in a laboratory test on NK function. The study design agreed upon after discussion with
the MHRA on September 12, 2017 was for a two-step Phase I/II study but this has been modified to an classic Phase I study followed
by a randomized phase II. At present we anticipate the Phase I to be performed under the modified CTA at a single UK site, Sheffield
University Hospital. We expect to initiate trial by the third quarter of 2021. In the Phase I trial, women with relapse refractory
ovarian cancer will be treated with INKmune, given as an intra-peritoneal infusion through an indwelling peritoneal catheter in
a traditional open label study to demonstrate safety and determine the dose of INKmune to be carried into the larger Phase II
portion of the study. Based on pre-clinical studies that indicate that women with relapsed/refractory ovarian cancer have NK cells
in their peritoneal cavity that response to INKmune to kill SKOV3, an NK-resistant ovarian cell line, we believe intra-peritoneal
delivery of INKmune will be therapeutically effective. Three clinical trials support this observation. Two clinical trials have
been performed using the first generation haplo-identical TpNK product in patients with AML. Both of those studies have been published
(PLoS One. 2015 Jun 10;10(6):e0123416. doi: 10.1371/journal.pone.0123416. eCollection 2015) and (Biol Blood Marrow Transplant.
2018 Mar 26. pii: S1083-8791(18)30132-0. doi: 10.1016/j.bbmt.2018.03.019.). In summary, the studies showed that TpNK therapy,
when delivered by intravenous infusion after conditioning therapy, was effective in providing prolong remissions with a toxicity
profile that was manageable. TpNK therapy has not been delivered via intraperitoneal infusion, but a similar treatment strategy
is used for the delivery of TALL-104 cells. TALL-104 is a replication incompetent human MHC non-restricted cytotoxic T-cell leukemic
cell line that has been extensively studied and used to treat a number of cancers. Currently, Galileo Research, an Italian biotech
company, has used TALL-104 in a Phase II clinical trial to treat women with ovarian cancer (http://www.galileoresearch.it/en/pipeline/TALL-104.html).
In that study, TALL-104 is delivered via intraperitoneal infusion. Although the efficacy of the therapy is not yet known, the
therapy is well tolerated with toxicities mainly related to the infusion catheter, not related to the TALL-104 infusion. The primary
end points of the INKmune Phase I trial are safety and determining the dose of INKmune to take into the Phase II portion of the
clinical trial. The key secondary efficacy end-points to be studied are i) increased NK cell priming as determined by multicolor
flow cytometry of NK cells from the patient; ii) increased NK cell killing of SKOV3 tumor in a bioassay as shown in Figure 2 below;
and iii) a decrease in tumor burden as measured by CA125 levels in the blood. Once safety and the optimal INKmune dose have been
determined, a randomized study of women treated with INKmune will be compared to a group of control patients who receive only
standard of care. We expect to treat six patients in the Phase I portion of the trial, but this number can increase by as many
as 18.
17
INKmune
Product Development Path Proposed Phase I Study in patients with high-risk MDS
During
2021, we plan to initiate an open label Phase I cancer study in patients with high-risk myelodysplastic syndrome (“MDS”).
Patients will be enrolled who have a low burden of disease after completion of conventional therapy and have peripheral blood
NK cells which can respond to INKmune in a laboratory test of NK function. At present we anticipate the Phase I to be performed
at a single UK site, University Hospital Southampton. A UK contract research organization has been appointed and we expect to
initiate trial by the third quarter of 2021. In the Phase I trial, patients with detectable residual disease in bone marrow and/or
peripheral blood (<15% blasts by conventional tests) will be treated with intravenous infusions of INKmune and monitored for
changes in peripheral blood NK activation, NK function and changes in residual blast counts in blood and bone marrow. We and others
have previously shown that MDS patients with inadequate NK function have statistically significantly poorer prognosis than matched
patients with normal levels of NK function (Tsirogianni et al 2019) and we have shown in laboratory experiments that the functional
activity of NK cells from MDS patients can be enhanced by exposure to INKmune. Moreover, INKmune-primed NK cells are not inhibited
by the hypoxic conditions of the diseased bone marrow microenvironment. Because both INKmune programs are being run in the UK,
delays due to the COVID-19 pandemic may delay initiation of the clinical trial.
INKmune
Registration Studies and/or Partnering
After
completion of proof-of-concept Phase II studies with INKmune, we will decide whether to continue to develop INKmune as a treatment
for ovarian carcinoma indication and/or high risk MDS. Other solid cancers are of interest including nasopharyngeal cancer (“NPC”)
which is a known target for NK cells and an important unmet clinical need in emerging markets such as mainland China. We expect
to have biopharma partners participate in this decision. We may also seek to be acquired at this stage or partner INKmune. Although
our development strategy is focused on North America and Europe, we believe INKmune will also be attractive for markets on the
Pacific Rim, South Asia and South America, but will wait for partners to help with the development in those regions, however,
at this time, we are not negotiating with any potential partners.
Importantly,
we have published data demonstrating INKmune efficacy at priming allogeneic NK cells ex-vivo (described above) and this includes
priming of NK cells differentiated from cord-blood derived hematopoietic stem cells (Domogala et al Cytotherapy 2017: 19:710-720).
Numerous companies are developing therapeutic strategies using cord blood derived NK cell products and one or more may wish to
partner with us to potentiate their product by co-incubation or co-administration with INKmune.
18
INKmune
Regulatory Strategy
INKmune
is a new therapy for the treatment of cancer that will need to be proven safe and effective by well-designed clinical trials that
show a meaningful clinical benefit to patients. We believe that registration trials will need to be designed as randomized trials
in patients with cancer where one group of patients received INKmune and another receive best available care. We received advice
from the MHRA on September 12, 2017 on the design clinical trial for ovarian cancer. And have used that advice to plan both current
phase I trials. We plan to perform the Phase I trials with INKmune in the United Kingdom under two clinical trials authorizations
(“CTA”) – one for each indication. If either phase I elicits “positive” data we plan to open one
or more Phase II programs to additional sites in the United Kingdom and the US. We will meet with the FDA once we have data from
the Phase I trials. Because there are no therapies similar to INKmune approved in any market, we plan to take advantage of the
regulatory opportunities afforded to therapies that treat small markets with a high unmet need. In the U.S., this includes Orphan
Drug Designation and expedited programs for approval including Accelerated Approval, Breakthrough Therapy Designation, Fast Track
Designation, and priority review (see “Government Regulation”). We cannot predict which of these programs we will
benefit from, if any at all, without further discussions with the FDA. Similar programs exist in the EU with the European Medicines
Agencies (“EMA”).
Emerging
Market Opportunity
The
cancer therapy market is large, diverse and competitive. Although the concept of immunotherapy with monoclonal antibodies has
been around for more than 20 years, the concept that patient derived immunosuppressive factors was a barrier to effective cancer
treatment was recently recognized and had its first therapy approved just four years ago (ipilimumab, Yervoy, BMS, March 2011).
Since then, five additional “check point” inhibitors have been approved, but the market is in its infancy. Most of
the focus on strategies for modulating tumor-based immunosuppression focus is on the adaptive immune system (“T-cells”).
The role of, and the importance of manipulating the innate immune system has more recently become a target of therapeutic development.
NK cells are part of the innate immune system and are critical in both tumor surveillance (prevention) and treatment (killing).
MDSCs are part of the innate immune system that only appear once the patient has chronic inflammation, a common occurrence in
patients with cancer. The main role of the MDSC is to protect the tumor from attack by the patient’s immune system. Because
T-cell focused strategies do not have an effect on the innate immune system, patient’s receiving such treatments may fail
to recruit half of the patient’s immune system, the innate immune system, to attack the patient’s cancer. Clinicians
increasingly recognize that durable responses to cancer require a coordinated attack by the patient’s adaptive and innate
immune system. Normalizing the response of the innate immune system requires eliminating the dysregulated innate immune response
that decreases the patient’s ability to see and attack the cancer as well as mechanisms the protect the cancer from immunologic
attack (effector and protector function respectively). INKmune primes NK cells to enable them to attack the tumor. INB03, by decreasing
the proliferation and function of MDSC, will lessen the immunosuppressive shield that protects the tumor from immunologic attack
and, through NK/DC crosstalk, recruit the adaptive immune system to the fight.
Challenges
in the Market for Our Product Candidates
The
market for new oncology therapies is busy, complicated, and rapidly evolving. We will be competing with companies that are older,
larger, better financed and have greater experience. There are two types of drug companies – development companies and commercial
companies. Development companies take the risk of developing new products to proof-of-concept. Once proof-of-concept has been
achieved, if the drug provides clinical benefit, the product is usually acquired by a commercial company, which completes the
drug’s clinical development and markets the product. We are a development company which will seek to develop products such
as INKmune from the bench to the bedside to demonstrate proof-of-concept. The goal for us is to successfully develop such products
to the point where they are attractive targets for potential partners/acquirers.
19
According
to a recent Markets and Markets report, the immunotherapy market is growing rapidly at an annual rate of over 13%. Recently, the
market is biased towards T cell-based immunotherapies including bi-specific antibody therapies, checkpoint inhibitors and CAR-T
cell-based therapies. There are substantial numbers of clinical trials that are focused on the adaptive immune system versus clinical
trials that are focused on the innate immune system for the treatment of cancer. Our challenge will be to educate partners on
the value of NK cell-based therapeutic strategies. The need to educate people of the importance of INB03 is equally challenging.
At the academic level, there is recognition that therapies targeting MDSC are needed to improve the results of immunotherapies.
Investors and potential partners are only now learning about MDSC. We will be responsible for educating them on the importance
of MDSC and why INB03 may be an important addition to the oncologist’s armamentarium. We believe educating investors and
partners about new therapeutic opportunities is an easier task than trying to differentiate our company from the many other cancer
immunotherapy companies. We plan to use a combination of publication, presentation and investor relations to promote INKmune and
INB03 and to educate the clinical, biopharma and investor community on the value of these novel therapeutic approaches.
DN-TNF
Competition
To
our knowledge, there are no other innate immune system check-point inhibitors in development that combine the characteristics
of neutralizing soluble TNF, decreasing the population and function of MDSC while promoting NK/DC crosstalk that expands, decreases
expression of MUC4 and recruits the adaptive immune response to attack the patient’s tumor. Lilly is developing LY3022855,
a human IgG1 monoclonal antibody designed to target the CSF1R that should inhibit MDSC from receiving CSF1 signals, decreasing
their survival and relieving the effect of MDSC in the tumor. Daiichi Sankyo Inc., in collaboration with Bristol Myers Squibb,
is testing DS-8273a, a TRIAL-R2 agonistic antibody in combination with a PDL1 inhibitor to decrease the number of MDSC in patients
with colorectal cancer. Rgenix Inc., is developing RGX-104, an orally bioavailable small molecule immunotherapy that targets LXR
(liver X Receptor). RGX-104 reportedly depletes MDSC. Syntrix Biosystems is developing SX-682. SX-682 is a small-molecule dual-inhibitor
of CXCR1 and CXCR2, the chemokine receptors pivotal to tumor metastasis, therapy-resistance, and myeloid cell suppression of cancer
surveillance by the adaptive immune system. By blocking the CXCR1/2 pathway, SX-682 may prevent recruitment of MDSC to the tumor
microenvironment. The University of Minnesota has a trivalent antibody program aimed at treating patients with advanced hematologic
malignancies. This CD16/IL-15/CD33 (161533) Tri-Specific Killer Engagers (TriKes) product may target CD33+ MDSC. Siamab Therapeutics
is developing an anti-sialyl-Tn monoclonal antibody that targets MDSC in some tumor types. Clathera Biosciences, in collaboration
with Incyte, a US based biotech, is developing CB-1158 (INCB01158), an arginase inhibitor to decreases MDSC. A Phase II clinical
trial is open that combines CB-1158 with nivolumab, an anti-PD1 CPI marketed by Bristol Myers Squib. Reata Pharmaceuticals is
testing omaveloxolone (RTA 408) in the phase Ib/II REVEAL trial in combination with either ipilimumab (Yervoy) or nivolumab (Opdivoo)
in patients with advanced unresectable or metastatic melanoma. Currently approved non-selective TNF inhibitors, infliximab, etanercept,
adalimumab and others, are not considered direct competitors of INB03 in the treatment of cancer because of their mechanism of
action and safety side effects. Non- selective TNF inhibitors block the function of both sTNF and tmTNF. Blockade of tmTNF is
immunosuppressive increasing the risk of infection and cancer in patients. This is shown in Figure 3 below where maintaining function
to tmTNF by genetic or pharmacologic means results in an immunocompetent animal that can protect itself against infection. Blockade
or knock-out of both sTNF and tmTNF results in death from infection.
20
INKmune
Competition
Our
industry is highly competitive and subject to rapid and significant technological change. Our potential competitors include large
pharmaceutical and biotechnology companies, specialty pharmaceutical and generic drug companies, academic institutions, government
agencies and research institutions. We believe that key competitive factors that will affect the development and commercial success
of our product candidates are efficacy, safety, tolerability, reliability, price, and reimbursement level. Many of our potential
competitors, including many of the organizations named below, have substantially greater financial, technical, and human resources
than we do and significantly greater experience in the discovery and development of product candidates, obtaining FDA and other
regulatory approvals of products and the commercialization of those products. Accordingly, our competitors may be more successful
than us in obtaining FDA approval for and achieving widespread market acceptance of their drugs. Our competitors’ drugs
may be more effective, or more effectively marketed and sold, than any drug we may commercialize and may render our product candidates
obsolete or non-competitive before we can recover the expenses of developing and commercializing any of our product candidates.
We anticipate that we will face intense and increasing competition as new drugs enter the market and advanced technologies become
available. Further, the development of new treatment methods for the conditions we are targeting could render our drugs non-competitive
or obsolete.
INKmune
is an immunotherapy that harnesses the biology of NK cells for the treatment of cancer. There is a long list of immunotherapy
strategies for the treatment of cancer and the immunotherapy for cancer market is growing rapidly. There are at least three ways
to classify immunotherapy for cancer. The list below classifies immunotherapy strategies beginning with those that are most closely
related to INKmune:
1.
Companies in the
NK cell therapy business;
2.
Companies in the
personalized immune-oncology business; and
3.
Companies in the
precision immuno-oncology business.
21
We
are not aware of any approved treatments that are classified as NK cell therapies. We are aware of public companies in the NK
cell therapy business such as NantKwest, Nkarta, Fate Therapeutics and Glycostem. These companies are developing products that
involve replacing or supplementing NK cells of the patient for the treatment cancer. Their product requires extensive ex-vivo
cell manipulations which, with respect to NantKwest and Fate Therapeutics, may include gene therapy. The next larger group of
companies are in the personalized immuno-oncology business with products focused on T cell activation strategies. The most popular
are the CAR-T cell therapies which are a patient specific ex-vivo gene therapy approach to a single disease (for example: pediatric
ALL). CAR-T therapy has become wildly popular of late and includes many private companies, newer public companies such as Bluebird,
Juno Therapeutics and Mustang Bio as well as established companies such as Novartis and Gilead. For many of the companies, CAR-T
cell therapies is their only business. For the latter two, CAR-T cell therapies is a newly in-licensed program with marketing
authorization in the US. Finally, the precision immune-oncology category also includes companies with anti-cancer antibody products
and the newer “check-point” inhibitors. Antibody therapies are all about “illuminating” the cancer to
the innate immune system (NK cells). Monoclonal antibodies were the original immunotherapy that drove the growth of well-known
biopharma companies including Genentech/Roche, Amgen, Merck and others. Each of these products is disease specific (ie: treat
only HER2+ breast cancer). Modern therapeutic antibodies are much more complicated bi-specific and tri-specific antibodies that
attempt to connect the cancer with activated T-cells of the adaptive immune system. Check-point inhibitors are currently the most
rapidly expanding product category in immuno-oncology. These CTLA-4 (ipilimumab) and PD-1 inhibitors (pembrolizumab and nivolumab)
specifically block a mechanism that shields cancers from T-cell killing. The two companies in this business are Merck (pembrolizumab)
and GSK (ipilimumab and nivolumab). There are many others trying to join this promising therapeutic area including large companies
such as BMS and Roche.
There
are several FDA approved drugs that improve the ability of the innate immune system (NK-cells) to treat cancer including mono-clonal
antibody therapies (for example: Rituximab®; Avastin® and Herceptin® marketed by Roche/Genentech); and “check-point”
inhibitors (Yervoy® and Opdivo®, BMS, Keytruda®, Merck and others). There is a large amount of development activity
in the immune checkpoint inhibitor field from both pharmaceutical giants including AstraZeneca, Merck & Co, Pfizer, Merck
KGaA, Roche, GSK, Novartis and Amgen and many start-ups, small companies and university spin-offs which have emerged in the past
two years. Examples (in alphabetical order) include Agenus, Alligator Bioscience, Ambrx, AnaptysBio, argenx, Bioceros, BioNovion,
Cellerant Therapeutics, Checkpoint Therapeutics, Compugen, CureTech, Enumeral, Five Prime Therapeutics, Genmab, GITR, ImmuNext,
IOmet Pharma, iTeos Therapeutics, Jounce Therapeutics, KAHR Medical, Multimeric Biotherapeutics, Nativis, Orega Biotech, Pelican
Therapeutics, Pieris Pharmaceuticals, Prima BioMed, Redx Pharma, Sorrento Therapeutics, Tesaro, TG Therapeutics, Theravectys and
ToleroTech active in the field. The list of companies with poly-specific antibodies that attempt to link the cancer with a cytotoxic
T cell is long, includes both private and public companies (Amgen, Xencor, F-Star, Merus and many others). Finally, two CAR-T
cell therapies were just approved for the treatment of ALL – Kymriah™ (Novartis) and Yescarta™ (Gilead). We
expect additional drugs to gain marketing authorization in the immune-oncology space.
To
our knowledge, there are no innate immune check-point inhibitors in development that have the unique characteristics of INB03
that neutralize sTNF to: i) decreases the proliferation of MDSC; ii) decreasing local and systemic immunosuppression caused by
MDSC by stopping production of immunosuppressive cytokines and; iii) improving NK/DC cross-talk to recruit the adaptive immune
system to fight the cancer.
Intellectual
Property
We
seek to protect our therapeutic programs by continuously developing patent properties covering novel compositions, formulations,
purpose-limited compositions, combination treatments, methods of medical treatment, and other inventions in the United States
Patent & Trademark Office (the “USPTO”), the World Intellectual Property Organization (“WIPO”) under
the Patent Cooperation Treaty (“PCT”), and in patent offices for various foreign jurisdictions. While each invention
is unique and territories for protection are decided on a case by case basis, we generally pursue patents in Australia, Canada,
Europe, Japan, and the United States, and sometimes in Brazil, China and/or Korea. The following sections and corresponding tables
summarize, for each of our current therapeutic programs, our pending and granted patent positions, to the extent publicly available,
as of the time of preparing this document:
22
DN-TNF
Platform Technology (Cancer, Neurologic Diseases, Metabolic Diseases, COVID-19)
The DN-TNF Platform
Technology covers a variety of dominant negative tumor necrosis factor (“DN-TNF”) variant proteins, including the pegylated
DN-TNF protein variants known as XPro1595, INB03, LIVNate, and Quellor. These DN-TNF protein variants can be considered a platform
technology for treating the underlying immune dysfunction associated with many disease manifestations. The following table summarizes
current IP covering our DN-TNF Platform Technology:
Patent/
Application
Number
Name
Jurisdiction
Ownership
Type
Expiration
Date
Patent
EP 1578988
PROTEIN BASED TNF-ALPHA
VARIANTS FOR THE TREATMENT OF TNF-ALPHA RELATED DISORDERS
EPO
Licensed
Composition
9/30/2022
Patent
JP 4353802
PROTEIN BASED TNF-ALPHA
VARIANTS FOR THE TREATMENT OF TNF-ALPHA RELATED DISORDERS
JPO
Licensed
Composition
9/30/2022
Patent
US 7610156
METHODS FOR RATIONAL
PEGYLATION OF PROTEINS
US
Licensed
Composition
3/31/2024
Patent
US 7642340
PEGYLATED TNF-a VARIANT
PROTEINS
US
Licensed
Composition
3/31/2024
XPro1595
(Neurologic Diseases)
The patent suite for
XPro1595 includes the DN-TNF patents (above) and other patents and patent applications directed to methods of treatment of disease.
This patent suite continues to expand with active prosecution on use of XPro1595 (a DN-TNF variant) in neurologic diseases. The
following table summarizes current IP expanding our DN-TNF Platform Technology for CNS-related methods of treatment:
Patent/
Application
Number
Name
Jurisdiction
Ownership
Type
Expiration
Date
Patent
EP 2892547 B1
A DOMINANT NEGATIVE
TNF-ALPHA INHIBITOR FOR USE IN TREATING NEUROLOGICAL DISORDERS OF THE CNS
EP
Licensed
9/10/2033
Application
EP 20178121 A
METHODS OF TREATING
NEUROLOGICAL DISEASES
EP
Licensed
TBD
Application
14/427,279
METHODS OF TREATING
NEUROLOGICAL DISEASES
US
Licensed
TBD
Application
16/371,848
METHODS OF TREATING
NEUROLOGICAL DISEASES
US
Licensed
TBD
23
INB03
(Oncology)
The
patent suite for INB03 includes the DN-TNF patents (above) and other patents and patent applications directed to methods of treatment
of disease. This patent suite continues to expand with active prosecution on use of INB03 (a DN-TNF variant) in oncology. The
following table summarizes current IP expanding our DN-TNF Platform Technology for oncology-related methods of treatment:
Patent/
Application
Number
Name
Jurisdiction
Ownership
Type
Expiration
Date
Patent
US 10,543,264
“CANCER PREVENTION
AND THERAPY BY INHIBITING SOLUBLE TUMOR NECROSIS FACTOR”
US
Licensed
Method
7/7/2038
Application
16/688,930
“CANCER PREVENTION
AND THERAPY BY INHIBITING SOLUBLE TUMOR NECROSIS FACTOR”
US
Licensed
Method
TBD
Application
2016876541
“CANCER PREVENTION
AND THERAPY BY INHIBITING SOLUBLE TUMOR NECROSIS FACTOR”
EP
Licensed
Method
TBD
Application
2016371907
“CANCER PREVENTION
AND THERAPY BY INHIBITING SOLUBLE TUMOR NECROSIS FACTOR”
AU
Licensed
Method
TBD
Application
3006767
“CANCER PREVENTION
AND THERAPY BY INHIBITING SOLUBLE TUMOR NECROSIS FACTOR”
CA
Licensed
Method
TBD
Application
20168073849
“CANCER PREVENTION
AND THERAPY BY INHIBITING SOLUBLE TUMOR NECROSIS FACTOR”
CN
Licensed
Method
TBD
Application
1020187020449
“CANCER PREVENTION
AND THERAPY BY INHIBITING SOLUBLE TUMOR NECROSIS FACTOR”
KR
Licensed
Method
TBD
Application
2018531185
“CANCER PREVENTION
AND THERAPY BY INHIBITING SOLUBLE TUMOR NECROSIS FACTOR”
JP
Licensed
Method
TBD
LIVNate
(Metabolic Diseases)
The
patent suite for LIVNate includes the DN-TNF patents (above) and other patents and patent applications directed to methods of
treatment of disease. This patent suite continues to expand with active prosecution on use of LIVNate (a DN-TNF variant) for treating
metabolic diseases. The following table summarizes current IP expanding our DN-TNF Platform Technology for metabolic disease -related
methods of treatment:
Patent/
Application
Number
Name
Jurisdiction
Ownership
Type
Expiration
Date
Application
16/652,407
TREATMENT OF COMPLICATIONS
RELATED TO ACUTE OR CHRONIC HYPERGLYCEMIA
US
Jointly-Owned
Method
TBD
Application
PCT/US20/32649
TREATMENT OF NON-ALCOHOLIC
STEATOHEPATITIS
PCT
Owned
Method
N/A
24
Quellor
(CRS and COVID-19)
The
patent suite for Quellor includes the DN-TNF patents (above) and other patents and patent applications directed to methods of
treatment of disease. This patent suite continues to expand with active prosecution on use of Quellor (a DN-TNF variant) for treating
cytokine release syndrome (CRS) and complications of COVID-19. We have two patent properties pending as of the date of this document.
INKmune
(Oncology)
The
INKmune program is directed to compositions and methods of treating cancer. INKmune comprises cells and/or membrane portions of
cells derived from a cancer cell line expressing a unique biological signature (that is often downregulated in many cancers),
which cells/membrane portions are inactivated to prevent proliferation, and which are administered to a patient. Once administered,
the inactivated cells/membranes (INKmune) are presented in vivo to the patient’s own resting NK cells, thereby providing
the unique biological signature, and resulting in what we call “NK cell priming,” that is, the change of a resting
NK cell to a non-naturally occurring state, or “primed NK cell,” wherein the primed NK cell has received the signals
often downregulated by cancer cells. Now having the often-downregulated signals, a primed NK cell can subsequently contact, adhere
and commence killing of the patient’s cancer cells. The following table summarizes current IP covering INKmune:
Patent/
Application
Number
Name
Jurisdiction
Ownership
Type
Expiration
Date
Patent
10,758,567
“IN VIVO PRIMING
OF NATURAL KILLER CELLS”
US
Licensed
Method
9/16/2036
Application
CA3009171A
“IN VIVO PRIMING
OF NATURAL KILLER CELLS”
CA
Licensed
Method
TBD
Patent
EP3349769
“IN VIVO PRIMING
OF NATURAL KILLER CELLS”
EP
Licensed
Method
11/14/2036
Application
2018534524
“IN VIVO PRIMING
OF NATURAL KILLER CELLS”
JP
Licensed
Method
TBD
Patent
2018203469
“IN VIVO PRIMING
OF NATURAL KILLER CELLS”
AU
Licensed
Method
11/14/2036
Application
CA3056631A
“IN VIVO PRIMING
OF NATURAL KILLER CELLS”
CA
Licensed
Method
TBD
Application
CN201880028522A
“IN VIVO PRIMING
OF NATURAL KILLER CELLS”
CN
Licensed
Method
TBD
Application
KR20197030017A
“IN VIVO PRIMING
OF NATURAL KILLER CELLS”
KR
Licensed
Method
TBD
Application
EP18768024A
“IN VIVO PRIMING
OF NATURAL KILLER CELLS”
EP
Licensed
Method
TBD
Application
16/494,713
“IN VIVO PRIMING
OF NATURAL KILLER CELLS”
US
Licensed
Method
TBD
Application
17/007,936
“IN VIVO PRIMING
OF NATURAL KILLER CELLS”
US
Licensed
Method
TBD
25
Our
commercial success depends in part on obtaining and maintaining patent protection and trade secret protection of our current and
future product candidates and the methods used to manufacture them, as well as successfully defending these patents against third-party
challenges. Our ability to stop third parties from making, using, selling, offering to sell or importing our products depends
on the extent to which we have rights under valid and enforceable patents or trade secrets that cover these activities. We cannot
assure you that our pending patent applications will result in issued patents.
●
“N/A”
when used above with respect to provisional patent applications and international PCT patent applications, each of which is
only temporary in nature, and does not mature into a valid enforceable patent by itself, but instead serves to establish a
chain of priority rights for subsequently filed patent applications.
●
“TBD”
when used above with respect to pending patent applications which are undergoing ordinary patent prosecution and may eventually
issue as a valid enforceable patent.
International
PCT patent applications cover all 152 nations which are signatories of the PCT. However, our IP strategy generally recognizes
the United States, United Kingdom, European Union, Canada, Japan, Australia and China as targets for extending patent protection
under the PCT. Decisions regarding which countries to extend patent coverage under the PCT is taken on a case by case basis, subject
to normal business considerations such as value and return on investment.
Each
of the above-identified patents and patent applications is subject to change based on strategic patent portfolio building decisions,
which may include refiling and reissue, certain abandonments, including those in favor of continuing patent applications, maturations
from provisional to non-provisional filings, and other regular patent prosecution activities.
Trademarks
The
following table summarizes trademark applications and registrations used or intended for use in connection with products in our
pipeline:
Application
/ Registration
Number
Mark
Jurisdiction
Application
90/517,195
INmune Bio
US
Application
88/857,507
INKmune
US
Application
90/517,204
INB16
US
Application
88/862,742
LIVNate
US
Application
88/907,267
Quellor
US
Each
of the above-identified trademark applications is subject to change as the trademark portfolio develops and we begin to perfect
these registrations with actual use after receiving marketing authorization.
Immune
Ventures, LLC License Agreement
On
October 29, 2015, the Company entered into an exclusive license agreement (the “INKmune License Agreement”) with Immune
Ventures, LLC (“Immune Ventures”). Pursuant to the INKmune License Agreement, we were granted exclusive worldwide,
sub-licensable, royalty-bearing licenses (collectively “Patent Rights”) as well as all applications (the “Field”)
of the Patent Rights, including rights to incorporate any improvements or additions to the patents that may be developed in the
future to the following patents and patent applications:
26
Patent
Applications:
Property
No.
Patent
Application Serial No.
Filing Date:
Title:
(1)
US 62/219,652
09/16/2015
IN VIVO ACTIVATION
OF NATURAL KILLER CELLS
(2)
US 62/263,951
12/07/2015
IN VIVO ACTIVATION
OF NATURAL KILLER CELLS
(3)
US 15/268,399
09/16/2016
IN VIVO PRIMING OF
NATURAL KILLER CELLS
(4)
PCT/US2016/061835
11/14/2016
IN VIVO PRIMING OF
NATURAL KILLER CELLS
(5)
US 62/471,953
03/15/2017
IN VIVO PRIMING OF
NATURAL KILLER CELLS
(6)
CA 3,009,171
06/19/2018
IN VIVO PRIMING OF
NATURAL KILLER CELLS
(7)
EP 16847576.2
04/16/2018
IN VIVO PRIMING OF
NATURAL KILLER CELLS
(8)
JP 2018-534524
04/16/2018
IN VIVO PRIMING OF
NATURAL KILLER CELLS
(9)
PCT/US2018/022722
03/15/2018
IN VIVO PRIMING OF
NATURAL KILLER CELLS
(10)
AU 2018203469
05/16/2018
IN VIVO PRIMING OF
NATURAL KILLER CELLS
(11)
CA 3,056,631
03/15/2018
IN VIVO PRIMING OF
NATURAL KILLER CELLS
(12)
CN 201880028522
03/15/2018
IN VIVO PRIMING OF
NATURAL KILLER CELLS
(13)
KR 20197030017
03/15/2018
IN VIVO PRIMING OF
NATURAL KILLER CELLS
(14)
EP 18768024.4
03/15/2018
IN VIVO PRIMING OF
NATURAL KILLER CELLS
(15)
US 16/494,713
03/15/2018
IN VIVO PRIMING OF
NATURAL KILLER CELLS
Patents:
Property
No.
Patent
No.
Issue
Date:
Title:
(N/A)
N/A
N/A
N/A
In
consideration for the Patent Rights, we agreed to the following milestone payments (of which none have been incurred as of December
31, 2020):
Each Phase I initiation
$ 25,000
Each Phase II initiation
$ 250,000
Each Phase III initiation
$ 350,000
Each NDA/EMA filing
$ 1,000,000
Each NDA/EMA awarded
$ 9,000,000
In
addition, we agreed to pay the licensor a royalty of 1% of net sales during the life of each patent granted to us. The Licensor
is owned by Raymond J. Tesi, our President and a member of our Board of Directors, David Moss, our Chief Financial Officer and
Treasurer and Mark Lowdell, our Chief Scientific Officer. In countries where a claim of an issued and unexpired patent or a pending
claim in a pending patent application within the Patent Rights exists a royalty of nine percent of net sales of each of each licensed
product shall be paid for the remaining life of each patent on a country by country basis.
The
term of the agreement began on October 29, 2015 and, if not terminated sooner pursuant to the agreement, ends on a country-by-country
basis on the date of the expiration of the last to expire patent rights where patent rights exists. Upon the termination of the
agreement we shall have a fully paid up, perpetual, royalty-free license without further obligation to Immune Ventures. The agreement
can be terminated by Immune Ventures if, after 60 days from the Company’s receipt of notice that the Company has not made
a payment under the agreement, and the Company still does not make this payment. On July 20, 2018, the parties amended the
agreement under which the Company was required achieve milestones pursuant to the agreement. On October 30, 2020, the parties
executed an additional amendment to the agreement under which the Company is required to achieve the following milestones:
27
Initiation
of Phase 1 clinical or equivalent trials by October 29, 2021
Initiation
of Phase II clinical trials or equivalent by October 29, 2023
Initiation
of Phase III clinical trials or equivalent by October 29, 2025
Filing
of NDA or equivalent by October 29, 2026 or equivalent
If
the Company doesn’t achieve the above milestones, it is required to negotiate in good faith with Immune Ventures to determine
how it can either remedy the failure or achieve an alternate development. If the Company fails to make any required efforts, or
if the efforts do not remedy the situation within 60 days of written notice by Immune Ventures, then Immune Ventures may provide
notice to terminate the license or convert it to a non-exclusive license.
University
of Pittsburg License Agreement
On
October 3, 2017, the Company entered into an Assignment and Assumption Agreement with Immune Ventures related to intellectual
property licensed from the University of Pittsburgh. Pursuant to the Assignment and Assumption Agreement (the “Assignment
Agreement”), Immune Ventures assigned all of its rights, obligations and liabilities under an Exclusive License Agreement
between the University of Pittsburgh – Of the Commonwealth System of Higher Education (“Licensor”) and Immune
Ventures to INmune Bio (“Licensee”), (the “PITT Agreement”).
Consideration
under the PITT Agreement includes: (i) annual maintenance fees, (ii) royalty payments based on the sale of products making use
of the licensed technology, and (iii) milestone payments.
Annual
maintenance fees under the PITT Agreement include: $5,000 due June 26 of each year 2020-2022; $10,000 due on June 26 of each year
2023-2024; and $25,000 due on June 26 of each year 2025 and annually thereafter until first commercial sale. As of December 31,
2020, the Company has no amounts owed pursuant to the PITT Agreement. The Company is current on its annual maintenance fees pursuant
to the PITT Agreement.
June 26 of each year 2020-2022
$ 5,000
June 26 of each year 2023-2024
$ 10,000
June 26 of each year 2025 until first commercial sale
$ 25,000
28
Upon
first commercial sale of a product making use of the licensed technology under the PITT Agreement, the Licensee is required to
pay royalties equal to 2.5% of Net Sales each calendar quarter.
Moreover,
under the PITT Agreement the Licensee is required to make milestone payments as follows:
Each Phase I initiation
$ 50,000
Each Phase III initiation
$ 500,000
First commercial sale of product making use of licensed technology
$ 1,250,000
The
Company made a $50,000 milestone payment to the University of Pittsburgh in March 2019 as a result of the initiation of a Phase
I clinical trial. The PITT Agreement expires upon the earlier of: (i) expiration of the last claim of the Patent Rights forming
the subject matter of the PITT Agreement; or (ii) the date that is 20 years from the effective date of the agreement (June 26,
2037).
The
Company may terminate the PITT Agreement upon 3 months prior written notice provided all payments under the license are current.
Licensor may terminate the PITT Agreement upon written notice if: (i) the Company defaults as to performance of material obligations
which have not been cured within 60 days after receiving written notice; or (ii) the Company ceases to carry out its business,
becomes bankrupt or insolvent, applies for or consents to the appointment of a trustee, receiver or liquidator of its assets or
seeks relief under any law for the aid of debtors.
Xencor
License Agreement
On
October 3, 2017, the Company entered into a license agreement with Xencor, Inc. (“Xencor”), which has discovered and
developed a proprietary biological molecule that inhibits soluble tumor necrosis factor (the “Xencor Agreement”).
Pursuant to the Xencor Agreement, Xencor granted the Company an exclusive worldwide, royalty-bearing license in licensed patent
rights, licensed know-how and licensed materials (as defined in the Xencor Agreement) to make, develop, use, sell and import any
pharmaceutical product that comprises, contains, or incorporates Xencor’s proprietary protein known as “XPro1595”
that inhibits soluble tumor necrosis factor (or all modifications, formulations and variants of the licensed protein that specifically
bind soluble tumor necrosis factor) alone or in combination with one or more active ingredients, in any dosage or formulation.
In connection with the Xencor Agreement, we paid Xencor a one-time non-creditable and non-refundable fee of $100,000 and agreed
to issue Xencor 1,585,000 shares of our common stock. We also issued warrants to Xencor which are discussed below.
We
also agreed to pay Xencor a royalty of 5% on net sales of all Licensed Products in a given calendar year, which are payable on
a country-by- country and licensed product by licensed product basis until the date that is the later of (a) the expiration of
the last to expire valid claim covering any pharmaceutical product that contains, comprises, or incorporates Xencor’s proprietary
protein known as XPro1595 alone or in combination with one or more active ingredients, in any dosage or formulation. (“Licensed
Product”) in such country or (b) ten years following the first sale to a third party of the licensed product in such country.
Net Sales with respect to any Licensed Product is the gross amounts invoiced by us for sales of the Licensed Products less deductions
actually incurred.
Under
the Xencor Agreement, we also agreed to pay Xencor a percentage of any sublicensing revenue that it receives equal to (i) 60%
of sublicensing revenue received in respect of any sublicense granted prior to initiation of a Phase 1 Clinical Trial of a Licensed
Product in the applications for the treatment of disease in humans (the “Field”); (ii) 30% of Sublicensing Revenue
received in respect of any sublicense granted on or after initiation of a Phase 1 Clinical Trial of a Licensed Product in the
Field and prior to initiation of a Phase 2 Clinical Trial of a Licensed Product in the Field; (iii) 15% of Sublicensing Revenue
received in respect of any sublicense granted on or after initiation of a Phase 2 Clinical Trial of a Licensed Product in the
Field and prior to initiation of a Phase 3 Clinical Trial of a Licensed Product in the Field; (iv) 10% of Sublicensing Revenue
received in respect of any sublicense granted on or after initiation of a Phase 3 Clinical Trial of a Licensed Product in the
Field and prior filing of the first NDA application for any Licensed Product in the Field; and (v) 5% of Sublicensing Revenue
received in respect of any sublicense granted on or after the approval of the first NDA application for any Licensed Product in
the Field. For clarity, initiation of a clinical trial shall mean dosing of a first patient in said clinical trial.
29
A
valid claim is an issued, unexpired or pending claim with the patent rights that Xencor controls as of October 3, 2017 which
patent rights are necessary to make, develop, use, sell, have sold, offer for sale and import a Licensed Product in the Field
(the Field means all applications for the treatment of diseases in humans) or the Product Patent Rights, which claim has not lapsed,
been abandoned, been revoked or been held to be unpatentable, invalid or unenforceable by a final judgment of a court or other
governmental agency or competent jurisdiction from which no appeal can be or is taken within the time allowed for appeal and which
has not been admitted to be invalid or unenforceable through reissue, re-examination, disclaimer or otherwise. Product Patent
Rights shall mean any and all our patent rights that are necessary to make, develop, use, sell, have sold, offer for sale and
import a Licensed Product in the Field, including any improvements or patent rights directed to the Licensed Product. Either party
may terminate the Xencor Agreement upon 60 days’ (10 days for any payment default) prior written notice to the other party
after the breach of any material provision of the agreement by the other party if the breaching party has not cured the breach
within the 60-day period (10-day period for any payment default) following written notice of termination by the non-breaching
party. We can terminate the Xencor Agreement upon 180 days prior written notice to Xencor. Xencor may terminate the Xencor Agreement
in its entirety or with respect to any specific Licensed Product upon written notice in the event that we contest, oppose or challenge
or assist any party in contesting, opposing or challenging, Xencor’s ownership of, or the enforceability or validity of
the Patent Rights that Xencor controls as of October 3, 2017 which Patent Rights are necessary to make develop, use, sell, have
sold, offered for sale and import a Licensed Product in the Field. Either party may terminate the Xencor Agreement upon written
notice to the other party upon or after the insolvency, bankruptcy, dissolution or winding up of such other party or the making
or seeking to make or arrange an assignment for the benefit of creditors of such other party or the initiation of proceedings
in voluntary or involuntary bankruptcy which proceeding or action remains undismissed or unstayed for a period of more than 60
days.
In
connection with the Xencor Agreement, we entered into a stock issuance agreement with Xencor pursuant to which it agreed to issue
Xencor 1,585,000 shares of its common stock and fully vested warrants to purchase an additional number of shares of common stock
equal to 10% our the fully diluted company shares immediately following such purchase. In August 2018, we entered into a First
Amendment to Stock Issuance Agreement. Pursuant to the amendment, the purchase price for the additional shares may only be paid
by cash.
University
College London License Agreement – MSC
On
July 19, 2019, the Company entered into license agreement with UCL Business PLC (“UCLB”) with a ten-year term. Pursuant
to the license agreement, the Company acquired an exclusive license (and a right to sub-license) to the technology and know-how
relating to an isolation and commercial scale expansion methodology of GMP grade human umbilical cord mesenchymal stem/stromal
cells (“MSC”).
In
exchange for the license agreement, the Company paid UCLB an initial license fee of approximately $10,000 and shall pay annual
licensing fees of approximately $13,000 per year for the remaining term of the agreement beginning in July 2020. The Company will
pay UCLB a royalty of 3-3.5% of the net sales value (as defined in the agreement) of all licensed products sold or used by the
Company. As of December 31, 2020, no amounts are owed to UCLB pursuant to this license agreement. In the event the Company sub-licenses
the technology and know-how, the Company will pay UCLB a royalty of 12 percent of the consideration (cash or non-cash) received
by the Company in relation to the development or sub-licensing of any of the technology and know-how.
30
INKmune
Research and Development
We
expect to use third parties to conduct our preclinical and clinical trials under the direct supervision of management.
INKmune
Manufacturing
We
intend to contract with third parties for the manufacture of our compounds for investigational purposes, for preclinical and clinical
testing and for any FDA approved products for commercial sale. Pre-clinical and clinical material for the early clinical trials
with INKmune has been manufactured under the direction of Mark Lowdell at a licensed Good Manufacturing Practice (“GMP”)
facility. The master cell bank, working cell bank and individual product doses were completed in July 2018. This clinical material
is planned for use in the Phase I/II clinical trials in ovarian cancer. If we raise adequate capital to initiate the high-risk
MDS Phase I/II trials, additional working cell banks and therapeutic product will be produced from the existing master cell bank.
This process takes approximately 6 months and is not anticipated to delay the initiation of the high-risk MDS Phase I/II trials.
We may transfer the manufacturing to a different commercial contract manufacturing organization after completion of these Phase
II studies.
Human
Mesenchymal Stem Cells
In
November 2017, we entered into a Material Transfer and License Agreement with the Anthony Nolan Cord Blood Bank (“AN”),
the oldest and largest non-directed cord blood bank in the United Kingdom for the supply the starting material for the mesenchymal
stem cells - umbilical cords not used after cord blood harvest. Mark Lowdell’s research group developed and validated a
methodology for producing large numbers of clinical-grade pooled human umbilical cord derived mesenchymal stem cells (“HucMSC”).
We believe the reproducible and reliable supply of large quantities of high-quality a may solve one of the major problems associated
with the development of mesenchymal stem cell therapies for medicine. Under this agreement we were granted a license to produce
and sell these cells for medical research, including clinical trials. The agreement provides that Immune Bio Internal shall pay
to AN £200 plus VAT (if applicable) for each umbilical cord tissue sample (and any intellectual property, developed, or
conceived by Immune Bio International in exercising its rights under the agreement (“Licensed Product”)) Immune Bio
International receives pursuant to the agreement. Additionally, during the entire term of the agreement, Immune Bio International
shall pay AN a royalty of 2% of the net sales of the Licensed Product. We believe we are well positioned to become a preferred
manufacturing partner for companies who need MSC for clinical programs. Manufacture of HucMSC is performed under the direction
of Mark Lowdell in a licensed GMP facility that is contracted to the Company as part of existing research and development agreements.
The starting material for the HucMSC product is provided by the AN. The HucMSC product produced in this facility are fully qualified
to be used for either research or clinical trials. Currently, we plan to supply HucMSC to third parties for their research use
and in clinical trials as part of the development process for commercial pro/ducts. We may decide to expand this agreement in
the future if the commercial and/or development opportunities warrant such expansion. At the current time, we expect this program
to be funded by revenues from commercial sales. The agreement with AN terminates on November 29, 2027. AN may terminate the license
on written notice to us, if a donor withdraws consent to the continued use of umbilical cord tissue samples that were obtained
by AN. Additionally, either party may terminate the agreement on 30 days prior written notice to the other if that other party
materially breach any term of the agreement and such breaches (to the extent it is remediable) is not remedied within 30 days
of the written request to the other party to do so.
31
Challenges
in the Market for Immunotherapy Products
Government
Regulation
The
FDA and other federal, state, local and foreign regulatory agencies impose substantial requirements upon the clinical development,
approval, labeling, manufacture, marketing, and distribution of drug products. These agencies regulate, among other things, research
and development activities and the testing, approval, manufacture, quality control, safety, effectiveness, labeling, storage,
record keeping, advertising and promotion of our product candidates. The regulatory approval process is generally lengthy and
expensive, with no guarantee of a positive result. Moreover, failure to comply with applicable FDA or other requirements may result
in civil or criminal penalties, recall or seizure of products, injunctive relief including partial or total suspension of production,
or withdrawal of a product from the market.
Various
regulatory authorities regulate, among other things, the research, manufacture, promotion, and distribution of drugs in the United
States under the FDA and other statutes and implementing regulations. The process required by the FDA before prescription drug
product candidates may be marketed in the United States generally involves the following:
●
completion
of extensive nonclinical laboratory tests, animal studies and formulation studies, all performed in accordance with the FDA’s
Good Laboratory Practice regulations;
●
submission
to the FDA of an investigational new drug application, or IND, which must become effective before human clinical trials may
begin;
●
for
some products, performance of adequate and well-controlled human clinical trials in accordance with the FDA’s regulations,
including Good Clinical Practices, to establish the safety and efficacy of the product candidate for each proposed indication;
●
submission
to the FDA of a new drug application or NDA;
●
satisfactory
completion of an FDA preapproval inspection of the manufacturing facilities at which the product is produced to assess compliance
with current Good Manufacturing Practice, or cGMP, regulations; and
●
FDA
review and approval of the NDA prior to any commercial marketing, sale or shipment of the drug.
The
testing and approval process requires substantial time, effort and financial resources, and we cannot be certain that any approvals
for our product candidates will be granted on a timely basis, if at all.
Preclinical
tests include laboratory evaluations of product chemistry, formulation and stability, as well as studies to evaluate toxicity
in animals and other animal studies. The results of preclinical tests, together with manufacturing information and analytical
data, are submitted as part of an IND to the FDA. Some preclinical testing may continue even after an IND is submitted. The IND
also includes one or more protocols for the initial clinical trial or trials and an investigator’s brochure. An IND automatically
becomes effective 30 days after receipt by the FDA, unless the FDA, within the 30-day time period, raises concerns or questions
relating to the proposed clinical trials as outlined in the IND and places the clinical trial on a clinical hold. In such cases,
the IND sponsor and the FDA must resolve any outstanding concerns or questions before any clinical trials can begin. Clinical
trial holds also may be imposed at any time before or during studies due to safety concerns or non-compliance with regulatory
requirements. An independent institutional review board, or IRB, at each of the clinical centers proposing to conduct the clinical
trial must review and approve the plan for any clinical trial before it commences at that center. An IRB considers, among other
things, whether the risks to individuals participating in the trials are minimized and are reasonable in relation to anticipated
benefits. The IRB also approves the consent form signed by the trial participants and must monitor the study until completed.
The
FDA offers several regulatory mechanisms that provide expedited or accelerated approval procedures for selected drugs in the indications
on which we are focusing our efforts. These include accelerated approval under Subpart H of the agency’s NDA approval regulations,
fast track drug development procedures and priority review.
32
We
plan to seek orphan drug designation for INKmune for the treatment of ovarian carcinoma. The United States, European Union and
other jurisdictions may grant orphan drug designation to drugs intended to treat a “rare disease or condition,” which,
in the United States, is generally a disease or condition that affects no more than 200,000 individuals. In the European Union,
orphan drug designation can be granted if: the disease is life threatening or chronically debilitating and affects no more than
50 in 100,000 persons in the European Union; without incentive it is unlikely that the drug would generate sufficient return to
justify the necessary investment; and no satisfactory method of treatment for the condition exists or, if it does, the new drug
will provide a significant benefit to those affected by the condition. If a product that has an orphan drug designation subsequently
receives the first regulatory approval for the indication for which it has such designation, the product is entitled to orphan
exclusivity, meaning that the applicable regulatory authority may not approve any other applications to market the same drug for
the same indication, except in limited circumstances, for a period of seven years in the United States and 10 years in the European
Union Orphan drug designation does not prevent competitors from developing or marketing different drugs for the same indication
or the same drug for different indications. Orphan drug designation must be requested before submitting an NDA. After orphan drug
designation is granted, the identity of the therapeutic agent and its potential orphan use are publicly disclosed. Orphan drug
designation does not convey an advantage in, or shorten the duration of, the review and approval process. However, this designation
provides an exemption from marketing and authorization (NDA) fees. We plan to follow a similar path with INB03, although the precise
indication cannot be determined until we are farther along in the development process.
Clinical
Trials
Phase
1 clinical trials typically involve the initial introduction of the product candidate into healthy human volunteers. In Phase
1 clinical trials, the product candidate is typically tested for safety, dosage tolerance, absorption, metabolism, distribution,
excretion and pharmacodynamics.
Phase
2 clinical trials are conducted in a limited patient population to gather evidence about the efficacy of the product candidate
for specific, targeted indications; to determine dosage tolerance and optimal dosage; and to identify possible adverse effects
and safety risks.
Phase
3 clinical trials are undertaken to evaluate clinical efficacy and to test for safety in an expanded patient population at geographically
dispersed clinical trial sites. The size of Phase 3 clinical trials depends upon clinical and statistical considerations for the
product candidate and disease, but sometimes can include several thousand patients. Phase 3 clinical trials are intended to establish
the overall risk-benefit ratio of the product candidate and provide an adequate basis for product labeling.
Clinical
trials involve the administration of the product candidate to human subjects under the supervision of qualified medical investigators
according to approved protocols that detail the objectives of the study, dosing procedures, subject selection and exclusion criteria,
and the parameters to be used to monitor participant safety. Regulatory procedures differ in each country we will be working in.,
For example, in the US, each protocol is submitted, to the FDA as part of the IND for their review and consent before enrolling
patients in the clinical trial. The US is not the only place to perform clinical trials. Most countries have systems in place
to allow academics and companies to sponsor clinical trials of novel therapies in patients. For financial and technical reasons,
the Company will perform the Phase I clinical trials of our programs in the United Kingdom and Australia. The US will be included
in the Phase II programs. Other venues such as Europe, Canada, Japan and other Pacific Rim countries may be included in the development
program in the future. The first clinical trial with INKmune will be initiated in the United Kingdom. In the United Kingdom, the
regulatory submission is made to the MHRA for a clinical trials authorization (“CTA”). This is a multistep process.
The Company had a Scientific Advice meeting with the MHRA in September 2017 to discuss the INKmune Phase I/II trial in women with
relapse/refractory ovarian cancer including trial design, manufacturing processes and clinical trial execution. The MHRA gave
recommendations on trial design, manufacturing controls and the regulatory procedures needed to initiate the clinical trial. We
received CTA approval from the MHRA for an INKmune trial in ovarian cancer on December 18, 2018. The approval allows for the execution
of the Phase I/II INKmune clinical trial in the United Kingdom. We plan to have two cancer clinics referring the 6 patients needed
for the Phase I portion of the trial. The patients will be treated at the Phase I unit a university hospital. We expect all of
the Phase I sites to be in London, United Kingdom. If the Phase I trial proceeds as planned, we expect to open the Phase II portion
of the trial in early 2020. The Phase II trial will include at least 3 other clinical sites in the United Kingdom and may include
clinical sites in the US. Because 30 patients will be required to complete the Phase II portion of the trial, we expect to need
sites in both the US and United Kingdom. The additional clinical sites in the United Kingdom or US have not been identified at
this time. No additional regulatory procedures will be needed to add sites in the United Kingdom. To add sites in the US, we will
need to file an IND with the FDA. Once the FDA approves the IND, clinical sites can be opened. We have chosen relapsed/refractory
ovarian cancer as the anticipated Phase 1 study for INKmune for a number of reasons. Relapsed refractory is a disease with poor
treatment options. Our pre-clinical data suggests INKmune may have advantages over other immunotherapies in the treatment of ovarian
cancer. Ovarian cancer has a sensitive and validated biomarker to measure disease burden – CA125. This allows the Company
to accurately select patients for the clinical trial and determine if INKmune therapy is effective. We believe that intraperitoneal
delivery of INKmune is a low-risk delivery strategy for a phase 1 study. The patients we plan to enroll in the trial have their
disease concentrated in the peritoneal cavity further supporting the use of intra-peritoneal delivery. Finally, relapsed refractory
ovarian cancer is an Orphan indication in the US. This provides regulatory advantages for registration of INKmune. INB03 will
follow a similar development strategy, but will use Australia for the Phase I programs. In Australia, clinical trials for INB03
are performed under the clinical trials notification (“CTN”) scheme authorized by the Therapeutic Good Administration
(“TGA”). The TGA is the equivalent agency to the FDA in the US and the MHRA in the United Kingdom. We filed an Australian
Clinical Trial Notification, or CTN, for INB03 and XPro1595 during the second quarter of 2018 and 2019 respectively. Applications
were accepted in May 2018 and 2019 to allow us to initiate the Phase I trials in cancer and Alzheimer’s disease respectively.
We have completed the oncology Phase 1 open label dose escalation trial in patients with advanced solid tumors and biomarkers
of inflammation in their blood.
33
The
Phase I trial has been completed and provided evidence of safety and a pharmacodynamic drug affect, decrease of inflammatory biomarkers,
needed to move the program to a Phase II clinical trial in cancer. The Phase II clinical trial that will combine INB03 with approved
second line therapy in patients with brain metastasis in women with Her2+ breast cancer. This is a combination trial where the
addition of INB03 to approved second line therapy may provide a therapeutic alternative in a disease without any drugs approved.
The Company has not lost interest in combining INB03 with CPI, but competition for patients is fierce in this arena. Our plan
is to pursue treatment of tumors that express MUC4 as our lead indication. Tumors that express MUC4 are resistant to all forms
of immunotherapy due to a combination of increased MDSC in the tumor, decreased inflammation in the tumor (a “cold”
tumor) and direct effects of MUC4 and soluble TNF on HER2 function. If combination therapy with INB03 decreases MUC4 expression
and changes the TME to make the “cold” tumor “hot”, then addition of a CPI will be warranted. Checkpoint
inhibitors are immunotherapy drugs that target proteins in the tumor and immune cells to improve the adaptive immune response
to the tumor by reversing immunologic strategies the cancer uses to evade the immune system. These drugs target PD1, PDL-1 or
CTLA-4. As of April 2018, there are six checkpoint inhibitors approved in the US (Ipilimumab, Atezolizumab, Avelumab, Durvalumab,
Pembrolizumab, and Nivolumab). Additional checkpoint inhibitors to new and existing targets are in development and will be approved
in the coming years. Checkpoint inhibitors are having a significant impact on the treatment of cancer and are expected to be the
largest selling class of cancer therapies by 2027. INB03 can impact the cancer market for CPI in two ways; i) increase the number
of patients eligible for CPI by making “cold” tumors “hot” and ii) reverse resistance to CPI due to immunologic
factors in the TME such as increased MDSC. Currently, only 25-30% of patients treated with currently approved checkpoint inhibitors
respond to therapy and many of these become refractory after a period of treatment. This means at least 70% of patients are resistant
to, or refractory to, checkpoint inhibitors. Experts agree that combination therapy is needed and necessary to improve the response
to checkpoint inhibitor therapy in resistant and refractory patients. To that end, companies with approved checkpoint inhibitors
are looking for companion drugs improve patient response and expand market opportunities. The INB03 development program in cancer
is designed to take advantage of our pre-clinical data and the needs to the cancer community to improve the safety and efficacy
of checkpoint inhibitors. At this time, the combination trial to treat trastuzumab resistant HER2+ expressing cancer is our lead
registration strategy for INB03. Current therapies for trastuzumab resistant cancers are used on a trial by error approach. Using
MUC4 expression as a biomarker for to predict trastuzumab resistance brings a precision medicine approach to this difficult clinical
scenario. Addition of INB03 to the treatment regimen for treating HER2+ cancers may convert “cold” tumors to “hot”
tumors making the eligible for treatment with CPI. Finally, the clinical development landscape for CPI combination therapies to
treat CPI resistant therapies is chaotic. The design and successful completion of a Phase II trial is not guarantee of clinical
relevance or commercial viability. There are multiple therapies on the market or in development for the treatment of trastuzumab
resistant breast cancer. The most prominent of antibody conjugates including ado-trastuzumab emtansine (Kadycycla/T-DM1, Genentech/Roche)
and trastuzumab deruxtecan (Enhertu, Daiichi Sankyo). To our knowledge, there are no drugs approved for the treatment of patients
with HER2+ brain metastasis. CPI are not active in HER2+ cancers but there is considerable interest in attempting to modify the
TME to allow effective use of CPI in patients with advanced disease. Checkpoint inhibitor companies announced large partnering
deal with companies producing checkpoint inhibitor potentiators – BMS/Nektar; BMS/IFM and Merck/Incyte. Experts agree that
partnering in this arena will continue. The registration and development strategy for INB03 is multinational. The Phase II program
may enroll patients in other countries, including the United States after submitting an Investigational New Drug application,
or IND, to the U.S. Food and Drug Administration, or FDA. If partnering is successful at any stage of INB03 development, we expect
the partner to influence the development and regulatory decisions needed with moving the drug to commercialization. Finally, combination
therapy to treat patients resistant to trastuzumab or CPI are not the only oncology application for INB03. INB03 can be combined
with other immune-oncology therapy to improve efficacy, safety or both. INB03 can be used as part of combination therapy with
immuno-oncology drugs, paired with tradition therapies such as cytotoxic chemotherapy, kinase inhibitors, cell therapies or radiation
therapy. The company is pursuing pre-clinical data in some of these areas. When and if positive developments occur, we will communicate
them to our shareholders. There are other regulatory venues that will be important for both our products – the largest and
most important is Europe. In Europe, the European Medicines Agencies (“EMA”) is responsible for authorization of clinical
trials in member states. In EU, there may be a requirement to get individual country authorization at the same time as EMA authorization.
The initial development of INB03. XPro1595 and LIVNate will occur in AUS followed by trials in the US. The development of INKmune
will occur primarily in the United Kingdom followed by trials in the US. XPro1595 is being developed for the treatment of Alzheimer’s
disease under a Part-the-Cloud Award received Feb 2019. The biomarker directed Phase I trial is being performed in AUS using a
regulatory strategy identical to that used for INB03 in cancer. Regulatory approval to initiate the trial was received on February
8, 2019. XPro1595 treats microglial activation and innate immune dysregulation may be the cause with Alzheimer’s disease
in some patients. To our knowledge, there are few companies using an anti-inflammatory strategy for the treatment of Alzheimer’s
disease. Those companies include Denali Therapeutics (NASDAQ: DNLI); developing DNL747 that targets critical signaling proteins
in the TNF pathway that regulate inflammation and cell death. Alector (NASDAQ: ALEC) in partnership with Abbvie is developing
AL002 that targets TREM2 on microglial cells. Gliacure is targeting microglial cells in Alzheimer’s disease with a small
molecule candidate GC021109. LIVNate is being developed for the treatment of NASH. The Phase II trial will occur in AUS and NZ,
is expected to require fewer than 5 clinical sites to complete enrollment. LIVNate offers a unique therapeutic strategy for the
treatment of NASH by targeting peripheral, regional and local cycles of pathology that contribute to the development and progression
of the disease. There are many drugs in development for NASH classified in three groups – anti-fibrotic, metabolic and anti-inflammatory
therapies. Drug development for the treatment of NASH has been difficult. In 2019, several programs failed in late stage development
including seldapar (CYMABAY) and selonsertib (GILEAD). Currently, ocaliva by Intercept is expected to be the first drug to receive
FDA approval for the treatment of NASH with by elafibranor by GENFIT is expected to be second. The list of companies with NASH
therapies in earlier stages of development is long, including cenicriviroc by ALLERGAN, MGL-3196 by MADRIGAL, VK2809 by VIKING
Therapeutics and belapectin by GALECTIN. To our knowledge, the only true anti-inflammatory strategy in development is an
anti-IL11 being developed by Boheringer Ingelheim most likely as part of combination therapy.
34
Clinical
testing must satisfy extensive FDA regulations. Reports detailing the results of the clinical trials must be submitted at least
annually to the FDA and safety reports must be submitted for serious and unexpected adverse events. Success in early stage clinical
trials does not assure success in later stage clinical trials. The FDA, an IRB or we may suspend a clinical trial at any time
on various grounds, including a finding that the research subjects or patients are being exposed to an unacceptable health risk.
New
Drug Applications
Assuming
successful completion of the required clinical trials, the results of product development, preclinical studies and clinical trials
are submitted to the FDA as part of an NDA. An NDA also must contain extensive manufacturing information, as well as proposed
labeling for the finished product. An NDA applicant must develop information about the chemistry and physical characteristics
of the drug and finalize a process for manufacturing the product in accordance with cGMP. The manufacturing process must be capable
of consistently producing quality product within specifications approved by the FDA. The manufacturer must develop methods for
testing the quality, purity and potency of the final product. In addition, appropriate packaging must be selected and tested and
stability studies must be conducted to demonstrate that the product does not undergo unacceptable deterioration over its shelf
life. Prior to approval, the FDA will conduct an inspection of the manufacturing facilities to assess compliance with cGMP.
The
FDA reviews all NDAs submitted before it accepts them for filing. The FDA may request additional information rather than accept
an NDA for filing. In this event, the NDA must be resubmitted with the additional information and is subject to review before
the FDA accepts it for filing. After an application is filed, the FDA may refer the NDA to an advisory committee for review, evaluation
and recommendation as to whether the application should be approved and under what conditions. The FDA is not bound by the recommendation
of an advisory committee, but it considers them carefully when making decisions. The FDA may deny approval of an NDA if the applicable
regulatory criteria are not satisfied. Data obtained from clinical trials are not always conclusive and the FDA may interpret
data differently than we interpret the same data. The FDA may issue a complete response letter, which may require additional clinical
or other data or impose other conditions that must be met in order to secure final approval of the NDA. If a product receives
regulatory approval, the approval may be significantly limited to specific diseases and dosages or the indications for use may
otherwise be limited, which could restrict the commercial value of the product. In addition, the FDA may require us to conduct
Phase 4 testing which involves clinical trials designed to further assess a drug’s safety and effectiveness after NDA approval,
and may require surveillance programs to monitor the safety of approved products which have been commercialized. Once issued,
the FDA may withdraw product approval if ongoing regulatory requirements are not met or if safety or efficacy questions are raised
after the product reaches the market.
Post-Approval
Requirements
Any
products manufactured or distributed by us pursuant to FDA approvals are subject to pervasive and continuing regulation by the
FDA, including, among other things, requirements relating to record-keeping, reporting of adverse experiences, periodic reporting,
distribution, and advertising and promotion of the product. After approval, most changes to the approved product, such as adding
new indications or other labeling claims, are subject to prior FDA review and approval. There also are continuing, annual user
fee requirements for any marketed products and the establishments at which such products are manufactured, as well as new application
fees for supplemental applications with clinical data. Pharmaceutical manufacturers and their subcontractors are required to register
their establishments with the FDA and certain state agencies, and are subject to periodic unannounced inspections by the FDA and
certain state agencies for compliance with GMP, which impose certain procedural and documentation requirements upon us and our
third-party manufacturers. Changes to the manufacturing process are strictly regulated, and, depending on the significance of
the change, may require prior FDA approval before being implemented. FDA regulations also require investigation and correction
of any deviations from cGMP and impose reporting requirements upon us and any third-party manufacturers that we may decide to
use. Accordingly, manufacturers must continue to expend time, money and effort in the area of production and quality control to
maintain compliance with cGMP and other aspects of regulatory compliance. If our future suppliers are not able to comply with
these requirements, the FDA may, among other things, halt our clinical trials, require us to recall a product from distribution,
or withdraw approval of the product.
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The
FDA may withdraw approval if compliance with regulatory requirements and standards is not maintained or if problems occur after
the product reaches the market. Later discovery of previously unknown problems with a product, including adverse events of unanticipated
severity or frequency, or with manufacturing processes, or failure to comply with regulatory requirements, may result in revisions
to the approved labeling to add new safety information; imposition of post-market studies or clinical studies to assess new safety
risks; or imposition of distribution restrictions or other restrictions under a REMS program.
The
FDA closely regulates the marketing, labeling, advertising and promotion of pharmaceutical products. A company can make only those
claims relating to safety and efficacy, purity and potency that are approved by the FDA and in accordance with the provisions
of the approved label. The FDA and other agencies actively enforce the laws and regulations prohibiting the promotion of off-label
uses. Failure to comply with these requirements can result in, among other things, adverse publicity, warning letters, corrective
advertising and potential civil and criminal penalties. Physicians may prescribe legally available products for uses that are
not described in the product’s labeling and that differ from those tested by us and approved by the FDA. Such off-label
uses are common across medical specialties. Physicians may believe that such off-label uses are the best treatment for many patients
in varied circumstances. The FDA does not regulate the behavior of physicians in their choice of treatments. The FDA does, however,
restrict manufacturer’s communications on the subject of off-label use of their products.
Other
Healthcare Laws and Compliance Requirements
Our
sales, promotion, medical education, clinical research and other activities following product approval will be subject to regulation
by numerous regulatory and law enforcement authorities in the United States in addition to FDA, including potentially the Federal
Trade Commission, the Department of Justice, the Centers for Medicare and Medicaid Services, or CMS, other divisions of the U.S.
Department of Health and Human Services and state and local governments. Our promotional and scientific/educational programs must
comply with the federal Anti-Kickback Statute, the civil False Claims Act, physician payment transparency laws, privacy laws,
security laws, and additional federal and state laws similar to the foregoing.
The
federal Anti-Kickback Statute prohibits, among other things, the knowing and willing, direct or indirect offer, receipt, solicitation
or payment of remuneration in exchange for or to induce the referral of patients, including the purchase, order or lease of any
good, facility, item or service that would be paid for in whole or part by Medicare, Medicaid or other federal health care programs.
Remuneration has been broadly defined to include anything of value, including cash, improper discounts, and free or reduced price
items and services. The federal Anti-Kickback Statute has been interpreted to apply to arrangements between pharmaceutical manufacturers
on one hand and prescribers, purchasers, formulary managers, and beneficiaries on the other. Although there are a number of statutory
exceptions and regulatory safe harbors protecting some common activities from prosecution, the exceptions and safe harbors are
drawn narrowly. Practices that involve remuneration that may be alleged to be intended to induce prescribing, purchases or recommendations
may be subject to scrutiny if they do not qualify for an exception or safe harbor. Failure to meet all of the requirements of
a particular applicable statutory exception or regulatory safe harbor does not make the conduct per se illegal under the federal
Anti-Kickback Statute. Instead, the legality of the arrangement will be evaluated on a case-by-case basis based on a cumulative
review of all its facts and circumstances. Several courts have interpreted the statute’s intent requirement to mean that
if any one purpose of an arrangement involving remuneration is to induce referrals of federal healthcare covered business, the
federal Anti-Kickback Statute has been violated. The government has enforced the federal Anti-Kickback Statute to reach large
settlements with healthcare companies based on sham research or consulting and other financial arrangements with physicians. Further,
a person or entity does not need to have actual knowledge of the statute or specific intent to violate it to have committed a
violation. In addition, the government may assert that a claim including items or services resulting from a violation of the federal
Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the False Claims Act. Many states have similar laws
that apply to their state health care programs as well as private payors.
36
Federal
false claims and false statement laws, including the federal civil False Claims Act, or FCA, imposes liability on persons or entities
that, among other things, knowingly present or cause to be presented claims that are false or fraudulent or not provided as claimed
for payment or approval by a federal health care program. The FCA has been used to prosecute persons or entities that “cause”
the submission of claims for payment that are inaccurate or fraudulent, by, for example, providing inaccurate billing or coding
information to customers, promoting a product off-label, submitting claims for services not provided as claimed, or submitting
claims for services that were provided but not medically necessary. Actions under the FCA may be brought by the Attorney General
or as a qui tam action by a private individual in the name of the government. Violations of the FCA can result in significant
monetary penalties and treble damages. The federal government is using the FCA, and the accompanying threat of significant liability,
in its investigation and prosecution of pharmaceutical and biotechnology companies throughout the country, for example, in connection
with the promotion of products for unapproved uses and other illegal sales and marketing practices. The government has obtained
multi-million and multibillion dollar settlements under the FCA in addition to individual criminal convictions under applicable
criminal statutes. In addition, certain companies that were found to be in violation of the FCA have been forced to implement
extensive corrective action plans, and have often become subject to consent decrees or corporate integrity agreements, restricting
the manner in which they conduct their business.
The
federal Health Insurance Portability and Accountability Act of 1996, or HIPAA, created additional federal criminal statutes that
prohibit, among other things, knowingly and willfully executing, or attempting to execute, a scheme to defraud any healthcare
benefit program, including private third-party payors; knowingly and willfully falsifying, concealing or covering up a material
fact or making any materially false, fictitious or fraudulent statement in connection with the delivery of or payment for healthcare
benefits, items or services; and willfully obstructing a criminal investigation of a healthcare offense. Like the federal Anti-Kickback
Statute, the Affordable Care Act amended the intent standard for certain healthcare fraud statutes under HIPAA such that a person
or entity no longer needs to have actual knowledge of the statute or specific intent to violate it in order to have committed
a violation.
Given
the significant size of actual and potential settlements, we expect that the government will continue to devote substantial resources
to investigating healthcare providers’ and manufacturers’ compliance with applicable fraud and abuse laws. Also, many
states have similar fraud and abuse statutes or regulations that may be broader in scope and may apply regardless of payor, in
addition to items and services reimbursed under Medicaid and other state programs. Additionally, to the extent that our products,
once commercialized, are sold in a foreign country, we may be subject to similar foreign laws.
In
addition, there has been a recent trend of increased federal and state regulation of payments made to physicians and other healthcare
providers. The Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act, or
collectively, the Affordable Care Act, among other things, imposed new reporting requirements on certain manufacturers of drugs,
devices, biologics and medical supplies for which payment is available under Medicare, Medicaid or the Children’s Health
Insurance Program, with specific exceptions, for payments or other transfers of value made by them to physicians and teaching
hospitals, as well as ownership and investment interests held by physicians and their immediate family members. Covered manufacturers
are required to collect and report detailed payment data and submit legal attestation to the accuracy of such data to the government
each year. Failure to submit required information may result in civil monetary penalties of up to an aggregate of $150,000 per
year (or up to an aggregate of $1 million per year for “knowing failures”), for all payments, transfers of value or
ownership or investment interests that are not timely, accurately and completely reported in an annual submission. Additionally,
entities that do not comply with mandatory reporting requirements may be subject to a corporate integrity agreement. Certain states
also mandate implementation of commercial compliance programs, impose restrictions on covered manufacturers’ marketing practices
and/or require the tracking and reporting of gifts, compensation and other remuneration to physicians and other healthcare professionals.
We
may also be subject to data privacy and security regulation by both the federal government and the states in which we conduct
our business. HIPAA, as amended by the Health Information Technology and Clinical Health Act, or HITECH, and their respective
implementing regulations, imposes specified requirements on certain health care providers, plans and clearinghouses (collectively,
“covered entities”) and their “business associates,” relating to the privacy, security and transmission
of individually identifiable health information. Among other things, HITECH makes HIPAA’s security standards directly applicable
to “business associates,” defined as independent contractors or agents of covered entities that create, receive, maintain
or transmit protected health information in connection with providing a service for or on behalf of a covered entity. HITECH also
increased the civil and criminal penalties that may be imposed against covered entities, business associates and possibly other
persons, and gave state attorneys general new authority to file civil actions for damages or injunctions in federal courts to
enforce HIPAA and seek attorney’s fees and costs associated with pursuing federal civil actions. In addition, certain states
have their own laws that govern the privacy and security of health information in certain circumstances, many of which differ
from each other and/or HIPAA in significant ways and may not have the same effect, thus complicating compliance efforts.
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Coverage
and Reimbursement
Sales
of pharmaceutical products depend significantly on the extent to which coverage and adequate reimbursement are provided by third-party
payors. Third-party payors include state and federal government health care programs, managed care providers, private health insurers
and other organizations. Although we currently believe that third-party payors will provide coverage and reimbursement for our
product candidates, if approved, we cannot be certain of this. Third-party payors are increasingly challenging the price, examining
the cost-effectiveness, and reducing reimbursement for medical products and services. In addition, significant uncertainty exists
as to the reimbursement status of newly approved healthcare products. The U.S. government, state legislatures and foreign governments
have continued implementing cost containment programs, including price controls, restrictions on coverage and reimbursement and
requirements for substitution of generic products. Adoption of price controls and cost containment measures, and adoption of more
restrictive policies in jurisdictions with existing controls and measures, could further limit our net revenue and results. We
may need to conduct expensive clinical studies to demonstrate the comparative cost-effectiveness of our products. The product
candidates that we develop may not be considered cost-effective and thus may not be covered or sufficiently reimbursed. It is
time consuming and expensive for us to seek coverage and reimbursement from third-party payors, as each payor will make its own
determination as to whether to cover a product and at what level of reimbursement. Thus, one payor’s decision to provide
coverage and adequate reimbursement for a product does not assure that another payor will provide coverage or that the reimbursement
levels will be adequate. Moreover, a payor’s decision to provide coverage for a drug product does not imply that an adequate
reimbursement rate will be approved. Reimbursement may not be available or sufficient to allow us to sell our products on a competitive
and profitable basis.
Healthcare
Reform
The
United States and some foreign jurisdictions are considering or have enacted a number of legislative and regulatory proposals
to change the healthcare system in ways that could affect our ability to sell our products profitably. Among policy makers and
payors in the United States and elsewhere, there is significant interest in promoting changes in healthcare systems with the stated
goals of containing healthcare costs, improving quality and/or expanding access. In the United States, the pharmaceutical industry
has been a particular focus of these efforts and has been significantly affected by major legislative initiatives.
By
way of example, in March 2010, the Affordable Care Act was signed into law, intended to broaden access to health insurance, reduce
or constrain the growth of healthcare spending, enhance remedies against fraud and abuse, add new transparency requirements for
the healthcare and health insurance industries, impose new taxes and fees on the health industry and impose additional health
policy reforms. Among the provisions of the Affordable Care Act of importance to our potential drug candidates are:
●
an
annual, nondeductible fee on any entity that manufactures or imports specified branded prescription drugs and biologic agents,
apportioned among these entities according to their market share in certain government healthcare programs;
●
an
increase in the statutory minimum rebates a manufacturer must pay under the Medicaid Drug Rebate Program to 23.1% and 13.0%
of the average manufacturer price for branded and generic drugs, respectively;
●
a
new methodology by which rebates owed by manufacturers under the Medicaid Drug Rebate Program are calculated for drugs that
are inhaled, infused, instilled, implanted or injected;
●
a
new Medicare Part D coverage gap discount program, in which manufacturers must agree to offer 50% point-of-sale discounts
off negotiated prices of applicable brand drugs to eligible beneficiaries during their coverage gap period, as a condition
for a manufacturer’s outpatient drugs to be covered under Medicare Part D;
●
extension
of a manufacturer’s Medicaid rebate liability to covered drugs dispensed to individuals who are enrolled in Medicaid
managed care organizations;
38
●
expansion
of eligibility criteria for Medicaid programs by, among other things, allowing states to offer Medicaid coverage to additional
individuals and by adding new mandatory eligibility categories for certain individuals with income at or below 133% of the
federal poverty level, thereby potentially increasing a manufacturer’s Medicaid rebate liability;
●
expansion
of the entities eligible for discounts under the Public Health Service pharmaceutical pricing program; and
●
a
new Patient-Centered Outcomes Research Institute to oversee, identify priorities in, and conduct comparative clinical effectiveness
research, along with funding for such research.
In
addition, other legislative changes have been proposed and adopted since the Affordable Care Act was enacted. These changes include,
among others, the Budget Control Act of 2011, which mandates aggregate reductions to Medicare payments to providers of up to 2%
per fiscal year effective April 1, 2013, and, due to subsequent legislative amendments, will remain in effect through 2024 unless
additional Congressional action is taken. In January 2013, President Obama signed into law the American Taxpayer Relief Act of
2012, which, among other things, further reduced Medicare payments to several providers, including hospitals and cancer treatment
centers, increased the statute of limitations period for the government to recover overpayments to providers from three to five
years. These new laws may result in additional reductions in Medicare and other healthcare funding, which could have a material
adverse effect on customers for our product candidates, if approved, and, accordingly, our financial operations.
We
expect that the Affordable Care Act, as well as other healthcare reform measures that may be adopted in the future, may result
in more rigorous coverage criteria and lower reimbursement, and in additional downward pressure on the price that we receive for
any approved product. Any reduction in reimbursement from Medicare or other government-funded programs may result in a similar
reduction in payments from private payors. The implementation of cost containment measures or other healthcare reforms may prevent
us from being able to generate revenue, attain profitability or commercialize our drugs.
Human
Capital Resources
As
of December 31, 2020, we had 5 full-time employees. We consider the intellectual capital of our employees to be an important driver
of our business and key to our future prospects. Since the Company’s inception the Company has experienced no employee turnover.
We monitor our compensation programs closely and provide what we consider to be a very competitive mix of compensation and insurance
benefits for all our employees, as well as participation in our equity programs. None of our employees is subject to a collective
bargaining agreement or represented by a trade or labor union. We consider our relations with our employees to be good.
Corporate
Information
We
were incorporated under the laws of the State of Nevada on September 25, 2015. Our principal executive office is located at 1200
Prospect Street, Suite 525, La Jolla, CA 92037 and our telephone number is (858) 964-3720.
39
Text extracted from the filing as submitted to EDGAR. Formatting, tables and exhibits are simplified for reading; the original document is authoritative for anything you rely on.