Nuvectis Pharma, Inc. 10-K

Item 1. Business OVERVIEW We are a biopharmaceutical company focused on the development of innovative precision medicines for the treatment of serious unmet medical needs in oncology. Our development strategy utilizes a precision medicine-based approach that translates key scientific insights relating to oncogenic drivers, pathway addiction and other cancer-promoting factors into selective and potent and highly selective anticancer drugs. CORPORATE INFORMATION We were incorporated in July 2020 under the laws of the State of Delaware under the name Centry Pharma, Inc., and changed our name to Nuvectis Pharma, Inc. in July 2021. Our principal executive offices are located at 1 Bridge Plaza, 2 nd Floor, Fort Lee, NJ 07024, and our telephone number is (201) 614-3150. We maintain a website with the address www.nuvectis.com. We make available free of charge through our Internet website our annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K, and any amendments to these reports, as soon as reasonably practicable after we electronically file such material with, or furnish such material to, the Securities and Exchange Commission (“SEC”). We are not including the information on our website as a part of, nor incorporating it by reference into, this report. Additionally, the SEC maintains a website that contains annual, quarterly, and current reports, proxy statements, and other information that issuers (including us) file electronically with the SEC. The SEC’s website address is http://www.sec.gov . PRODUCTS UNDER DEVELOPMENT NXP800 (HSF1-Pathway Inhibitor)  We have licensed exclusive world-wide commercial rights to NXP800, a novel Heat Shock Factor 1 (“HSF1”) pathway inhibitor, which was developed at the Institute for Cancer Research (“ICR”) in London, England. Our license agreement with the ICR is subject to certain milestone and royalty payments. For additional information see section “NXP800 License Agreement”. Scientific Background: Cancer cells actively exploit HSF1 to overcome diverse stresses and promote biological activities crucial for their survival, progression, immune evasion, and metastasis. This utilization of the HSF1 pathway by the cancer cell in order to overcome stress is also referred to as an HSF1 addiction. In preclinical studies, treatment with NXP800 inhibited tumor growth in human xenografts of ovarian cancer. In addition, we identified a gene signature related to a mutation in the AT-Rich Interaction Domain (“ARID1a”) gene that has potential to serve as a biomarker for patient selection in ovarian and other cancer types. Based on this work, we plan to initially study the potential efficacy of NXP800 in Ovarian Clear Cell Carcinoma (“OCCC”) and endometrioid ovarian carcinoma, and to investigate the use of ARID1a mutations as a potential patient selection marker for additional types of cancer. The genetic screening for the ARID1a mutation is a standard part of the commercially available screening panels being utilized in the clinic for cancer patients. A comprehensive preclinical data package supported the approval of the Clinical Trial Application (“CTA”) by the Medicines and Healthcare Regulatory Agency (“MHRA”) in the United Kingdom, and we believe that it will also be sufficient for the Investigational New Drug (“IND”) Application submission to the FDA, which is expected in the second quarter of 2022. In December 2021, we announced the commencement of the Phase 1 study for NXP800. The Phase 1 study is comprised of two parts: dose-escalation Phase 1a, initiated in December 2021, to be followed by an expansion Phase 1b. In the Phase 1a, the safety and tolerability of NXP800 will be evaluated in patients with advanced solid tumors to identify a dose and dosing schedule for the Phase 1b. In the Phase 1b, the safety and preliminary anti-tumor activity of NXP800 will be evaluated in biomarker-selected patients, initially in OCCC and endometrioid carcinoma harboring the ARID1a mutation and possibly cohorts of patients with additional types of solid tumors. Additional preclinical studies will be conducted by the ICR and other third-party vendors in order to assess the preclinical safety and efficacy of NXP800 in additional solid tumor types. 6 Addressing an Unmet Need in Clear Cell Ovarian Cancer and Advanced-stage Endometrioid Ovarian Carcinoma We plan to initially investigate NXP800 as treatment for OCCC and endometrioid ovarian carcinoma. NXP800 is precisely targeted for women with these diseases who have either the ARID1a mutation or ARID1a epigenetic loss. OCCC is highly malignant, difficult to treat, and has a very poor survival rate due to frequent recurrence after surgery and first-line treatment. First-line treatment consists of platinum-based chemotherapy (“PBC”), for which the reported response rate in relapse/refractory, platinum resistant patients is 1%, demonstrating a clear and dire need for a new treatment option for OCCC. OCCC represents approximately 10% of all ovarian cancer cases in the United States, with an annual incidence of approximately 2,200 patients. Endometrioid ovarian cancer represents approximately 10% of all diagnosed ovarian cancer cases. If diagnosed as early-stage, endometrioid ovarian tumors can typically be resected. However, if diagnosed at later stages, these tumors have a substantially worse prognosis. Advanced, platinum-refractory, endometrioid cancer in the United States represents approximately 30% of the endometrioid ovarian cancer segment. In this ovarian subset the progression-free survival at three years for patients diagnosed with stage III/IV is a dismal 20% for stage III and 0% for stage IV, representing a clear unmet cancer treatment need. OCCC and endometrioid ovarian carcinoma are subtypes of epithelial ovarian carcinoma whose clinical characteristics are distinct from those of high-grade serious ovarian carcinoma. They exhibit a unique biological profile that is markedly different from those of other histologic types. The incidence of OCCC and endometrioid among ovarian cancer patients is higher in East Asia (for example approximately 25% and 19% in Japan for OCCC and endometrioid, respectively), than in Europe and the United States (approximately 10% for each indication). Market Potential/Addressable Patient Population in Additional Solid Tumor Types Beyond our initial target indications, we believe that NXP800 has the potential to demonstrate anti-tumor activity in several additional tumor types, such as gastric, hepatocellular, esophageal, urothelial carcinoma and others. In vitro preclinical work has been conducted and in vivo preclinical studies are underway to investigate the use of ARID1a mutation as a potential patient selection marker in these additional tumor types. This work could support our use of a tumor agnostic development strategy wherein we enroll patients based on the cancer’s genetic and molecular features without regard to the type or location of the cancer. NXP800 Clinical Development Plan Based on the compelling preclinical data, in December 2021 we announced the commencement of the first-in-human Phase 1 study for NXP800 in adult patients. The Phase 1 study consists of two parts: dose-escalation Phase 1a, initiated in December 2021, to be followed by an expansion Phase 1b. In the Phase 1a, the safety and tolerability of NXP800 will be evaluated in patients with advanced solid tumors to identify a dose and dosing schedule for the Phase 1b. In the Phase 1b, the safety and preliminary anti-tumor activity of NXP800 will be evaluated in biomarker-selected patients, initially in ovarian clear cell carcinoma and endometrioid carcinoma harboring the ARID1a mutation and possibly cohorts of patients with additional types of solid tumors. The MHRA in the United Kingdom has approved our CTA for the Phase 1 study, and we plan to submit an IND application with the FDA in the second quarter of 2022. Our Phase 1 dose-escalation study in the U.K. began in December 2021 and is currently ongoing. 7 NXP900 – Scientific Background In August 2021, we licensed worldwide commercial rights to NXP900 from the University of Edinburgh in Scotland. NXP900 is a preclinical-stage, targeted-therapy, small molecule drug candidate designed to preferentially inhibit the Proto-oncogene c-Src ( “SRC”) and YES1 kinases. We started the preclinical IND-enabling studies for NXP900 in the fourth quarter of 2021. Following the IND-enabling studies, we plan to submit an IND application with the FDA, or an equivalent submission with a foreign agency, in order to begin a Phase 1 dose-escalation study of NXP900 in solid tumors. Subsequently, upon successful completion of the dose-escalation study, we plan to conduct a clinical trial to investigate NXP900 in solid tumors where the SRC and/or YES1 pathways are overactivated and implicated. SRC as an Anti-Cancer Target SRC is aberrantly activated in many cancer types, including solid tumor cancers such as breast, colon, prostate, pancreatic and ovarian cancers, while remaining predominantly inactive in non-cancerous cells. Increased SRC activity is generally associated with late-stage cancers, metastatic potential and resistance to therapies, and correlates with poor clinical prognosis. To date no kinase inhibitor has been approved for the treatment of SRC-active solid tumor malignancies. NXP900’s Novel Mechanism of Action SRC pathway activation is regulated by a switch between inactive and active conformations. The inactive conformation of SRC family kinases is associated with lack of membrane binding, lack of phosphorylation of the activation loop, and characterized by a “closed conformation.” The active “open” conformation allows for the binding of SRC to signaling partners and enables full activation of the pathway via SRC’s kinase catalytic activity and the scaffolding property. Unlike the approved and clinical-stage SRC kinase inhibitors, NXP900 induces and locks the SRC kinase in its native inactive conformation which inhibits both the catalytic (enzymatic) and scaffolding functions. The existing SRC inhibitor drugs only inhibit the catalytic functions of SRC which enable it to bind to its signaling partners with the pathway remaining partially active. NXP900 is a highly specific inhibitor and, unlike many other SRC inhibitors, does not inhibit the Abelson tyrosine kinase (“ABL”), and as such, NXP900 in vivo data indicates no treatment related immunosuppression. The lack of immunosuppressive effects with NXP900 is a potential advantage in the setting of solid tumors. NXP900's unique mechanism of action, which leads to inactivation of the SRC kinase, has resulted in SRC-pathway inhibition in vitro and in vivo. In vivo, treatment with NXP900 inhibited primary and metastatic tumor growth in xenograft models of triple negative breast cancer and demonstrated on-target pharmacodynamic effects. This novel mode of inhibiting SRC by NXP900 could lead to improved treatment of SRC-associated oncologic disorders and the potential to treat solid tumors for the first time with a SRC inhibitor. Gene amplification of the site containing the YES1 gene has been reported in clinical samples in several tumors including lung, head and neck, bladder and esophageal cancers. Furthermore, it has been found that YES1 gene amplification is a key mechanism of resistance to Epidermal Growth Factor Receptor (“EGFR”) or Human Epidermal growth factor Receptor 2 (“HER2”) inhibitors. YES1-dependent oncogenic transformation has also been reported, suggesting that YES1 plays a key role in these solid tumors. The transforming ability of YES1 has been demonstrated through several experimental methods, for example down-regulating YES1 by short hairpin RNA (“shRNA”) significantly inhibited cell growth in several malignancies, including colon carcinoma, rhabdomyosarcoma, and basal-like breast cancer, suggesting YES1 may play a key role in these solid tumors. NXP900 has been shown to inhibit the YES1 kinase in preclinical models, providing an additional potential target for pharmacological inhibition by NXP900 of a biologically-relevant target in various cancer types, some of which may rely on both the SRC and YES1 pathways for their advantage. There are no selective YES1 inhibitors that are FDA approved or in clinical development. We plan to conduct in vivo studies to better understand the effects of YES1 inhibition in solid tumors. 8 OUR STRATEGY We have a mission-driven strategy to build a global biopharmaceutical company through the identification, licensing, development, and commercialization of therapeutics to address unmet medical needs in oncology, with an initial focus on OCCC and endometrioid ovarian carcinoma patients. The key elements driving our business strategy include: ➢ establishing a leadership position in oncology therapeutics, targeting the inhibition of the HSF1 pathway utilizing the ARID1a mutation as a biomarker; ➢ advancing our lead product candidate, NXP800, through clinical development towards regulatory approval in OCCC and endometrioid cancers; ➢ maximizing the therapeutic potential for NXP800 by leveraging preclinical data in additional tumor types harboring the ARID1a mutation, both as a monotherapy and possibly in combination with other approved therapies; ➢ positioning NXP900 as a differentiated SRC kinase inhibitor with improved therapeutic activity in solid tumors compared to the existing SRC kinase inhibitors; ➢ maximizing the therapeutic potential of NXP900 by generating additional preclinical data to highlight the benefits of YES1 inhibition; ➢ deploying our differentiated and proven business development expertise to further expand our targeted oncology pipeline for patients with unmet medical needs; and ➢ evaluating opportunities to accelerate development timelines and enhance the commercial potential of our programs in collaboration with third parties, including potential ex-U.S. collaboration opportunities. INTELLECTUAL PROPERTY We strive to protect the proprietary technologies that we believe are important to our business, including pursuing, obtaining and maintaining patent protection intended to cover the composition of matter of our current or future product candidates, their methods of use, related technologies and other inventions that are important to our business. In addition to patent protection, we also rely on trade secrets to protect aspects of our business that are not amenable to, or that we do not consider appropriate for, patent protection. We also rely on know-how and continuing technological innovation to develop and maintain our proprietary and intellectual property position. As with other biotechnology and biopharmaceutical companies, our commercial success depends in part upon our ability to obtain, maintain, enforce, and protect our patents, intellectual property, and other proprietary rights for our current or future product candidates and other commercially important technologies, inventions, improvements, and know-how related to our business. Our success also depends on our ability to defend and enforce our intellectual property, any patent rights that we may own or in-license, prevent others from infringing any patents we may own or in-license, preserve the confidentiality of our trade secrets, and operate without infringing the valid and enforceable intellectual property and proprietary rights of third parties. Our ability to maintain and solidify our proprietary and intellectual property position for our current or future product candidates and technologies depends on our success in obtaining effective patent claims and enforcing those claims if granted. However, our current patent applications and any patent applications that we may in the future file or license from third parties may not result in the issuance of patents, and any issued patents we may obtain may not guarantee us the right to practice our technology in relation to the commercialization of our products. We also cannot predict the breadth of claims that may be allowed or enforced in any patents we may own or in-license in the future. 9 The patent positions for biotechnology and biopharmaceutical companies like us are generally uncertain and can involve complex legal, scientific, and factual issues. We cannot predict whether the patent applications we are currently pursuing will issue as patents in any particular jurisdiction or whether the claims of any issued patents will provide sufficient proprietary protection from competitors. Any issued patents that we may own or in-license in the future may be challenged, invalidated, circumvented, or have the scope of their claims narrowed. Furthermore, the coverage claimed in a patent application can be significantly reduced before a patent is issued, and its scope can be reinterpreted and even challenged after issuance. Moreover, many jurisdictions permit third parties to challenge issued patents in administrative proceedings, which may result in further narrowing or even cancellation of patent claims. As a result, we cannot guarantee that any of our current or future product candidates will be protected or remain protectable by enforceable patents. Moreover, any patents that we hold may be challenged, circumvented or invalidated by third parties. We cannot be certain of the priority of inventions covered by pending third-party patent applications. If third parties prepare and file patent applications in the United States that also claim technology or therapeutics to which we have rights, we may have to participate in interference proceedings in the U.S. Patent and Trademark Office (“USPTO”) to determine priority of invention, which could result in substantial costs to us, even if the eventual outcome is favorable to us, which is highly unpredictable. In addition, because of the extensive time required for clinical development and regulatory review of any current or future product candidate we may develop, it is possible that, before any current or future product candidates can be commercialized, any related patent may expire or remain in force for only a short period following commercialization, thereby limiting the protection such patent would afford the respective product and any competitive advantage such patent may provide. In May 2021, we licensed one patent family covering the composition of matter for NXP800, which includes two issued U.S. patents as well as methods of using and making NXP800. Composition of matter patents in this family have also been issued in other major markets, including Australia, Brazil, China, India, Israel, Mexico, Russia, Singapore, the European Union and Japan. The statutory expiration for patents in this family is October 2034, without taking into account any possible patent term extension, where applicable. We licensed a patent family directed to additional compounds, structurally distinct from NXP800, that modulate HSF1. This patent family is granted in the U.S. and has a statutory expiration of April 2036. We have also licensed a patent family pending in the U.S. and Europe directed to deuterated compounds that modulate HSF1. Any patent that grants from this family would have a statutory expiration of October 2037. We intend to pursue additional patent protection for NXP800 relating to methods of use and related technologies that we consider important to our business. In August 2021, we licensed one patent family covering the composition of matter for NXP900, which includes one U.S. patent covering the composition of matter for NXP900, as well as patents and patent applications issued/pending in major markets, including the European Union and Japan. The statutory expiration for patents in this patent family is April 2036, without taking into account any possible patent term extension, where applicable. The term of individual patents depends upon the legal term of the patents in the countries in which they are obtained. In most countries in which we file, the patent term is 20 years from the earliest date of filing a non- provisional patent application. In the United States, the term of a patent covering an FDA-approved drug may, in certain cases, be eligible for a patent term extension under the Hatch-Waxman Act as compensation for the loss of patent term during the FDA regulatory review process. The period of extension may be up to five years but cannot extend the remaining term of a patent beyond a total of 14 years from the date of product approval. Only one patent applicable to an approved drug is eligible for extension and only those claims covering the approved drug, a method for using it, or a method for manufacturing it may be extended. Similar provisions are available in Europe and in certain other jurisdictions to extend the term of a patent that covers an approved drug. It is possible that issued U.S. patents covering NXP800 and NXP900, may or will be entitled to patent term extensions. If our current or future product candidates receive FDA approval, we intend to apply for patent term extensions, if available, to extend the term of patents that cover any approved product candidates. We also intend to seek patent term extensions in any jurisdictions where they are available; however, there is no guarantee that the applicable authorities, including the FDA, will agree with our assessment of whether such extensions should be granted, and even if granted, the length of such extensions. In addition to patent protection, we also rely on trade secret protection for our proprietary information that is not amenable to, or that we do not consider appropriate for, patent protection, including certain aspect of our manufacturing processes. However, trade secrets can be difficult to protect. Although we take steps to protect our proprietary information, including restricting access to our confidential information, as well as entering into non-disclosure and confidentiality agreements with our employees, consultants, independent contractors, advisors, contract manufacturers, clinical research organizations (“CROs”), hospitals, independent treatment centers, suppliers, collaborators and other third parties, such parties may breach such agreements and disclose our proprietary information including our trade secrets, and we may not be able to obtain adequate remedies for such breaches. In addition, third parties may independently develop the same or similar proprietary information or may otherwise gain access to our proprietary information. As a result, we may be unable to meaningfully protect our trade secrets and proprietary information. For more information regarding the risks related to our intellectual property, please see “Risk Factors - Risks Related to Our Intellectual Property.” 10 NXP800 License Agreement In May 2021, we entered into a worldwide, exclusive license agreement with the CRT Pioneer Fund (“CRT”) for NXP800 and any of its derivatives (collectively, the “NXP800 Program”). NXP800 is a small molecule product candidate that we believe can be applied to a broad range of cancers. Pursuant to the license agreement, we have an obligation to pay success-based milestones and royalties to CRT, as follows: ➢ pre-approval milestone payments of up to approximately $26.5 million including an upfront payment of $3.5 million which has already been paid; ➢ regulatory approval and commercial sales milestones of up $178 million; and ➢ mid-single digit to 10% royalties on a tiered basis on net sales. In addition, in connection with the licensing agreement, we expect to provide ICR with up to an additional $500,000 in research and development support over the next 18 months to conduct additional scientific research and preclinical testing for certain indications that we select in connection with the NXP800 Program. We own an exclusive license to intellectual property rights developed in the collaboration, to research, develop and commercialize products resulting from the collaboration. License Term The license will remain in effect in each territory subject to the license and will continue until our obligation to pay royalties in such territory has expired. The royalty term for each licensed product in each country commences with the first commercial sale of the applicable licensed product in the applicable country and ending on the expiration of the last to expire of any patent specified by the license (with the key composition of matters patent expiring October 2034) or the expiration of any extended exclusivity period in the relevant country. CRT may earlier terminate the license if we, or any of our affiliates or sub-licensees, challenge or seek to challenge the validity of any of the licensed patents or upon certain change of control provisions. Either party may terminate the license upon material breach by the other party, and upon the appointment of a receiver or upon a winding-up order or similar or equivalent action. NXP900 License Agreement In August 2021, we entered into a worldwide, exclusive license agreement with the University of Edinburgh (“UoE”) for NXP900 and any of its derivatives (collectively, the “NXP900 Program”). Discovered at the UoE, NXP900 is a targeted therapy, small molecule SRC and YES1 kinase inhibitor product candidate that we believe can be applied to a broad range of cancers. 11 Pursuant to the license agreement, we have an obligation to pay success-based milestones and royalties to the UoE, as follows: ➢ pre-approval milestone payments of up to approximately $49.5 million including an upfront payment of $3.5 million which has already been paid; ➢ regulatory approval and commercial sales milestones of up $279.5 million; ➢ mid-single digit to 8% royalties on a tiered basis on net sales; and ➢ 2.5% of the gross amount of each Nuvectis fundraising, including our initial public offering, up to an aggregate total of $3.0 million. In addition, in connection with the license agreement, we expect to provide the UoE with up to an additional £580,000 in research and development support over the next 18 months to conduct additional scientific research and preclinical testing for certain indications that we select in connection with the NXP900 Program. We own an exclusive license to intellectual property rights developed in the collaboration, to research, develop and commercialize products resulting from the collaboration. License Term The royalty term for each licensed product in each country is the period commencing with first commercial sale of the applicable licensed product in the applicable country and ending on the expiration of the last to expire of any patent specified by the license (statutory expiration for the NXP900 patent family is April 2036), or the expiration of any extended exclusivity period in the relevant country. We may terminate the license if we determine that it is not scientifically or commercially viable to research, develop, or commercialize the licensed products which are the subject of the license agreement. UoE may terminate the agreement if we: (i) cease to carry on the business regarding the treatment, prevention and/or diagnosis of human diseases; (ii) discontinue the development of the licensed products which are the subject of the license; (iii) dispose of our assets or business in whole or in material part; (iv) challenge the validity, ownership, or enforceability of the exclusively licensed technology; (v) contest the secret or substantial nature of certain know-how subject to the license; or (vi) breach certain diligence obligations or fail to pay any amount due under the license within a specified time frame. The parties may terminate the NXP900 license agreement immediately by written notice upon material breach by the other party, if such breach (if capable of cure) is not so cured within thirty (30) business days following the notice of breach. Competition Our industry is intensely competitive and subject to rapid and significant technological changes. We face competition with respect to our current product candidates, and will face competition with respect to future product candidates, from segments of the pharmaceutical, biotechnology and other related markets. There are several companies that are developing drugs for various types of ovarian cancer, including ImmunoGen, Inc. and Constellation Pharmaceuticals, Inc. (acquired by MorphoSys AG in June 2021). MorphoSys AG disclosed patient recruitment commenced in May 2021 in a phase 2 expansion cohort for CPI-0209 in patients with relapsed urothelial carcinoma, relapsed OCCC, and relapsed endometrial carcinoma, all with known ARID1A mutations. Turning Point Therapeutics, Inc. (“Turning Point”) is developing a MET/SRC/CSF1R inhibitor which is currently being studied in a Phase 1 trial of patients with advanced or metastatic solid tumors harboring Mesenchymal–Epithelial Transition (“MET”) genetic alterations. The simultaneous inhibition of MET, SRC and CSF1R kinases has been reported by Turning Point as a key component of the target product profile, and Turning Point has described the program as a strategy for the treatment of MET-driven solid tumors, an area that does not overlap with our development strategy. Turning Point is also developing TPX-0046, a Rearranged during Transfection (“RET”) kinase inhibitor that can also inhibit other kinases including SRC family members, YES1, ABl, TRK and JAK2. TPX-0046 is being evaluated in an ongoing Phase 1/2 clinical trial for the treatment of advanced solid tumors with RET gene alterations, an area that does not overlap with our development strategy. Our competitors may obtain regulatory approval of their products more rapidly than us, or may obtain patent protection or other intellectual property rights that limit our ability to develop or commercialize our current or future product candidates. Our competitors may also develop drugs that are more effective, more convenient, more widely used and less costly, or have a better safety profile than our products; and these competitors may also be more successful than us in manufacturing and marketing their products. 12 In addition, we may need to develop our current or future product candidates in collaboration with diagnostic companies, and we will face competition from other companies in establishing these collaborations. Our competitors will also compete with us in recruiting and retaining qualified scientific, management and commercial personnel, establishing clinical trial sites and patient registration for clinical trials, as well as in acquiring technologies complementary to, or necessary for, our programs. The acquisition or licensing of pharmaceutical products is also very competitive. If we seek to acquire or license products, we will face substantial competition from a number of more established companies, some of which have acknowledged strategies to license or acquire products and many of which are bigger than us and have more institutional experience and greater cash positions or flows than we have. These more established companies may have competitive advantages over us, as may other emerging companies taking similar or different approaches to product licenses and/or acquisitions. In addition, a number of established research-based pharmaceutical and biotechnology companies may acquire products in late stages of development to augment their internal product lines, which may provide those companies with an even greater competitive advantage. Supply and Manufacturing We do not have any manufacturing facilities. We currently rely, and expect to continue to rely, on third-party manufacturers, including a single-manufacturer to make the NXP800 drug substance and a single-manufacturer to make the NXP800 drug product. With respect to NXP900, to date, the drug substance has been manufactured by a non-good manufacturing practices (“non-GMP”) manufacturer for research purposes at lab scale. We will need to identify a third-party manufacturer(s) compliant with current good manufacturing practices (“cGMP”) for the production of NXP900 drug substance and drug product. With any supply program, obtaining raw materials of the correct quality cannot be guaranteed and we cannot ensure that we will be successful in these endeavors. We plan to continue to rely on third-party manufacturers for the supply of NXP800 and NXP900, for manufacture of future additional product candidates, for preclinical testing as well as for clinical trials and commercial manufacture if our current or future product candidates receive marketing approval. GOVERNMENT REGULATION Numerous governmental authorities, principally the FDA, as well other state and foreign regulatory agencies impose substantial regulatory requirements upon the clinical development, manufacture and marketing of our product candidates, as well as our ongoing research and development activities. Before marketing in the U.S., any drug that we develop must undergo rigorous preclinical testing and clinical trials and an extensive regulatory approval process implemented by the FDA under the Food, Drug and Cosmetic Act of 1930. The FDA regulates, among other things, the pre-clinical and clinical testing, safety, efficacy, approval, manufacturing, record keeping, adverse event reporting, packaging, labeling, storage, advertising, promotion, export, sale and distribution of biopharmaceutical products. If we fail to comply with applicable FDA or other legal requirements, we may become subject to administrative or judicial sanctions or other legal consequences. These sanctions or consequences may include, among other things, the FDA’s denial of our pending applications, the issuance of clinical holds for ongoing studies, suspension or revocation of approved applications, warning or untitled letters, product withdrawals or recalls, product seizures, relabeling or repackaging, total or partial suspensions of manufacturing or distribution, injunctions, fines, civil penalties or criminal prosecution. The clinical testing and approval processes require substantial time, effort, and financial resources, and we cannot be certain that any approvals for our current or future product candidates will be granted on a timely basis, if at all. We, along with our vendors, contract research organizations and contract manufacturers, will be required to navigate the various preclinical, clinical, manufacturing and commercial requirements of the FDA, as well as those of any other governing regulatory agency of the countries in which we wish to conduct studies or seek approval of our current or future product candidates. The process of obtaining regulatory approvals of drugs and ensuring subsequent compliance with appropriate federal, state, local and foreign statutes and regulations requires the expenditure of substantial time and financial resources. 13 Preclinical and clinical trials for drugs Before testing any drug in humans, a product candidate must undergo rigorous preclinical testing. Preclinical studies include laboratory evaluations of drug chemistry, formulation and stability, as well as in vitro and animal studies to assess safety and address use concerns. The conduct of preclinical studies is subject to federal and state regulations and requirements, including good clinical practice (“GCP”) requirements for safety/toxicology studies. The results of the preclinical studies, together with manufacturing information and analytical data must be submitted to the FDA as part of an IND application. An IND application is a request for authorization from the FDA to administer an investigational product to humans and must become effective before clinical trials may begin. Some long-term preclinical testing may continue after the IND application is submitted. An IND application automatically becomes effective 30 days after receipt by the FDA unless the FDA raises concerns or questions about any portion of the IND application and imposes a clinical hold. In such a case, the IND sponsor and the FDA need to resolve any outstanding concerns before the clinical trial can begin. Submission of an IND application may result in the FDA not allowing clinical trials to commence or not allowing clinical trials to commence on the terms originally specified in the IND application. A separate submission to an existing IND application must also be made for each successive clinical trial conducted during product development of a product candidate, and the FDA must grant permission, either explicitly or implicitly by not objecting, before each clinical trial can begin. Clinical development of product candidates to support New Drug Applications (“NDAs”) are typically conducted in three sequential phases, which may overlap: ➢ Phase 1: The investigational product is initially introduced into healthy human volunteers. These studies are typically designed to test the safety, dosage tolerance, absorption, metabolism, excretion and distribution of the investigational product in humans, the side effects associated with increasing doses, and, if possible, to gain early evidence of efficacy. In the case of some products for severe or life-threatening diseases, such as cancer, especially when the product may be too inherently toxic to ethically administer to healthy volunteers, the initial human testing is often conducted in patients. ➢ Phase 2: This phase typically involves administration of the investigational product to a limited patient population with a specified disease or condition to determine optimal dosages, dosage tolerance and dosing schedule, to identify possible adverse side effects and safety risks, and to preliminarily evaluate the efficacy of the product candidate for specific targeted diseases. ➢ Phase 3: This phase typically involves administration of the investigational product to an expanded patient population to provide significant evidence of clinical efficacy and to further test for safety, generally at multiple and often geographically dispersed clinical trial sites. These clinical trials are intended to provide the primary basis for the overall risk/benefit ratio of the investigational product and to enable regulatory decision-making of product approval and physician labeling. These trials may include comparisons with placebo and/or other comparator treatments. The duration of treatment is often extended to mimic the actual use of a product during marketing. ➢ Phase 4: Post-approval trials, sometimes referred to as Phase 4 clinical trials, may be conducted after initial marketing approval. These trials are used to gain additional experience from the treatment of patients in the intended therapeutic indication. In certain instances, the FDA may mandate the performance of Phase 4 clinical trials as a condition of approval of an NDA. Expedited development and review programs The FDA is authorized to designate certain products for expedited development or review if they are intended to address an unmet medical need in the treatment of a serious or life-threatening disease or condition. These programs include fast track designation, breakthrough therapy designation and priority review designation. 14 A new drug is eligible for fast track designation if it is intended to treat a serious or life-threatening disease or condition and demonstrates the potential to address an unmet medical need for such disease or condition. Fast track designation provides increased opportunities for sponsor interactions with the FDA during preclinical and clinical development, in addition to the potential for rolling review of a marketing application once a marketing application is filed, meaning that the agency may review portions of the application before the sponsor submits the complete application, as well as priority review, discussed below. In addition, a new drug may be eligible for breakthrough therapy designation if it is intended, alone or in combination with one or more other drugs or biologics, to treat a serious or life-threatening disease or condition and preliminary clinical evidence indicates that the drug may demonstrate substantial improvement over existing therapies on one or more clinically significant endpoints, such as substantial treatment effects observed early in clinical development. Breakthrough therapy designation provides all the features of fast track designation in addition to intensive guidance on an efficient drug development program beginning as early as Phase 1, and FDA organizational commitment to expedited development, including involvement of senior managers and experienced review staff in a cross-disciplinary review, where appropriate. Drugs or biologics designated as breakthrough therapies are also eligible for accelerated approval of their respective marketing applications. Finally, the FDA may designate a product for priority review if it is a drug or biologic that treats a serious condition and, if approved, would provide a significant improvement in safety or effectiveness. The FDA determines at the time that the marketing application is submitted, on a case-by-case basis, whether the proposed drug represents a significant improvement in treatment, prevention or diagnosis of disease when compared with other available therapies. Significant improvement may be illustrated by evidence of increased effectiveness in the treatment of a condition, elimination or substantial reduction of a treatment-limiting drug reaction, documented enhancement of patient compliance that may lead to improvement in serious outcomes, or evidence of safety and effectiveness in a new subpopulation. A priority review designation is intended to direct overall attention and resources to the evaluation of such applications, and to shorten the FDA’s goal for taking action on a marketing application from ten months to six months for a new molecular entity NDA from the date of filing. Even if a product qualifies for one or more of these programs, the FDA may later decide that the product no longer meets the conditions for qualification or decide that the time period for FDA review or approval will not be shortened. Furthermore, fast track designation, breakthrough therapy designation and priority review do not change the standards for approval and may not ultimately expedite the development or approval process. Other regulatory matters Manufacturing, sales, promotion and other activities of product candidates following product approval, where applicable, or commercialization are also subject to regulation by numerous regulatory authorities in the United States in addition to the FDA, which may include the Centers for Medicare & Medicaid Services (“CMS”) an agency within the U.S. Department of Health and Human Services (“HSS”), other divisions of the Department of Health and Human Services, the Department of Justice, the Drug Enforcement Administration, the Consumer Product Safety Commission, the Federal Trade Commission, the Occupational Safety & Health Administration, the Environmental Protection Agency and state and local governments and governmental agencies. Other healthcare laws Healthcare providers, physicians, and third-party payors will play a primary role in the recommendation and prescription of any products for which we obtain marketing approval. Our business operations and any current or future arrangements with third-party payors, healthcare providers and physicians may expose us to broadly applicable fraud and abuse and other healthcare laws and regulations that may constrain the business or financial arrangements and relationships through which we develop, market, sell and distribute any drugs for which we obtain marketing approval. In the United States, these laws include, without limitation, state and federal anti-kickback, false claims, physician transparency, and patient data privacy and security laws and regulations. For a description of these risks, please see the section entitled “Risk Factors.” 15 Current and future healthcare reform legislation The FDA’s and other regulatory authorities’ policies may change and additional government regulations may be enacted that could prevent, limit or delay regulatory approval of our current or future product candidates. If we are slow or unable to adapt to changes in existing requirements or the adoption of new requirements or policies, or if we are not able to maintain regulatory compliance, we may lose any marketing approval that we otherwise may have obtained and we may not achieve or sustain profitability, which would adversely affect our business, prospects, financial condition and results of operations. In recent years, there has been heightened governmental scrutiny over the manner in which biopharmaceutical manufacturers set prices for their marketed products. Such scrutiny has resulted in several recent U.S. Congressional inquiries and proposed and enacted federal and state legislation designed to, among other things, bring more transparency to drug pricing, review the relationship between pricing and manufacturer patient programs, reduce the cost of drugs under Medicare, and reform government program reimbursement methodologies for pharmaceutical products. Congress and the executive branch have each indicated that it will continue to seek new legislative and/or administrative measures to control drug costs, making this area subject to ongoing uncertainty. Other U.S. environmental, health and safety laws and regulations We may be subject to numerous environmental, health and safety laws and regulations, including those governing laboratory procedures and the handling, use, storage, treatment and disposal of hazardous materials and wastes. From time to time and in the future, our operations may involve the use of hazardous and flammable materials, including chemicals and biological materials, and may also produce hazardous waste products. Even if we contract with third parties for the disposal of these materials and waste products, we cannot completely eliminate the risk of contamination or injury resulting from these materials. In the event of contamination or injury resulting from the use or disposal of our hazardous materials, we could be held liable for any resulting damages, and any liability could exceed our resources. We also could incur significant costs associated with civil or criminal fines and penalties for failure to comply with such laws and regulations. We maintain workers’ compensation insurance to cover us for costs and expenses we may incur due to injuries to our employees, but this insurance may not provide adequate coverage against potential liabilities. However, we do not maintain insurance for environmental liability or toxic tort claims that may be asserted against us. In addition, we may incur substantial costs in order to comply with current or future environmental, health and safety laws and regulations. Current or future environmental laws and regulations may impair our research, development or production efforts. In addition, failure to comply with these laws and regulations may result in substantial fines, penalties or other sanctions. Government regulation of drugs outside of the United States In addition to regulations in the United States, there are a variety of foreign regulations governing clinical trials and commercial sales and distribution of any product candidates. The approval process varies from country to country, and the time may be longer or shorter than that required for FDA approval. EMPLOYEES AND HUMAN CAPITAL MANAGEMENT As of March 22, 2022, we had 8 full-time employees. Additionally, we have retained and may retain in the future, a number of expert consultants and vendors that help navigate us through and execute the different aspects of our business. We consider our relationship with our employees to be good and have not experienced any work stoppages, slowdowns or other serious labor problems that have materially impeded our business operations. None of our employees are represented by labor unions or covered by collective bargaining agreements. Our human capital management objectives include, as applicable, identifying, recruiting, retaining, incentivizing, and integrating our new and existing employees. The principal purpose of our equity incentive plan is to attract, retain, and motivate selected employees, consultants, and directors through the granting of stock-based compensation awards and cash-based bonus awards. 16